Buyers (Solicitor) Beware: Withholding Information from your Clients Amounts to Negligence


The High Court has recently declared that a solicitor was negligent in failing to warn a client buying a £25 million property that there were plans to build two schools (for 1400 children in total) in the same street.

It was held that, where a solicitor has information that may affect a client's decision-making process, he has a duty to inform the client of that material.

Orientfield Holdings v Bird & Bird LLP [2015] EWHC 1963

Summary of the facts

The claimant was purchasing a £25m house in London. Their solicitors became aware that there was planning permission for two schools with 1400 pupils in the same street. They did not disclose this in their Report on Title. Contracts were exchanged. The claimant subsequently found out about the planning permission and refused to go ahead with the completion. They negotiated with the seller and agreed to forfeit half of their deposit. The claimant successfully sued the solicitors for their loss based on the premise that the claimant would not have exchanged if they had known about the planning permission. The Court refused to accept the argument that the purchasers had not mitigated their loss by completing the purchase.

Conclusion

This case provides a timely warning to solicitors who deal with purchases. If one of the reports or searches reveals something which would adversely affect the value of the property it must be disclosed to the client before exchange of contracts.

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