Statements during a property transaction

During the course of a property transaction, it is common practice for the purchaser to raise questions as to the state of the property. The seller is generally bound by any statements they make about the property, and such statements can have critical bearing on a purchaser’s decision to proceed with a transaction.

A seller may attempt to exclude liability for misrepresentations made in their contract for sale, but the Court does have power to assess whether such clauses have any standing to prevent a seller from relying on such misrepresentations.

The exclusion clauses

In the matter of First Tower Trustees Ltd & Intertrust Trustees Limited v CDS (Superstores International) Limited [2018] EWCA Civ 1396, the landlord relied on clauses that prevented the tenant from being able to rely on representations made by the landlord, should issues later arise.

Asbestos in the unit

During the course of the transaction, the landlord’s agent became aware that the units subject to the let to the tenant, contained asbestos. The Tenant had specifically raised an enquiry as to whether the premises being let contained any hazardous substances or asbestos containing materials. The reply from the landlord was, “the buyer must satisfy himself”.

Reasonableness

The Court had to assess whether the exclusion clauses were reasonable in all the given circumstances. The Court of Appeal upheld the Judge’s decision to find that to deny a purchaser’s ability to raise questions and expect to receive reasonable answers in return would undermine the conveyancing process. The Court of Appeal did not favour the landlord’s argument that the misrepresentation was an innocent one.

Comments

The landlord attempted to argue that one must make a fraudulent statement before the Court could argue that the exclusion clauses are not reasonable. However, the Court of Appeal has quite rightly noted how such an argument would undermine a conveyancer’s ability to raise pre-contract enquiries and rely on statements made by the seller.

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