191 thoughts on “Property Misrepresentation Claims in Practice”
Hi, I bought a ground floor flat almost 5 years ago and when the new basement flat owner moved in last year , they started complaining about the noise coming from my flat.
The entire flat had a wooden flooring, which was one of the attractions when buying a flat.
He then found a clause in the lease that states that the both the bedroom and living room must be fitted with a wall-to-wall carpet. I was happy to install a carpet in the bedroom as that’s where the downstairs neighbour had the biggest issue. I am now trying to sell the flat and the potential buyer is pulling out because he doesn’t want the carpets in the living room.
In this case, who’s at fault here? Is it the seller who had wooden flooring illegally, and didn’t tell me when they sold the flat? Or is it the management company, who hadn’t noticed this and only now have decided to enforce me to do it or is it me for not checking this?
It’s very frustrating and just wanted to know whether there is anything I can do to claim some kind of compensation.
It is very unlikely that you would have any basis of claim against the seller. You purchased the flat in the condition that you viewed it in and it was not down to the seller to identify any possible breaches of the lease. If the seller expressly stated that there were no subsiding breaches, then there may be a basis of claim, but ultimately it is down to a buyer and their solicitor to decide whether or not there are any breaches by a seller which need to be remedied before proceeding with a purchase. This is likely what you are discovering at this time.
If you purchased a flat which was in breach of the applicable leasehold terms, and floor coverings is a fairly usual term to appear in a residential lease, then you are liable for rectifying the issue.
In April 2022 we made an offer on a property which was accepted. One of the key factors in the decision to offer was the annual service charge for the property. We were informed by the agent twice verbally and once in email that the service charge ~£2000 per year. In July 2022 the report on title and supporting documentation was provided by the conveyancer, which showed the actual service charge to be 2 x the amount that had been quoted, resulting a significant, unbudgetted additional cost. We decided to proceed rather than pull out of the sale for a number of reasons, principally the interest rate increases that have taken place since the initial mortgage in principle was provided, which would have resulted in an even higher additional outlay. We have now exchanged contracts on that basis and will complete in late August. I consider that I have a claim for either innocent or negligent misrepresentation against the estate agent. Grateful for your thoughts. Thanks
From what you have stated, it is very unlikely that you have a claim for misrepresentation. Reliance is a key element to any misrepresentation claim. A buyer cannot hold a seller liable if the seller has not misled the buyer and caused the buyer’s loss. Our blog on this can be found here… Reliance: A Necessary Ingredient in Misrepresentation Claims.
In short, you did not rely on the seller’s inaccurate statement of fact regarding the service charges, whether made by the seller or the seller’s agent. You knew that this statement was inaccurate and decided to proceed for other reasons.
I have a very similar issue to the above poster, but have not yet completed as I am still wanting clarity. If I were to not complete, would I be able to make a misrepresentation claim for my costs incurred so far?
Thanks for your response, which I found really useful.
Would it be possible to argue that I relied on the information on service charge costs in association with current interest rates and the potential time to completion to enter into the contract? It was the combination of these 3 factors that led to a decision.
When the accurate information was available to me it would have been too late to a) find another property in the time required and b) obtain a mortgage at the same interest rate as I had previously obtained. I had relied on a timely completion and a minimal net monthly total cost (including mortgage repayment and service charge). The increase in monthly service charge would be less than the increase in mortgage repayments and therefore provided the lowest increase in cost – given that we wanted to complete a purchase within a certain timeframe.
We purchased our property in January 2021 and both the waste water company and the seller confirmed that the property was connected to mains drainage. In April 2021, the manhole cover overcharged and we reported a blockage to the waste water company. The following morning, their contractor attended and confirmed we were discharging into a cess pit and we had no mains drainage connection. I took this up with the waste water company and exhausted all their complaint process and enlisted the assistance of the Consumer Council for Water. They said they confirmed on the basis that a water bill had been paid on the property as far back as their records existed (to 2006). In correspondence they did confirm an enquiry had been made for a mains connection in 2016. We understand the sellers had purchased the property around 2008 and only lived in it periodically with older relatives being the main residents. The connection to mains drainage was a material fact in our decision to make an offer of the full asking price. Had we known about the drainage situation we would definitely have made a reduced offer as we are not happy with cess pit drainage and would have factored in the cost of connection into our finances as we were using all of the proceeds of our sale to purchase and did not intend to take out a mortgage to buy the property. We cannot afford to pay to make the connection so we haven’t made a “loss” and would use any damages from a claim towards the connection. Having a cess pit is a constraint on value compared to the property on mains drainage. What are our options?
If you were informed that the property was connected to the mains by both the seller and the relevant water authority, when it was not, there would be a basis of claim in misrepresentation against the seller. Also, check your water searches as if these were not accurate, the search provider may have insurance which can be claimed against. There will be a question on whose representation you relied on. We suspect that ultimately, liability would likely be shared between them in some way.
As you have identified, your loss is the fact that you would have negotiated the purchase price if you had known. Your loss is therefore the difference between what you paid or the property and what a reasonable person would have paid for it knowing about the cess pit. This is called diminution in value. There is also some limited scope for the cost of claiming remedial works in a misrepresentation claim.
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Hi, I bought a ground floor flat almost 5 years ago and when the new basement flat owner moved in last year , they started complaining about the noise coming from my flat.
The entire flat had a wooden flooring, which was one of the attractions when buying a flat.
He then found a clause in the lease that states that the both the bedroom and living room must be fitted with a wall-to-wall carpet. I was happy to install a carpet in the bedroom as that’s where the downstairs neighbour had the biggest issue. I am now trying to sell the flat and the potential buyer is pulling out because he doesn’t want the carpets in the living room.
In this case, who’s at fault here? Is it the seller who had wooden flooring illegally, and didn’t tell me when they sold the flat? Or is it the management company, who hadn’t noticed this and only now have decided to enforce me to do it or is it me for not checking this?
It’s very frustrating and just wanted to know whether there is anything I can do to claim some kind of compensation.
Thanks!
Thank you for your comment.
It is very unlikely that you would have any basis of claim against the seller. You purchased the flat in the condition that you viewed it in and it was not down to the seller to identify any possible breaches of the lease. If the seller expressly stated that there were no subsiding breaches, then there may be a basis of claim, but ultimately it is down to a buyer and their solicitor to decide whether or not there are any breaches by a seller which need to be remedied before proceeding with a purchase. This is likely what you are discovering at this time.
If you purchased a flat which was in breach of the applicable leasehold terms, and floor coverings is a fairly usual term to appear in a residential lease, then you are liable for rectifying the issue.
In April 2022 we made an offer on a property which was accepted. One of the key factors in the decision to offer was the annual service charge for the property. We were informed by the agent twice verbally and once in email that the service charge ~£2000 per year. In July 2022 the report on title and supporting documentation was provided by the conveyancer, which showed the actual service charge to be 2 x the amount that had been quoted, resulting a significant, unbudgetted additional cost. We decided to proceed rather than pull out of the sale for a number of reasons, principally the interest rate increases that have taken place since the initial mortgage in principle was provided, which would have resulted in an even higher additional outlay. We have now exchanged contracts on that basis and will complete in late August. I consider that I have a claim for either innocent or negligent misrepresentation against the estate agent. Grateful for your thoughts. Thanks
Thank you for your comment.
From what you have stated, it is very unlikely that you have a claim for misrepresentation. Reliance is a key element to any misrepresentation claim. A buyer cannot hold a seller liable if the seller has not misled the buyer and caused the buyer’s loss. Our blog on this can be found here… Reliance: A Necessary Ingredient in Misrepresentation Claims.
In short, you did not rely on the seller’s inaccurate statement of fact regarding the service charges, whether made by the seller or the seller’s agent. You knew that this statement was inaccurate and decided to proceed for other reasons.
I have a very similar issue to the above poster, but have not yet completed as I am still wanting clarity. If I were to not complete, would I be able to make a misrepresentation claim for my costs incurred so far?
Can you please be more specific about your issue? You can always contact us about any legal problems you may have, and we would be happy to help.
Hi Mark, Thanks for your response I have followed up with you by email. Graeme
Hi Mark,
Thanks for your response, which I found really useful.
Would it be possible to argue that I relied on the information on service charge costs in association with current interest rates and the potential time to completion to enter into the contract? It was the combination of these 3 factors that led to a decision.
When the accurate information was available to me it would have been too late to a) find another property in the time required and b) obtain a mortgage at the same interest rate as I had previously obtained. I had relied on a timely completion and a minimal net monthly total cost (including mortgage repayment and service charge). The increase in monthly service charge would be less than the increase in mortgage repayments and therefore provided the lowest increase in cost – given that we wanted to complete a purchase within a certain timeframe.
Happy to discuss further by phone.. Thanks
We purchased our property in January 2021 and both the waste water company and the seller confirmed that the property was connected to mains drainage. In April 2021, the manhole cover overcharged and we reported a blockage to the waste water company. The following morning, their contractor attended and confirmed we were discharging into a cess pit and we had no mains drainage connection.
I took this up with the waste water company and exhausted all their complaint process and enlisted the assistance of the Consumer Council for Water. They said they confirmed on the basis that a water bill had been paid on the property as far back as their records existed (to 2006). In correspondence they did confirm an enquiry had been made for a mains connection in 2016.
We understand the sellers had purchased the property around 2008 and only lived in it periodically with older relatives being the main residents.
The connection to mains drainage was a material fact in our decision to make an offer of the full asking price. Had we known about the drainage situation we would definitely have made a reduced offer as we are not happy with cess pit drainage and would have factored in the cost of connection into our finances as we were using all of the proceeds of our sale to purchase and did not intend to take out a mortgage to buy the property.
We cannot afford to pay to make the connection so we haven’t made a “loss” and would use any damages from a claim towards the connection. Having a cess pit is a constraint on value compared to the property on mains drainage. What are our options?
Thank you for your comment.
If you were informed that the property was connected to the mains by both the seller and the relevant water authority, when it was not, there would be a basis of claim in misrepresentation against the seller. Also, check your water searches as if these were not accurate, the search provider may have insurance which can be claimed against. There will be a question on whose representation you relied on. We suspect that ultimately, liability would likely be shared between them in some way.
As you have identified, your loss is the fact that you would have negotiated the purchase price if you had known. Your loss is therefore the difference between what you paid or the property and what a reasonable person would have paid for it knowing about the cess pit. This is called diminution in value. There is also some limited scope for the cost of claiming remedial works in a misrepresentation claim.