Potential shift in property law: High-profile £32.5m moth-ridden mansion case stirs up developer cautions
UK Property Sellers Face Stricter Disclosure Rules Following High Court Ruling
In a landmark decision, the High Court has altered the long-standing "buyer beware" rule in UK property transactions. The ruling, made in the case of Iya Patarkatsishvili and Dr Yevhen Hunyak versus property developer William Woodward-Fisher, has set a new precedent for sellers to disclose all known defects and issues transparently.
The case, which involved a £32.5 million Victorian mansion in Notting Hill, known as Horbury Villa, was centred around a severe moth infestation that the seller, William Woodward-Fisher, had failed to disclose. Judge Justice Fancourt stated that the seller did not honestly believe the truth of his replies.
Sellers are now expected to respond truthfully to detailed pre-contractual questions regarding vermin infestations, structural defects, damp, and other hidden issues. If a seller has knowledge of defects, they must disclose this, including any relevant inspection reports. If a seller is unaware of defects but has not had a formal survey, they should clearly state this and advise buyers to rely on their own surveys and professional advice, avoiding any warranty or false assurance.
The ruling reinforces that sellers must provide truthful and complete information in Property Information Forms (TA6). Failure to do so can lead to legal consequences for misrepresentation. Sellers can no longer provide misleading or incomplete responses without facing serious financial repercussions.
Tara Jones, a Property Litigation Solicitor at Lester Aldridge, emphasized the importance of transparency in property transactions. "The recent case highlights that sellers cannot rely on general disclaimers or the buyers' due diligence alone; active disclosure is required where sellers have knowledge of defects," she said.
This stricter approach by the courts is aimed at protecting buyers and aligns with the principle that sellers must "beware" and not attempt to take advantage by omitting known issues. The principles established in this case could trickle down to the broader property market, potentially leading to legislative reforms requiring more stringent disclosure rules.
Increased transparency is required from sellers when answering pre-contract enquiries. Buyers may become more confident in challenging misleading seller representations, potentially leading to an increase in litigation over property defects.
More broadly, current legal and ethical standards in UK property sales emphasize full disclosure of material facts that affect the property's value or safety. This includes structural problems, damp, infestations, planning permissions, and alterations. Sellers must provide documentation such as previous inspection reports, insurance details, planning permissions, and any claims history. Recognizing that non-disclosure or misleading information can lead to claims for misrepresentation or fraud, financial penalties, compensation, or even sale cancellation.
In countries like the United States, sellers are already required to provide detailed property condition reports; the UK may be heading in the same direction. The damages in the Iya Patarkatsishvili and Dr Yevhen Hunyak versus William Woodward-Fisher case included £3.7 million for stamp duty and £15,000 for ruined clothing and antique bottles of wine. The sellers were ordered to refund the purchase price (minus £6 million for use of the property) and pay an additional £4 million in damages.
As buyers become more aware of their rights and the increasing scrutiny on sellers, the UK property market is expected to see a shift towards greater transparency and honesty in disclosures.
[1] The Law Society Gazette
[2] Property Week
- Sellers in the UK should provide truthful and complete information in Property Information Forms (TA6), as highlighted by the recent high court ruling, to avoid legal consequences for misrepresentation.
- Buyers may benefit from increased confidence in challenging misleading seller representations, potentially leading to an increase in litigation over property defects, following the stricter approach by the courts.
- Recognizing that non-disclosure or misleading information can lead to claims for misrepresentation or fraud, financial penalties, compensation, or even sale cancellation, sellers are expected to disclose all known defects, such as damp, infestations, structural problems, and planning permissions.
- Sellers are required to provide detailed documentation, including previous inspection reports, insurance details, planning permissions, and any claims history, to ensure a higher level of transparency and honesty in UK property sales, similar to the requirements already enforced in countries like the United States.
