Wednesday, February 19, 2014

Disclosure by estate agents?

A recent post on a property blog* has raised the interesting question about the extent of an estate agents' duty of disclosure when offering a property for sale - how much of the bad news must he revealed to a potential buyer, particularly in the wake of the serious flooding in Britain and South western France. The question arose in response to one about the effects of the new UK 2008 consumer protection legislation on estate agents' property descriptions.

It is a question often raised in France and one that I have had to wrestle with, both during my time as a sales negotiator in a French estate agency, and more recently as a property consultant/advisor. French consumer law offer a number of built-in protections to the potential buyer and even at the stage of the pre-contract of sale (known as the 'compromis de vente') and usually running to more than 50 pages, a lot of information is written about the property.

This includes its history, its reference on the 'cadastral plan' and a copy of the expert report prepared by a specialist (paid for by the vendor) which describes the state of the electrical and plumbing installations, and the presence/absence of termites, lead, asbestos etc and an energy efficiency rating if there is a fixed heating system installed.

In addition the Notaire handling the sale will normally include information about zones liable to flooding, landslides, earthquakes etc when he does his detailed searches as to title.

It seems that the British legislation goes further than this, with an obligation to point out factors such as proximity to a motorway or a noisy factory or school, which might detract from the value of the property being sold. These are aspects that may not be pointed out by a typical French estate agent and indeed in the final sale document the buyer is warned that he/she 'purchases the property at his own risk and in the state in which he finds it'.

This puts a lot of the onus on the intending purchaser or his advisor to extend their researche into the wider location of a property, something which many buyers fail to do in the euphoria of discovering their dream home.