Buyer or Seller Beware
The property buying and selling process in England and Wales does not require a seller to reveal any problems although if asked a question they must answer truthfully. You may or may not be aware of the Latin phrase Caveat Emptor, which translates to “let the buyer beware”. Potential buyers must do their research and ask questions of the seller prior to purchasing property. This means the onus is on the buyer to carry out due diligence prior to making a purchase. A seller is generally not responsible for any issues which come to light after the sale, unless they have misrepresented the position or deliberately covered up problems.
If you are buying any property, as the buyer, it is important that any property forms provided by the seller are carefully read and fully understood, and any concerns should be raised as early as possible. A buyer will often answer questions vaguely so you may need to ask further questions. A thorough inspection of the property by you is essential. As conveyancers we carry out searches on your behalf, as searches, and in particular the Local Authority Search, reveal information that could have an adverse impact on the transaction. Hiring a reputable surveyor to inspect the property and provide a report is also important as it can also reveal issues that may not be visible upon immediate inspection of the property.
New Efforts to Ensure Buyer and Seller Transparency
In an effort to streamline property transactions, the National Trading Standards Estate and Letting Agency Team (NTSELAT) has revealed that estate agents are to be compelled to disclose more ‘material information’ relating to sales within their listings, in particular more details about the lease term and service charge if the property is leasehold. NTSELAT has also mentioned that there will be further requirements for estate agents to incorporate information relating to restrictive covenants and flood risk in an effort to reduce the number of abortive transactions.
In January 2023, the Law Society updated some of its property forms. The significance of property forms is, of course, that they are universally accepted by all conveyancers. They are designed to provide the buyer with information and transparency in respect of the property they are intending to buy. The updated leasehold information form (TA7) now includes a section on building safety in a bid to assist transactions impacted by the Building Safety Act 2022. The questions focus on remediation works, whether the lease is a qualifying lease, and information surrounding the leaseholder Deed of Certificate and the Landlord’s Certificate. More specifically, the Law Society has added questions where the seller must disclose whether they are aware of any defects which create a building safety risk as they seek to also assist those wishing to access mortgage finance.
There has been a lot of focus on sellers providing upfront information, however, it is arguably as important that buyers should be obliged to do the same. When it comes to the information provided, the more the better, and it must be from both sides to ensure the full picture is there for everyone involved in the transaction. If buyers were to be compelled at offer stage to outline their position, including the state of their finances and timescales they wish to work towards, it could reduce friction further down the line.
The Bottom Line: Buyers Beware
The recent case of SPS Groundworks and Building Ltd. –v- Mahil  EW HC 371 (QB) does illustrate that sellers do have some duty to disclose defects. Here they failed to disclose an overage agreement. There is a move towards disclosure by the buyer but Caveat Emptor remains the principle and buyers must take steps to protect themselves. You should be meticulous, as buying a home is a huge commitment and any defects could cause issues in the event the buyer wishes to sell the property in the future. Even if there were to be a fault on the seller’s part in respect of withholding crucial information, bringing the seller to court is costly and time consuming. For now, the burden of researching the quality of a property remains with the buyer in a transaction, which is why it is vital that buyers carry out the necessary precautions to ensure they have the best understanding of the property they are intending to purchase. The role of your legal advisor in guiding you through this process is not to be underestimated.