Conveyancing Solicitors are sometimes asked about the effect of misdescriptions contained in property sale brochures, advertisements, or photos and videos seen on a web-site.
The Property Misdescriptions Act 1991 (PMA) makes it a criminal offence to make a misleading statement about various items relating to land and buildings offered for sale in the course of an estate agency business. The items are set out in full in a supplementary Order, and include not only the description of the physical property itself, but also statements relating to the title, the length and details of any lease, and other legal matters such as rights of way and wayleaves.
The PMA applies to statements made by an estate agency or property development in the course of their business. A Conveyancing Solicitor or other provider of conveyancing services is not subject to the PMA (except when providing an estate agency service. ) This means that if an estate agent passes on incorrect information to a sellers Conveyancing Solicitor who passes it on to the buyers, the agent not the Conveyancing Solicitor would be liable under the Act.
The Property Information Questionnaire (PIQ) as referred to in the heading of this article was a requirement for a Home Information Pack (HIP), but these have now been abolished. It was anticipated that many estate agents would complete the PIQ themselves as part of the preparation of a HIP, rather than asking sellers to do this themselves. However it is now more likely that vendors will themselves complete a property information form supplied by their Conveyancing Solicitors, such as the forms which now form part of the Law Society's 'TransAction' scheme.
Misdescriptions in sales details
Property buyers are more likely to be concerned with misleading statements contained in sales particulars and other information issued by agents or by developers selling new homes. The PMA is clearly aimed at them. In terms of liability for an offence, the person by whom the agency or property development business is carried on can be liable (this can be an individual, a body corporate, an unincorporated body or a partnership). Also Officers of a corporate body and employees of the persons carrying on the business can be liable.
A false statement is one which is false to be material (i.e. not trivial). The wording of the Trade Descriptions Act 1968 in terms of defining “material degree “. A material degree will vary with the circumstances and an objectivity test will apply. Some trading standard guidance suggests as an example that, what may be a material discrepancy between quoted and actual room sizes may be one of no consequence if it relates to the dimensions of a garden. In considering whether an offence had been committed a court would be likely to base its view on what a normal prospective purchaser would consider to be false to a material degree having regard to generally accepted standards.
Does a misdescription entitle the buyer to rescind a contract?
Anyone who feels that a misleading statement was made during the course of buying a property is advised in the first instance to take the matter up with their Conveyancing Solicitor as soon as possible. It is important to note that a possible offence under the PMA does not itself entitle a buyer to withdraw if contracts have already been exchanged, but if the misdescription is serious then advice from a Property Lawyer will be required as to the contractual position.
Pictures and videos can be misleading
A statement can be made orally or in writing - or by pictures and scale models. This means that pictures and videos available on a web-site would be covered by the PMA.
The extent to which a statement is false must be material but it is possible for a statement to be misleading without actually being false if a reasonable person would draw a false inference from it. Equally a statement may be misleading if it is incomplete. The Act does not create a duty to volunteer information but it imposes an obligation to ensure that any details which are given are accurate.
One of the key points of the PMA is that a misleading statement is one from which a reasonable individual would be likely to make a false inference, even though the statement is not itself false. The offence is one of strict liability; in other words there is no need to prove intention if it can be shown that the relevant statement was false or misleading.
There is a defence to show that all reasonable steps have been taken and all due diligence exercised to avoid committing the offence. There is a large amount of case law which has built up around this statutory defence.
Are disclaimers valid?
House sales details and other advertising material usually include some form of disclaimer. The PMA does not prohibit the use of disclaimers. However, the concept of disclaimers has been developed by the courts in relation to the Trade Descriptions Act 1968 and the principles governing their effectiveness for the purposes of that Act have been established by the courts. The general consensus amongst the legal profession is that the same principles will be applied in determining the effectiveness of disclaimers under the PMA.
Disclaimers may be reasonable where an agent considers that an unqualified statement might be misleading. An example might be a statement that a house had full central heating, when the agent knew that the system had not been used for some years and therefore had reason to believe that it might not be in working order. In such circumstances it might be considered prudent - and helpful to prospective purchasers - to state that the condition of the system was unknown.
The PMA is enforced by trading standards officers, who have powers to require the production of books, documents or hard copy of information held on computers and other enforcement powers. Check on council web-sites for contact details,
Getting advice from your Conveyancing Solicitor
If a purchase has already been completed before the misdescription is discovered then you should still contact your Conveyancing Solicitors or other Property Lawyer immediately for further advice. If there has been a possible offence under the PMA then trading standards will have to be contacted, but further advice will need to be obtained about making any civil action.
Government review of the Act
The Government is currently reviewing the need for the PMA in view of the introduction of the Consumer Protection from Unfair Trading Regulations in 2008. A consultation paper issued by the Department for Business Innovation and Skills in early 2011 indicated that the thinking was that consumers are protected by two broadly equivalent pieces of legislation. This duplication may be unnecessary and as the PMA did not provide any additional protection it could be repealed without affecting consumers.