In a property transaction, where :
- A seller makes a false representation to a buyer ;
- The seller knows that the representation is false, alternatively, he is reckless as to whether it is true or false. ;
- A seller intends that a buyer should act in reliance on it ; and
- A buyer does act in reliance on the representation and, in consequence, suffers loss.
then a seller may leave herself open to a claim from a buyer for misrepresentation.
In Greenridge Luton One Ltd v Kempton Investments Ltd the High Court gave a timely reminder that the courts are ready to decide against those who do not treat enquiries seriously, or who treat the exercise without due care.
Sellers must ensure that they give their advisors correct replies to enquiries and ensure these are kept up-to-date throughout the transaction, and be careful to inform their advisers of changes in circumstances that will affect the accuracy of replies to enquiries. Information that should be revealed must be revealed to avoid a potential claim for fraudulent misrepresentation.
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