CAVEAT EMPTOR (BUYER BEWARE)
Released On 22nd Jan 2024
All property transactions are subject to the legal principle of caveat emptor. A buyer should carry out all possible investigations (due diligence) because if anything comes to light after the purchase has completed, the buyer cannot take any legal action against the seller as the buyer ‘should have known about it’.
I recently had a buyer arrange an electrical survey after buying a property, only to find that the property needed over £2,000 of electrical work to be done. It is always worth considering having electrical and gas surveys done as part of the pre-contract surveys, along with the structural survey, as it is possible to negotiate on the sale price with a seller if it is found that lots of work is needed.
Doing these surveys after exchanging contracts of sale or completing the purchase will mean that the buyer has to rectify the faults at their own cost. There is no guarantee that a price reduction will be given, but at least the additional cost is known from the outset or the buyer can decide to withdraw from the purchase due to the amount of work needed. A seller is not required to carry out any electrical or gas system services as part of the sales process. Many sellers are happy to arrange and pay for a gas boiler service if the service is due, but as it isn’t legally required, some will refuse to incur this cost. All sellers should allow a buyer to arrange their own testing / service, at the buyer’s cost, as part of the buyer’s due diligence – this is particularly worth doing in an older property or one that has been empty for a period of time.
Of course, a service report doesn’t always mean that there won’t be a system breakdown. In another case, a buyer was provided with a recent gas boiler service report by the sellers, but after purchasing the house and putting the heating on, a fault occurred which resulted in over £1,000 of repair costs. Although the buyer was keen to see if any action could be taken against the seller to recover some of the repair costs, this was not possible as the seller no longer had any legal responsibility over the property.
Where a seller knowingly or recklessly misrepresents something to a buyer, there is a legal case against the seller. In most instances though, it is for a buyer to carry out all inspections to ensure there are no hidden surprises. A conveyancer will obtain property search reports (e.g. Drainage and Water) and review these for any potential issues, but they won’t visit the property being bought; the buyer must arrange for qualified experts to visit the property and the buyer should personally examine the property to be satisfied that the price being paid is a fair reflection of the value of the property.
Ruth Richardson, Conveyancing Paralegal
