Pre-contract searches/enquiries are conducted to elicit information that cannot be deduced from the documents provided by the seller or his estate agent. This article discusses the need and the method of gathering such information, and the liability in the case of misinformation.
Purpose of the search
The third among the list of usual searches is pre-contract enquiries. Such enquiries should be made for every transaction to extract information (that which he is not bound by law to disclose) from the seller about the physical aspects of the property.
Since the seller is not bound by law to disclose certain information, he can also refuse to answer the same. But such refusal is uncommon and bound to raise suspicion and may even hinder the progress of the transaction or even cause the buyer to call off the purchase.
Residential property
When the Protocol is followed, the seller’s conveyancing solicitor should advise his client to complete a PIF for freehold properties and TA7 in the case of leasehold properties. These forms contain questions related to the property, but phrased in a language that is easy for even a layman to understand. He should be able to fill it with minimal help from his solicitor. But it is recommended (by the Law Society) that the conveyancing solicitor should check the answers filled by the client and make sure that the questions are answered correctly. This is to prevent any erroneous or misleading reply which may even lead to litigation for liability in misrepresentation. This form is then submitted to the buyer’s solicitor as a part of the pre-contract package.
Additional enquiries
With respect to enquiries regarding general areas that are not covered under standard forms, but relevant to a buyer’s situation, these should be raised as an additional enquiry either at the space provided at the bottom of the printed form or on a separate sheet (in duplicate). Such additional enquiries may even extend to questions that arise out of the contract or from evidence of the title supplied by the seller.
But such enquiries should only be related to matters to which an answer cannot be obtained just by reading documents provided by the seller, or particulars provided by the agent, or from a survey or physical inspection of the property. Care should be taken to avoid irrelevant enquiries that may irk the seller’s property lawyer who may even refuse to answer these questions.
Summary of information to be obtained from searches
The following is the list of minimum enquiries that are applicable to most cases:
a) Are there any disputes with neighbouring owners or occupiers? Were there any disputes in the past?
b) Who is in occupation of the property?
c) Have there been any alterations in the property or was any building work carried out on the property? And if such work was carried out, was proper planning permission obtained?
d) Has there been any change in the use of property?
e) Do services to the property pass through the adjoining land?
f) Do services to other properties pass through the land to be sold?
Liability
Incorrect replies to pre-contract enquiries lead to liability in misrepresentations. Sometimes an exclusion clause may help to avoid or minimise the liability, but this too is subject to a reasonableness test laid down under section 11 of the Unfair Contract Terms Act of 1977, and hence does not guarantee protection to the seller.
When the seller’s conveyancing solicitor is responsible for the negligence, he would be directly liable to his own client, but under such enquiries, the liability may be applicable to the buyer as well.
Usually a solicitor will answer as vaguely as possible in order to avoid liability for misrepresentation. The answer can be like ‘not as far as we are aware of’, or ‘not as far as the seller is aware of’. But under the judgement given in the William Sindall plc vs. Cambridgeshire CC [1994] 1 WLR 1016 case, such replies are only indicative of the fact that the seller does not have actual knowledge of the matter and that he has made all reasonable enquiries expected of a prudent person. And some conveyancing solicitors include a condition in the contract that questions raised should not be taken to mean that extra enquiries have been made, although the effect of such a condition is not clear.
Photo courtesy: Michael Cornelius
