What Is The “Let The Buyer Beware Principle” And How Does It Affect My Mortgage?
In his latest Timms blog, Trainee Solicitor Michael Radze-Constable discusses “What Is The “Let The Buyer Beware Principle” And How Does It Affect My Mortgage?”…
In 1603, a man purchased a £100 bezoar stone that was supposed to have healing properties. He realized later that the stone did not work as it was supposed to (it was simply a stone) and sued the seller, asking for his money back. The subsequent case of Chandelor v Lopus ruled that “the bare affirmation that it was a bezoar stone, without warranting it to be so, is no cause of action.” In plain English, it is the buyer’s responsibility to know what he is getting into when he parts with his money. This 17th century case has gone on to shape consumer law, and in particular, property transactions.
The seller of a property is therefore only under a duty to disclose matters that they actually know about, or matters the reasonable seller is supposed to know if acting diligently. Such matters fall under the term of “latent defects in title”.
What Matters Fall Under ““Latent Defects In Title”.
- A right of way, which would not be apparent from an inspection of the property
- A right of drainage
- A right for underground pipes to cross land
- A restrictive covenant
- A tenancy
- Notices of rent review served on the prospective seller of leasehold property
- A local land charge
However, other than this, the onus is on the buyer to find out everything it wants or needs to know about the property before buying it or becoming committed to buy it. Consequently, conveyancers carry out lots of work behind the scenes to ensure that their purchasing clients are buying property with a title that is “good and marketable”. After all, buying a house is likely to cost you far more than a bezoar stone! To ensure the title is good and marketable, a lender will require that “the title to the property must be free of any restrictions, covenants, easements, charges or encumbrances.” But what does that mean?
What Is A Good And Marketable Title?
Essentially, a good and marketable title does not have to be a perfect title. However, the buyer should be satisfied that the seller is in a position to pass the title of the property to the buyer without the possibility of a dispute or litigation over matters such as boundaries, mines and minerals underneath the house itself, or which neighbour is responsible for maintaining a fence or painting a wall if there is a “covenant” which requires this. Otherwise, it may be necessary to take out indemnity insurance, and if you are taking out a mortgage, your lender will most likely require this unless the defect can be remedied prior to completion, which would be preferable to indemnity insurance.
In summary, a 17th century case concerning a bezoar stone has shaped how your 21st century property transaction is processed. While the seller of a property has a limited duty of disclosure, it is crucial for conveyancers to ensure that your property has no hidden elements or nasty surprises prior to your move.
How Can Timms Help?
If you have any queries regarding this blog, or any other Conveyancing matters, please don’t hesitate to contact me at m.radze-constable@timms-law.com or on 01283 561531. Alternatively, you can visit the Conveyancing page of our website here.
August 2022