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Avoiding Professional Negligence Risks on Property Purchases

Wednesday, 9 July 2014

There is plenty of anecdotal and statistical evidence to show that the latest property boom has led to falls in the quality of professional advice.

When professional advisers such as surveyors, solicitors and agents are suddenly inundated with much higher quantities of work, there is always a risk that those with weak internal procedures and controls will suffer falls in the quality of their output.

The wide availability of cheap fixed-price conveyancing online can be tempting for property buyers unaware of the importance of high quality advice. But making short term savings on such a high value purchase can be false economy if problems occur later on. Many buyers are only finding this out when it is too late.

Property laws in the UK can be very complex and subject to ancient quirks that can still affect your purchase today so it is essential that you sure you use the services of an experienced solicitor. If professional negligence is suspected then independent advice is required.

Restrictive Covenants Lead to Law Firm Negligence Claim

The conclusion of a recent appeal case involving a residential property buyer and a firm of solicitors shows the risks for both the buyer and professional adviser in missing important details during the title search.

In that case Ms Helen Joyce had bought a property in Torquay for £460,000 in 2007, at the peak of the last boom, with a view to altering both the interior and exterior.

After the purchase was complete and the external alterations had commenced, neighbours that owned an adjacent property objected to the works. The neighbours eventually secured an injunction to stop the works based upon restrictive covenants in the title which had not been noted to Ms Joyce during pre-purchase investigations. The dispute was never resolved and Ms Joyce eventually lost the property to lenders Northern Rock which sold it in a distressed sale in 2010 for £390,000.

The lower court found that during the course of the purchase, Ms Joyce’s solicitor Mr John Darby of Darby & Darby, failed to inform her about a number of restrictive covenants relating to the property and “so breached the duty expected of him as a reasonably competent conveyancing solicitor.” It also held that he was responsible for various other failings that occurred following the initial purchase and awarded damages of £186,004.94.

The solicitor’s appeal did not dispute the original negligence claim regarding the failure to inform his client about the restrictive covenants. It merely sought to limit the damages awarded to those liabilities that were foreseeable and caused by the original negligence.

Reduced Damages Equals Lose-lose

The Court of Appeal found in favour of the solicitor and limited the damages to the difference in value of the price paid on the date of purchase and its market value. It also included the cost of expenditure on labour and materials by Ms Joyce.

This final quantum of damages in likely to be considerably less than the amount included in the original award but still entailed a significant liability for the negligent firm. Unfortunately for Ms Joyce, it did not include other costs such as those amounts spent dealing with the neighbours’ injunction.

Professional negligence can be a lose-lose for parties to property transactions so the advice of an experienced solicitor is essential. For specialist advice contact Peter Gourri today by email or telephone 0207 611 4848.

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