How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Ash Your Own Question
Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
75100385
Type Your Property Law Question Here...
Ash is online now

It Concerns a number of lots I am considering bidding on at

Resolved Question:

It Concerns a number of lots I am considering bidding on at auction: several flats in a block. And it concerns the question of misrepresentation by a seller in respect of tenants/ AST rentals advertised in the property detail. What do they have a duty
to disclose? Detail: The auctioneer provides access to a legal pack for each property furnished by the vendors solicitor, which where tenanted the pack contains an AST. The catalogue refers the property as tenanted with rent of a certain amount, and the AST
states that deposit is to be held with a certain deposit agency but that is not proof it was done.. In this case - properties are being sold by a receiver acting on behalf of a mortgage company, rather than the owner - but is no doubt collecting rent from
the tenants since the mortgage company foreclosed.. Clearly whether the AST and tenant is a benefit or a liability at sale depends on whether the tenant is in good standing, ie there are no substantive rent arrears, and also because the correct handling of
a deposit is material in determining landlord rights when serving notices should there be problems, the existence of a properly treated deposit is essential. In this case, Special terms at auction demand the purchaser pays any rent arrears. The purchaser clearly
inherits the tenant!. There is a total imbalance of information, the purchaser can get no access to rent payment or deposit records except from the seller: SO TO THE QUESTION!! does the buyer have recourse under misrepresentation should it be discovered after
auction that there are either substantive rent arrears, or if there was a failure to deposit at the nominated agency, which the seller almost certainly does know as the collector of rent, or could check by looking at records/ contact with deposit agency??
The fact of whether the deposit is actually held is material to the value, and a professional selling the property knows this: so do they have a duty to disclose, bearing in mind their monopoly on state of knowledge? At an auction the exchange happens when
the hammer goes down: there are no opportunities to do due diligence after.
Submitted: 2 years ago.
Category: Property Law
Expert:  Ash replied 2 years ago.
Hello my name is ***** ***** I will help you.
Does the legal information say whether there is rent arrears or a deposit please?
Customer: replied 2 years ago.
No it does not. The special terms relating arrears are clearly "standard" - make no mention of the fact of arrears and are intended to cope with the normal situation of potential payments to "new landlord/owner " for periods or part periods around completion. no mention is made of status at present.
Expert:  Ash replied 2 years ago.
So they do not represent that the account is clear, or a deposit? In that case there is no misrepresentation. Misrepresentation is reliance on a statement made which induces you into the contract. If there is no statement and in this case there has not been, then sadly there is no misrepresentation.
If they had said there were no rent arrears and there were, that is a different matter. But in this case it is not happened like that - therefore the onus is on the purchaser to make any enquries they see fit to satisfy themselves as to the correct position.
I am sorry if this is not necessarily the answer you want but I have a duty to be honest.
Can I clarify anything for you about this today please
Alex
Customer: replied 2 years ago.
But that is the problem Alex. Monopoly of information.
I cannot get access to the rent records as a third party, or the deposit record. But as a buyer their statement of tenant in place rent "so much per annum" is clearly enticing and misleading if that rent is not actually being paid, ditto an AST that says a deposit is present contained in the legal pack, to my mind misrepresents if they know or could easily verify such a deposit does not exist in fact, but is stated in the vendors provided information as part of AST contract..
Is the monopoly of information not important, and therefore does selective partial disclosure constitute misrepresentation if they know there are adverse material facts concerning statements they do make?
Expert:  Ash replied 2 years ago.
If they know it is adverse and fail to mention it, then there is a claim.
Does that clarify?
Alex
Customer: replied 2 years ago.
Surely any professional seller should be considered to know that rent arrears, and missing deposits are adverse?In short, if I bid, win, discover no deposit and 6 months arrears do I have a potential claim? and is that 5% likely to succeed , 95% - or a complete lottery? Are there any precedents in respect of undeclared rent arrears. PS happy to pay more to get the right answer!
Expert:  Ash replied 2 years ago.
It really depends on the Judge you get. It would be unfair to offer a % without seeing all the evidence. You can find case law here:
http://www.bailii.org/
Doing legal research for you though is beyond the remit of this question and answer site!
Can I clarify anything else for you.
Alex
Ash and other Property Law Specialists are ready to help you
Customer: replied 2 years ago.
There is no way to extend the service for you look at precedents for me?
I could send you a (sample) AST, a sample set of special conditions, indeed the auction catalogue: but in the end none of those are really relevant, it comes back to the point of law and precedents: Are they allowed to make a misleading partial disclosure (ie flat comes with benefit of tenant and rent, AST says there is a deposit) - without telling me what they actually know hat the rent is not being paid and there is no deposit!Anyway...if you cannot go further, it will have to be end of conversation. Dont want to waste anyones time.