If you have recently bought a property and you believe that the seller lied in the sale/on the property information form, or didn’t disclose something important, you may be able to claim property misrepresentation.
In this article, Dispute Resolution specialist Anthony Eaton outlines how property misrepresentation works and whether you have a claim.
What is misrepresentation when buying a house?
The phrase ‘buyer beware’ is often mentioned in relation to buying a house. Whilst, as a buyer, you have to be satisfied with the condition of a property before exchange and completion, sometimes the only way to find out everything you need to know about a property is to ask the seller some questions.
Questions about the current and historic condition of the property are covered by the Law Society’s TA6 form, a questionnaire that the seller is required to answer. Your solicitor may also have their own questions to ask.
If the seller makes a statement of fact to you, or your solicitor, about the property in response to these questions which causes you to enter into the contract, the seller may be guilty of misrepresentation.
What is an example of a misrepresentation?
There are various problems that a seller might not have disclosed that would constitute misrepresentation.
For example, problems with damp, drainage, flooding, boundary disputes with neighbours and infestations of Japanese Knotweed are some common issues that can give rise to claims.
Dealing with these issues can be costly and can affect the value of the property.
Related: Boundary disputes between neighbours - Your questions answered
What are the grounds for misrepresentation?
For a misrepresentation claim to be made, the seller must have made a false statement to you or your solicitor that you relied upon being true when entering into the contract.
You must also have suffered a loss as a result of entering into the contract because you were relying on a false statement.
There are different types of misrepresentation such as fraudulent misrepresentation, negligent misrepresentation, and innocent misrepresentation. The difference in these categories is generally the level of blame which can be attributed to the person making the misrepresentation.
How do I make a claim for property misrepresentation?
As with most litigation matters, there is a protocol which must be followed before court proceedings are issued.
The first step is to send a Letter of Claim to the seller, setting out the background to the claim, the grounds on which the claim is brought and what remedy you are seeking.
As claimant, you should gather plenty of evidence to support your claim before taking it forward.
How do you prove property misrepresentation?
To be successful in a claim for misrepresentation, you must prove that the statement that you relied upon is untrue.
For example, the TA6 form asks the question “Has any part of the property ever been flooded?”. If the seller has answered “No” to this question and you subsequently find that the property is regularly flooded, you may have grounds for a claim.
However, you would have to prove that flooding also occurred before you purchased the property. This can be difficult to prove but, it is a good first step to speak with neighbours to ask them of any prior flooding and to get advice from an expert who can determine signs of previous flooding.
You must also be able to show that you would not have entered into the contract without relying on the seller’s statement. You don’t need to show that the statement was the sole reason for entering into the contract, but it must have had a substantial effect on your decision.
What are the damages for misrepresentation?
There are two remedies available in misrepresentation claims, rescission and damages, or a combination of both in the case of fraudulent misrepresentation.
In order for the court to award damages to compensate you, you will have to show the losses incurred. The amount of damages payable is often the difference between the property’s true value as it was at the time of purchase and the value of the property as described by the seller.
You will need a valuation from an expert surveyor to advise you of this figure. As a claimant, you would need to pay for this valuation, but you would seek to recover this cost in any settlement negotiations or at court.
Related: Property Surveys - Choosing a surveyor and cost considerations
Can a house sale be reversed after completion?
In a successful misrepresentation claim, the court can order the purchase contract to be overturned (rescinded) which will effectively undo the property transaction and the seller to repay the purchase price to you. In the case of fraudulent misrepresentation, the court can also award damages.
However, this is not always practical where the transaction forms part of a chain and, in these cases, the court has discretion to award damages only.
Do I need a solicitor to make a property misrepresentation claim?
Although you aren’t legally required to instruct a solicitor for a misrepresentation claim, it is recommended as the process can be complex, and it can be difficult to know whether your claim is valid without one.
A solicitor will be able to advise you on the strengths of your case and guide you through the steps in the claim to potentially settle the matter without the need for court proceedings.
If you do end up going to court, having a solicitor on side can also be crucial.
What now?
If you’re reading this article after an unsuccessful misrepresentation claim, you will likely want to sell the property. Although you may have sold property before, its always good to brush up on the process involved and the documents you’ll need.
You can read our guidance on the process here, and the documents here.
If you are now looking to buy a property, after a successful or unsuccessful misrepresentation claim, you can download our free guide to buying a home here. It includes everything you need to know from putting in an offer to moving day.
If you are reading this article but on discovering issues with your property which were not picked up by the surveyor who you instructed in the purchase and you think they should have been, you may have a claim in professional negligence. You can read our guidance on that topic here.
Specialist Property Misrepresentation Solicitors
If, after reading this article, you have any more questions or would like to speak to a specialist; please don’t hesitate to contact our Dispute Resolution Team.
Our bright and experienced team can provide tailored advice, assist you in making a claim for property misrepresentation, ensure that you have all the correct evidence in place and represent you to achieve the best outcome in Court.
You can call us on 01202 499255, or fill out the form at the top of this page, for a free 30-minute appointment.
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