City Living: Why should buyers pay for a survey to find defects that vendors already know about, asks Edel Morgan
You discover a previous sale has fallen through on a property you are interested in but you don't know why. When you get a survey done, a major defect is discovered and it becomes apparent why the other party pulled out. You have wasted €250-€350 on a survey when the vendor and estate agent both knew there was something wrong with the property.
Were they hoping your surveyor wouldn't notice? Wouldn't it be more honest to tell prospective buyers about the defect and reduce the price accordingly?
Before Christmas I bid on a house in North Strand, knowing that at least one other sale had fallen through on it. The estate agent was vague when I asked why this had happened. I was outbid on the property but after Christmas it was offered to me again. By now it was apparent there was something wrong and eventually I extracted from the estate agent that there was "a bit of damp" on the wall between the reception rooms. I called The Damp Store and asked how much they reckoned damp on one wall would cost to treat. The chap I spoke to said it was difficult to say without seeing it but it could be anywhere between €700-€1,000. The estate agent told me the previous purchaser demanded a reduction in the price of the property but the vendor refused. It seemed strange that a sale would fall through for the sake of less than €1,000, so I called in a surveyor and The Damp Store to assess the property.
It emerged there was damp in several rooms and it would cost at least €30,000 to put it right - and that was only a preliminary estimate. A look behind the skirting boards would determine the real extent of the problem. While The Damp Store doesn't charge for its survey, I spent several hundred euro on a structural survey and wasted a lot of time discovering what the vendor and estate agent already knew. The vendor refused to budge on the asking price so I decided not to purchase.
I know of someone who somehow got the phone number of the architect who carried out a previous survey on a property he was interested in and offered the architect €100 under the going rate to buy the report. It rankled with him that the architect was earning extra money on a report that was already paid for but he reckoned it was better than wasting everyone's time doing a new one from scratch. Is there a way around this situation? Should the details of a survey be made available to subsequent interested parties? Or is that unfair to the first party who had to pay for it?
IAVI chief executive Alan Cooke replies that the survey is requested and paid for by a prospective buyer and "is not intended for use by the vendor or his/her agent. Neither of these can therefore disclose its contents to another party, as to do so may open up liability on the part of the surveyor to the third party, leaving the discloser at risk of an action for damages."
He says estate agents cannot disclose information detrimental to the vendor's interests without clear instructions to do so from the vendor. He referred to a case in the Appeal Court in the UK last week where purchasers lost on appeal in an action against a vendor because the fact that a horrific murder had been committed in the property they bought had not been disclosed to them at the time of purchase. The Appeal Court decided to uphold the ancient caveat emptor (let the buyer beware) tenet, which also operates in Ireland.
"In the United States, it would have been mandatory for the vendors, and therefore their agent, to disclose that fact. In Britain and Ireland, were an agent to disclose that information without the client's authority, they could be sued for breach of their duty to their client, under their contract of agency." He says that a survey "costs a modest enough sum" when compared to modern property values "and, even if one has to get four or five surveys done before one secures a property, the total expended is a reasonable 'due diligence' expense set against the value of the investment being purchased".
Dermott Jewell of the Consumer Association describes my experience "as a classic example of one of the frustrating elements of house purchasing. Your questions are reasonable and it would be the reasonable expectation of every house-buyer that the agent would deal with them in a professional way.
"Arguably, this example highlights the difficulties for all concerned. The agent will have a contractual obligation to the client. Auctioneers, estate agents and valuers must, under their regulations, exercise the skill and care reasonably expected of professionals in their position. They will therefore tell you that they have to take particular care not to misrepresent or falsify details of a property, or to unfairly enhance the property's characteristics or value leading a potential purchaser to buy under false pretences.
"They will not do this because they might be sued. Therefore, they will not indicate the view of another that there is a dampness problem because it, arguably, could be open to interpretation or dispute. That is fair enough but it also indicates a need for change. What is to stop the seller providing a report that prospective purchasers could view? What is to stop estate agents taking professionalism a little further and providing that report if their clients will not? It would speed up the sale or clearly indicate to the seller that work must be done first if there is ever to be a sale or the price will need to reflect the amount of work to be done. Either way, there is room here to improve and there is equal room to bring our outdated systems and enshrined practices up to date."
In the current "let the buyer beware" climate, the prospective buyer is required to do all of the homework and pay for it. "It is wrong," says Jewell. "It is not a professional attitude and, until it changes, it is clearly open to the criticism that it is perpetuated to guarantee an outlay by the consumer and an income for the surveying community."
