19 November 2009 by Louise Dawson

Let the Buyer Beware or Let the Seller Be Honest

The common law principle of caveat emptor, “let the buyer beware”, means that the onus is on a buyer to find out everything he wants or needs to know about a property before becoming committed to buying it i.e. prior to exchange of contracts. In addition to the usual conveyancing searches, this has led to solicitors raising detailed enquiries of the seller’s solicitors in order to protect their buyer client. The Law Society regards this as an “inquisitorial and defensive approach to information that is actually readily available to the seller”.

There are exceptions to this principle, the main one being the seller’s duty to disclose latent defects in title. A latent defect is one which the buyer could not have discovered by any reasonable inspection of the property. This exception is limited to the seller’s actual knowledge i.e. the seller can only disclose those defects of which he is aware, or of which acting reasonable he should have known. An example of a latent defect is a right of way or a tenancy.

In contrast, a patent defect is one which the buyer might be able to discover on a reasonable inspection of the property. In practice, this distinction has become blurred and unclear.

A recent Law Society consultation paper has proposed of a move away from caveat emptor to full seller disclosure. To a certain extent a move has already been made towards this with the introduction of the Home Information Packs, although this is really only in the marketing process.

Under seller disclosure, as well as providing the required elements of the Home Information pack and all relevant property information forms, the seller would provide a completion ready pack which would include a standard form of contract containing comprehensive warranties, guarantees, covenants and certificates from the seller.

The buyer would still carry out their own survey of the property, but the new pack should reduce the number of pre-contract and pre-completion enquiries raised by the buyer’s solicitor.

The advantage to the buyer should be access to greater information and a quicker transaction. The flip side of this is no doubt increased cost for the seller not to mention possible greater uncertainty and even an increased risk of litigation.

We will have to let the consultation run its course for now and certainly the Law Society will need to look into the form of warranties provided by the seller in the new contract. In the meantime, a prudent seller would be well advised to take a cautious approach and make full disclosure of all third party rights and title defects.

6 November 2009 by Vincent Billings

How to sell a business in three days…

On Tuesday I took urgent instructions from a client, who was in the process of selling their business.

16 November 2009 by Lynne Burdon

This week I got a present

It all arose out of a mistake. Like so many mistakes somehow this problem had slipped through the net every place where it should have been picked up. We didn't spend too long looking at where to apportion blame. The solicitor worked with the most senior partners and eventually solutions were found. The rest is history - the case was won and everyone is delighted.

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