Whilst a new version of the Commercial Property Standard Enquires being released is slightly less anticipated than the latest iPhone, the introduction of CPSE 1 (3.2) serves as timely reminder to solicitors, agents and clients alike of the care required in providing accurate responses to enquiries.
The concept of ‘caveat emptor’ (let the buyer beware) can be a little misleading and hoodwink sellers into the misapprehension that the burden of risk lies solely with the purchaser. The potential for claims of misrepresentation against both agent and client is highlighted by recent caselaw.
In the case of Clinicare, a dry rot enquiry was met with the fairly standard response that, whilst the solicitor was not aware of any, the buyer should rely on its own investigations. The buyer arranged for a survey which revealed the existence of damp and recommended a further survey which the buyer proceeded without. On dry rot subsequently being discovered, the sellers’ solicitor was successfully sued.
It was held that knowingly failing to disclose the existence of the dry rot (presumably on client instructions) led to an actionable misrepresentation, Merely advising the purchaser and their solicitor to rely on their own investigations will not simply pass responsibility and, as such, the burden. Similarly, in the residential case of McMeekin, a sellers’ failure to disclose an ongoing neighbour dispute amounted to misrepresentation and an award of £67,000 in damages.
It is imperative that sellers (and those acting for them) answer such enquiries with due consideration. In a challenging market, it may be tempting for vendors keen to clinch a deal to be somewhat economical with the truth. However, with sizable sums involved purchasers are more frequently turning to litigation where a problem, not disclosed in the conveyancing process, materially affects enjoyment or use of the property. Sellers are advised to offer more rather than less information to prevent such problems.
BSG can offer invaluable advice to agents and vendors in the disclosure required in both commercial and residential matters. If you have a question or query relating to CPSEs or SPIFs, please do not hesitate to contact Alex Walsh at the Preston office on 01772 253841 or email aw@bsglaw.co.uk or Mark Burrow in Lancaster on 01524 386500 or emailmwb@bsglaw.co.uk
