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What happens if a seller is economical with the truth?

When selling a property, whether residential or commercial, sellers have to provide replies to enquiries. There is an obligation to update those replies to enquiries if the answers change at any point up to exchange of contracts.


In a recent case, Greenridge Luton One Ltd and another v Kempton Investments Ltd [2016] EWHC 91 (Ch) (22 January 2016) the claimant, a buyer was awarded not only the return of its deposit but also damages for deceit of £395,948.
The defendant (the seller) had a commercial property which was let (in the main) to one tenant. The lease provided for a service charge.  In June and September 2013 the tenant withheld part of the service charge payment it was due to make and instructed solicitors to represent it in a claim over service charges against its landlord, the seller.
In anticipation of selling the property, the seller had prepared replies to standard enquiries in March 2013. In August 2013 a buyer (the claimant) had been found and the replies to enquiries were issued to the buyer.  The replies stated that there were no disputes and that a tenant had raised “mainly historical issues and had recently raised further enquiries.”  Despite being asked, no further information was provided.
In September 2013 contracts were exchanged.
The buyer then attempted to get funding for the purchase and the bank’s valuers found out about the service charge dispute and advised that the dispute should be resolved before the purchase could complete.
Eventually the buyer cancelled (otherwise known as rescinded) the contract claiming the return of the deposit that it had paid and damages arising from the fraudulent misrepresentation of the seller. The matter went to court and a judge agreed that the seller had either fraudulently misrepresented the situation or had been reckless as to whether the information provided was correct and therefore the buyer was entitled to the return of the deposit and an award for deceit.
It is important for sellers to spend time ensuring that the information they provide is correct and that the information should be correct not only at the time of preparing the replies but also at any time up to exchange of contracts.
If you have recently bought a property and found out that the seller had not disclosed something please contact Kevin Rogers.
If you would like assistance in buying or selling a property please contact Nina Wilson.