In conveyancing in England and Wales, the common law principle of caveat emptor, 'let the buyer beware,' applies. This principle requires the buyer of any property to find out everything they want or need to know about it before they become bound to buy it.
This is where the Seller's Property Information Form (SPIF) comes in. This form includes a specific question that a seller has to answer regarding whether or not there have been any previous disputes about the property or issues related to flooding, for example.
A seller is obliged to answer the questions posed on the SPIF (aka TA6 form) truthfully, and a failure to do so could mean that later on, the buyer has a damages claim against the seller for misrepresentation.
Essentially, a contract to purchase a property is no different from any other contract, albeit a house purchase is probably the biggest single purchase that anyone ever makes. If one party to a contract says something that is not factually correct and the other party relies on that statement, then this can give rise to a claim for damages for misrepresentation. This would apply if someone suffers a financial loss as a result of the reliance that they have placed on the statement made by the seller.
In some cases, depending on the gravity of the misrepresentation, it might be possible to rescind the contract altogether. This is a very draconian remedy, but it would effectively put the parties back in the position that they would have been if they had not entered into the contract, i.e., reverse the transaction completely.
The forms the buyer has to complete are called pre-contract enquiries. Warnings are given to both the buyer and the seller on the standard Property Information Forms, reminding them that they have to answer the questions accurately because the buyer will be relying on the statements given when deciding whether or not to proceed with the purchase.
Residential property disputes are common regarding answers given in a Seller's Property Information Form, but a misrepresentation can extend to any untrue statement about the property. Sometimes, written or oral correspondence between the parties and their solicitors can also amount to a misrepresentation.
We are all human; mistakes can happen, and the seller can make an innocent misrepresentation. However, there are occasions when the seller might make a reckless misrepresentation and answer the questions without caring or properly checking that what they say is accurate. In worst cases, the seller might deliberately say something that is misleading and causes the buyer to complete the transaction, which amounts to a fraudulent misrepresentation.
What can a buyer do when they discover the truth?
If the seller does not know the answer to one of the questions, they should not speculate or guess the answer; they should simply say they do not know.
For a claim for misrepresentation to exist, there has to be a reliance on the part of the buyer as to a representation on the buyer's part. If it does not influence the decision to enter into the contract, it cannot be classed as a misrepresentation.
It does not have to be the sole reason for proceeding with the purchase, but it does have to be a material reason and encourage the buyer to proceed, generally without making enquiries they may otherwise have made.
Silence is not normally a misrepresentation because something specific has to have been asserted for the buyer to rely on it. However, there is a distinction where the buyer is induced to proceed based on an obvious error or misunderstanding, and the seller fails to correct this.
An example of the need for accuracy was demonstrated in the case of McMeekin v Long [2003]. In this case, the seller expressly said no to questions about whether or not there were any disputes with neighbours or complaints about them as owners. The sellers, in fact, went on to say that the neighbours were friendly.
The background reality was that there was an ongoing dispute about access to the property parking and an access road, which the sellers had a right of way over. The sellers sought to suggest that the dispute had been resolved, but the court disagreed and considered that there was a continuous confrontational atmosphere between the seller and the neighbours.
The court specifically referred to how clear the questions in the Property Information Form were and how it was written in such a way that it was designed for the general public and did not require specific legal knowledge. In that case, the court held that based on the facts, the issues with the neighbour clearly amounted to a dispute and that the seller had made a fraudulent misrepresentation.
What does the seller have to tell a buyer?
The short answer is nothing. If the seller makes no representations at all and tells the buyer to rely solely on their own investigations, then that rules out any claim for misrepresentation. The "Buyer Beware" principle would apply, and it would be up to the buyer to decide whether or not to proceed with the purchase.
In conclusion, every property misrepresentation case depends on its own unique facts. If sellers want to avoid issues after the sale, they should always answer the questions honestly or not at all.
However, mistakes can happen, so if you have been affected by a misrepresentation in a transaction, then please feel free to get in touch.
