What happens if you're mis-sold a home?

Being mis-sold a house can have a huge impact on the buyer. Along with disappointment and stress, seller misrepresentation can bring devastating financial losses. The damages that can be claimed for seller misrepresentation depend on whether the court determines that the seller made an innocent mistake, or they were reckless or fraudulent.

What does mis-sold mean?

Being mis-sold a home means that someone has bought a property based on representations made by the seller which turn out to be incorrect. Although the buyer is responsible for doing their own due diligence on the property, if the seller makes any erroneous statements on which the buyer relies to make the purchase, then they may be able to make a claim.

What are examples of mis-selling property?

There are three ways a seller could mis-sell a property:

  • Innocent negligence: Where the seller makes a genuine mistake.
  • Negligent/reckless misrepresentation: The seller failed to verify the accuracy of the information they provided.
  • Fraudulent misrepresentation: Where the seller deliberately misleads the buyer when they make enquiries prior to purchasing the property.

Examples of mis-selling property could include where a seller fails to mention previous or ongoing disputes or complaints with neighbours, such as boundary disputes. Failure to mention structural problems like subsidence, damp, or other issues affecting the building such as the existence of Japanese Knotweed may also be classed as mis-selling property.

Anyone selling a property will usually fill out a TA6 form, which provides the buyer with some basic information about the property. The form states that it is of utmost importance that all information provided is accurate, whether in writing or discussed verbally with the buyer. In addition, the seller should provide a TA10 fittings and contents form which lists what is and is not included in the sale of the property. Sellers must answer as honestly and accurately as possible, otherwise they could open themselves up to claims of miss-selling.

To what extent does the buyer need to “beware”?

The case of SPS Groundworks & Building Ltd v Mahil (2022) highlighted the extent to which the buyer should be made aware of certain points that may affect the future value of the property. In this case, the buyer bought a plot of land at auction which was described as having “excellent scope for development, subject to any required planning permission, making a superb investment opportunity”.

After purchasing the property, the buyer found out that the land was subject to an overage clause and details could be found in a deed of covenant. The terms included that 50% of any increase in the value of the land attributable to obtaining planning permission must be paid to the Co-operative Limited. Whilst the legal pack included a copy of the deed of covenant, the auction brochure did not refer to it.

When taken to court, it was initially found that it was the buyer’s responsibility to understand the details in the legal pack regarding the overage clause, but in the High Court appeal case, it was decided that the seller had failed to fully disclose this information. Although the buyer did not study the legal pack, it was the seller’s duty to make the buyer aware of the overage clause through the auction brochure, the sales particulars, the addendum notice, or by the auctioneer.

The reason behind this was that the buyer may have assumed that the deed of covenant did not include any information that would significantly affect the value of the property without being made specifically aware of it.

What is the process of claiming for seller misrepresentation?

Before doing anything, buyers should double-check all the information that the seller has provided to them and the surveyor report (if a surveyor was instructed) to make sure there are no details that have been missed.

It is advisable to get advice from a qualified property dispute lawyer who can guide you on the next steps to take. This is because it depends on how the house was sold, whether through an estate agent or auction, and how the representations were made, whether in marketing material or legal documents, for instance.

Dispute resolution

The next step may be to find an alternative means to resolve the dispute through mediation, arbitration, or negotiation. This is an alternative option to going to court which provides a way that both parties can discuss the issues with the help of an independent professional and come to an amicable agreement. In some cases, this may not always be possible if the issues are complex or where an agreement cannot be reached.

Take the matter to court

If a buyer is confident that there is evidence to prove misrepresentation by the seller and they wish to take the matter to court, the next step is to appoint a valuation surveyor. Their task will be to find out if there is a difference in the valuation of the house due to the issues that are now known. The difference in value between what was paid for the home and the new valuation figure will be the amount that the buyer can claim. This evidence is usually vital as it is much more difficult to prove that if the buyer had known about the issues, they would not have purchased the property. 

If the judge decides that an award for damages would not be enough to compensate the buyer, then a rescission of the purchase may be made. This means that the property contract becomes null and void and is not recognised as legally binding.

BHW Conveyancing is the leading residential property law firm in Leicestershire and is ranked in the top ten real estate firms in the East Midlands by the Legal 500 guide. We pride ourselves on giving our clients a seamless and efficient end-to-end conveyancing service and adhere to high-quality industry standards. We work with many estate agents and financial advisors as their preferred conveyancing partner. Due to our proactive approach to progressing our clients’ property transactions, we are constantly being referred time and time again. 

Whether you are a property professional, seller, or buyer, we can help with your residential conveyancing queries. To request a personal conveyancing quotation, or to discuss setting up a professional referral relationship with your business, please call us on +44 (0)116 289 7000 or send us an email at conveyancing@bhwsolicitors.com.