The new 'Property Information Questionnaire' or 'PIQ' could leave vendors financially exposed

If you order a ‘Home Information Pack’ or ‘HIP’ on or after 6th April 2009 you will need to complete a 'Property Information Questionnaire’ or ‘PIQ’ as part of the HIP.

It is now over a year since Home Information Packs (HIPs) were introduced as an integral part of the process of selling property in the UK.

Within a HIP you can expect to find a number of compulsory legal documents and searches. These include an 'Index', an 'Energy Performance Certificate' or 'EPC' (which gives a “fridge type” efficiency rating for the property and makes suggestions for improvements), a 'Sale Statement', a list of Standard Searches, 'Evidence of Title' and, where appropriate, additional information for leasehold sales.

The production of a HIP is mandatory and it must be assembled by a seller prior to marketing a residential property.

The average cost of a Home Information Pack is approximately £250.

As of 6 April 2009 the Home Information Pack will be required to include an additional compulsory document called a ‘Property Information Questionnaire’ or ‘PIQ’.

The PIQ is designed to be completed by a seller providing useful information about the property and it is intended to help inform prospective buyers' decisions to view or make an offer on the property.

The PIQ is six pages long, contains a number of detailed enquiries and is ostensibly similar in nature to the current ‘authorised’ (read optional) and almost never included ‘Home Use Form’ or HUF. The reality however is that inaccurately completed, the PIQ could leave the prospective vendor with significant exposure, possibly to the tune of thousands of pounds.

Simon Seaton of Fridaysmove explains that “In the past, there was next to no chance of the seller or buyer having any financial exposure to each other until contracts were exchanged or the purchase completed.

By way of example he adds that “if the seller made a misrepresentation via the agent that the property had permission for a conservatory and it transpired that there was in fact no planning permission leading the buyer to subsequently withdraw, there was very little chance of the buyer being able to recover any financial losses that resulted from attempting to buy on the initial representation.

The PIQ puts a very different spin on this scenario. The fact that it will soon be included in HIP before marketing will mean that a vendor will be making written representations that a buyer can claim to have relied upon prior to making an offer on the property.

The PIQ is a legally binding document. For the first time, a buyer will be able to withdraw from a transaction and sue the seller for providing inaccurate information within the PIQ irrespective of whether the information was provided fraudulently, negligently or innocently. ”

The financial exposure to the seller could be significant. Although not an exhaustive list, a buyer could potentially incur (and therefore recover) the following financial losses:

1. Legal fees for an abortive conveyancing transaction possibly totalling £750 + VAT.

2. The legal costs for recovering financial losses estimated at £550 plus VAT.

3. Survey costs, typically around £550 plus VAT.

4. Mortgage arrangement fee, usually around £250 plus VAT.

It is highly unlikely that the Government actually envisaged this flipside when introducing the requirement for a completed PIQ within the HIP.

On the face of it, the introduction of the PIQ seems like a good idea. However, the problem is that changing a small element of a complex food chain can have significant knock-on implications elsewhere.

Sellers would be well advised to instruct a Home Information Pack provider or better still a lawyer offering a detailed understanding of how to complete the forms without leaving themselves legally exposed. It is probable the cost of a HIP will increase, potentially protract the average time of pack compilation and offer more ammunition to those still advocating the abolition of Home Information Packs.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.