Scrapping the ‘Buyer Beware' rule might make conveyancing quicker and cheaper
When you're buying or selling a home the one thing which always seems to delay completion is all those searches which buyer's solicitors insist upon making and the extensive information they ask for from sellers.
The main reason for them doing this is the existence of the ‘buyer beware' rule (or ‘caveat emptor' to give it its old Latin name) - which basically means is that a buyer must look out for him- or her-self. Under the present law a seller is under no duty to provide any information about the property being sold or to give any warranty or guarantee as to its condition.
Perhaps conveyancing could be speeded up and made cheaper if this legal rule was abolished. If sellers were made liable for any physical or legal defects in the property which were discovered after completion then buyers wouldn't need to have searches or surveys made.
‘Buyer beware' is irrelevant when we buy goods - so why retain it for homes?
‘Caveat emptor' is an ancient rule of law which actually applies to transactions of all types, not just property purchases. But for most things that we buy today this rule has long ceased to have any effect because a raft of legislation gives consumers protection.
We are so used to the idea that if we buy something that is faulty, or even if we just change our minds, we can take it back and get it exchanged or get our money back.
What does this mean for home buyers in 2016?
It can come as a bit of a surprise to property buyers to find that much of this consumer legislation does not help them. This is largely because most property purchases are arranged with private sellers.
Admittedly sellers and agents can be liable for misrepresentation - if they make a false statement which the buyer relies on they could be sued. But this is often difficult to prove, and bringing a court case after the purchase has completed can be an expensive and time-consuming exercise.
So if sellers are not obliged to give any information or guarantees then buyers (or more usually their solicitors) will have to make all those searches and enquiries, and sensible buyers will also want a proper survey carried out.
In this way a buyer will not get any nasty surprises after completing the purchase, such as finding that property lies in the path of a new by-pass or that the council is taking enforcement action because there are no consents for the substantial extension the seller had built - or perhaps the existence of some severe structural defect.
The blame for delays in getting information is often put on solicitors, but they rarely cause the delay - in fact it is usually the local authorities and other information providers who are slow to respond. And quite often sellers themselves are at fault for failing to reply to enquiries promptly.
The problem is exacerbated in the case of leasehold properties (typically flats) where sellers will be required to obtain substantial information from freeholders or managing agents - who are under no obligation to respond quickly.
Make sellers liable for property defects and conveyancing could be much quicker
So would it help to bring about quicker conveyancing if the caveat emptor rule was abolished for residential property sales? Sellers could be made liable if any defects or adverse information comes to light after completion - even if the seller had not given any information to the buyer and perhaps even if the seller did not know about the defect.
If that were the case buyers would be able to go ahead much quicker since there would be no need to bother about searches and surveys - and they would also save the often substantial fees involved.
This is certainly an attractive idea on the face of it - at least to buyers.
But it would clearly be less attractive to sellers, especially if they thought they could be sued over something that they didn't even know about - perhaps woodworm in a remote corner of the loft or a windfarm some distance away which hadn't received planning permission when the property was sold.
Of course sellers could protect themselves to some extent by getting their solicitors to carry out the usual searches and having a HomeBuyer survey done before putting the property on the market, and then making this information available to would-be buyers.
That would be rather like going back to the unpopular Home Information Packs (HIPs) which were introduced by the Labour government in 2007 and scrapped by the Conservatives in 2010.
Is it better to find out about problems before buying a home, or afterwards?
While making sellers legally liable might be initially attractive to buyers there are problems with this. You wouldn't really be able to return the property and ask for a refund, and trying to sue a seller after you bought the property could be difficult. What would you do if the seller has gone to live abroad, or can't be traced?
Seeking a remedy from a seller might involve taking them to court - often a complicated, expensive and stressful exercise, especially if the other person disputes liability. And even if successful a court would probably only award damages, which would not necessarily be adequate compensation - and even then you might not get payment!
All in all it seems that while abolishing the caveat emptor rule could initially speed up conveyancing it might give rise to more problems than it would solve. Buyers generally want to know if there are any problems before going ahead with a purchase rather than finding out about them afterwards.
So it would seem better to concentrate on ways to get the pre-contract conveyancing stages completed quicker rather than making substantial and probably controversial changes to the law.
There were certainly attractions to the HIPs scheme and it is perhaps a pity that they became a matter of party-politics and were not given a longer trial. They were introduced at a time when the housing market had nose-dived, which was unfortunate. (Similar Home Reports have however been retained in Scotland.)
Getting searches done quicker is a better solution to faster conveyancing
Waiting for replies to local authority searches and similar searches with other public bodies is one of the most frequent causes of delay in conveyancing. Recognising this we have teamed up with Searches UK, a leading provider of property searches to UK property professionals.
When buyers confirm they want to go ahead Hiomeward Legal can order a full search pack straight away ensure that there is as little delay as possible in getting the results.
We can also arrange professional property surveys, something which all property buyers should seriously consider. It is false economy to rely on a mortgage ‘survey' which is little more than a brief inspection, if that.
Sellers can also help themselves, but rarely do, by instructing a solicitor when putting the property on the market rather than waiting until a buyer is found. Even though HIPs have been abolished it is still useful if sellers complete the usual form of pre-contract enquiries early on so that they are ready to send out when a buyer is found.
It is also useful if a solicitor has the opportunity to check the seller's title beforehand, and if necessary sort out any problems before they cause delay.
Get in touch today on to see how we can help find you a good quality conveyancing solicitor to help with your property sale or purchase.