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Property misrepresentation occurs when a seller provides inaccurate or misleading information about a property, either intentionally or unintentionally.
A common form of alleged misrepresentation relates to property purchases and sales, where aspects of a property may be misdescribed in estate agents particulars or in answers to pre-contract enquiries. We are commonly asked whether a misrepresentation, if proven, will mean that the transaction can be rescinded (cancelled). The answer will depend legally on the signifcance of the misrepresentation. Generally speaking, for legal and practical reasons, damages would be a far more common legal remedy awarded than rescission where a property misrepresentation claim is proven.
Buying a property and then discovering a misrepresentation is extremely upsetting. However, taking legal action is expensive and risky and it’s highly advisable to get experienced advice not only on the merits of your claim, but the likely amount you may recover.
To succeed in a claim, you'll need to prove:
False Statement - the seller made a false statement of material fact.
Reliance - you relied on the false statement when making your purchase decision.
Loss - you suffered financial loss as a result of the misrepresentation.
The burden of proof will be on a claimant in any court action to demonstrate the necessary elements described above.
Misrepresentations can be innocent on the part of the person making the statement, negligent or fraudulent. This is relevant as regards the potential legal remedies available because is the misrepresentation was fraudulent this creates a better opportunity to rescind (cancel) the contract. It is however important to remember that if you only find out about a misrepresentation after you complete a property purchase, the seller will have your money and you may not be able to rescind in practical terms.
Silence from the seller in responding to either a standard form enquiry before contract or a specific enquiry will not be a misrepresentation. In that situation, you may find that you have a potential claim against your conveyancing solicitors if they failed to advise you on gaps in information from the seller.
With residential conveyancing transactions, there are standard sets of questions which are sent by the buyers solicitors to sellers, to speed things up. The buyer can ask as many additional specific questions as they like. It is common for sellers to answer both standard and additional enquiries in vague terms, such as “not to the seller’s knowledge, please relay on your own enquiries”. It is up to you as buyer and your solicitor to decide whether to accept answers like this.
Structural issues - hidden defects like subsidence, structural damage, invasive weeds such as Japanese knotweed, faulty wiring or with leasehold flats, where the seller claims not to have made any structural alterations when in fact he/she/they did.
Damp and mold - where the seller states there are no damp or mold problems.
Boundary disputes - uncertain or disputed property boundaries.
Neighbour disputes - ongoing disputes or problems with neighbours.
If you're successful in a misrepresentation claim at court, by far the most common and practicable order will be damages, meaning financial compensation for losses incurred due to the misrepresentation. This often results in a major dilemma, because litigation has inherent risks and is costly and in most property misrepresentation cases, short of a major structural related misrepresentation, the value of the claim may not justify going anywhere near a court trial.
In many cases, you may find that an alternative claim, where possible, for professional negligence, against your surveyor or solicitor, might be a better option, as they will have professional indemnity insurance.
If you think you have a claim for property misrepresentation, it's crucial to seek legal advice from a property law specialist. We can assess your situation, advise on the best course of action, and represent you in legal proceedings.
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