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tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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We are purchasing a house in which we are tenants, and are

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We are purchasing a house in which we are tenants, and are purchasing directly from the landlords. There is a problem at the property with Japanese Knotweed, which needed treating for removal before any mortgage could be obtained. We agreed with the landlord / sellers that we would pay for the cost of clearing the JK and they discounted the sale price to compensate for our removal costs as well as the risk of purchasing a property that has a JK problem. We have paid thousands to have the JK removed, and have obtained a mortgage offer as a result. Now they seem to be pulling out. We have provided them with an immense benefit in the form of removing a major problem from their property, and it was with the implicit agreement that they would in turn sell us the house at the agreed price. Can we sue for breach of contract?
Submitted: 3 years ago.
Category: Law
Expert:  tdlawyer replied 3 years ago.

tdlawyer :

Hi, thanks for your question. My name isXXXXX can help with this.

tdlawyer :

Yes, you should be able to recover the costs of sorting out the JK from their property.

tdlawyer :

I'm assuming they didn't sign a written contract for the sale of the property?

Customer:

They signed the contract but we have not exchanged.

tdlawyer :

OKay. Then you're likely to be left only with a claim for the payment to clear the JK.

tdlawyer :

This is on the basis of the laws relating to unjust enrichment.

tdlawyer :

There was a similar case that went to the highest court in the land, the Supreme Court, raising very similar issues, in which the Court held that damages of the reliance expenditure (i.e. the cost of removing the JK in reliance on their promise to contract with you) would be recoverable, even though no contract was signed to exchange.

tdlawyer :

That was a planning issue, about expenses incurred to obtain planning consent, but the principle is exactly the same.

Customer:

But what about an implied contract? They have a major benefit granted to them ... it's as though we have given them an interest free loan.

Customer:

But more than an interest free loan -- it is difficult to sell a house with JK and now it is gone.

tdlawyer :

Yes, that is another basis on which this could be run, but the result is the same: you should be able to recover the expenditure.

tdlawyer :

What you cannot do, is force them to sell the property to you.

Customer:

The value of their house has improved.

tdlawyer :

I do see you point, and the Court is likely to award you interest at 8% on the money you spent, which is more than the cost of most loans at the moment.

Customer:

And what about the unjust enrichment of increased property value? Could we sue for the difference on that? Say they discounted us 10% of the value of the property, could we sue for that?

Customer:

In other words, getting rid of the JK was worth 10% of the value of the property; could we sue for that?

Customer:

Also, why could we not force a sale?

tdlawyer :

The cases decidided in thie area though do not suggest you would recover for any improvement in the house value. Again, the case I mentioned, is similar, in that once planning was granted, the land was worth much more. However, the court said they only got restitutionary damages (i.e. the sums they spend to obtain the planning permission). There is another case, at the highest level, here: http://www.walkermorris.co.uk/business-insights/unjust-enrichment-supreme-court-enlightenment

tdlawyer :

You cannot force a sale because of s.1 of the Law of Property (Miscellaneous Provisions) Act 1989, which requires any contract for the sale of land to be in writing to have any legal effect. In other words, you must have agreed to have a written contract. Whilst you had a document prepared, you didn't exchange it. Hence, you don't coply with s.1 of the 1989 Act.

Customer:

But if there is an implied contract? There was an agreement, consideration was paid, they reneged, but keep the benefit?

tdlawyer :

Where property is concerned, statute overrides the common law position that you have stated.

Customer:

Ah.

Customer:

And if our agreement is written, but not in contractual form?

Customer:

By email, say?

tdlawyer :

There is another requirement in addition to it being in writing: it must contain all relevant terms of the agreement. In other words, your email would have to state the purchase price, address, all the covenents applicable, etc... in the real world, this doesn't happen, and this is why we have contracts drawn up by lawyers that contain just about evey term you can think of!

Customer:

Seems a very unfair outcome that they can do this to us.

tdlawyer :

It does - I agree. I'm not saying you coulnd't come up with some arguments to try and get more out of them, you possibly could, but what you want to run such speculative arguments at court - maybe not.

tdlawyer :

It's about how you put your case that is important now, and they pay you what you've lost.

Customer:

Worth a shot. Restitution does not seem to correct their unjust enrichment. Well, if it comes to it, I will find a clever lawyer and throw everything at them. Worth a try. Thanks for your help. Could you recommend some reading on the law of restitution in England and Wales?

tdlawyer :

The leading work on this, available at decent public libraries, is http://www.sweetandmaxwell.co.uk/Catalogue/ProductDetails.aspx?productid=333340&recordid=4543

tdlawyer :

It's expensive, so probably a library job.

tdlawyer :

But it's the best.

Customer:

Thanks.

Customer:

Very helpful. If a little disappointing.

tdlawyer :

Can I ask whether you're happy with my service this morning please?

Customer:

Yes. It was very helpful to know the general principles involved. Thank you. I will rate you "excellent."

tdlawyer :

You're a star - thank you! Have a greak weekend.

Customer:

You too!

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