In property transactions, misrepresentation is when the seller provides false information about the state of the property they are selling. A buyer is dependent on certain information when buying a property, which can only be given to them by the seller and is frequently located in the Property Information Form. Most of the time, the seller will fill out the form as completely and truthfully as they can, giving the buyer all the information they need, to decide whether or not to proceed with the purchase.
What redress can a buyer seek if a seller is dishonest or withholds information unintentionally or deliberately?
Misrepresentation of Property
The seller may be held liable for misrepresentation if the buyer bases their decision to buy the property on inaccurate information or an omission (a failure to do something). Misrepresentation occurs when one party gives another, a false statement of the truth which persuades them to sign a contract. The statement need not be part of the agreement, but it must have influenced the innocent party’s choice to sign the contract.
There are three various types of property misrepresentation:
Although it is the most serious, fraudulent misrepresentation is also the most difficult to establish in court. It is necessary that the specific statement made by the seller that persuaded the buyer to buy the house was done so intentionally or carelessly. It can be very challenging for the buyer to gather proof that the seller intentionally misled or withheld information to establish this beyond a reasonable doubt.
It is simpler to try to establish negligent misrepresentation, which calls for the seller to have made the claim carelessly or without having sufficient evidence to support it. Due to the burden of proof placed on the seller under the Misrepresentation Act 1967, it is simpler to establish this in court. The seller must demonstrate that they had good reason to believe the statement they made was accurate.
Innocent misrepresentation is the final type of misrepresentation, which occurs when a seller gives information, they believe to be accurate and true, but it isn’t.
When Would Litigation be Necessary for Property Disputes?
In some cases, a seller’s misrepresentation may not have affected the buyer in any significant way, and therefore it may not be worth entering into litigation as any damages which may be awarded are likely to be nominal. However, it frequently happens that a seller’s misrepresentation causes the buyer to face serious issues with the property, such as drainage problems, flooding, boundary disputes, or other neighbourhood problems. As the buyer will have likely incurred costs in resolving, or trying to resolve the issues, negotiations or litigation will likely be required in these situations.
Solutions for Misrepresentation
In cases involving purchases of property, damages are frequently awarded if a court determines that the seller made false representations. A court will only consider annulling a contract in extremely exceptional circumstances. Damages are typically calculated based on the property’s “diminution in value” as a result of the problems encountered on the basis of the misrepresentation. This represents the difference in price between the property’s market value before the problems came to light and the lessening in the value of the property without the remedy of the defects. Damages may also include “compensation” for any inconvenience as well as the price of fixing any issues.
Our London construction law solicitors are experienced in advising on all types of construction defects. If you’re involved in a construction dispute, you can contact us online or by phone at 0208 769 6739.