Hampshire property blog - April 10
should the seller, not the buyer, beware?
Welcome to the April edition of the Hampshire property
blog, in which we take a timely look at the interesting
question of whether things might work better with "Caveat Venditor
" rather than "Caveat Emptor".
It's long been accepted that the house buying process requires a
little bit of 'selective marketing'; cupboard sized kitchens
described as 'bijou' and damp patches covered up with a quick lick
of paint. In the vast majority of cases the truth about the
property is discovered long before completion due to repeated
viewings, the plethora of searches now available, the questions
asked by your solicitor and increasingly large numbers of questions
specifically requested by buyers. The latter has primarily
been a result of increased buyer awareness of the principle of
'caveat emptor' or 'let the buyer beware'. In layman's terms
– if the buyer doesn't ask, the seller doesn't have to tell.
However, occasionally things in the conveyancing process go
wrong as evidenced by the recent case of Adrian Howd and his wife,
Caroline, who purchased a semi-detached 1920's house on the Thames
riverbank for £1.9 million in October 2006. Before they
exchanged on the property, the Howds' solicitor asked for
confirmation "that the property has never suffered from
flooding". The response from the sellers' solicitors was,
"our clients confirm that the property has never suffered from
flooding during their 14-year occupation". Within weeks of
moving in, the Thames had burst its banks and the garden to the
property, ominously named Tides End, was slowly disappearing.
Since their purchase, the Howds claim that the garden floods around
80 times a year and on occasion the whole of the garden
disappears. As a result, at the end of January 2010, the
Howds were suing their sellers for fraudulent misrepresentation –
essentially, they wanted their money back.
The principle of caveat emptor has retained such an important
part in the conveyancing process in England and Wales for two
reasons: the seller is not obliged to reveal any defects in the
property and the buyer's purchase is not protected by a
warranty.
In June 2009 the Law Society opened a consultation paper
entitled Improving Residential Conveyancing, which mooted
a move away from caveat emptor; the argument for which being that
making the buyer responsible for finding information through
searches and enquiries that might be readily available to the
seller is neither cost nor time effective. This begs the
question – is this the end of 'caveat emptor' and the beginning of
'caveat venditor'?
Home Information Packs have already introduced an element of
caveat venditor through the inclusion of a shortform Property
Information Form, but HIPs have not been a helpful addition to the
conveyancing process. The Law Society has therefore suggested
a 'completion ready pack', which would include comprehensive
warranties, guarantees, covenants and certificates held by the
seller. Another solution might come from Denmark where buyers
have a right for up to 20 years after a sale to return to their
seller and demand compensation for faults that have come to light
after completion. Consequently, sellers carry conveyancing
insurance and insurance companies carry out their own rigorous
surveys to check for problems.
In the end though, the case of the Howds and their seller
settled, confidentially, on the last day of their court hearing and
therefore the Law Society's suggestion and the Danish approach
might prove just a little too pithy for the reserved English.
