Question: We're trying to sell our flat but, as a joint freeholder with two other flats, we are also contesting a shared bill for major roof repairs put forward by one of the other freeholders. Do we have to tell potential buyers about it? We don't want to scare them off (the bill is for at least £2,500 each) and we would rather not say if nobody asks. Is this acceptable, or would we run into future trouble if found out?
Answer: There's plenty to play fast and loose with in a house sale but hiding a financial dispute with neighbours isn't one of them. Transparency is absolutely vital: to maintain trust in the housing market and to prevent hideously expensive legal claims for misrepresentation.
In your case, as a joint freeholder in a simple freehold management company, your contested repairs bill will have to be highlighted in what's known as the Property Information Form (Pif), says Gavin Brazg at Theadvisory.co.uk . One of the first questions in the questionnaire, he points out, is: "Do you know of any disputes about this or any neighbouring property?"
Your potential buyer will rely on what you write here. If you lie and avoid disclosure of the uncapped £2,500 bill, you run a very high risk of being found out – and the possibility of legal action against you.
"The purchaser's solicitor will usually make enquiries of the freehold management company including whether there are any planned works," says David Hollingworth at mortgage broker London & Country. "If you fail to disclose the £2,500 bill and it arises in the future, then the buyer may be able to make a claim against you for misrepresentation."
If it went to court, in all likelihood, you'd end up being forced to pay the original £2,500 plus any interest or court fines on top of that.
"Be honest about the bill from the start and, that way, at least there won't be any nasty surprises for your buyer," Hollingworth urges. "If it comes out during the buying process, it's bound to affect their faith in the transaction."
One option is to be up front about the bill and perhaps offer either a discount on your sale price, or agree to leave behind white goods or other furniture that match the £2,500 bill. Alternatively, suggests JamesBrooks at property agent Kinleigh Folkard & Hayward, you could bite the bullet and swiftly sort the situation yourself before any sale. "A new buyer certainly won't want to be left with this," he says. "They will be concerned that they are getting into a building that holds future problems."Reuse content