In a warning to house buyers that it is wise to obtain a full survey before committing yourself, a couple who contracted to pay £3.6 million for a country house – but later pulled out of the deal when evidence of damp and dry rot emerged – have forfeited their £150,000 deposit and been ordered to pay £235,000 in damages.
The couple were anxious not to lose the property and exchanged contracts for its purchase a day after the price was agreed. They received a surveyor’s report about a month later which revealed signs of penetrating and rising damp as well as wet and dry rot and timber decay. They also had other concerns about the property and did not pay the balance of a 10 per cent deposit or proceed to completion.
The vendors’ response was to rescind the contract. They retained the £150,000 already paid by the couple and sued them for the balance of the deposit as well as for damages for breach of contract. The couple, who had wanted a property in a pristine state, resisted the claim. They argued, amongst other things, that the condition of the property had been recklessly misrepresented to them.
In upholding the vendors’ claim, however, the High Court accepted that they had been unaware of the damp problem before contracts were exchanged. The couple had viewed the property several times, once with an architect, and had accepted it in the physical state that it was in at the time. In those circumstances, the vendors had an ‘unconditional right’ to rescind the contract and to seek damages.