During conveyancing transactions sellers are asked all sorts of questions about the property. These include queries ranging from boundary issues, septic tanks and planning matters to disputes with neighbours and flood risks. As part of the process, the buyer asks the seller to complete Form TA6, a lengthy document containing a wide range of questions about the property. The seller is under no obligation to answer each question on the form. However if they do choose to respond, the buyer is entitled to rely on the answer. A failure to respond to an enquiry on whether the property has ever flooded, for example, would probably raise a bright red flag for most buyers and could jeopardise the sale. As such, it is recommended that the form is completed in full.
The case discussed in this article deals with the situation where a seller responds to questions about the condition of the property in an untruthful way. As we will see, in Patarkatsishivili v Woodward Fisher even though the sale had gone through, and the buyers were already in possession of the property, they were able to rescind (cancel) the contract for sale and return the property to the seller.
The case received a huge amount of publicity – partly down to the eye watering value of the property (£32.5million). However, the legal issues discussed are important for anyone involved in buying or selling property, regardless of price. Notably, some commentators have argued that the decision undermines the age old concept of ‘buyer beware’ in property transactions. In fact, a close reading of the case shows the Judge went to great lengths to explain that his decision in no way affected that important principle.
Background
The details of the case were extensively covered in the national media. In summary, the background to the case was as follows.
Iya Patarkatsishvili, a Georgian heiress, bought a sprawling mansion in London’s Notting Hill for £32.5 million in May 2019. After she and her family moved in, they almost immediately noticed moths in the home, and engaged several pest control companies to deal with the problem. By October 2019 the situation had not improved, and an inspector opened up part of a ceiling and discovered that the wool insulation used at the property was completely infested with moths. The family then moved out to enable specialists to carry out control work. By this stage, the infestation had been identified as an ‘extremely severe situation’ that had ‘been a problem over years rather than months.
The remedial work cost £270,000, and despite moving back in, Ms Patarkatsishvili remained concerned about the state of the property and began to consider who she may be able to take legal action against to compensate her. She subsequently discovered that the seller had used specialist treatment companies to carry out moth treatment work in 2018. The reports of this treatment identified the source of the problem as an infestation in the insulation of the house. Ms Patarkatsishvili then wrote to the seller alleging that he had fraudulently misrepresented the true condition of the property during the conveyancing process. She sought rescission of the contract and return of the purchase price, as well as damages for the expenses she had incurred because of the infestation.
Decision
The judgment in the case is lengthy – it runs to over 70 pages. But in essence, the case boiled down to the question of whether the seller had given untruthful answers to the questions asked by the buyer on Form TA6. The relevant questions were:
- Has the property ever been affected by woodworm, dry rot or other timber infestation or decay; defects in drainage, water pipes, gas pipes or electrical wiring; damp; Subsidence, landslip or heave; any structural building or drainage defect; vermin infestation; asbestos.
- Please supply a copy of any report concerning any matter referred to in 1 above or otherwise concerning the fabric of the property.
- Is the seller aware of any defects in the property which are not apparent on inspection (due to the presence of furniture, carpets, cupboards etc?).
The seller replied to these questions by stating that he was unaware of any such defects. He qualified this by saying that he had not had the house surveyed for such defects and that it was up to the buyers to satisfy themselves as to the condition of the property. No reference was made to any of the treatment he had carried out or to the reports into the existence of moths that he had received.
A great deal of legal argument took place as to whether moths came under the definition of vermin, the court even consulted the Cambridge English Dictionary on this point. Ultimately, the Judge had no difficulty finding that the defendant had responded falsely to the pre contract enquiries. His reasons were:
- Insects such as moths can legally be regarded as vermin and the question as to whether there had been an infestation had not even been seriously challenged by the seller
- The seller was aware of reports that his wife had commissioned pest control reports which referred to the fact that moths were present in the property insulation. For the seller to respond to the enquiries saying there were no such reports was false
- In relation to whether there were any defects in the property that were not visible on inspection (‘latent defects’) the Judge said that the presence of moths in the property insulation which the seller knew about was a latent defect. For the seller not to mention it rendered his response to this enquiry false
In what was a resounding victory for the buyer, the Judge ordered recission of the contract and repayment of the purchase price as well as additional damages.
Comment
Truthful completion of the various Property Information Forms is integral to the conveyancing process. Whilst the forms cover a lot of ground, sellers shouldn’t feel overwhelmed. The Law Society explains that sellers aren’t expected to have expert knowledge of legal or technical matters, or matters that occurred prior to their ownership of the property. At the same time, it is very important that the answers are accurate. If you give incorrect or incomplete information to the buyer, they may be able to make a claim for compensation or refuse to complete the purchase. Per the case discussed, a seller could even force you to take back the property long after the sale has completed. Finally, it should be emphasised that this case does not change what sellers are obliged to disclose. It does not dilute the buyer beware principle. What the case does confirm is that if a seller chooses to respond to pre contract enquiries then they must do so honestly. From any perspective that does not appear to be an unduly onerous responsibility.
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