UK: Even Professionals Need Surveyors When Purchasing Real Estate

Last Updated: 23 March 2015
Article by Mike Lewis

Hardy and another v Griffiths and another [2014] EWHC 3947

The Facts

On 1 April 2011, Mr Griffiths, a QC barrister, and his solicitor wife ("G") entered into a written contract with the Hardys ("H"). The contract was for the GBP 3.6 million purchase of Laughton Manor, a country residence in East Sussex.

Having previously withdrawn an offer in 2010, G agreed to a completion date of 31 October 2011. A six month extension was later agreed between the parties but a further request was refused by H, who served a Notice to Complete on 30 April 2012.

In rescinding the contract, H claimed breach of contract. G counterclaimed on grounds of misrepresentation.

The Alleged misrepresentation

G alleged that:

1.) The property suffered from dampness and dry and wet rot

2.) An eighth of an acre of land, represented as belonging to Laughton Manor, had been sold to adjoining proprietors

The Court judgment

The Contract incorporated the Standard Conditions of Sale and a number of special conditions which the Judge looked at in turn:

1. Right to rescind

In reviewing SCS 7.1.3, the Judge held only part (a) to be potentially relevant. This provides that "an error or omission only entitles the buyer to rescind the contract where (a) it results from fraud or recklessness...".

However, the Judge found that H did not know and had no reason to know that there were problems of dampness and rot. Further, H had not represented that there were "no problems" in this regard. Accordingly, G did not have grounds to rescind the contract under Standard Condition 7.1.3(a).

2. Physical condition

SCS 3.2.1 holds that "The buyer accepts the property in the physical state it is in at the date of the contract...".

The Judge upheld the principle of caveat emptor or 'buyer beware'. The responsibility fell to G to carry out adequate investigations. Accordingly, the Judge found that H was not required to disclose any information about patent defects, such as dampness, prior to contracting, even if they had had the required knowledge. In the event, G had not sought any professional advice from a surveyor regarding the physical condition of the property.

3. Representations

Special Condition 10 stated that "The Buyer agrees that no representation... concerning the Property has been made... by or on behalf of the Seller which has influenced or persuaded it to enter into this contract... except representations made by the Seller's conveyancers in writing before the date of this contract".

The Judge concluded that Special Condition 10 was fair and reasonable, despite being an exclusion clause. Therefore, G could only rely on representations made in writing by H's solicitors prior to entering into the contract. Only the Replies to the Additional Enquiries before Contract were relevant for dampness. However, its answers were based solely on historical perspective. Regardless, the Judge was not convinced that G had read the Replies.

Furthermore, the Judge held that G had known prior to entering the contract that the land plot had been sold. Irrespective, any oral representations would have been excluded by Special Condition 10. If G had been concerned they should have investigated further adhering to the caveat emptor principle.

The Counterclaim was dismissed and H was entitled to damages for breach of contract, to keep the deposit and to resell the property.

Conclusion

The importance of obtaining a professional survey before entering into a contract for the purchase of property cannot be underestimated. All purchasers should be aware of the "Buyer Beware" principle and address all concerns to their own satisfaction, as soon as they arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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