The traditional approach of Jersey conveyancing is based firmly on the caveat emptor (buyer beware) principle. Property conveyances include standard wording under which the property is sold "in the state in which it was at the date hereof with all its apparent or hidden defects ("vices cachés"), if any". This places the onus squarely on the purchaser to be satisfied with the physical condition of the property. If it were to fall down immediately after contract is passed before Court, it would be the purchaser who would be left to pick up the pieces.
Where, then, should a purchaser look for protection against the risk of the condition of the property not turning out to be as it should have been?
A prudent purchaser should ensure that the property is inspected by a qualified building surveyor. There are two principal bases of inspection:
- A Homebuyers' Report. This involves a reasonably detailed inspection of the property, and identifies potential problems or defects. The purpose of Homebuyers Report is to allow a purchaser to make a reasoned and informed decision on what is a reasonable price to pay for the property, taking into account any required repairs or replacements.
- A full building survey. This involves an in-depth inspection of the property. The report will contain a detailed analysis of the property's construction and condition and in addition to identifying areas of concern it will offer remedial solutions.
The surveyor will be able to advise on which form of investigation is likely to be the most appropriate for the property concerned, having regard to its age, size, value and other characteristics.
Surveyors also produce valuation reports for lending banks. Whilst valuation reports will note any significant defects which might affect value (based on a superficial inspection of the property) they are not survey reports. Furthermore, and crucially, a survey report is commissioned by and addressed to the lender. This means that, whilst a purchaser may derive a degree of information or comfort from the contents of the valuation report, he or she would not be able to sue the surveyor if the surveyor had been negligent in preparing it, for example by missing an obvious and significant defect.
The principle that vendors of Jersey properties do not assume liability to the purchaser for the condition of the property needs to be qualified in relation to sales by developers. If the vendor is a developer, there may be various warranties included in a sale agreement, especially if the sale agreement is entered into before the property is built, i.e. bought 'off plan'. Such warranties typically include warranties to the effect that the property is or will be constructed in accordance with:
- specified plans and specifications;
- necessary statutory consents; and
- recognised prudent local building practices.
Warranties such as this are often supplemented by an express 'snagging clause', obliging the developer/vendor to remedy defects raised by the purchaser within a defined period (typically six months) following completion. In cases where the developer and the purchaser do not enter into any contractual commitment until the property is complete, the vendor is likely to be reluctant to provide warranties as to build quality, as the purchaser is free to inspect the finished product. Nevertheless, snagging obligations will usually be assumed by the vendor in such cases.
In addition, it has become common (and indeed standard practice in relation to apartment developments), for developers to put in place latent defects insurance. This form of insurance (also known as 'decennial' insurance, because it typically takes effect for ten years post-completion) provides protection against significant structural and weatherproofing issues arising from defective design or construction. Warranties from third parties involved in the design or construction process, and/or product guarantees, may also be available as part of the package of protection put in place by the developer.
Finally, mention should also be made of what are known as pre-contract enquiries, that is to say the various queries raised by the purchaser's lawyer with the vendor's lawyer as part of the conveyancing process. The scope and length of these enquiries has expanded significantly in the recent past. Much of what is asked for is reasonable. For example, a purchaser has a legitimate interest in knowing if the vendor has been in dispute with neighbours, or if insurance for the property has previously been declined or offered only on a restricted basis. Queries such as this are of a factual nature and cannot be answered by purchasers based on their own, or their advisers', investigations. However, vendors and their lawyers should be very wary of queries which relate to the condition or fitness for purpose of the property concerned or anything in or serving it. It is not for a vendor to warrant such matters and the vendor's lawyer should politely decline to answer enquiries of this nature.
No one likes nasty surprises and purchasers should mitigate the risks by taking appropriate professional advice before committing themselves to transactions. Vendors too need to be properly advised. Those who are developers will be expected to provide their purchasers with a sensible package of protection whilst other vendors should avoid warranting the condition of the property being sold.