Buyer Beware
Do buyers still need to beware? Or does a seller’s duty of disclosure, and consumer protection regulations safeguard against hidden problems?
Our Head of Property Mark Laird explains these conflicting principles and how they can affect the sale of a home.
Sellers steer buyers away from potential issues
In a recent survey by House Buyer Bureau, 19% of sellers confess to steering buyers away from a problematic view which could deter them from purchasing a property. In addition, 13% of sellers admit to avoiding showing buyers a particular room in their property.
Buyer beware?
Many people have heard the phrase buyer beware. Caveat emptor or ‘let the buyer beware’ is a common law principle which places the onus on a buyer to properly investigate a property before entering into a contract for purchase. There is no general responsibility for the seller to disclose physical problems with a property.
Duty of disclosure — patent v latent defects
A seller’s duty to disclose problems with a property is limited to latent defects in title only. A latent defect is a problem which cannot be discovered by reasonable inspections or investigations, for example the right of a neighbour to enter onto the property and dig up the garden to lay new drains.
A defect in title relates to an issue with the seller’s title deeds. A patent defect is problem which should be apparent upon reasonable inspection or investigation. Whilst there is no duty to disclose patent defects, a seller may breach a buyer’s consumer rights if they fail to do so.
Consumer rights
The Consumer Protection (Amendment) Regulations 2014 offer limited protection to buyers. It places the obligation on the seller not to mislead the buyer. Sellers must not use unfair tactics, such as omitting information a buyer would need to make an informed decision as to whether to proceed with a purchase.
Misrepresentation
If a seller provides inaccurate information to a buyer during a sale, the buyer may be able to take legal action for misrepresentation. A ‘misrepresentation’ is an untrue statement of fact or law which induces a buyer to enter into a contract. A buyer may be able to recover any losses incurred as a result of relying on the inaccurate statements should the seller have acted fraudulently or negligently.
To find out more about our residential property and conveyancing services please call us on 033 3344 9600 or email [email protected].
