Seller Beware

Following on from the article in the March edition regarding the dangers of non-disclosure, the idea of caveat emptor (buyer beware), with the buyer taking the property as it is, applying to contracts is not entirely correct. Although the buyer should inspect and make proper enquiries, there are exclusions from the buyer beware concept. These include latent defects (being technical defects in the legal title which are not reasonably discoverable by inspection of the property or consideration of the paperwork, such as a restrictive covenant), fraud and misrepresentation.

In addition, it has now been suggested that consumer protection law might affect some transactions by imposing a direct requirement on advisers to disclose property defects. The Consumer Protection (Amendment) Regulations 2014 are the cause of this concern because they have introduced new private law actions open to consumers and potentially widened the scope of the previous legislation.

Whilst traders were subject to the Consumer Protection from Unfair Trading Regulations 2008, the 2014 regulations changed the definition of “trader” to include, in addition to a person acting for the purposes of a business, someone acting in their name or on their behalf, which could catch their advisers.

When considering whether there is a potential “consumer”, the test to be applied is whether the deal falls “wholly or mainly outside that individual’s business”. This means that the skilled and experienced investment purchaser may still be a consumer.

It has also been suggested that, as advisers are carrying out a commercial practice, any dealing with a consumer on the other side could involve a “trader – consumer” relationship under the regulations. If this assessment is correct, advisers could be caught by owing direct obligations to the consumer. Although doubt has been cast on this interpretation because it would create a “trader” relationship for a transaction (such as a typical house sale and purchase) which would otherwise be between consumers, it is recognised that advisers do have professional duties which include honest and fair dealing.

The guidance therefore is that, in a potential “trader – consumer” transaction, the “trader” party needs to ensure that they act in an open and honest way to avoid putting both themselves and their advisers at risk of possible claims under the 2008 and 2014 regulations. As a result, in the event that an adviser is told not to disclose something, it is likely that a conflict would arise which would lead to the adviser being unable to continue acting.

Whether the suggestion that the 2014 regulations apply a direct relationship to agents is overly cautious, it does serve as a reminder that it is not safe to issue vague replies to enquiries where the facts are known, especially as consumer protection is an area which is likely to increase in regulatory control.

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Gaenor Thomas

Associate, Commercial Property

Gaenor has experience in all aspects of commercial property law. She worked in the city before moving to Southampton for 12 years prior to joining...

Gaenor Thomas

Associate, Commercial Property

Gaenor Thomas

Gaenor has experience in all aspects of commercial property law. She worked in the city before moving to Southampton for 12 years prior to joining Hart Brown. Gaenor deals with transactions in respect of a wide range of properties including office, retail, industrial and warehouse and storage facilities, acting for both landlords and tenants.

As well as this, Gaenor also deals with secured lending, acquisitions and disposals, options and pre-emptions and regularly supports the company commercial department dealing with the property aspects of business transactions.

Gaenor is based in both the Guildford and the Godalming office, splitting her time through the week.

Gaenor also speaks fluent French.

Here are Gaenor's answers to a brief interview about her interests and achievements:

Personal interests:
Foreign travel

What are your favourite travel destinations?
Malaysia for the wildlife
Aeolian Islands for the geology
Italy for the food
France for the language and culture.