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Estate agent caused me to overpay

I have moved into my house on a private road in Surrey and the neighbours were quick to say I had overpaid. In fact, they held a party in my honour because they think I’ve inflated house prices on the street! I think the estate agent misled me about certain things. I’m furious. Can I take the agent to court?

Underlying the process of buying any house is the principle of caveat emptor, Latin for “let the buyer beware”. But, if representations have been given to you that have caused you to buy the property but which are untrue (either deliberately or negligently so), there might be some recourse. In the conveyancing process, this typically results in a seller’s solicitor adding a provision to the sale contract ensuring that the seller is not responsible for representations that have not come from them. But those additions do not usually absolve an agent from liability.

That’s exactly what happened — he misled me on the value of the homes sold in the area.

It is important for buyers to understand that some information they’ll be given by the estate agent will be merely sales “puff” or expressions of opinion which cannot be relied upon and for which, legally, the agent will have no liability. But if the estate agent has made representations of fact which turn out to be untrue, this could land the estate agent in a significant amount of trouble, both civilly and criminally. Agents have to comply with the Consumer Protection from Unfair Trading Regulations which requires that whether in writing, in pictures or verbally, the information they provide must be accurate. If they do not, criminal prosecution could ensue where there are unlimited fines and, potentially, up to two years’ imprisonment.

He told me, to my face, that several homes in the street had recently sold for over £1m, but that’s not true. I’ve now checked on Rightmove.

Buyers should always keep an accurate record of all information given to them by the estate agent before contracts are exchanged (and, if given verbally, they should confirm it by way of an email to the estate agent). Buyers should also relay any important information to their solicitor so that it can be verified, either by independent investigations or by raising inquiries of the seller. Unless the estate agent’s representations are recorded in writing, it will be difficult for buyers to prove that they have been misled.

I have it in an email! Right, how do I get that man in front of a judge?

Litigation can be costly and should never be the first response. In the first instance, buyers should go directly to the estate agent to see if their grievance can be amicably resolved. If that does not produce a satisfactory outcome, buyers may consider making a complaint to the Property Ombudsman who will investigate the issue and who has power to make awards up to £25,000. They may also consider making a complaint to the agent’s trade association (likely to be the National Association of Estate Agents). As a last resort, a civil claim could be brought against the estate agent under the tort of misrepresentation. This will not result in the purchase being voided (it’s not the seller’s fault) but could result in the court making a financial award of damages in favour of a buyer.

James Bunker is a Senior Associate at Farrer & Co LLP

Don’t give in to lofty ambitions

It took us forever to sell our house in London. We’ve finally found buyers, but they want to start work on a loft conversion straight after exchange. We don’t want to lose the sale but surely this would put us in a risky situation?

In short, yes. This is extremely risky. This type of request for early access should be refused wherever possible.

Why is it so risky if we have exchanged contracts?

The main risk is that the buyers start the works and fail to complete the purchase of the property — that is quite rare, but it does happen. Although your solicitor is holding their deposit, which may provide you with some comfort, you could be left with a building site. The deposit might not be enough to cover the cost of completing the works, or reinstating the property.

Will the buyers’ works be covered by our insurance policy?

Under the Standard Conditions of Sale, the property is at the risk of the buyers from the date of exchange. But even if you continued to maintain your building insurance policy, the works would almost certainly not be covered.

Is there any other incentive we can offer the buyers?

You may consider giving them access between exchange and completion to “measure up” in preparation for the planned conversion. If you go down this route, your solicitor should prepare an early access licence in which you clearly define what the buyers can and can’t do and ensure that they return the keys to the agents at the end of each day. This could be accompanied by the obligation that the buyers assume all insurance arrangements coupled with liability for paying council tax and utility services from exchange onwards. Remember to check the property regularly and the people coming and going — or ask the agent to do so and to keep you informed of the situation at all times.

Daniel Shein is an Associate in the property team at Goodman Derrick LLP

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