Friday, November 28th, 2008
House buyers are being misled by false information in Home Information Packs (HIPs) produced by some estate agents, according to an investigation by trading standards officers.
The officers from Birmingham Trading Standards visited 15 estate agencies in the city and asked to see HIPs for different properties. They selected six to subject to a detailed inspection and found that five of them were unsatisfactory.
Some wrongly claimed that information was not available or answered questions by stating “not as far as is known” even though the information was readily available from the local authority. The officers suspect that the problems arose because private search companies are cutting corners to save money.
The Trading Standards report gives several examples of faults contained in the HIPs they inspected. Some claimed there was no planning history on the property when it fact it was readily available. Others provided inaccurate dates for planning proposals or stated that there were no planning restrictions when there was a restriction on permitted development.
In one example, a HIP claimed that the property was in Worcestershire when it was actually in Birmingham. There was also a case where the HIP said that planning history only dated back as far as 1990 when in fact the local council held paper records from 1948.
The investigation was carried out in Birmingham but it’s feared that the same thing is happening in other areas across the country.
Councillor Neil Eustace, Chair of the Birmingham Public Protection Committee, said: “The results of this survey are shocking. Buying a house is one of the most important investments most people will make and they rely on professionals to do their job properly.
“Some of this inaccurate or missing information could result in someone buying a house they would otherwise think twice about. A local authority search would have to be done later and any inaccuracies detected could result in sales falling through. These searches are simply not worth the paper they are written on.”
The Law Society said the Birmingham findings seem to confirm reports it had received that some estate agents are being paid commission by search companies to include poor quality searches in their HIPs. The society president, Paul Marsh, urged sellers to consult a solicitor for advice about HIPs.
Mr Marsh said: “If the pack is to provide any value to the consumer at all it needs to be accurate and contain reliable information. That requires those who compile these packs to understand what they are doing.
“Anyone who buys a HIP from an unregulated estate agent or HIP provider might as well throw their money away.
“It makes perfect sense in a slow market to use the time you have properly and instruct a solicitor not only in the preparation of a HIP but on all the paper work that is involved in the selling of your home, including the contract, as soon as possible.
“All the research shows that instructing a solicitor early on in the transaction will speed up the process of selling a property significantly and ensure it runs as smoothly as possible.”
Please contact us if you would like more information about HIPs or any aspect of buying or selling property.
If you are thinking about selling contact Sophie Warren now to arrange your HIP at our low fixed price.
Wednesday, November 26th, 2008
It has taken six years of wrangling but the European Parliament has finally voted to accept the Directive giving equal rights to agency workers.
The Temporary Agency Workers directive will ensure equal treatment in terms of basic working and employment conditions including pay. This applies from day one of employment unless individual governments negotiate alternative arrangements with social partners such as trade unions and business organisations.
The British Government reached agreement in the summer with unions and the CBI that temporary workers will be entitled to equal treatment after 12 weeks. At the time, the three parties said the agreement would protect the rights of workers while maintaining flexibility for employers.
They issued a statement saying that the equal treatment to which agency workers will be entitled after 12 weeks “will be defined to mean at least the basic working and employment conditions that would apply to the workers concerned if they had been recruited directly by that undertaking to occupy the same job.”
Although agreement on the 12-week qualifying period was reached in the summer, the Government could not implement it until the Directive was adopted by the EU. Now that has happened, the UK Government says it will move to implement the agreement as soon as possible. It will then come into effect within three years.
In the meantime, there will be further negotiations between the Government, the unions and the CBI to find mechanisms for resolving disputes regarding the definition of equal treatment and compliance with the new rules.
They will also be looking at anti-avoidance measures with particular reference to such things as repeat contracts for the same worker.
For guidance and advice on any employment matter contact Jonathan Friend.
Monday, November 24th, 2008
To most people, ‘dwelling’ is just a fancy term for ‘home’ or possibly ‘house’. However, the difference in the meaning of words is a common source of legal dispute, as was illustrated in a recent case that also has significance for tenants of holiday park homes and similar properties and their landlords.
The case concerned bungalows at a holiday park in Cornwall. As is common in such cases, the planning permission under which they had been built prohibited permanent occupation of the bungalows, which were stipulated as being for holiday purposes only. The tenants also covenanted with the park owner landlord ‘not to use the…bungalow for any purpose other than that of a holiday bungalow’. It was recognised that this restriction was not adhered to by several of the tenants.
As is also normal, the tenants were required to contribute to the costs of maintaining the site etc. by payment of service charges. The dispute arose because some of the owners claimed that the service charges were excessive and relied on the Landlord and Tenant Act, which provides that only reasonable service charges can be recovered from tenants of ‘a dwelling’. Specifically, the Act defines a dwelling as ‘a building or part of a building intended to be occupied as a separate dwelling…’. The tenants applied to the Leasehold Valuation Tribunal (LVT) for a ruling on the fairness of the charges.
The LVT refused to hear their claim on the ground that the holiday bungalows were not dwellings since they could not be used as permanent residences. The tenants appealed.
The question that needed to be settled was whether a home can be a dwelling, for the purposes of the Act, if it is a place in which a person cannot permanently reside. Unfortunately for the tenants, the Lands Tribunal could not agree that the protection offered by the Landlord and Tenant Act was intended to apply to premises such as the bungalows in this case.
For legal help with all service charge problems contact Jonathan Friend.
Saturday, November 22nd, 2008
Following changes introduced in the pre-budget statement last October, the rules relating to inheritance tax (IHT) allowance have now been changed. They now allow a person, on death, to pass on their nil-rate allowance to their spouse or civil partner. This can mean that up to £624,000 of assets pass free of Inheritance Tax on the second death, at current rates.
Everybody has always had an allowance on death upon which there will be no IHT to pay. Everything above that amount is liable to be taxed at 40%.
Before last year’s changes, the allowance was lost if the deceased person left their entire estate to their spouse or civil partner, as the estate would pass under the spousal exemption, so there would be no liability to IHT. Then on the second death, the size of the estate would include the assets of both partners, and there would be a liability to IHT on everything above the nil-rate band.
In order to retain the nil-rate allowance of the first person to die, married couples and civil partners had to set up discretionary trusts to transfer assets to the value of the allowance away from the estate of the survivor. This ensured that, on the second death, the first person’s allowance could still be utilised, and was not lost.
The changes apply to married couples and civil partners who are now able to transfer the unused part of their nil-rate band to their surviving spouse. The transfer is passed as a percentage uplift to the allowance available on the second death.
For example; if a perosn has died this year, when the nil-rate allowance is £312,000 but their spouse had died in December 2005 when the nil-rate allowance was £275,000 and the entire estate to the spouse then the estate will now be able to take advantage of 2 x nil-rate allowance at todays rates. The spouse’s estate can therefore benefit from £624,000 of nil-rate allowance, and IHT will only be payable on anything above that amount.
This will clearly assist many families, who will no longer have any liability to IHT. However, there may be other issues that make a trust beneficial.
If you would like more information on Wills or Inheritance tax then contact Marie Turner now.
Thursday, November 20th, 2008
Dilapidations claims are one of the most used and abused weapons in the commercial landlord’s armoury. The business tenancy will usually contain covenants by the tenant to return the property in the same good condition in which it was at the beginning of the tenancy but the wording in leases differs in every case and the precise terms of the requirement vary from tenancy to tenancy.
Even the term “dilapidations” can have different meanings according to who the landlord might be. It will usually extend, at least, to removing tenant’s fixtures and fittings, filling the holes in the wall which held up that display case and replacing stained carpet.
Dilapidations became a good means of tacking on a few extra pounds to a business tenancy’s worth at the end of the term. The more unscrupulous landlord served a schedule of dilapidations (the document listing details of the claim for breach of repairing and maintaining terms) for items which were not needed (and frequently not even seriously contemplated as anything on which the landlord would spend some money).
Sadly, for the majority of good landlords, this approach led to a huge distrust on the part of business tenants and the advisors for any dilapidations claim. There were many exaggerated landlord’s claims which typically settled at around half of what was originally claimed. Other problems involved the combative nature of the claim with surveyors and solicitors adopting a ”them and us” stance as well as a disjointed approach to making claims by which the landlord drafted the schedule as a wish list with little thought for the evidence, the terms of the lease or how any item might be proved.
The Civil Procedure Rules came into effect in 1999. They brought with them a number of protocols for different types of claim which carried similar problems. There are protocols for personal injury, medical negligence, professional negligence and even housing disrepair. Unfortunately, dilapidations in tenancies of business premises were not addressed and the problems continued.
Things are changing. The Royal Institute of Chartered Surveyors developed its own protocol in June 2000. It is now in its third edition published on the 12th May 2008 and it is very good. Despite this the Department for Constitutional Affairs has yet to adopt it and bring it in to the Civil Procedure Rules and so its use is largely voluntary. However, most surveyors adopt it as a matter of course and it helps greatly with narrowing issues and achieving agreement on things which ought never to be an issue.
In broad terms, it requires:
After the first four steps, it is unusual for the last two to be needed.
Burt Brill & Cardens was an early adopter of the protocol and we have used it consistently since publication of the first edition.
Wherever possible, we do our best to smooth the way by sending a copy of the schedule by email (or even on a floppy disk or cd-rom) when we act for the landlord or requiring a landlord to do so when we act for the tenant. The tenant can add responses and comments easily, email back the completed schedule and we quickly have an all encompassing document showing all of the issues and points agreed at an early stage. With a good surveyor, often appointed jointly by the parties, we can concentrate on the seriously disputed items.
The result is that the parties only fight about the matters which need fighting and the difference between them is rarely enough to justify huge fees when the parties stop looking at the bottom line and consider the value of the truly disputed items. Costs are reduced and the claim is completed very much more quickly.
Even better, if the protocol is used in good faith and fails to achieve a swift settlement and the matter proceeds to a trial in the County Court, the parties can be sure that they will not be criticised by the Judge for behaving unreasonably. Despite the lack of a formal protocol in the CPR, parties to any dispute are encouraged to follow the protcol and failure to do so can have devastating costs consequences even for a winner.
We will continue to support the adoption of the dilapidations pre-action protocol and hope to see its use made mandatory in all cases soon.
For help with all business tenancy or dilipadations claims contact Steven Kinch or Jonathan Friend
Thursday, November 20th, 2008
“He hit me first!” is the usual cry of fighting children. It met its equivalent in a recent High Court case concerning a squabbling employer and employee.
Employers and employees owe each other a mutual duty of trust and confidence. Breach by an employer can entitle the employee to claim constructive dismissal. This is a shorthand way of saying that breach is so serious that the employee can view the relationship as irreparably damaged and leave. Although it looks like a resignation, in contract terms it is in fact an acceptance of the employer’s breach of contract as something which brings the contract to an end.
Constructive dismissal plays a huge part in employment law and especially in unfair dismissal cases. Rudeness or bullying are often at the heart of the matter. If the employee is treated badly, he can quit or can walk away for good. In either case, he accepts the breach and the contract comes to an end…or so we thought.
Things may have changed. In the recent case of RDF Media Group PLC & RDF Media Limited v Clements, the High Court decided that the right to claim constructive dismissal may depend on how the victim has behaved.
Mr Clements was a shareholder of a media company, IWC. IWC was taken over by RDF who entered a contract with Mr Clements for him to work as a director of content for IWC. The contract stopped Mr. Clements from working for a competitor for 3 years after he left his job but for only 2 years if he was unlawfully dismissed.
The relationship soured and Mr. Clements gave notice. RDF put him on garden leave for his notice period. Things became worse. There were accusations that RDF staff were rude about Mr. Clements in press briefings and at board meetings and it was alledged that Mr. Clements was lining up a job with a competitor and informally agreeing to poach some of his own projects from RDF when he left.
During his notice period, Mr. Clements resigned and claimed constructive dismissal because of the comments. RDF denied constructive dismissal him and said the contract continued. Mr. Clements refused to accept his pay cheque so RDF wrote to say that he was in fundamental breach of contract and had brought the contract to an end. They wanted the 3 years restriction and that depended on it being his fault. Each side blamed the other and the matter finished in the High Court.
RDF won. Whether negative comments were a breach of the trust and confidence term depended on the context and circumstances. Internal comments by directors were not a breach. Comments to the press were. When evaluating the breach it was important to look at the relationship between the parties at the time. If it had broken down altogether or if the employee was seriously in breach (as Mr. Clements was) those factors had to be balanced in deciding whose breach ended the contract. Here, it was Mr. Clements who destroyed the relationship by his own breaches and therefore it was wrong to say that RDF had broken and ended the contract however badly it may have behaved.
This is new and somewhat surprising. Ordinarily, RDF would have been taken to have waived Mr. Clements’ behaviour by not accepting it as a breach which allowed them to call time on the contract. The contract would have continued and then, if he had accepted RDF’s negative comments as a breach, he would have been entitled to claim that he had been constructively dismissed. The question is usually “who acted in response to a breach first?” Here it was “who was the real villain of the peace?” The case was due to go to the Court of Appeal but was settled before the hearing. The High Court decision is not binding but will no doubt have an effect on employment tribunals and other court decisions.
It seems that the Court may have inadvertently started to rewrite the law to cater for a case where it decided in favour of the employer. It is an unusual case and the outcome may be peculiar to the facts. However, the decision stands until the Court of Appeal says otherwise.
Monday, November 17th, 2008
With mortgage defaults rising, banks are increasingly seeking to repossess properties on which they have advanced mortgages. When proceedings are commenced, it is by no means unusual for a bank to find that the property is not occupied by the mortgagee, but by someone else – often another family member.
Under the law, an ‘undisclosed tenant’ (one who is there without the knowledge of the mortgagor) has no right to remain and cannot prevent the repossession, even by paying the mortgage. However, there are exceptions to this rule. If the occupier is the spouse or civil partner of the mortgagee, then the lender will have to negotiate with them. Another issue may arise if the person living in the property claims to have contributed to the mortgage and offers to continue to pay it. Unless the lender makes it clear than any payment is accepted as being made on behalf of the mortgagee, the occupier may acquire equitable rights over the property.
In a recent case, a woman who had contributed to the mortgage on a house owned by her husband’s cousin was faced with an application for possession, from UCB Home Loans, after her marriage broke up and significant arrears built up on the mortgage. She also faced an application for possession from her husband and his cousin. She claimed she had built up an equitable interest in the property because she had paid the mortgage. UCB agreed that they would not seek possession of the property if she paid the arrears and that they would treat any payments made as being made on behalf of her husband’s cousin.
When she fell into arrears again, UCB again sought possession and she sought to suspend the order. The court ruled that UCB was prevented (by a doctrine called estoppel) from not treating her as if she were the mortgagee and ruled that the possession proceedings should be held in abeyance pending the conclusion of the divorce proceedings, when the divorcing couple’s financial arrangements could be settled.
This case illustrates that the courts will seek to ensure that in circumstances similar to these, fairness will prevail. If you are faced with a claim for repossession of your property, taking professional advice promptly can mean the difference between retaining your home and losing it.
For partial advice on all property problems contact Jonathan Friend.
For advice on divorce or separation contact Marie Stock.
Saturday, November 15th, 2008
New guidelines to help prevent irresponsible lending are being drawn up by the Office of Fair Trading (OFT).
The move follows changes introduced in the Consumer Credit Act 2006 which mean the OFT now has to consider the possibility of irresponsible lending before granting a consumer credit licence.
It is now in the process of consulting with business, consumer groups and other stakeholders to identify potential problems it may need to address. An OFT statement says: “The study will consider all forms of consumer credit lending which the OFT licences and all participants in the market, including lenders, brokers and other intermediaries.
“The issues the review could consider include the advertising and marketing of products, selling techniques, product design, use of credit scoring techniques, appropriateness of products to borrowers, sale of associated products and management of consumers’ accounts including handling of defaults and arrears.”
The main objective of the process is to produce clear and concise guidelines on practices which the OFT believes to be irresponsible and unacceptable. Failure to comply could result in a licence being revoked.
There are currently 120,000 consumer credit licence holders in the UK.
Ray Watson, OFT Director of Consumer Credit, said: “Credit is an important part of everyday life so it is vitally important that consumers are safeguarded from irresponsible lending and that businesses have clarity about what this constitutes.”
Thursday, November 13th, 2008
Where an easement (the ability to use someone else’s land in some way) is granted, it is usual for its terms to state any restrictions which may apply to its use.
Recently, a case came to court where a property was conveyed with a right of way over a pathway over the adjacent property such that access could be obtained to the road from the rear of the property.
The right of way stated that the occupiers of the property had the right of use of the pathway at all times for the purpose of access to or egress from the property for ‘all reasonable use necessary for the proper enjoyment of the property’. Unfortunately for their neighbour, this involved access early in the morning and late at night by visitors. The neighbours took the view that this use was more than was needed ‘for the proper enjoyment of the property’ and sought a ruling to restrict the use of the path.
The judge agreed, ruling that the original purpose of the right of way was to allow access to the rear of the property when access to the front was impracticable. In reaching this decision, he considered two documents which purported to come from the local council (which had sold both properties under the ‘right to buy’ legislation). These stated that the right of way was restricted in various ways. One of these documents, however, was written after the properties had been sold.
On appeal to the Court of Appeal, the decision was reversed. The understanding of the parties at the time of the grant of the right of way was not in point, what mattered was the law which applied. The legal documentation clearly stated that the grant of the right of way applied at all times for the reasonable use of the property. If there had been the intention to limit the right, it should have been contained in the deeds.
“There is no substitute for including any necessary clauses in the original documentation,” says Marie Stock. “This involves the vendor and the purchaser thinking through the possible issues and ensuring that any necessary rights or limitations of rights are dealt with at the time.”
Contact Marie Stock now for advice in all matters affecting property.
Wednesday, November 12th, 2008
The Government has announced plans to make it easier and cheaper to register Lasting Powers of Attorney (LPA).
It’s hoped the move will encourage more people to prepare for a time when they may be unable to make important decisions for themselves about their finances and about their health and welfare.
The proposals have been put forward as part of a review of how well the Mental Capacity Act 2005 is working. The Act came into force in October last year and introduced LPAs as a replacement for the previous system involving Enduring Powers of Attorney.
The new LPAs proved even more popular than expected. The Office of the Public Guardian (OPG), which administers the registration process, says that three times as many people applied to register powers of attorney over the last 12 months as in previous years.
The sudden surge in demand has led to delays which the OPG has been trying to address.
The OPG is to carry out a wide ranging review of the Act but will concentrate at first on powers of attorney. It is now conducting a consultation process on a number of proposals including reducing the registration fee from £150 to £120.
There are also plans to redesign the form and guidance notes to make them clearer and “introduce a new level of supervision of court-appointed deputies to give short-term support and scrutiny where needed”.
The Justice Minister, Bridget Prentice, said: “The Mental Capacity Act is an important piece of legislation that enables people to plan for the future, and helps protect the most vulnerable people in society. This welcome review will ensure the law continues to deliver what people need.”
LPAs offer a wide range of options to people who want to prepare for a time when they may lose some of their mental capacity.
The property and finance LPA allows you to appoint someone to look after your financial affairs if you become incapable of doing so yourself. The personal welfare LPA lets you grant an attorney authority over such matters as health care and the kind of treatment you receive.
The Office of the Public Guardian needs to register LPAs before they can be used. Registration is followed by a 42-day statutory waiting period to allow people to raise objections to the registration. This waiting period is one of the safeguards built into the process to ensure that the LPA has been drawn up properly and is not fraudulent.
The consultation period will end on 15th January next year and some of the changes will be introduced from the following April.
Please contact Maria Turner if you would like more information about Lasting Powers of Attorney.
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