Misrepresentation In Property Sales: the consequences of not telling the truth when selling property

Buying property is a big investment for anyone, so it’s only right that the purchaser should be satisfied with what they are buying.

Likewise, the seller should be entitled to some comfort in knowing that once their property is sold, that is the end of the matter.

The Seller’s Property Information Form

During the conveyancing process, the buyer will ask the seller questions about their property. These are called pre-contract enquiries and requisitions on title. As part of the process of selling a property, the seller will normally complete a Property Information Form. Much of the time, the form used is the Law Society Property Information Form, sometimes referred to as the Seller’s Property Information Form.

The idea behind this process is that the buyer satisfies themselves by asking the seller relevant questions and the seller answers them. If the seller has been as upfront as possible in response to those questions, the seller cannot normally be held liable for anything else they say.

What happens if the seller’s information is not accurate?

We see a lot of cases where a seller, sometimes unintentionally but sometimes deliberately, misleads a buyer by answering a question on the Seller’s Property Information Form or during negotiations incorrectly – or partly incorrectly so as to create a misleading impression. The buyer then purchases the property and moves in, only to discover that the information provided by the seller was inaccurate.

We have dealt with cases where a seller has:

  • failed to disclose existing disputes with neighbours;
  • suggested that a property does not suffer from a flooding issue when it does;
  • inaccurately maintained that the property does not suffer from Japanese knotweed when it does;
  • stated that the boundaries are in one place or have not moved when in fact they are not or have been changed;
  • suggested that the property does not suffer from damp when it does;
  • explained something in relation to an existing tenant which is incorrect; and
  • stated that there are no planning or other proposals nearby which could have an effect on the property.

… the list goes on.

In all of these cases, the buyer may very well have a claim for misrepresentation, depending on what the seller said about the position.

If you are interested to read about real cases which have been decided by the Courts, examples can be found on our article Property Misrepresentation in Practice.

Misrepresentation is a false statement of fact which induces a party into a contract causing a financial loss. It does not have to be the sole inducement, but the buyer would have to have relied upon the statement to bring a claim.

Depending on whether or not the seller innocently, negligently or fraudulently answered the questions inaccurately in the Property Information Form, the buyer may be entitled to claim damages from the seller. In some cases, the buyer will be entitled to ‘rescind’ the contract. This means that the buyer is entitled to their money back and return the property to the seller. This does not happen very often and normally, a Court will award only damages.

Normally the measure of damages awarded to a buyer is based on ‘diminution in value‘, or the difference between what a buyer would have paid for the property knowing about the issue and what they actually did pay for it. This may not necessarily reflect the actual cost to the buyer in rectifying the issue. However, in some cases, additional damages can be awarded to cover other expenses incurred.

Diminution in value

To give an example of how diminution in value is calculated, we have acted for insurers in professional negligence claims against surveyors, who have failed to identify that a property suffered from subsidence. The measure of damages was based on diminution in value. The cost to the buyer in underpinning the property to stop the subsidence was greater than the actual loss suffered. This is because the property was situated in a highly sought after location with a large rental market, meaning that the impact on the value of the property was less.

Based on the fact that a hypothetical purchaser would have seen the property as an investment opportunity that could provide a return by renting it to tenants, rather than considering it a family home for life, the expert’s opinion was that a hypothetical purchaser would have been more likely to negotiate a smaller reduction in the purchase price than the full cost of the repairs, to make sure that their offer was accepted by the seller and because even with the defect, the property represented a good investment.

How can a seller ensure that their buyer will not bring a claim for misrepresentation against them?

Sadly there is no way to be 100% certain that a buyer may not make a claim later. All a seller can do is minimise the risk of this as much as possible.

Although completing the Seller’s Property Information Form is not mandatory, it is unlikely that a buyer will proceed with the purchase if their questions are not answered.

Therefore when completing the Seller’s Property Information Form, the seller should answer questions as fully and honestly as possible. We often advise clients to think about what they would want to know about the property if they were buying it.

If a seller is not certain about an answer to a question in the Seller’s Property Information Form, they should think carefully about whether they want to answer it.

What happens if the seller’s replies were accurate at the time they were given to the buyer, but by the time of exchange the information has changed?

In some circumstances, a seller is under a continuing obligation to ensure that their replies to enquires are accurate up to the date of exchange of contracts. Therefore if there is a change of circumstances meaning that the original statement is no longer accurate, there is every chance the seller would be obliged to update the buyer.

The Seller’s Property Information Form also specifically tells the seller that in the event that something happens which would mean that their replies are no longer accurate, they should notify their solicitor of this, who should in turn notify the buyer’s solicitor.

If they don’t do this, the seller risks a potential claim against them for misrepresentation.

What if a seller knows something which is not specifically asked about by the buyer?

Have you bought a house with problems which were not disclosed?  Unfortunately, this is unlikely to give rise to a claim for misrepresentation.

The basic position here is ‘caveat emptor’, or ‘buyer beware’. If a buyer does not ask the seller a question, they cannot then look to the seller for compensation if they discover something that they do not like about the property. It is up to the buyer to satisfy themselves that they want to purchase the property and ask questions about it which are important to them.

As the basic position in a property transaction is buyer beware, it follows that if no statement or answer is given by the seller, the buyer cannot be said to have relied on it to enter into the transaction.

Having said this, sometimes (but this is unlikely unless a special or fiduciary relationship exists) a misrepresentation can take place by a failure to mention something material to the transaction.

In some cases, a “half-truth” or explanation which is accurate on the face of it but misleading about the true circumstances of the matter can also amount to a misrepresentation.

The moral of the story

Sellers should be upfront about any issues that affect the property and buyers should take all steps they consider appropriate to obtain the information that they want before committing to a purchase.

If a seller doesn’t know or is unsure of the answer to a buyer’s question, they should consider not answering the question. However, by not providing a response the seller could be putting their sale at risk, as the buyer may not be prepared to proceed without an answer.
Sometimes a seller will qualify their response but this in itself is not always enough to prevent a claim. It is important to discuss it with your property solicitor.

If you are interested to read about real cases which have been decided by the Courts, examples can be found in our article “Property Misrepresentation Claims in Practice”.

If you are facing a claim for property misrepresentation or believe that you have a claim yourself, please do feel free to get in touch.

This article is for information only. It is not a precise statement of the law and should not be relied upon as or for a substitution for proper legal advice.

The circumstances of every case are different. We are always happy to discuss your circumstances to see if we can assist.

Questions people ask about misrepresentation

As you can see, buying and selling property is not always as simple as you think. We’ve tried to address some common questions below, but if you are still unsure please feel free to contact us for an answer.

> What is property misrepresentation and what are property misrepresentation claims?

There is no specific definition of this but broadly this could be described as a claim which arises by reason of a misrepresentation occurring during a property transaction.

> Can I sue the seller if I bought a house with problems that were not disclosed?

A seller does not have to volunteer information about a property. If a seller stays silent on something, a representation has not been made and a claim for misrepresentation can arise.

> What compensation will I receive in a property misrepresentation claim?

Damages for all types of misrepresentation cases are intended to put the claimant in the position that they would have been in had the misrepresentation not been made.
In property misrepresentation cases, this is normally the difference between what you paid for the property and what it would have been worth, had the truth been told. This is called diminution in value.

> What should a seller disclose when selling their property?

The seller does not have to disclose anything but if they do not, then a buyer might decide not to take the risk of buying the property.
Normally a seller will fill out a property information form. For residential purchases, the Law Society published a standard property information form for this purpose, called a TA6 or a TA7.

> What if the seller lied on the property information form?

If a party to a contract deliberately misrepresented facts relating to the property with the intention of misleading the buyer, a fraudulent misrepresentation can arise. Often, such a representation does not need to be in writing.

> Do I have to declare planning applications, like a neighbour’s extension?

There is case law on this and it will normally depend on whether or not you have received a formal planning notice.
Have a look at our article Property Misrepresentation Claims in Practice for a case on this point.

287 thoughts on “My Seller Lied To Me!”

  1. We purchased a cottage that was owned by a life time mortgage company. The lady who lived in the cottage had died and so no information was available. We paid for searches to be done and were told it was on mains water with a water meter and mains sewage. I also phoned the water authority to check regarding water and was told the same information as the searches. The house had been empty for approx 2 years and the water/heating system had been drained down so we could not try the system when we were shown round by the state agent. After moving in we discovered there was no mains water and no mains sewerage. The water authority denied responsibility because they said we should have checked which we thought was the point of searches???? We later discovered there was a bore hole which had been installed some years before. After living in the house for a few days we discovered a cess pit in the garden which we were also not informed about. Should the life time mortgage company, as the legal owners have informed us? And are the water authority at fault for giving us false information in the searches?

    1. Thank you for your comment.

      A water and drainage search would ordinarily reveal if a property was not connected to mains water and drainage. If this is not the case, then it may very well be that there is a basis to bring a claim against the search company.

      Much of the time, searches are backed with an insurance policy in case incorrect information appears in them. We have acted in the past for an individual in exactly the same circumstances, namely that the search result inaccurately stated that the property was connected to mains drainage when it was not. The insurers agreed to indemnify our client for the cost of the necessary rectification works.

      We would recommend that you check to see whether or not the searches included an insurance policy in the first instance and consider making a claim against that policy. You will need evidence that the search results were inaccurate, so you may need to obtain a report from a suitably qualified individual confirming that, as at the date the search was issued, there was no connection to the mains.

      As for any sort of claim against the seller, from what you have written, this appears unlikely. There is no obligation on a seller to provide information regarding a property at all, if they do not want to. However, if information is volunteered, it should be accurately provided. If there are inaccuracies in what has been said, then a potential misrepresentation claim may arise.

      It would be uncommon for a seller not to provide a TA6 or similar property information form, even though there is no obligation on a seller to provide it to a buyer. If this was provided, the answers to question 12.4 should be considered. This is the section where the seller is asked to confirm whether or not the property is, to the seller’s knowledge, connected to the mains and surface water drainage.

  2. I purchased a house and exchanged contracts less than a month ago. Our surveyor had highlighted a damp patch in the hallway. The owner had disclosed on the contract they had made an insurance claim to rectify a leak from the upstairs bathroom. After moving in I believe this leak hasn’t been rectified and the details of an insurance claim are false leading to a costly repair, does this count as misrepresentation? Thanks

    1. Thank you for your comment. A misrepresentation is normally any statement which is false and on which you rely and are entitled to rely, and as a result of your reliance on this have suffered a loss or damage. However it is not uncommon for property transactions to limit reliance or include entire agreement clauses which may limit your rights to claim for misrepresentation. As such we would have to see the contract before being able to advise upon this.

      If this is something mentioned in the contract, then a failure by them to have rectified the leak may also be a breach of contract on their part, but once again we would need to see the contract in full before we could properly advise you in respect of this. On the other hand, depending on how it is worded it may be that they were only obliged to, or acknowledging that, they have claimed on the insurance to go towards this; it will depend on the exact wording used.

      Please feel free to telephone our Litigation team at the Braintree office to discuss this further if you wish.

  3. Hello. We have just bought a property at auction. We have since found out that the property has previously flooded due to rain water flowing off adjacent land. The seller answered No to the question re: history of flooding in the TA6 form. However, through my subsequent investigations I have collated a body of evidence that shows the seller did know, including a formal report from the the local council flood team relating to a previous occurrence. This has put us in a difficult position with both insurance and mortgage. Do we have potential to make a claim?

    1. Thank you for your comment. From what you have described, there probably is a potential misrepresentation claim here. If the seller has expressly stated that the property has not flooded but you have evidence that that statement was untrue, there is likely to be a loss to you. That loss would normally be based on what is called diminution in value, being the difference in the value of the property with and without the defect complained of. However, case law is developing to the extent that sometimes the cost of repairs can be considered the appropriate measure of damages.

      Do feel free to get in touch if you would like to progress this matter in more detail.

  4. Seller gives floor plan and room measurements are not accurate. We asked EA and he told us that this approximant measurement. But one room measurement is more than 6 inches smaller. One or two inches difference is understandable but 6 inches is too much. Please guide us, what to do.

    1. Thank you for your comment. Unfortunately we cannot provide you with any specific guidance on our website. We can, however, provide you with some general guidance.

      If you have relied on something a seller has told you during the course of the transaction, then if that turns out not to be true, there could be a claim for misrepresentation. However, the basic measure of damages is what is called “diminution in value”. This is the difference between the value of the property with and without the defect complained of. We would not be able to advise you on the value of your claim and how a 6 inch difference in measurement would impact on the value of the property. For this we would have to appoint a suitably qualified surveyor to provide this information.

      If it is determined that the difference in size is of no material impact on the value of the property, then the prospects of their being any loss or damage and therefore any claim to pursue, may be quite low.

  5. Hi.

    I received this email from our solicitors regarding an LPE1 for that was filled out incorrectly by the management company of the flat I sold:

    “Morning Rebecca,

    Further to your sale of the above property the buyer’s solicitor has been in touch with regards to the service charge.

    We received an LPE1 from the management company who advised that the service charge was paid up to March 2022 when it was actually paid monthly by yourself. This means that when we worked out the apportionments on completion for the service charge it was incorrect and the buyer has effectively ‘paid you back’ for the service charge up to March but has now received a payment demand from the management company from August. The total for the amount to be paid back to the buyer is £636.39.

    I’ve attached a copy of our client account details for payment to be made, please ensure you call the office and check these prior to making any payments.”

    Not once did I mention that service charge was paid up until March 22 I have always stated I paid monthly. This error was created by the management company. I’ve never even seen this LPE1 form.

    Where do I stand on this issue. Can I refuse to pay?

    Thanks in advance

    1. Thank you for your comment. The basic position is that a lessee will be liable for all of the charges arising during their period of occupation of a property pursuant to a lease. If it can be said that you have received something over and above that which you were entitled to by reason of someone else’s mistake, there may be a claim for unjust enrichment, unless your position has changed significantly.

  6. I offered on a flat that the estate agent told me was being sold share of freehold. This affected our decision to offer on the flat rather than another property we had seen and increased our offer. Through the conveyancing process we discovered that the flat was not share of freehold after all. When we questioned the estate agent we were told that the freeholder had changed their mind about selling the freehold.

    If we decide not to go through with the purchase is the estate agent liable for our fees as they told us the property was share of freehold and did not notify us of the change?

    1. We would think it unlikely that there would be any basis of claim. The freeholder may very well have changed their mind as any seller would be entitled to do before exchange of contracts.

      If you do consider that the marketing or advertisement of the property was in some way misleading, you could consider making a complaint to any relevant redress scheme that the estate agent belongs to.

  7. I’d like advice on stopcocks please. On 2nd viewing, after our offer had been accepted, we found a leak in the property which is a top floor flat. We looked for the stopcock in the flat to turn off the water but couldn’t find it. Seller had indicated stopcock (and water meter) were in the hall cupboard. We flagged the leak to the solicitor and said we could not find the stopcock. The water meter was actually outside, in the road. We got the reply that the leak had been fixed and the stopcock was in the cupboard. Date for completion has now been agreed. Our solicitor suggested we do a final check on the leak. This time the water had been turned off. Still no sign of the stopcock so we asked a neighbour who said there were no internal ones, only ones out under covers on the road. We can’t now check to see if any of the pipes are leaking as obviously don’t have access. Water co said it is strongly advisable for flats to have internal stopcocks, and that’s what we were expecting. It seems so minor but I don’t want to move in and find a ton of problems with leaky pipes. Seller just seems to be wasting our time over this. They also have the key to the garage which they said they would drop off to the agent. The agent doesn’t have it and the seller has now gone to an amber country. He doesn’t know when they’ll be back. Originally the seller didn’t even know the garage was part of the property – only when we got the deeds we could see it. We haven’t even been able to see in it as nobody has the key and with quarantine the seller won’t make it back before the completion date. Am now wondering if the cooker and washing machine will be working, let alone the heating, as the sellers seem so unreliable! The flat has been tenanted for a long time but even so…Is any of this misrepresentation?

    1. Thank you for your comment. A misrepresentation occurs when someone says something that the other party relies on when entering into the contract and that statement is not accurate, causing a loss to the other party.

      You should discuss the position with your solicitor. In particular, if you are unsure of the contractual position, you might want to discuss the point that clause 3 of the standard conditions of sale (which are normally incorporated into the contract) state that the buyer accepts the property in the physical condition that it is in on exchange.

  8. I purchased a house the beginning of the year, when we looked around the property we specifically asked the Estate agent if there were any issue with neighbours etc. we were told not at all its a lovely neighbourhood.
    We then decided to proceed with the purchase, and on the forms the sellers stated that they did not have any issues with neighbouring properties.
    However since moving in, this was obviously not the case and we have since learned that the sellers had issues with the neighbour and that was the reason that they wanted to move.
    Since moving in we have had endless issues with the same neighbour relating to drugs, loud music and general anti social behaviour. We have two small children who as scared in there own homes so this is a real problem.
    Do we have any grounds for claims against the sellers?

    1. We are sorry to hear of this and sadly, it is not uncommon. There are examples of cases where sellers have been ordered to pay damages to buyers because they have suggested that there are no disputes with neighbours and this turns out to be untrue.

      Whether or not there is any sort of misrepresentation claim here will depend a great deal on the written correspondence and documentation, specifically the property information form. What you have been told orally is less likely to be relevant because the standard conditions of sale normally incorporated into a contract of sale exclude these as being actionable. An exception to this would be in cases of fraud.

      Please do feel free to get in touch if you would like to consider the matter in more detail with us.

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