Property Misrepresentation Claims

Purchasing a property may be one of the most significant purchases an individual or company is likely to make. It is essential that purchasers are clear that the property they thought they were buying is in fact the property that they are buying. Property misrepresentation occurs if a purchaser was misled by the seller during the sale. In order to demonstrate a misrepresentation, you will need to show that:

1. An untrue statement of fact or law was made by the seller (or his agent for the purposes of passing on the representation) to the purchaser.
2. The untrue statement induces the purchaser to enter the contract.
3. By entering the contract, this has resulted in a loss to the purchaser. 

Whether a representation has been made is to be assessed objectively and according to the impact that the statement may be expected to have on a reasonable person in the position and with the known characteristics of the actual representee.

It is important to remember that a buyer of a property has a duty to complete all the necessary checks and searches before buying a property. Therefore, it is the buyer’s responsibility to make sure everything is as it should be.

However, alongside the buyer’s responsibilities, it is essential that the seller provides full and honest information about the property before a decision is made. Where important information has been omitted or incorrectly disclosed to a purchaser, there may be grounds for a misrepresentation claim.

Misrepresentation is classified in three ways:

1. Innocent misrepresentation – where the seller makes a false statement where it is made entirely without fault and can show it had reasonable grounds to believe the statement was true.
2. Fraudulent misrepresentation – where the seller makes a false statement knowingly or without belief in its truth or recklessly as to its truth.
3. Negligent misrepresentation – where the seller makes a statement carelessly or without reasonable gourds for believing its truth.

Property misrepresentation claims can be resolved in different ways and remedy will depend on the type of misrepresentation. If a court find that a misrepresentation took place, the court may award:

1. The buyer damages to be paid by the seller to compensate for the detriment or diminution in value of the property as a result of the misrepresentation.
2. Rescission of the contract. The sale is “undone” and the buyer gets their money back as well as compensation.

We can assist in claiming or defending a misrepresentation claim by completing the following steps:

1. Assessing the statement made and providing advice as to whether we believe there are merits to a misrepresentation claim.
2. Where exchange of contracts has not taken place, we can negotiate the next steps on your behalf.
3. If the property has been purchased, we can assist you in drafting a letter before action.
4. Considering making an application for pre-action disclosure of documents should this be necessary.
5. Liaising with specialist surveyors to provide an idea of diminution in value of the property.
6. Partaking in settlement discussions or mediation to resolve the matter efficiently and cost effectively.
7. Where necessary, partake in formal court action and guide you through the process.