HIP operation
Date: 24 April 2009
Authors: Peter Ambrose
Issue: Vol 159, Issue 7366
Categories: Features, Property
The credibility of HIPs is certainly not helped by the lack of understanding among HIP providers of basic property legal issues, so it is hardly surprising that faith is often lacking in the accuracy of documents that they produce.
Until 6 April, most estate agents and clients had little to fear about the timely and accurate production of documentation. If the agent could be given an energy chart for their property particulars, then everyone was happy. This limited requirement clearly benefited those HIP providers with scant legal knowledge and ensured that HIPs remained as merely a legal formality that must be completed before contracts could be exchanged.
However, as sellers must now disclose more information about their property and the removal of the crutch of personal search insurance, issues concerning accountability and liability have come to the fore, and the emphasis has switched towards legal matters and responsibility for content.
Information questionnaire
Sellers must now complete a Property Information Questionnaire (PIQ) before an estate agent is allowed to market their property. This document, a cut-down version of the original Home Use Form, loosely modeled on the Sellers Property Information Form (SPIF), contains basic information about the property, although it does include questions about access rights and asks for disclosures about previous issues with the property.
The introduction of the form has led one firm to claim that any inaccuracy will create a liability for the seller, with potential damages of up to £5,000. Indeed, the apparent importance of the document is underscored by the guidance notes that suggest that if an estate agent assists the seller in the completion of the form, then the Property Misdescriptions Act 1991 will apply.
However, it is unclear whether any representation in the questionnaire will result in such a liability. Despite the efforts of HIP providers to force clients to use online submission methods, many PIQs will be scanned and included in electronic format, for ease of distribution to third parties. Therefore, if a signature was included, this would introduce a significant identify theft risk. To counter this risk, a signature is not required on the form.
Suffice to say, an unsigned document is evidentially extremely weak and it would be difficult for a claimant to prove that it was the seller that completed the form, and therefore made such misrepresentations.
However, given that the disclosures on a PIQ are easily transferred to the SPIF ready for signing by the client, this should prove a useful time-saver when preparing these documents, which traditionally clients can be notoriously slow in completing.
Reliance on content
One of the key issues facing solicitors when provided with a HIP is whether the content should be relied upon. Given the frequency with which title information is incomplete and inaccurate and the proliferation of poor quality personal searches, it is hardly surprising that for most solicitors, the drainage search is often the only document that they feel comfortable using. However, the changes introduced this month should mean that the quality of the local authority search will be improved and should result in a wider acceptance of their content.
While most HIP providers struggle to understand the fundamental differences between an official and a personal local authority search, the abolition of the sticking-plaster solution of personal search insurance has been a wake-up call for the industry. As personal searches must now include complete information including key matters such as building regulations approval, their price has risen to such an extent that official searches are now frequently cheaper than a personal search. The effect of this is that providers are now being given the option by search providers to choose whichever search is the cheapest resulting in the more widespread use of official searches.
While some solicitors will continue to dismiss HIPs as an irrelevance, there is anecdotal evidence that elements of the documentation are being used for pre-contract enquiries and preliminary title investigation. The combination of more timely disclosure from the client in the PIQ and the increased use of official searches should mean that HIPs will finally start to deliver genuine benefits to the consumer.
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