Have you heard the one about the £32.5 million London mansion which came with a rather sizeable moth infestation?
You probably have now if you’ve been reading/watching the news recently.
There’s no punchline as such unless you’re the previous owner of that mansion who recently lost a High Court claim against them when the new owners discovered the moths – hundreds per day apparently which had to be killed, although eventually they did manage to get this number down to the mid-thirties.
Hey, you do the moth, as the Americans don’t say.
Take out the moth element and we get to the nitty gritty of why the case went in favour of the new owners. The High Court agreed with their lawyer’s claim that the previous owner had not answered three pre-contract enquiries correctly; effectively the previous owners did know there was a moth problem, had already had pest control companies in and had been told they needed to be removed.
The Judge ordered that the previous owner should not only pay for taking the property back, but also cover all costs and compensation/damages to tune of £36m, which includes £3.75m of stamp duty.
The ability of the previous owner to pay is up in the air but the case, and its verdict, should give all conveyancers and their clients, cause to consider exactly what they are saying in reply to those enquiries. And what information a seller is, or rather isn’t disclosing when they put the property on the market and/or when they are being asked about such matters.
For a start, this case appears to show why a buyer’s conveyancing lawyer needs to raise enquiries around non-legal issues to ensure their client has the protection of the contract.
This conveyancer did, and it was the fact the seller lied when answering those questions, that they eventually lost their case based on fraudulent misrepresentation.
In my view, there does seem to be something of an industry pushback against raising enquiries around non-legal issues, but without it, we are not able to provide that protection to the buyer via the contract and, we as conveyancers, are charged with advising our clients how to legally protect their position.
Although of course there has to be a balance here, for example, only raising these enquiries if the client asks you to, or if it is plainly apparent from the contract pack provided that you really need to. I still stand by the fact there has never been a law or a case proving that ghosts exist but, if my client does ask me to raise an enquiry on paranormal activity, I have to and will no doubt enjoy the seller’s conveyancer’s response.
There have been two previous cases – the Rosser case (Rosser v Pacifico Ltd | [2023]) and SPS Groundworks & Building Ltd v Mahil [2022] which both effectively proved ‘buyer beware’ simply means the buyer has to ask the appropriate enquiries of the seller, relative to their intended use and enjoyment.
It shows that honesty is the best policy for all parties, not just the buyer and seller themselves, but of course the law firms involved.
Buyers being misled, or blatantly lied to, can have severe consequences as both these cases prove – the first in terms of the seller suggesting there had been no breaches of planning permission by them having a Velux window installed when it was later found that there had, and the second in terms of the seller not disclosing an overage obligation which affected the property.
To my mind, these cases prove the case for why it is much better for the seller to be providing all this information upfront via the Material Information. Everything the average buyer would want to know about a property is going to be legally required by the Material Information and therefore there is absolutely no reason why it should not be there and evident to all potential buyers who would view this.
All the cases mentioned above went against the seller because there was deemed to be a duty of disclosure and they were judged to have failed to have met this duty, and because they were raised as enquiries they formed part of the legal contract.
It would seem self-evident that we need to be providing and reviewing full material information at the point of marketing that means full disclosure is there from the outset, and that no buyer is unaware of any potential condition(s) which might stop them from wanting to purchase the property/putting in an offer/owning the property. Whether that is a moth infestation, a dodgy Velux Window, or any other potential obstacle to their enjoyment of the property.
Seller’s conveyancers have been warned and buyer’s conveyancers have been shown how to act to protect their client. So we should not mothball asking non-legal enquiries instructed by our clients, and providing Material Information on non-legal issues, albeit we are not going to be able to advise on anything but the laws impacting the property and the legality of the transaction, not how to eradicate moths.
Beth Rudolf is Director of Delivery at the Conveyancing Association (CA)
2 responses
Actually a better way of dealing with it as the seller would have been to say nothing and suggest the buyer commissions an investigation to address the issue.
The problem here was that the seller decided to interpret the enquiries a certain way (ie the meaning of “vermin”) and then answer it so as not to give information about the moths contained in 3 reports. If the seller had been “up front” or the buyer had commissioned a survey the transaction would have ended or the buyers could have proceeded in full knowledge.
This case does not justify wide ranging enquiries or indeed the use of Standard Enquiries but it does highlight knowing when to respond and how to respond to an enquiry where some form of interpretation of terms used is required.
In other words if you have to try and work out what the enquiry means then don’t respond or respond with all the information you, the seller, have.
Refusing to answer the enquiry would have frustrated the transaction and may have led to the prospective buyer withdrawing. There was no report of any other interest in the property.
Not telling the truth obviously didn’t work for the seller.
If he answered those rather straightforward enquiries honestly he would have saved him & his wife a lot of time, money and stress. Yes he may have been asked to replace all the effected insulation or reduce the sale price in line with the associated costs, but that would not be unreasonable considering the treatments he commissioned were evidently not working.
Sellers are already asked if they are aware of Japanese knotweed or any flooding. I see no difference asking a seller if they are aware of other issues a buyer could not reasonably be expected to uncover without invasive survey.