Freehold, Leasehold or Commonhold? - Misleading Omission
Complaint
Following Miss D’s offer being accepted and the memorandum of sale issued, her solicitor informed her that the tenure of the property was not freehold and was in fact a shared ownership leasehold property. Miss D subsequently withdrew from the transaction and alleged that the Agent had misdescribed the property as being freehold.
Investigation
The property itself had been recently repossessed by the corporate seller client who had gained possession but, of course, had never lived there. The sale particulars were produced which stated that the tenure was “Freehold, Leasehold or Commonhold” and that “it is important that prospective purchasers seek confirmation from their solicitors regarding the tenure”. It was apparent that the Agent had not made any enquiries about the title and had not been aware that ownership of the property was shared between the seller and another company, until the seller informed them after sale had been agreed with Miss D. However, I observed that Agent was marketing a similar property on the same road which was described as ‘shared ownership’.
Outcome
Under the CPRs the Agent was required to provide Miss D with material information that she needed to make an informed transactional decision about the property. Accordingly, I would have expected the Agent to have made some enquiries about the title before marketing the property. The fact that it was a repossession property and that the Agent was marketing an almost identical property on the same road that was advertised as shared ownership, should have prompted them to make more enquiries about the title. In addition, I considered that the Agent’s obligation to check the property’s title was stronger, given that the seller was likely to know less information than the average seller-occupant, as they had never lived there. To that end I considered that the Agent had mis-described the property and supported the complaint. In making an award, I took into account that the tenure of the property is something that I would have expected to have been investigated by Miss D’s solicitor in any event. I also took into account that, as soon as the Agent discovered the issue with title, they immediately informed Miss D and tried to resolve the situation. I made an award of £200 for avoidable distress, aggravation and inconvenience.
Learning
It is not acceptable to use statements or disclaimers intended to encompass all possibilities when information is known that should put an agent on notice that such a statement may be inappropriate, especially given the requirement for material information to be divulged under the CPRs.