The Hidden Dangers of Non-Disclosure: The Moth-Infested Mansion

Selling your property is a significant life event, and while it can be exciting, it’s also crucial to get the process right.

One area that often trips up sellers, and can lead to serious legal consequences, is the disclosure of information about the property.

A recent high-profile case involving a Georgian billionaire’s daughter and her husband has brought the issue of property disclosure sharply into focus.

The couple purchased a west London mansion only to discover a severe moth infestation.

So severe, in fact, that their barrister, John McGhee KC, described how at the peak of the problem, the couple were swatting approximately 100 insects daily.

The High Court judge, Mr Justice Fancourt, ruled against the elite property developer, Woodward-Fisher, finding that they had provided “false” answers regarding the property’s condition and failed “honestly to disclose” the “serious infestation.”

While the judge acknowledged that the developer, a former Great Britain rower, hadn’t intentionally deceived the buyers, he added that they “simply wanted to sell the house and move on” and knew that disclosing the infestation would jeopardise the sale.

The court ordered the sale to be rescinded, meaning Woodward-Fisher must reimburse the purchase price, less approximately £6 million to account for the couple’s time in the property.

This case serves as a stark reminder of the critical importance of honesty and transparency during property transactions. While the allure of a quick sale can be tempting, failing to disclose known issues can lead to significant legal repercussions

What is the Property Information Form?

In England and Wales sellers are required to complete a Property Information Form (form TA6). This document is designed to provide potential buyers with crucial information about the property, its history, and any potential issues and disputes. It covers a wide range of topics, from structural problems and past renovations to disputes with neighbours and known defects.

Why is Disclosure so Important?

Transparency is key in property transactions. Buyers rely on the information provided by the seller to make informed decisions. Deliberately hiding or misrepresenting information can create a false impression of the property’s condition and value. This not only damages the buyer’s trust but can also lead to significant financial losses for them down the line.

What Constitutes Misrepresentation?

Misrepresentation occurs when a seller makes a false statement of fact (or sometimes, in specific circumstances, a statement of opinion) that induces the buyer to purchase the property.

Under UK law, misrepresentation can take several forms, each with different levels of culpability and potential remedies:

Fraudulent Misrepresentation: This is the most serious type. It occurs when the seller knowingly makes a false statement, intending the buyer to rely on it. This means the seller knows the statement is untrue or is reckless as to whether it is true or not. It’s a deliberate act to deceive.
Negligent Misrepresentation: This occurs when the seller makes a false statement carelessly, without reasonable grounds for believing it to be true. While there’s no deliberate intent to deceive, the seller’s carelessness in checking the facts amounts to a breach of their duty of care to the buyer.
Innocent Misrepresentation: This occurs when the seller makes a false statement believing it to be true. The misrepresentation is neither fraudulent nor negligent. The seller genuinely believes the information they are providing is correct.
Silence: Failing to disclose known issues, even if not directly asked. In some cases, silence can be considered a form of misrepresentation.

It’s important to note that the lines between these categories can sometimes be blurred, and the specific facts of each case will be crucial in determining the type of misrepresentation.

Furthermore, the remedies available to the buyer will depend on the category of misrepresentation.

Consequences of Non-Disclosure and Misrepresentation:

The consequences of failing to disclose information or misrepresenting facts can be severe:

Legal action: Buyers can sue sellers for damages, seeking compensation for the costs of repairing undisclosed defects or the difference in value between the property as represented and its actual condition.
Rescission of the contract: In some cases, a buyer may be able to rescind the contract entirely, meaning the sale is cancelled, and the seller has to return the purchase price.
Reputational damage: Being accused of misrepresentation can severely damage your reputation, making it difficult to sell property in the future. This is particularly relevant for commercial developers.

Examples of Information You Should Disclose:

While the specific requirements vary depending on your location, some common examples of information that should typically be disclosed include:

Structural issues: Cracks in the foundation, dampness, subsidence, or problems with the roof.
Plumbing and electrical problems: Leaky pipes, faulty wiring, or issues with the heating or cooling system.
Pest infestations: Past or present infestations of termites, rodents, or other pests.
Neighbour disputes: Ongoing disagreements with neighbours about noise, boundaries, or other issues.
Past flooding or other natural disasters: Any history of flooding, landslides, or other natural disasters affecting the property.
Renovations or additions: Details of any significant renovations or additions, including permits and approvals.

Key Takeaways from this Case:

Disclosure is paramount: Sellers have a legal and ethical obligation to disclose any known defects or issues that could affect the value or enjoyment of the property. This includes, but isn’t limited to, structural problems, dampness, pest infestations, and neighbour disputes.
“Moving on” is not an excuse: The judge’s comments highlight that a seller’s desire to conclude a sale does not justify withholding crucial information.
Consequences can be severe: As this case demonstrates, the consequences of non-disclosure can be costly, potentially including rescission of the sale and substantial legal fees.
Buyers must be diligent: While sellers have disclosure obligations, buyers should also conduct their own due diligence, including professional surveys and inspections.

Selling a property is a complex process, but by being honest and transparent, sellers can avoid potential legal pitfalls and ensure a smooth and successful transaction for all parties involved.

Talk to us

If you’ve experienced problems with a property after purchase and believe the seller withheld or failed to disclose important information, or if you’re a seller needing guidance on your disclosure obligations, please don’t hesitate to contact me, James Overton or a member of our team.