Knowledge

In Jersey, property is generally conveyed by passing a contract before the Royal Court. It is customary to include a "tout tel clause" in those sale contracts.

The "tout tel clause" means the buyer has the onus of checking the physical condition of the property. The principle of the clause is arguably a mirror of the English principle of caveat emptor (or "buyer beware").

The effect of the "tout tel clause" is that the purchaser takes the property in the condition in which it is found. The buyer will take the property together with all its defects which are present at the time at which the contract is passed (whether or not the buyer could have discovered them on an investigation or inspection of the property).

The "tout tel clause" seeks to remove the seller's liability to the buyer for any defects in the property.

The defects which may impact a property vary widely. They include:

• physical defects in the property (such as subsidence or structural issues);
• defects in title which may impact the saleability of the property or its market value (for example the property is subject to restrictions on its permitted use); and
• the property being in breach of the law (such as not having been constructed in accordance with building regulations).

There are two principal ways in which a buyer can protect themselves against the purchase of property with a defect:

• raising enquiries with the seller; and
• obtaining a full building survey.

Enquiries and investigations

In practice, a buyer will raise standard enquiries on the purchase of a property (together with specific enquiries on issues which arise in the title investigation).

The seller's responses to the enquiries raised are deemed to be "representations". If the seller's representations are false (whether or not the seller knew that they were false) then the seller makes a misrepresentation to the buyer.

The enquiries raised by a buyer are generally wide-ranging and will ordinarily cover issues such as insurance matters, flooding and disputes with neighbours. The buyer has a legitimate interest in understanding the history of the property and the principal issues that the seller has encountered during their ownership.

It is reasonable for the buyer to raise a broad spectrum of enquiries. However, because of the risk of misrepresentation (discussed below) the seller ought to be cautious in answering queries which are very broad or which relate to the general condition of the property. Additionally, where the seller does not know the answer to the enquiry, they should state that to be the case.

Misrepresentation

The courts in Jersey have decided that the presence of a "tout tel clause" did not prevent a buyer suing the seller where the seller had made a misrepresentation on which the buyer had relied.

Where a buyer relies on a seller's misrepresentation and suffers a loss as a result, then the buyer may be able to make a claim against the seller for damages to compensate them for that loss.

Building survey

It is always advisable for the buyer to instruct a building survey in advance of completion. The surveyor will undertake a detailed inspection of the property and then produce a report which:

• comments on the age, size and principal characteristics of the property;
• gives an opinion as to the value of the property; and
• details any issues which may affect the value of the property.

The survey should also be addressed to the buyer's lender (if any). If the surveyor does not identify a defect which they ought to have identified, then the buyer or their lender can sue the surveyor for any loss they suffer as a result of that defect.

New properties

The buyer of a newly constructed or renovated property will generally enter into a "pre-sale agreement". The pre-sale agreement obliges the buyer to purchase the property once it has been constructed.

In recognition that a buyer will not have the opportunity to carry out a building survey before they enter into the pre-sale agreement, the developer will oblige themselves to construct the property in accordance with:

• the plans and specifications agreed at the time of the pre-sale agreement;
• planning permissions, building controls and other statutory consents; and
• good building practice.

In the event that the developer breaches those obligations, then the buyer will be able to sue the developer for any loss they suffer.

Practicalities

A seller should think carefully about the representations they make to enquiries and should not be tempted to confirm anything of which they are not certain.

A buyer should mitigate the risk that they will discover a defect in the property after their purchase by:

• instructing lawyers to carry out a comprehensive suite of searches and a site inspection and investigate title; and
• obtaining a buildings survey of the property.

Bedell Cristin has a team of property experts who can help you with any queries.