The Changing Guidance for Conveyancers and its Impact

Published by GlobalX

Tuesday Mar 03 2020 Industry News

The home buying and selling process is based on foundations of trust. Trust that the buyer has the necessary funds to afford the transaction and trust that the vendors have revealed everything they know that could affect the transaction and prevent it from completing.

A number of recent legal cases have highlighted the importance of disclosing potential faults with the property or issues which could impact a sale, especially if you are the seller. However, a number of recent amendments to guidance notes has also ushered some of the responsibility onto the buyer.

In an age of accountability, what does the guidance now say and what implications will this have on the home buying and selling process?

Japanese Knotweed Becomes Buyer Concern

In the past, the Law Society’s compulsory TA6 Property Information Form required the vendor to provide an exhaustive list of property issues, placing accountability solely at the seller’s door.

In recent weeks, updated guidance has redistributed the level of accountability and increased the nuanced detail of information each property transaction should accumulate.

The updates changed the levels of information surrounding Japanese Knotweed, flood risk, radon and septic tanks.

Previous iterations (3 rd edn, question 7.8) of the form required definitive responses of ‘yes’ or ‘no’ when asked if the property is affected by knotweed.

Such certainty recorded in these answers encouraged increases in ‘misrepresentation claims’ as disgruntled buyers became angered after finding traces of the invasive plant despite the previous owner stating that the property had ‘no’ infestation.

New guidance switches the accountability as the 4 th edition of the form allows the seller to input ‘not known’ if they are not certain of the plant’s rhizome presence both over ground, underground and within three metres of the property’s boundary.

If properly informed by stakeholders in the home buying and selling process, it now means that most sellers will state ‘not known’, transferring the risk to the buyer.

It could also significantly reduce the protections a buyer has during and immediately after a completed transaction. In the case of Davies v Connells Survey and Valuation Limited, Birmingham CJC, Dec 2018, the claimant sued her surveyor for failing to spot the signs of the invasive plant.

The claim suggested the surveyor failed to identify Japanese Knotweed growing on the property the claimant purchased and failed to inspect the adjoining property which was said to have infected her own property.

On both counts, the surveyor was not found to be liable as the surveyor could not see any visible signs of the plant during the site visit as the plant started to bloom after the claimant moved into the property.

Secondly, the court found that a home survey looking at adjourning properties sat outside the scope of duty. For the guidance this means that buyers could be forced to buy property without any concrete certainty regarding the presence of Japanese knotweed.

Whilst the buyer is faced with increased accountability for spotting the signs of the invasive plant, the updated guidance could also have implications for sellers.

In terms of seller obligations, they must put ‘yes’ if they are aware of any treatment plan in place and provide all documentation on the treatment. Given the lending sector’s concerns over the plant and the additional rewording of ‘eradication’ of the plant to ‘managing its regrowth’, this information could result in the diminution in future property price.

First Flood Guidance In Four Years

Given the plethora of serious floods hitting the UK through 2019 and the start of 2020, it is not particularly surprising that the TA6 Property Information Form now requires buyers to offer historical information regarding flooding to the property and surrounding areas.

The Commercial Property Standard Enquiries Form (CPSE 1) also requires sellers of commercial property to provide details of any flooding they are aware of in addition to any difficulties in obtaining insurance at normal rates.

Following the persistent and intense floods plaguing the UK in recent months, the Law Society updated its practice note on flood risk for the first time in four years.

The note suggested that stakeholders should offer stronger guidance on the importance of completing flood searches and taking out relevant insurance to help buyers prepare for and mitigate the risks.

When acting on behalf of a buyer, tenant or lender, conveyancers are advised to consider whether to mention flood risks ‘in all cases’, regardless of the historic danger.

This advice should be acted upon considering how commonplace flood risk housing has become.

Government data revealed that one in ten homes in England, built since 2013, are located on land at the highest risk of flooding. This means that over 84,000 at-risk homes have been built in the past decade in England alone.

The erratic rainfall in September last year resulted in over 2,400 properties damaged by flooding and 22,000 at the mercy of flood defences. Similarly, during February 2020 storm Dennis ravaged UK buildings resulting in over 1,400 homes and businesses being affected.

In an age of accountability, it is vital to offer your client appropriate guidance which will also help to protect them from the potential hidden dangers in a transaction.

GlobalX’s extensive flood and environmental reports for both residential and commercial transactions will help to illuminate any issues and provide the buyer with the information they need.

Our quick turnaround times, competitive prices and dedicated helpdesk will also ensure that this early stage of the home buying and selling process is not dampened by further delays.