House Selling Now Spooky Thanks to New Regulations

Selling your house? Be careful if you omit to mention the common knowledge that it's haunted. But more on that later. The off-cited legal principle of- 'let the buyer beware' - may be about to receive a knockout blow.
|

Selling your house? Be careful if you omit to mention the common knowledge that it's haunted. But more on that later. The off-cited legal principle of caveat emptor - 'let the buyer beware' - may be about to receive a knockout blow.

For many years, home owners have taken comfort from that classic maxim. But a tightening of rules, which began last year and strengthened still further this April, irrevocably changes the balance.

From 1991, property sales were regulated by the Property Misdescriptions Act. That Act was repealed last October in a move which arguably alters little of the actual or ethical landscape for estate agents and others, but which leaves sellers and others unusually exposed to the full glare of the wide-ranging 2008 Consumer and Business Protection Regulations.

The risk lies because the regulations will be enforced against professionals involved in the property market - estate agents, auctioneers, internet property retailers, developers, investors and lawyers - from April by the new Competition and Markets Authority and one of the country's local authorities, Powys County Council.

There is every likelihood that the regulators will want to set an early example.

But the professionals know what is coming and will generally abide by the rules, because fines and prison can be unpleasant. They also have a robust defence against being accused of omitting or massaging key information: The seller misled or did not tell them.

This will leave buyers, aware perhaps for the first time that they have consumer rights when it comes to buying houses, left and even encouraged to pursue their grievance through a civil action against the seller.

In other words, individual sellers will be far more exposed than they were. For example, if a previous sale fell through because of a bad survey, the seller should now point that out to the next buyer.

Previously, the seller might have been tempted to stay silent and wait to see if the second buyer had an equally diligent surveyor.

Theoretically, the fact that a house is widely understood to be haunted might also be actionable. This may sound extreme. But the test is only what a "reasonable person" would expect to have been told.

Consumers as defined by the regulations include not only individuals buying directly from one of the above mentioned members of the industry, but also prospective clients, prospective or actual viewers, and potential buyers. So, anyone you show around could perhaps claim a grievance, that is how sweeping the regulations are in scope.

It will certainly no longer be enough to hide behind the buyer's perceived obligation to rely on their own searches, enquiries and inspections. Sellers and their advisors must not now "materially distort the economic behaviour of the average consumer".

Or put another way: sellers may be legally obliged to shoot themselves in the foot by disclosing matters that could prejudice or reduce the value of a sale.

If a "reasonable person" is likely to be able to say "you should have told me that" then the seller has got problems.

So, welcome to a new era as the country's property market hots up: caveat venditor, "let the seller beware".