It is well known that replies to enquiries must be accurate when given to avoid potential claims for misrepresentation.
Greenridge Luton One Limited –v- Kempton Investments Limited [2016] is a reminder that any changes to replies previously given must be disclosed prior to exchange of contracts. Care must also be taken when marketing properties for which sales packs were prepared in advance or on sales after abortive transactions to ensure that the replies provided are still correct.
The case concerned replies to enquiries which the seller had prepared in March 2013 but which were not provided to the buyer until August 2013. Although the replies mentioned that the principal occupational tenant had raised queries regarding some issues, they stated that there had been no complaints from and there were no disputes with the tenant. The tenant had, however, informed the landlord seller that it considered that there was a dispute regarding the sinking fund operation at the end of May and in June it started withholding service charge payments.
Having exchanged contracts, the buyer learned of the position and sought to rescind the contract on the basis of misrepresentation. The judge agreed that the replies gave a false impression. Although they might have been correct when they were prepared, they were not accurate when they were supplied and had not been updated at the time of exchange. The buyer was entitled to rescind the contract and recover its deposit, in addition to being entitled to damages to cover wasted legal fees, surveys, reports and specialist tax advice in respect of the transaction.
It is vital to remember to disclose any additional information or changes in circumstances as a transaction progresses and sellers would be advised to re-read the replies to enquiries just before exchange to check whether they require updating.
