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Dispute on material information accuracy leads to court case

Tuesday 03 December 2019

Agents must be aware of the need to conduct due diligence checks on material information, as vendors from Oxfordshire are being sued for damages after claims they failed to disclose accurate information to their buyers.

The buyers withdrew from the sale after the exchange of contracts when information of a planned nearby hotel development came to light.

The prospective buyers, Adrian and Lisa Powell, had been searching for the perfect house for six years when they found the £1m barn conversion near Buckland village. They even bought a horse in anticipation of owning the property, which has three acres of paddock.

Who is at fault?

Vendors Philip and Elizabeth Ash stated in the house sellers' questionnaire they did not know of any nearby development which might affect the property. However, after the exchange of contracts, it emerged that a hotel development was planned on the nearby A420, which included a neon-lit drive-thru and a 61-room motel. It is unclear from reports how the Powells found out about the development, but it caused them to withdraw from the sale.

The case has now gone to court, where the Ashes insisted that they did nothing wrong in not mentioning the motel plans, claiming that at the time they filled in the property sellers' questionnaire, they did not consider the development would have an effect on the sale of their home. During the court case, it also came to light that, despite having stated on the sellers’ questionnaire that they were unaware of any developments affecting the property, they not only were aware of the diner’s development but had made an objection at the planning stages as part of a local residents’ group.

The buyers claim that false, misleading and/or inaccurate pre-contact statements entitled them to tear up the contract and be refunded their £108,000 deposit. The sellers say it was they who validly rescinded the contract - for non-completion - and that the Powell’s deposit is forfeited.

The motel and diner have since been built, with 79 rooms instead of the planned 61, and opened with a celebrity reception earlier in the year.

Due Diligence

The case, regardless of the eventual outcome, highlights to agents the need to conduct due diligence on any material information submitted by the sellers. A quick check of the information submitted on the sellers' questionnaire will save a lot of trouble further down the line if any issues can either be confirmed before the sale, or easily disproven.

CONSUMER PROTECTION REGULATIONS

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