|
| The
Property Misdescriptions Act 1991
The Property
Misdescriptions (Specified Matters) Order 1992 |
Purpose
This guidance note sets out the
main provisions of the Property Misdescriptions Act 1991 and the
Property Misdescriptions (Specified Matters) Order 1992, and
provides general advice on them.
This information is not, however,
intended to be used as a substitute for the text of the legislation
itself, which is available from the HMSO online Office of Public
Sector Information website
www.opsi.gov.uk.
The DTI hopes that you will find
this guidance helpful, but you should bear in mind that the
Department's view on the meaning of the legislation has no
particular authority and the question whether there has been a
breach of the law is ultimately a matter for a court to decide. If
in doubt you should seek your own legal advice.
When did the legislation come
into force?
The Property Misdescriptions Act
came into force on 27 June 1991. However, it only had practical
effect when the Property Misdescriptions (Specified Matters) Order
came into force on 4 April 1993. The Order prescribes those matters
in respect of which false or misleading descriptions will be an
offence.
What in General do the Act and
the Order require?
Essentially the Property
Misdescriptions Act 1991 makes it an offence to make false or
misleading statements about specified aspects of land (which
includes buildings) offered for sale by those in estate agency or
property development business. There is no general requirement to
disclose information. But where information is given, it must be
accurate and must not be misleading. The aspects of property
(strictly matters relating to land) in respect of which
misdescription is to be an offence are listed in the Order. The
coverage of the list (copy attached) is broad, reflecting the fact
that it is not a list of matters about which information must be
given, but stipulates matters about which information must not be
misleading.
Who is subject to the Act and
the Order?
The Act and the Order apply to
statements about prescribed matters made in the course of an estate
agency or property development business. They do not apply to
statements made in the course of the provision of conveyancing
services. A solicitor is thus subject to the Act when providing an
estate agency service but not when providing conveyancing services.
"Estate agency business" is linked to the definition in
Section 1 of the Estate Agents Act 1979. This is based on the taking
of instructions from a client introduce him to a third party, with a
view to acquiring or disposing of an interest in land.
Neither the Property
Misdescriptions Act 1992 nor the Estate Agents Act 1979 refer
specifically to the position of sub-agents. There is scope for
differing interpretations as to whether sub-agents are subject to
the provisions of the Property Misdescriptions Act, but it is the
view of the Department that they are. The qualifications in the
introduction to this note apply to this as to the other guidance it
contains.
The Act does not apply to statements
made directly to prospective purchasers by private individuals, nor
does it apply to such statements by ordinary traders who are
offering their business premises for sale. Where however either
employs an agent, the agent must comply with the Act in respect of
any information which either provides to the agent and which the
agent repeats to prospective purchasers.
What property is covered?
The Act applies to statements made
in the course of estate agency or property development business for
the purpose of disposing or acquiring an interest in land. It thus
covers both residential and commercial property. Property
development businesses are caught only when they offer for sale an
interest in land which consists of or includes a building
constructed or renovated as part of that business. A property
developer seeking to dispose of land or buildings surplus to his
requirements which he had not in the event developed or re-developed
would not be caught by the provisions of the Act.
"Interest in land" is
defined for England and Wales and Northern Ireland by reference to
the provisions of the Estate Agents Act 1979 to cover sales of
freehold and of leasehold property having a capital value. For
Scotland the reference is to the Land Registration (Scotland) Act
1979, which defines an interest in land to mean a heritable right
over land, but excluding a lease which is not a probative lease
exceeding 20 years. The Act does not therefore generally extend to
rented property. (The Order nevertheless includes references to rent
to cover, for example, rents receivable from tenants, ground rents
payable, or garages available for rent to purchasers of flats.) The
terms of the two 1979 Acts are such that "land" means land
within the United Kingdom - property elsewhere is not covered.
What constitutes a false or
misleading statement?
A false statement is one which is
false to a material degree. The definition adopts the wording of the
Trade Descriptions Act 1968 and is intended to ensure that trivial
errors or discrepancies in descriptions will not constitute an
offence. What constitutes a material degree will vary with the
circumstances. For example, what may be a material discrepancy
between quoted and actual room sizes may be one of no consequence if
it relates to the dimensions of a garden. In considering whether an
offence had been committed a court would be likely to base its view
on what a normal prospective purchaser would consider to be false to
a material degree having regard to generally accepted standards. In
this context it should be borne in mind that there may be
differences in what would be considered material by, say, private
purchasers of residential property and buyers of large commercial
premises.
A misleading statement is one from
which a reasonable person would be likely to make a false inference,
even though the statement is not itself false.
The offence under the Act is one of
strict liability - it is not necessary for the prosecution to prove
that there was an intention to mislead in order to secure a
conviction - but only that the statement was false or misleading.
A statement may be oral or written,
or be in the form of a picture, model, or any other means of
conveying information.
What can an agent who is unsure
of the accuracy of information do?
There are three broad possibilities.
He can check and if necessary correct it before disclosing it to
prospective purchasers. He can qualify it so that the prospective
buyer will be clear as to the extent to which he can rely on what he
is told. Or he can avoid saying anything about aspects of the
property where he has doubts about the reliability of his
information. These options are dealt with more fully later in this
note.
What steps must be taken to
verify information and what about genuine mistakes?
The Act provides a defence where
the agent or developer can show that he took all reasonable steps
and exercised all due diligence to avoid the commission of an
offence. Where therefore an agent was able to satisfy a court that
although a false statement had been made it was in spite of all
reasonable steps having been taken and all due diligence having been
exercised to avoid it occurring, he could avoid conviction.
There is no absolute obligation to
check all information supplied to the agent by the vendor or others.
But to avail himself of the "due diligence" defence where
he relied upon information supplied to him by another person, an
agent would need to satisfy the court that it was reasonable to do
so, having regard in particular to the steps he took or might
reasonably have taken to verify the information and whether he had
any reason to disbelieve it.
Where an agent is charged with an
offence and proposes to use the defence that he committed it as the
result of the act or default of another or relied on information
supplied by another, he must give the prosecutor seven day's notice
of this proposal, including information in his possession which
identifies the person concerned. This may enable the agent to secure
acquittal even where an offence has been committed, for example
where he can satisfy a court that it was reasonable to rely on the
information provided by another person, eg the vendor, or an
employee of the agent. However, only in the case of an employee does
the Act provide for that other person to be prosecuted (see also para
below).
What about the use of
disclaimers?
The Act does not provide that
disclaimers may be used nor does it prohibit their use. However, the
concept of disclaimers has been developed by the courts in relation
to the Trade Descriptions Act 1968 and the principles governing
their effectiveness for the purposes of that Act have been
established by the courts. It is considered likely that the same
principles will be applied in determining the effectiveness of
disclaimers under the Property Misdescriptions Act. Thus any
disclaimer which is applied must be as bold, precise and compelling
as the statement to which it relates, be as effectively brought to
the notice of anyone to whom the property may be sold, and equal the
description in the extent to which it is likely to get home to
prospective purchasers.
A disclaimer which is applied to a
statement which the maker of that statement knows is false will not
be effective. A disclaimer may not always be effective in other
circumstances; for example, where an agent stated that room sizes
were approximate and then systematically overstated them. Nor would
a blanket statement that information quoted had not been checked or
verified necessarily be effective - a court might wish to consider
what steps might reasonably have been taken to ensure that the
information, particularly that which could be readily verified, was
correct.
Disclaimers may nevertheless have a
useful role where an agent considers that an unqualified statement
might be misleading. An example might be a statement that a house
had full central heating, when the agent knew that the system had
not been used for some years and therefore had reason to believe
that it might not be in working order. In such circumstances it
might be considered prudent - and helpful to prospective purchasers
- to state that the condition of the system was unknown.
What about disclosing
unfavourable information - e.g. a bad survey?
As noted above, there is no general
requirement to disclose information, but an offence can arise where
a statement is misleading because of an omission from it. For
example, this might be held to be the case where a property was
stated to have views over open country when there was a cement works
a few fields away.
There is no obligation to volunteer
either the existence of a survey or any results from it. But answers
to questions need to be truthful, and must not be misleading.
What about updating particulars?
To continue to issue particulars
containing information which is no longer accurate could well
involve an offence. Where a prospective purchaser showing interest
in a property might be relying on outdated particulars it would be
both prudent and desirable to inform him of the up-to-date position.
It might help to avoid confusion on the part of both estate agency
staff and prospective purchasers and thus reduce the possibility of
an offence being committed if particulars carried the date on which
they were compiled or had been revised.
Who can be held liable for an
offence?
The person by whom the estate
agency or property development business is carried out can be held
liable. This could be an individual or a body corporate or an
unincorporated body or person or (in Scotland) a partnership. In
addition, officers of a body corporate and employees of the person
carrying on the business can also be liable. It is also possible for
both a company and its officers to be prosecuted. In Scotland,
liability can extend to an individual partner in addition to the
partnership itself.
Why does the Order refer to the
Consumer Protection Act 1987 in relation to price?
Statements about prices are,
generally speaking, covered. However, price statements about new
private dwellings, including conversions where the building
previously served some other purpose, are already subject to the
provisions of Part III of the Consumer Protection Act 1987 and the
associated Code of Practice for Traders on Price Indications. The
Order therefore excludes statements about the prices of new private
dwellings which are covered by this existing legislation, which has
been in force for some years.
Who enforces the Act?
The Act is enforced by local
authority trading standards officers, except in Northern Ireland,
where it is enforced by the Department of Economic Development
Trading Standards Branch.
What powers do they have?
Where they have reasonable cause to suspect
that an offence has been committed enforcement officers can require
the production of books, documents or hard copy of information held
on computers and can take copies of them. Where they have reasonable
causes to believe that an offence has been
committed they can seize and retain such material.
There are powers for enforcement
officers to enter premises at a reasonable hour and, on production
of credentials, to ascertain whether an offence has been committed.
In certain limited circumstances, but only after obtaining a warrant
from a justice of the peace (or sheriff in Scotland), enforcement
officers may enter premise by force.
It is an offence for enforcement
officers to disclose information obtained in exercising these
powers, except for the purpose of performing their functions under
the Act or for the purposes mentioned in Section 38(2) of the
Consumer Protection Act 1987.
These provisions follow the
standard pattern for legislation of this kind. There are no powers
to enter private dwellings, even where it is the description applied
to private dwelling which is in dispute.
What are the penalties under the
Act for making a false or misleading statement?
On summary conviction (i.e. before a
magistrates' court) a fine not exceeding the statutory maximum (£5,000
from October 1992). On conviction on indictment, i.e. before a Crown
court, an unlimited fine.
Isn't there an associated Order
under the Estate Agents Act 1979?
The Estate Agents (Specified
Offences) (No. 2) (Amendment) Order 1992, will also come into force
on 4 April 1993. This will add offences under the Property
Misdescriptions Act to the offences in respect of which the Director
General of Fair Trading may issue prohibition notices under the
Estate Agents Act 1979. The DGFT can use such notices to prohibit
offenders from engaging in some or all types of estate agency work.
Notices do not apply to other kinds of work which estate agents may
do, such as property letting or property management. A guide to
Estate Agents Act 1979 legislation - The Estate Agency Guide - is
issued by the Office of Fair Trading. The current guide is available
from OFT's Distribution Unit, telephone 071 269 8768.
ANNEX - SPECIFIED MATTERS
1. Location or address.
2. Aspect, view, outlook or
environment.
3. Availability and nature of
services, facilities or amenities.
4. Proximity to any services,
places, facilities or amenities.
5. Accommodation, measurements or
sizes.
6. Fixtures and fittings.
7. Physical or structural
characteristics, form of construction or condition.
8. Fitness for any purpose or
strength of any buildings or other structures on land or of land
itself.
9. Treatments, processes, repairs
or improvements or the effects thereof.
10. Conformity or compliance with
any scheme, standard, test or regulations or the existence of any
guarantee.
11. Survey, inspection,
investigation, valuation or appraisal by any person or the results
thereof.
12. The grant or giving of any
award or prize for design or construction.
13. History, including the age,
ownership or use of land or any building or fixture and the date of
any alterations thereto.
14. Person by whom any building,
(or part of any building), fixture or component was designed,
constructed, built, produced, treated, processed, repaired,
reconditioned or tested.
15. The length of time during which
land has been available for sale either generally or by or through a
particular person.
16. Price (other than the price at
which accommodation or facilities are available and are to be
provided by means of the creation or disposal of an interest in land
in the circumstances specified in section 23 (1)(a) and (b) of the
Consumer Protection Act 1987(a) or Article 16(1)(a) and (b) of the
Consumer Protection (NI) Order 1987(b) (which relate to the creation
or disposal of certain interests in new dwellings)) and previous
price.
17. Tenure or estate.
18. Length of any lease or of the
unexpired term of any lease and the terms and conditions of a lease
(and, in relation to land in Northern Ireland, any fee farm grant
creating the relation of landlord and tenant shall be treated as a
lease.)
19. Amount of any ground-rent, rent
or premium and frequency of any review.
20. Amount of any rent-charge.
21. Where all or any part of any
land is let to a tenant or is subject to a licence, particulars of
the tenancy or licence, including any rent, premium or other payment
due and frequency of any review.
22. Amount of any service or
maintenance charge or liability for common repairs.
23. Council tax payable in respect
of a dwelling within the meaning of section 3, or in Scotland
section 72, of the Local Government Finance Act 1992(a) or the basis
or any part of the basis on which that tax is calculated.
24. Rates payable in respect of a
non-domestic hereditament within the meaning of section 64 of the
Local Government Finance Act 1988(b) or, in Scotland, in respect of
lands and heritages shown on a valuation roll or the basis or any
part of the basis on which those rates are calculated.
25. Rates payable in respect of a
hereditament within the meaning of the Rates (Northern Ireland)
Order 1977(c) or the basis or any part of the basis on which those
rates are calculated.
26. Existence or nature of any
planning permission or proposals for development, construction or
change of use.
27. In relation to land in England
and Wales, the passing or rejection of any plans of proposed
building work in accordance with section 16 of the Building Act
1984(d) and the giving of any completion certificate in accordance
with regulation 15 of the Building Regulations 1991(e).
28. In relation to land in
Scotland, the granting of a warrant under section 6 of the Building
(Scotland) Act 1959(a) or the granting of a certificate of
completion under section 9 of that Act.
29. In relation to land in Northern
Ireland, the passing or rejection of any plans of proposed building
work in accordance with Article 13 of the Building Regulations
(Northern Ireland) Order 1979(b) and the giving of any completion
certificate in accordance with building regulations made under that
Order.
30. Application of any statutory
provision which restricts the use of land or which requires it to be
preserved or maintained in a specified manner.
31. Existence or nature of any
restrictive covenants, or of any restrictions on resale,
restrictions on use, or pre-emption rights and, in relation to land
in Scotland, (in addition to the matters mentioned previously in
this paragraph) the existence or nature of any reservations or real
conditions.
32. Easements, servitudes or
wayleaves.
33. Existence and extent of any
public or private right of way.
Where to obtain the legislation
The Property Misdescriptions Act
1991, the Property Misdescriptions (Specified Matters) Order 1992,
Statutory Instrument 1992 no. 2834, and the Estate Agents (Specified
Offences) (No. 2) (Amendment) Order, Statutory Instrument 1992 No.
2833 can be obtained from The
Stationery Office - London enquiry telephone number 020 7873
0011, or see local telephone directory.
Contacts
You can obtain further guidance from your local authority Trading
Standards Department and in Northern Ireland from local officers of
the Department of Economic Development Trading Standards Branch.
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