What is it and what are your legal options?
Property misrepresentation occurs when a seller provides inaccurate or misleading information about a property, either intentionally or unintentionally. A misrepresentation can also be made by an agent of the seller such as estate agent or solicitor.
A common form of misrepresentation is where aspects of a property may be misdescribed in estate agents particulars or in answers to pre-contract enquiries.
We are commonly asked whether a misrepresentation, if proven, will mean that the transaction can be rescinded (cancelled). The answer will depend legally on the significance of the misrepresentation. Generally speaking, for legal and practical reasons, damages would be a far more common legal remedy awarded than rescission where a property misrepresentation claim is proven.
Buying a property and then discovering a misrepresentation is extremely upsetting. However, taking legal action is expensive and risky and it’s highly advisable to get experienced advice not only on the merits of your claim, but the likely amount you may recover. Please do call or email us.
What constitutes a property misrepresentation?
To succeed in a claim, you'll need to prove:
False Statement - the seller made a false statement of material fact.
Reliance - you relied on the false statement when making your purchase decision.
Loss - you suffered financial loss as a result of the misrepresentation.
The burden of proof will be on a claimant in any court action to demonstrate the necessary elements described above.
Misrepresentations can be innocent on the part of the person making the statement, negligent or fraudulent. This is relevant as regards the potential legal remedies available because if the misrepresentation was fraudulent this creates a better opportunity to rescind (cancel) the contract. It is however important to remember that if you only find out about a misrepresentation after you complete a property purchase, the seller will have your money and you may not be able to rescind in practical terms.
Misrepresentation in answering pre-contract or pre-lease enquiries
Silence from the seller in responding to either a standard form enquiry before contract or a specific enquiry will not be a misrepresentation. In that situation, you may find that you have a potential claim against your conveyancing solicitors if they failed to advise you on gaps in information from the seller.
With residential conveyancing transactions, there are standard sets of questions which are sent by the buyers solicitors to sellers, to speed things up. The buyer can ask as many additional specific questions as they like. It is common for sellers to answer both standard and additional enquiries in vague terms, such as “not to the seller’s knowledge, please relay on your own enquiries”. It is up to you as buyer and your solicitor to decide whether to accept answers like this.
Common Examples
Structural issues - hidden defects like subsidence, structural damage, invasive weeds such as Japanese knotweed, faulty wiring or with leasehold flats, where the seller claims not to have made any structural alterations when in fact he/she/they did.
Damp and mold - where the seller states there are no damp or mold problems.
Boundary disputes - uncertain or disputed property boundaries.
Access and rights over land – misleading statements about rights of way, shared driveways, private roads, parking or access across neighbouring land.
Condition, repairs and dilapidations – misleading statements about the condition of premises, outstanding repairs, reinstatement works, compliance with repairing obligations or works said to have been completed.
Building and construction work – false or misleading information about the status or progress of works, specifications, materials, defects, remedial works, completion dates or responsibility for completing a project.
Property development – misrepresentations about planning status, funding, construction costs, contractor arrangements, pre-sales, development prospects or project viability.
Property investment and joint ventures – false claims about rental yields, valuations, occupancy, ownership, funding, liabilities, development prospects or how investment money will be used.
Restrictions and rights affecting property – misleading statements about restrictive covenants, development rights, licences, easements or other limitations on how land can be used.
Legal redress for misrepresentation
If a property misrepresentation claim succeeds, the most common and practical remedy is damages – financial compensation for the loss caused by the misrepresentation. Depending on the circumstances, other remedies may be available, including rescission, which seeks to unwind the contract and put the parties broadly back into their pre-contract positions. However, rescission can be difficult or impractical in property transactions, particularly where time has passed, third-party rights have arisen or the property or circumstances have materially changed.
Specific performance may sometimes be relevant to the wider property dispute, particularly where a party is seeking to enforce a contractual obligation concerning land. However, it is generally a remedy for breach of contract rather than misrepresentation itself, so the available claims and remedies need to be considered together.
The practical difficulty is often whether the claim is commercially worthwhile. Litigation is inherently uncertain and expensive and, unless the misrepresentation has caused substantial loss, for example, a serious structural, development, access or valuation problem, the likely damages may not justify taking the case to trial.
It is therefore important to consider other potential defendants and causes of action. Where a surveyor, solicitor or other property professional should have identified the problem, a professional negligence claim may provide an alternative or additional route to recovery. This can sometimes be more commercially attractive, particularly because regulated professionals will generally have professional indemnity insurance.
How we can help
If you think you have a claim for property misrepresentation, it's crucial to seek legal advice from a property law specialist. We can assess your situation, advise on the best course of action, and represent you in legal proceedings.
