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PIQs could expose agents to damage claims, say lawyers

01 April 2009
Written by Rosalind Renshaw

A practice specialising in property law has warned that the addition of the new Property Information Questionnaire to HIPs next week will create a legal quagmire.

Fridays Property Lawyers claim that PIQs have legal ramifications even before a contract has been agreed.

If a prospective buyer has run up costs on the basis of inaccurate information, he or she might launch a civil action to claim for costs.

Director Simon Seaton said: “The PIQ is going to be a minefield for vendors and agents alike. It asks the vendor difficult, and often subjective, questions, the answers to which are then actionable if a purchaser considers them to be misleading.

“If the agent has provided any advice at all on filling in the PIQ, the agent can be joined in the action.

“The really big departure is that a ‘purchaser’ does not need to have purchased before taking action – he can sue without having committed even a deposit.”

Seaton said that effectively the PIQ enables, in certain circumstances, legal action to be taken before any contract is signed, as the form is intended to give the prospective buyer enough information to take preliminary steps towards purchase of the property.

Such steps would include engaging a conveyancing lawyer, arranging finance and obtaining a valuation.

Seaton advised agents to refuse to get involved in advising on the PIQ. He said: “If you thought conveyancing lawyers were a necessary evil, they are angels compared to litigators.”

But, he warned, a refusal to help could alienate clients while also significantly slowing the process of completing a HIP. Agents are not liable if the form has been solely completed by the seller. Any advice on the PIQ provided by agents could leave the agency exposed to civil liability as outlined above, as well as liability under the Property Misdescriptions Act 1991.

Fridays is also calling for sellers facing possible repossession to be allowed to market their properties from day one – despite next week’s change in the law.

Seaton said: “Most sellers facing repossession are not able to afford the outlay for the HIP but, on the other hand, they need to market their property as quickly as possible to stave off repossession.

“The impact of the removal of first day marketing from April 6 is yet another body blow for them.”

He urged the Government to consider making an exception to first day marketing where the seller is under threat of repossession proceedings by their lender, by way of a slight amendment to the regulations.

He added: “With at least two million people coming off cheaper fixed-term deals this year and with many likely to struggle to find another mortgage, it is essential that ministers offer as much relief as possible to those most vulnerable. Such an initiative wouldn’t cost the taxpayer a penny.”

www.fridaysmove.com

Comments

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    There is an inetersting piece of commentary on this very subject in today's Telegraph: www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/5094655/House-sellers-could-be-sued-under-new-Home-Information-Pack-rules-warns-law-firm.html

    • 03 April 2009 10:38 AM
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    I find it hard to comprehend why you guys are making such a fuss over nothing. I could understand the vendor getting their knickers in a twist as it's just another form to fill in for no good reason but you guys don't have to do any thing. We will handle it for you.

    • 02 April 2009 12:48 PM
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    No doubt m'learned friends will have a field day with this but I think they'll struggle to win a case:

    1. PIQ is not required to be signed by the person completing it, so there's no proving who completed the form. Who would a civil action be directed at?

    2. The PIQ states in a note to buyers: 'The information contained in this document should have been completed truthfully...'. Note the word 'should'. Not 'is' or 'must'.

    3. The disclaimer goes on to say that the information in the PIQ 'does not replace official documents or legal information and you should confirm any information with your conveyancer'

    I rest my case M'Lud.

    • 01 April 2009 18:00 PM
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    Just read Nicks comment..... Use Legal Brokers Ltd... We are great.... Hurrah.

    • 01 April 2009 17:53 PM
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    Dear Patricia,

    Apologies if this sounds blunt.

    The HIP is designed to speed up the conveyancing process when a buyer is found...

    When the Tories get in they're committed to keeping the EPC so there'll always be an upfront cost & hassle for buyers to hurdle....

    Hence if you subsequently realise the EPC will always be in place the grudge is then the amount of cost spent smoothing through the Conveyancing Solicitors job by having the searches etc already prepared.

    If you agree the old system was flawed, took too long & too many transactions fell through as a result... something had to be done.

    I'll admit the Government are their own worst enemy (don't get me started on Local Authorities & search costs)but to move forward things had & have to change.

    All the best. Jon

    • 01 April 2009 17:51 PM
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    I have said it before and I will say it again. Order your Hip from Pali and we will take care of the PIQ. You will have no involvement and therefore no risk. A simple email or log on to HipView to place your orders. Let us take the hassle out of your office and put it in ours. It’s what we do.
    Oh and by the way all our searches will be Hip compliant post April 6th as they are now.

    • 01 April 2009 17:28 PM
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    Make no mistake about the three card trick that is - HIP regulation. Homeowners are sitting targets. Everyone will at some time in their life sell their home - and guess what, Gordon is at the ready and has devised the HIP purely to create jobs out of nothing for several thousand people at the expense of the homeowner, not to mention the tax revenue he will take from it. Homeowners have absolutely no choice but to get a HIP before they sell their property. Currently the price is around £300 but of course it will be £1000 this time next year and higher the year after. For what, a frivolous attempt at trying to convince the public that they actually need this. They don't, never did and never will. How on earth were we dragged into this without our approval - the Government did not want to listen to the NAEA about it and went on ahead regardless of opinion. He has driven this country to the brink of ruin with his little wheezes and cunning tax rises. Lets
    hope David Cameron will keep his pledge of abolishing this complete waste of time and money and not bottle it to the cries from HIP providers of being stuck on the unemployed scrap heap if they do abolish it. We have been misled and missold this, you know it, we know it and they know it, so they should be prepared for the consequences.

    • 01 April 2009 15:10 PM
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    This is clearly "thinly disguised" scaremongering on the part of Fridays. Matters remain "Subject To Contract" at the initial stages of a transaction until an exchange of contracts is effected, and I am sure the Courts would deal with any such action brought by a potential purchaser quite robustly. In any event, surely a potential purchaser is going to be wanting to buy a property, rather than entering into potentially costly litigation?

    • 01 April 2009 11:48 AM
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    Mike - Scaremongering maybe but there is nevertheless a genuine risk to both agent and vendor. The HIP is a presented as a statutory document and therefore there is a reasonable assumption from the potential buyer that the information contained therein is accurate and can be relied on. This is precisely the argument for documents such as the PIQ not being included unless they are completed by a solicitor.

    If the PIQ is not intended as a legal document then any legal standing that the HIP may have is severely diluted. That it is not to replace the work conveyancers and other property professionals entirely deconstructs any rational for the HIP in its present form. If it can not be relied on without duplication and separate verification under proper due diligence to the buyer then both the PIQ and HIP are entirely pointless. By your own voluntary declaration welcome to the anti-HIP brigade!

    • 01 April 2009 11:14 AM
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    Scaremongering to drum-up business:

    'We accept that some duplication of questions may occur ... However, the PIQ is not intended to be a legal document or to replace the work of conveyancers and other property professionals, which will continue to be required as the transaction is finalised.'

    CLG (post won't print link)

    Come on EAT, report the news, not PR spin.

    • 01 April 2009 10:32 AM
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