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Property misrepresentation is a serious issue that can lead to legal and financial consequences, and even emotional distress for both buyers and sellers. Whether the misrepresentation is intentional or accidental, it is essential to understand what it entails and how to handle it.

Understanding what property misrepresentation is

In this blog, we will break down what property misrepresentation means, highlight why transparency is crucial in property transactions and offer some advice on what to do if a seller fails to disclose a dispute or indeed if you realise you as a seller may have misrepresented some replies in your enquiries that were given before contract.

What is property misrepresentation?

Property misrepresentation happens when incorrect or misleading information is shared about a property during a sale. There are three main types of misrepresentation: fraudulent, negligent, and innocent:

1. Fraudulent Misrepresentation: This occurs when a seller knowingly provides false information which they know will mislead the buyer. For example, a seller might insist that the property has never had any flooding issues, even though they know about past water damage from heavy rains. Such deception can lead to substantial financial harm for the buyer.
2. Negligent Misrepresentation: This type arises when a seller provides inaccurate information due to a lack of proper care or research. For instance, if a seller advertises a home as having a new roof based on a casual remark from a contractor, but does not verify the roof’s actual condition, the buyer might end up facing unexpected repair costs.
3. Innocent Misrepresentation: This happens when a seller unknowingly shares false information. For example, if a seller lists a property as being in a certain school catchment area, unaware that the boundaries have changed, it can still lead to buyer dissatisfaction and potential legal issues.

Each of these types of misrepresentation can lead to serious consequences, highlighting the need for thorough diligence and transparency in real estate transactions. Regardless of intent, misrepresentation can be legally actionable.

Why full disclosure matters

Full disclosure in property transactions is vital. Undisclosed disputes like ongoing construction issues or boundary conflicts can dramatically affect the property’s value and the buyer’s enjoyment of it. By being upfront about any potential problems, sellers can avoid legal issues arising and help buyers make informed decisions. If a buyer finds out after purchasing the property that false information was knowingly provided to them, they may have a claim for compensation against the seller for the value of the loss they have suffered.

Spotting Misrepresentation

There are signs to look out for that might indicate property misrepresentation, such as discrepancies between the listing details and the property’s actual condition or inconsistent information from the seller. Carefully reviewing property information forms and hiring a professional inspector or appraiser can help uncover any hidden issues.

One of the most common places sellers put themselves at risk of a claim for misrepresentation is when they complete the Property Information Form. Within this form sellers are asked specific questions such as “if there have been any disputes or complaints regarding the property”. Sellers must ensure they reference here any disputes they are aware of that relate to the property such as neighbour/boundary/right of way disputes.

What to do if a dispute was not declared

If you suspect that a seller has not disclosed a dispute or has misrepresented the property, start by gathering evidence. This could include photos, emails, contracts, or statements from witnesses. Seeking legal advice from our Property Litigation team that specialise in this area can help you understand your rights and options available to you to resolve the dispute. Each claim will have a different basis of valuation for any damages or compensation that can be sought, which we can assist you with. Recent examples of cases our team have been involved in are set out below:

• Buyer was not informed their property had Japanese Knotweed in the garden despite the gardener stating it was a longstanding issue. Following intervention and advice from us the seller agreed an out of court settlement agreeing to pay the buyer a sum to cover the cost of the removal of the knotweed and compensation for the disturbance of having to deal with it.
• Undisclosed neighbour disputes are common especially regarding historical rights of way, shared access/driveways and drainage disputes. Our team have successfully helped reach resolutions for both buyers and sellers when these disputes occur.
• In one case in relation to an undisclosed boundary dispute the buyers were forced to litigate with their new neighbours to establish what the boundaries were and who would be maintaining the same in the future. The costs for entering into the litigation, boundary surveyor’s fees and the costs for documenting the settlement all formed part of a claim against the vendor which was eventually settled.

Finding a resolution

Resolving disputes can range from mediation to commencing legal action. Mediation allows both parties to negotiate a mutually agreeable solution outside of court proceedings. Our Property Litigation team have successfully reached a resolution to our misrepresentation cases either through correspondence, solicitor meetings or mediation. However, if these methods do not work legal action may be necessary to resolve the issue.

Summary

Navigating the complexities of property misrepresentation requires vigilance and a proactive approach. Understanding the types of misrepresentation, recognising their significance in property transactions, and knowing how to address them if they arise are crucial steps. Honesty and transparency are key in buying or selling property (whether the property is commercial or residential).

If you believe you have been affected by property misrepresentation, then contact a member of our Property Litigation team.