Set the scene: your offer has been accepted to purchase a new home, the mortgage offer is in, and your solicitor has investigated the title and provided you with a full report. You decide to dispense with a survey to save some extra pennies; after all the lender will carry out a valuation. After many sleepless nights, your solicitor informs you that you are ready to exchange contracts – the point of no return. How many of us tell our solicitor to delay exchanging contracts until a surveyor has assessed the property’s condition and we have carried out one final physical inspection?
Contracts for the sale of property and land commonly incorporate a standard condition that “the buyer accepts the property in the physical state it is in at the date of the contract”. There is also a common law principle of caveat emptor (let the buyer beware). In other words, a buyer ought to find out everything they need and want to know about a property before committing to buy it.
On 2 December 2014, the High Court reminded us why buyers should consider obtaining professional advice as to the physical condition of property. In this case, a buyer failed to complete a purchase of a £3.6 million property on the contracted completion date when a survey, carried out after contracts were exchanged, revealed rising and penetrating damp and wet and dry rot. The principle of caveat emptor applied, and the seller was able to keep the buyers’ deposit and sue for damages. The fact the buyer exchanged contracts without having had a survey was no-one’s fault but their own (Hardy v Griffiths [2014] EWHC 3947 (Ch)).
An earlier case in 2010 cautions buyers to carry out a final inspection of the property before committing to the purchase. A contract for the sale of a property in Worcestershire for £1.3 million was agreed to include all fixtures and fittings. After the buyer inspected the property but before contracts were exchanged, an intruder removed approximately £300,000 worth of items including three fireplaces, a number of oak paneled doors, kitchen and bathroom equipment, a hot water cylinder, copper piping, a chandelier, carpets and stair rods. The burglary did not come to the buyer’s attention until after contracts had been exchanged. The judge held that the purchase of the property to include all fixtures and fittings meant the fixtures and fittings as at the date of exchange of contracts, and the buyer had accepted the risk of a change by not re-inspecting. (Wickens v Cheval Property Developments Ltd [2010] EWHC 2249 (Ch)).
These judgments are a reminder to:
