Annual Report: Omission of the truth shatters buyers' dream

Published on Friday, 09 June 2017. Posted in Case Studies

Read more about this consumer case summary and the Ombudsman’s investigation, which found the agent had withheld material information with dire consequences for the Buyers.

The agent was instructed to sell a property in a sea-side village.  The agent knew that there is a proposal to stop maintenance of the sea wall defences at some point in the future but did not disclose the proposal to the buyers, who purchased unaware of the issue.

On discovering the proposal after completion, the buyers made a complaint, saying they would not have bought had they been aware.  They fear they have bought a depreciating asset which will be hard to sell.

Paragraph 7i of the TPO Code of Practice reminds agents that the Consumer Protection from Unfair Trading Regulations (CPRs) “require you to disclose any information of which you are aware….in a clear intelligible and timely fashion”.  The Paragraph continues “All material information must be disclosed and there must be no material omissions which may impact on the average consumer’s transactional decision”.

The Ombudsman investigated and found that the proposal had already severely affected the value and marketability of local properties, and continues to do so.

The present difficulty faced by property owners in selling their homes, the likelihood of substantial devaluation of the property in future and its potential loss to the sea over time, supported a conclusion that the sea defence management plan was material information to an average consumer making a transactional decision, whether or not to buy, and if so, at what price.

The solicitor did not uncover the issue of sea defence of the village.  However a complaint against her to the Legal Ombudsman concluded that she had met her responsibilities.  She carried out all the necessary searches and enquiries, none of the searches revealed the problem and the seller said he had received no official notice or correspondence which affected the property.  The solicitor was not to blame for failing to disclose what she did not know.

The Ombudsman considered that it is beyond what it is reasonable to expect of the average consumer to expect them to have asked if there were any proposals as to future maintenance of the sea wall.  It was therefore crucial that the agent met their responsibility to disclose that there was a plan to discontinue sea defence maintenance.

The impact of the agent’s failure to disclose what they knew is life changing for the buyers. They have the constant worry of whether they will be able to sell at all in future, and how they will fund their next move.  These are severe worries and the impact upon them will be profoundly felt for the rest of their lives.

The appropriate outcome in this case was to make an award which compensated the buyers for the distress, aggravation and inconvenience they have and will continue to suffer in future, mindful of the financial implications of the agent’s non-disclosure.

The Ombudsman made an award of £25,000.

Please note: the complaint was made in 2016 and the award was issued in 2017