In light of a recent decision by the Central London County Court awarding damages of over £200,000 to a claimant for an answer on a Property Information Form, we look at the importance of accuracy on these transactional documents and what can be done to mitigate any risk.
What is Japanese Knotweed?
Japanese Knotweed is an invasive non-native plant thought to affect around 4-5% of UK homes which can cause damage to property foundations and pavements, often leaving the owner of the property liable to any repair or removal costs as well as devaluing their property. Building’s insurance will very rarely cover any damage and mortgage lenders are generally hesitant to lend on a house where Japanese Knotweed is present.
Japanese Knotweed can lay dormant in the soil for over 20 years before growing and requires specialist professionals to identify, treat and remove the plant before it causes damage.
It is such a prevalent issue that The Law Society included a new provision on the TA6 Property Information Form from February 2020 requiring a seller to disclose whether the property is affected by Japanese Knotweed.
What happened here?
Point 7.8 of the TA6 asks “Is the property affected by Japanese Knotweed? ‘Yes’, ‘No’, ‘Not Known’”. The seller in this case answered ‘No’ and argued that he reasonably believed the property was not affected by knotweed as he had seen no evidence of it in the 3 years he had lived at the property, and a surveyors’ report prior to his purchase did not raise knotweed as an issue.
Upon selling the property, the new owner discovered knotweed canes in a bush next to a shed in the garden which had shown evidence of it having been potentially treated with herbicide in the past.
The judge upheld the claimant’s claim for misrepresentation on the grounds that the defendant had admitted to not knowing what was behind the bush or the shed where the knotweed was found. This was held to be insufficient for an answer of ‘No’ on the Property Information Form as the defendant had positively asserted that knotweed did not affect the property despite not undertaking specific investigation.
How can we mitigate this?
Where representations are made on information forms which are relied on by buyers, absolute assurance must be given that the forms are as accurate as can be. Merely assuming something to be true without evidence to the contrary opens up liability should there be problems in the future. Caveat Emptor in this scenario would not apply as the buyer is relying on the seller’s truthful assertions on the TA6.
In the above scenario the defendant could have answered ‘Not Known’ to point 7.8 of the TA6 which would have allowed for the buyer to undertake his own investigation for Japanese Knotweed at the property prior to purchase, and then to renegotiate the purchase price accordingly.
We would advise in all scenarios that if a client is not 100% sure of their answer to a question then they have two options: The first is to tick ‘Not Known’ where it is an available answer as it cannot be argued that one is misrepresenting the condition of the property. The second is to investigate the answer fully and be supported with evidence and warranty from an expert.
This advice not only applies to questions relating to Japanese Knotweed but other sections of the TA6, such as questions of property boundaries, conservation and listing issues, Radon, and drainage services for example. This is also applicable where the seller is acting as an executor or attorney as it is highly likely that they were not resident at the property and cannot therefore make positive assertions a property is not affected by issues.
The Conveyancing team at Ramsdens is on hand to advise at every step along the way of a property transaction, including assisting clients answer the Property Information Form accurately and clearly to avoid any potential misrepresentation. When acting for a buyer we will investigate the TA6 thoroughly and advise where further investigation is needed on certain points to ensure that the client is fully aware of everything they are buying.
References:
New Law Journal - 171 NLJ 7940, p20, Veronica Cowan