29 October 2015

But No-One Told Me!

Ever bought a building and later discovered the seller has not mentioned something about it to you?
UK Real Estate and Construction
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Ever bought a building and later discovered the seller has not mentioned something about it to you? This might be little more than the eccentricities of an elderly boiler – or it might be a development which has an impact on the price or even your decision to purchase the property.

Two such omissions have been so material to the relevant buyers recently that they have sued the sellers. The cases both involved residential properties but the implications are just as relevant to commercial properties.

In Thorp v Abbotts [2015] EWHC 2142 (Ch) the sellers had received leaflets from the council and residents' group about proposals to earmark three sites for residential development as part of the core housing strategy. The sellers went to a meeting about the plan and talked to a "leading light" of the residents' group opposing the development. The Abbotts came to the view that the local authority did not support development on the site nearest their home. So when they sold the property a year later, they didn't mention anything about the proposals, even though the pre-contract enquiries asked specifically about notices, communications, neighbours and things affecting the property. After the property was sold, a developer won – on appeal – planning permission for the site nearest the property for 800 homes. The buyer felt the Abbotts should have told the buyer what the Abbotts knew about the development risk and sued.

A development nearby was also the issue in Orientfield Holdings v Bird & Bird LLP [2015] EWHC 1963 (Ch). After exchange of contracts the buyers learnt about proposals to build a 1,400 pupil school on the open land immediately behind their new home. The sellers had received notices about this as part of the planning process. They had retained a planning consultant at Knight Frank to try and block the scheme and had been involved in the residents' group which opposed the development of the school on the open land.

Orientfield felt they had no option but to rescind the contract. They sued their sellers – and settled part of the claim with them out of court. They then sued Bird & Bird, the lawyers who acted for them on the purchase.

Two disgruntled buyers. Two court cases. In one case the buyer won and in another the seller.

The Abbots were the successful seller. The Judge held that they had given reasonable replies to the questions they were asked. They couldn't have predicted the chances that planning permission would have been granted on appeal. The council's consultation about the local plan and the publicity from the residents association weren't sufficiently formal to have been caught by the pre-contract enquiry they had been asked.

By contrast, Orientfield had an out of Court settlement from the sellers – which implies some sort of liability (and also won a victory against Bird & Bird). In their case the Judge felt the seller's answers had been evasive or possibly untruthful. Bird & Bird should have done more to probe the answers, and should have passed a planning search on to Orientfield. We need to disclose our interest here. Wedlake Bell's David Golten acted for Orientfield and their successful case against Bird & Bird.

What are the lessons here for buyers and sellers:

Sellers should give as much information as possible to their solicitors. We can help you decide what is relevant and how to protect yourself.

Buyers should make sure their solicitors know of any particular concerns or curious things you noticed when you inspected the property. These help us sift through information to highlight key points to you.

The old maxim of "buyer beware" still applies – but now we must also say "seller be wary". 

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.

29 October 2015

But No-One Told Me!

UK Real Estate and Construction
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