01 Mar 2016

“The truth, the whole truth…”: replies to pre-contract enquiries

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Let’s face it, when you’re selling a property, dealing with replies to enquiries isn’t the most exciting part of the deal; just time consuming admin that you don’t have time for. You’ve done it all a thousand times before - don’t you just reply “not so far as the Seller is aware” to everything?  What could possibly go wrong?

The recent case of Greenridge Luton One v Kempton Investments tells us that that’s a risky approach. In that case, which concerned the sale of three office buildings for £16.25 million, the Seller told the Buyer in replies to standard enquires that there weren’t any service charge arrears. That was untrue and the Buyer discovered the true position before the sale had completed. The Buyer claimed it had relied on the statement that there were no arrears and that the existence of arrears went to value. The court permitted the Buyer to rescind the contract, reclaim the deposit of over £800,000 and awarded damages of nearly £400,000 for deceit. Not so risk free after all…

The moral is that, when dealing with replies, make sure that the information provided is accurate and up to date. If you’re not sure of something check it first rather than making a statement you think “might” be true; you can be guilty of fraudulent misrepresentation if you make a statement and are reckless as to whether or not it’s true. As a bottom line, Sellers can be liable for misrepresentation unless they honestly and reasonably believe that the information they give is accurate.

But what if additional information comes to light after you’ve given the replies? Well, if you haven’t exchanged, you need to pass that information on so that the replies can be updated. If that isn’t done, Buyers will have a potential misrepresentation claim.

In short, it’s worth spending a bit of time checking that replies are accurate. It’s a good investment of time and, if you make it, you can sleep easy knowing that there won’t be any nasty surprises down the line.

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