Are some estate agents exposing conveyancers to the risk of facing a professional negligence claim?
At present, and despite the unfounded perception in certain quarters that Home Information Packs (HIP) are a waste of time, the good news is that most estate agents around the country are adhering too, and complying with the requirements of the Home Information Pack Regulations 2007.
A number of pro-active Trading Standards Departments have upon recent investigation found that overall estate agents are following the law, and that an acceptable percentage of the properties on the market have a home information pack attached. There was however a handful of agents who were found in breach and who were issued with an ‘on the spot’ fine, as well as a warning that they could face OFT investigation and ultimate closure.
The big question however, is whether this level of compliance can be maintained in the light of the political uncertainty hanging over the Home Information Pack. The Conservative Party headed by the Shadow Housing Minister, Grant Shapps, has vowed to make the HIP a number one target if his part is elected Government in May or June of next year. As to why this should be top of the Party’s shopping list given other far more important issues, such as Europe, health and the economy, to name a few, is beside the point, and is perhaps a topic for discussion on another occasion.
The real danger here is that some estate agents may in spring of 2010 decide in the light of the Conservative stance on HIPs, to turn a blind eye to marketing without a HIP believing that as the HIP is close to extinction no one will really care. Could we see the start of a widespread epidemic of non-compliance?
Some say Mr. Shapps unhealthy obsession with the removal of the HIP, may also have the effect of once again stalling the property market. This is a point that has not escaped the eye of one of the major players in the estate agency market, Rightmove. In a recent press release Rightmove was quick to point this out, arguing that the political uncertainty needs to be addressed, and for this to be done sooner rather than later.
As lawyers do we really care? As a lawyer with a conveyancing practice that has thrived on the back of the HIP, I must confess I do. However even though you may not have embraced with open arms the HIP, and the many marketing opportunities it presents, you could still find yourself and your practice affected by non – compliance. Your pockets could be hit with litigation and perhaps also a sharp increase in the already crippling indemnity insurance premium.
It is one thing for a small minority of estate agents to act irresponsibly by taking a risk at flouting the law, but is completely unacceptable for a Conveyancer, and indeed the partners of a law practice, to ignore the requirement upon a seller, and the implications of that requirement, under Section 5 of Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007(2) (EPC Regulations). Regulation 5 sets out a duty on the seller where a building is to be sold, to make available free of charge a valid energy performance certificate to any prospective buyer (a) at the earliest opportunity and (b) in any event before entering into a contract to sell the building…’ There is a further duty in Regulation 5(5) of the EPC Regulations on the seller to ensure that a valid certificate has been given free of charge to the person who ultimately becomes the buyer. Given the majority of all residential EPCs are delivered in a HIP, how many of you or your conveyancing colleagues actually ask the seller’s Conveyancer for the HIP to be produced, and to check to make sure the EPC is available? How may report to the buyer on the results of the EPC? More to the point how many conveyancers have exchanged contracts without first checking that their client has seen the EPC?
Failure to do so, and exchanging without inquiring about an EPC, and ensuring the buyer has seen it, could present grounds for a negligence action. Putting it very simply, and not getting embroiled in the ins and outs of the criteria for a successful professional negligence claim, how would a buyer’s solicitor stand if a client purchased a property without an EPC only to later to find that the energy efficiency rating was so low that if known before exchange this would have led to either a downward re-negotiation of the selling price, or even a decision to withdraw from the purchase?
I consider we should all be checking our filing cabinets just to make sure we have been undertaking this due diligence on behalf of our buyer clients. I just wonder how many potential claims exist and could exist if we do not begin to make sure the seller is complying with the requirements of the EPC Regulations. We should all be speaking to our ‘friendly’ estate agents to make sure they are not marketing without a HIP, and to ensure the HIP including the EPC is produced promptly on an offer being received so that is can checked and a report given on its results to the seller. If they are not then the buyer should be advised to report the failing of the seller and if engaged estate agent to Trading Standards Departments for investigation.
Incidentally, by doing this your client will also be helping to make a significant contribution to the worldwide effort to reduce the level of carbon emissions. A ‘win, win’ situation all round!
David Pett
Solicitor; estate agent; Home Information Packs; Lawyer; legal;Hip2go
Interesting post David. I wonder if this applies to the commercial market as well as the domestic.
ReplyDeleteIf it did then the sums of money involved would be much larger and as we all know compliance in the domestic sector shames that of the commercial.
I also take your point with regard the potential effect threatening the existence of the HIP will have on the market. Home owners will only hold off putting their property on the market if they think they can avoid a HIP by simply waiting until after the election.
Perhaps the very argument that Grant Schapps is touting that HIPs stifle the market could be the very thing that he unwittingly unleashes himself through his short sighted approach?
Interesting times ahead.
Hi
ReplyDeleteYes it does - it needs to be in place before the parties become legally committed.