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Property Section

PAS FAQ: Making a misleading omission

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What should you do if your client asks you not to mention a possible subsidence issue to their buyer? The Practice Advice Service reviews what you need to consider.

My client is selling his home and has instructed me not to inform the buyer’s solicitors about a subsidence issue with the property on which I advised a couple of years ago. I suspect that the subsidence issue was never rectified. As this is something for the buyer to find out by physical inspection or survey, is there anything I should do?

 The test is whether omitting to disclose material, or failing to provide it in a clear, intelligible and unambiguous manner, is likely to cause the average consumer to take a different transactional decision.

Because of the possibility of criminal sanctions, you should err on the side of caution

The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) have been amended to apply to immoveable property. The CPRs have an important impact on the duties of solicitors in conveyancing transactions in general and in dealings involving consumers, whether they are clients or third parties dealing with clients whom the solicitor is representing. The full effect of the CPRs remains untested and in some respects rather uncertain. It is for the courts to determine the extent and applicability of the CPRs. Because of the possibility of criminal sanctions against solicitors for breach of the CPRs, you should err on the side of caution.

The impact of the CPRs’ prohibition on ‘misleading omissions’ is that you must make full disclosure to private buyers / tenants (or the solicitor representing them) about defects and other materially adverse matters relating to the property known to you, having obtained the authority of your client to do so.

If you are aware of the existence of material information relating to the transaction in hand – even if you are not aware of the content – it may, in the circumstances, be your duty in a trader-consumer transaction to disclose what you know (with the client’s authority) to avoid any misleading omission. This goes further than the duty not to misrepresent, reduces the application of caveat emptor, and may impinge on your duty of confidentiality to your client.

The conflict between your duty of confidentiality and your obligations under the CPRs may be a good reason for you to consider refusing to act and terminate the retainer if he instructs you not to disclose material information.

For further information, please see the Law Society’s Practice Note on Consumer Protection Regulations in conveyancing and the Law Society’s Conveyancing Handbook (25th edition) which is available to purchase from the Law Society’s online bookshop.

While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.

Have you got a practice question? Call the Practice Advice Service on 020 7320 5675 or email practiceadvice@lawsociety.org.uk.

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