As you may know, last week saw the repeal of the Property Misdescriptions Act 1991 and also some simultaneous amendments to the Estate Agents Act 1979 (to reflect the former).
This is part of a further reinforcement of the promotion to primary legislation for The Consumer Protection against Unfair Trading Regulations, or CPRs for short.
This new act first came into effect in 2008, but has now taken centre stage in setting standards for the conduct of estate agents. It also reinforces consumer rights, and brings sector practices more into line with other commercial areas.
What you NEED to know:
- It is the responsibility of the agent and the vendor / landlord to declare any facts that might affect a client’s interest in a property or service – known as ‘material’ information. These must be established and shared even if the client still goes on to complete the transaction.
- Lack of knowledge or non-disclosure by the vendor is no longer a defence in law. As professionals, you are expected to know or have established any relevant facts and used good judgement in declaring these to the client(s).
- The interpretation of what is ‘material’ remains the subject of some discussion within the industry, the trade press, and also the legal establishment (there are a few hundred cases pending that will start to establish clearer case law), but this cannot be a reason for us to delay adopting good practices.
As leading professionals, we would like to strongly suggest the following approach:
1) Ensure that all your staff / team have been properly briefed on the importance, extent and potential impact of CPRs, with written handouts or at least links to relevant informational portals such as the one below.
2) As soon as possible, adopt a fact find document or PIQ for all new clients across your office(s), to help ensure that you are concisely and accurately capturing the relevant data.
3) Keep accurate and timely written records of any conversations and disclosures to your clients, especially if this involves matters which could potentially be viewed as ‘material’.
4) Wherever there is doubt or potential inconsistency, you must investigate the matter yourselves and not assume that the balance of probability will protect you. An example might be uncertainty over freehold vs leasehold, rights of way, or planning permission for alterations to the dwelling.
5) Similarly, you are liable to follow up on any information that comes to light after the initial engagement with the client, but which could be viewed as material (such as queries over communal parking areas).
As part of this process, it is worth emphasising to the vendor or landlord that they are equally liable for any shortfalls in disclosure, which could be subject to financial or even criminal penalties. This could perhaps be presented as ‘looking after their interests’, which any professional would be expected / want to undertake.