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The Property Misdescriptions Act explained

publication date: Aug 25, 2008
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areaBrushing up on the basics: Think you know all there is to know about getting your property details absolutely right? This Act is well established but it still catches agents out… 
The Trading Standards Institute helps out with an overview of the salient facts 
Basic principles 
The Property Misdescriptions Act 1991, which controls property developers as well as estate agents, creates criminal offences for making false or misleading statements about any of the matters in the Specified Matters Order. You do not have to refer to any item in the Order, but, if you do, your description of it must be truthful. 
Whilst there was no general requirement under the Act to disclose information to consumers, the new Consumer Protection from Unfair Trading Regulations 2008 now prohibit omitting material information from consumers, if that omission might cause the consumer to take a different decision. 
Material information is defined as 'information which the average consumer needs, according to the context, to take an informed transactional decision'. Whilst this concept has yet to be tested in the courts it is likely that you would now have to disclose the existence of an adverse survey on the property, without having to be asked, if that information would affect the consumer's decision. 
Things you say, verbally, about the property will be covered, as well as the printed word, photos, plans, models, websites, etc. 
The Act does not prevent you from acting in vendors' interests by presenting property in the best light, provided what you say, or do, does not mislead the purchaser or the vendor. 
Things you are recommended to do:
  • Get vendors to sign to say that particulars are correct before you market a property. Give them a chance to amend anything that is wrong. This won't protect you if you print a misdescription you could have reasonably checked out for yourself, but it will minimise the risk.
  • Think about all the descriptive phrases you use and ask yourself what they will mean to an average purchaser.
  • Make it somebody's task to proofread particulars and sign to say they have done so.
  • When you get enquiries about a property, get the person who prepared the details to answer the questions, and make a record of what is said on file. You won't be held responsible for what vendors tell purchasers in your absence unless you knew what they were going to say, but remember that purchasers might forget who told them what.
  • Check everything you can. Ask to see receipts and guarantees for work carried out. Ring up to check council tax bands. Ask for evidence of sales and turnover if you want to describe the success of a business property.
  • Set up a system to ensure that your staff are adequately trained and that their work is regularly checked. You should consider random doublechecking of property details against the property itself during this auditing process. Any deficiencies can then be dealt with by issuing corrected particulars and retraining, where necessary. You should keep records of training and checks made. 
General descriptions 
Terms such as 'immaculate condition' or 'recently decorated' are not banned by the Act, but these terms will be taken to refer to the entire property unless otherwise stated. If there are any particularly attractive features, your client will obviously expect you to use them as selling points but they should not be emphasised to the exclusion of bad features if the overall result is a misleading description. 
It is likely that the Consumer Protection from Unfair Trading Regulations will now require you to disclose defects such as a leaky roof, if that information would affect the transactional decision of the average consumer. 
Location 
Don't stretch popular and desirable areas too far! Use the correct postal address. If a house is in one county geographically, but its postal address is in a neighbouring county, you should include both with equal prominence.
Comments concerning the proximity of properties to local services should be used with care. Terms such as 'close' or 'easy access' are best avoided, as are estimates of journey times. A statement of the actual distance is more accurate, e.g. three miles to Junction 34 of the M4. 
Environment
If a house has open fields on three sides and an abattoir or nightclub on the fourth, the safest option is not to refer to the outlook. If you said that it was surrounded by views across open fields, you would mislead unless you made equal reference to the view on the fourth side. If you use a photograph of the back or the side of a property on its own, you should make that fact clear. 
Photographs 
A photograph can be misleading. Do not doctor photos or use extreme lenses. If you take a photo of the view from a bedroom window, but cannot include the rubbish dump, don't say 'panoramic views' or 'unspoilt countryside'.
Measurements 
You should try to make measurements as accurate as you can. Sonic measures (e.g. tape measures) are not specifically banned, but, as with any measuring instruments, they should be calibrated every twelve months and used with great care. Laser measures appear to be easier to use and less likely to give misleading readings, but should still be checked on a regular basis against a known distance. 
Be careful with gardens, where large length or area measurements can be involved. 
‘New instructions’ 
You may advertise a property as a 'new instruction' to your agency for only a short period (we would suggest a month) after you have been asked to become the vendor's agent. This applies even if the property has been advertised previously with another agency. 
Pricing 
The Consumer Protection from Unfair Trading Regulations 2008 covers the pricing of all properties, and you must be careful not to mislead consumers with regard to the previous price of a property if you are claiming a reduction in price. The Pricing Practices Guide published by DBERR gives guidance as to how price reductions can be advertised. 
You should also be aware that the Regulations ban a trader from passing on materially inaccurate information about market conditions with the intention of getting the consumer to make a purchase at less than normal conditions (e.g. an agent telling a consumer that he has sold several properties in the same area, just like the one the consumer is viewing, at a certain price, in order to get the consumer to buy at an inflated price, if this information is not true).
Pricing of newly built and newly converted properties is not covered by the Property Misdescriptions Act, but pricing of second-hand and commercial properties is a 'specified matter' and, as such, any statement must not be misleading. We would advise you to follow the Pricing Practices Guide (see above) for this too, to ensure that you do not mislead anyone. 
Of course, you can change the price at any time and not claim a 'reduction' (but make sure all copies and methods of advertising a property are changed at the same time). 
Tenures 
You should be able to provide adequate evidence to show that you have tried to obtain information on the length of any lease or freehold of the property. Alternatively, say that this aspect has not been checked. 
Extensions and loft conversions 
Conversions have created problems where an estate agent has described a room as a bedroom, but it has not been subject to planning or building regulation approval and, thus, is not suitable to be used as such. If a vendor is unable to supply details, then the planning office should be approached for confirmation. If you are unable to establish that the extension was correctly approved, then great care needs to be exercised - either describing the room as a boarded loft area, or stating clearly that planning permission for the room has not been provided. 
Communal areas and parking places 
Problems have arisen when a vendor has assumed that he/she owns, or has rights over, a particular parking space when, actually, he/she only parks there by habit or private arrangement. If a parking space, used by a vendor, is not clearly within the boundary of a property, further checks should be made, or great care should be used, when describing this feature. 
Re-checking 
If you have a property that has been under your instructions for a long period of time, it is advisable to check to see if the details are still correct. If particulars are issued which contain information that is no longer accurate, an offence could be committed. 
If a new road is planned which wasn't before, or if the local train operator withdraws a train service to which you had referred, you should modify your details and advertisements. You should consider a system of re-verifying particulars with vendors and including a clause in their contract requiring notification of any material alterations they make to property post-marketing. 
It is suggested that particulars should carry the date on which they were compiled or revised to avoid confusion.
Disclaimers 
The Act does not provide that disclaimers may be used, nor does it prohibit their use. 
General disclaimers in small print, telling buyers not to rely on details, won't be effective in preventing offences. In particular, they are unlikely to be effective in relation to any misleading omission under the Consumer Protection from Unfair Trading Regulations 2008. 
Case law under the Trade Descriptions Act 1968 (now repealed) stated that 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, but this may well not be sufficient under the new Regulations, so you are advised to be accurate with all the information you supply. 
However, there are some cases where a specific qualifying description may be acceptable. For example, if the vendor claims, without documentary evidence, that the property was treated for dry rot, you may only mention this if you say as part of that description that you have not seen any documents to verify this. 
A similar qualification might be applied to the working order of household appliances, or central heating, or claims about the history of a property. The crucial fact in assessing whether a qualified description is valid is the ease with which you could have reasonably checked it. 
What are the penalties for making false or misleading statements? 
If a case is heard in the Magistrates' Court, the maximum fine is £5000 per offence. One set of property particulars might contain several offences. If the case is heard in the Crown Court, there is no limit to the fine. 
In addition, the Director General of Fair Trading can use his powers under the Estate Agents Act 1979 to issue a warning or prohibition notice. Such notices can prohibit an offender from carrying out some, or all, types of estate agency work. Trading Standards can also take action under the Enterprise Act 2002 if an estate agent misleads consumers or generally acts in an unfair manner. 
As well as carrying out spot-checks, Trading Standards Officers also deal with complaints. You should be ready to co-operate with Officers and show them any documentation they need to see. All Officers carry credentials, which they will gladly show. 
‘Home Authority’ 
Principle With each Trading Standards Service dealing with descriptions seen within its own area, it is important that there is uniformity. If you have any specific questions on the interpretation of the Act, and your business has a Head Office outside the area in which you operate, you are encouraged to ask your Head Office to seek the advice of their local Trading Standards Service, in the first instance. 
OTHER MATTERS WHICH MAY AFFECT YOU 
1) Consumer Protection from Unfair Trading Regulations 2008 
The above Regulations apply in relation to all elements of the work of the estate agent, so it will not only cover descriptions you apply to properties, but also any description you make concerning the service you provide, as well as the service itself. For example, if you display a 'For Sale' board outside a property you are not authorised to market, or display a 'Sold' board outside a property you have not sold, you are likely to be breaching the Consumer Protection from Unfair Trading Regulations and could face civil and/or criminal action. 
2) Town & Country Planning (Control of Advertisements) Regulations 1992 
Under these Regulations, the display of temporary ‘For sale’, ‘To let’ or ‘Sold’ boards is allowed by way of a "deemed planning consent", providing certain criteria regarding maximum size, etc. are met. Once a sale has gone through, or a premise has been let, a sign such as ‘Sold’ or ‘Let’ may only be displayed for a maximum of 14 days. A useful guide is the ‘Outdoor advertisements and signs: a guide for advertisers’ which can be found on the Communities and Local Government website. 
3) Estate Agents Act 1979 
Most of this Act is enforced by the Office of Fair Trading (OFT) by a system of negative licensing - i.e. you do not need a license to act as an estate agent, but if you breach the legislation, you may be banned. It covers various undesirable practices, such as failure to declare a personal interest, failing to pass on offers, discriminating against buyers that do not take other services, conviction for other offences involving fraud or dishonesty, etc. The part enforced by Trading Standards relates to the maintenance and auditing of clients’ accounts. 
4) Consumer Credit Act 1974 
If you offer credit, or introduce people to sources of credit, you are a credit broker and need a license from the OFT. 
5) Safety of furniture in let accommodation 
This may affect anyone who lets furnished accommodation as a business activity. This includes letting agents, estate agents and private landlords. See our separate leaflet ‘Safety of goods in rented accommodation – landlords and letting agencies’. 
Please note: This information is not an authoritative interpretation of the law and is intended only for guidance. For further information, please contact your local Trading Standards Service. This information is relevant for England, Wales and Northern Ireland 
DO WHAT YOU SAY YOU WILL DO! 
Estate Agent prosecuted under Trade Descriptions Act 1968 
Please note: 
You can download a complete copy of the Property Misdescriptions Act 1991, the Property Misdescriptions (Specified Matters) Order 1992 and the Estate Agents (Specified Offences) (No. 2) (Amendment) Order 1992 as well as the Consumer Protection from Unfair Trading Regulations 2008. Go to: http://www.opsi.gov.uk/legislation/about_legislation.htm