Residential Buyers Beware: Buyer Information Packs (BIPs) – are they a good idea?
Home Information Packs (HIPs) were first introduced in 2007 and contained a series of mandatory documents that had to be obtained prior to marketing a property for sale, including a sale statement which included property searches, evidence of title documents and an EPC. They were subsequently scrapped in 2010, mainly due to their use being cited as incurring costs prematurely for a seller, when there was no guarantee of a buyer.
We are increasingly seeing the use and promotion of Buyer Information Packs (BIPs), which is in effect a reincarnation of the HIPs, although voluntary, but very much encouraged by selling agents, now at the cost of the buyer. On the face of it, useful information is provided upfront, which can potentially save time during the conveyancing process. However, they can cause a headache for a buyer’s conveyancer, if the information provided does not meet requirements, for example, the searches supplied do not meet a mortgage lender’s specifications or the searches are out of date by the time the transaction is ready to complete. Ultimately, this can result in the buyer having to obtain new searches, prolonging the conveyancing process and incurring further costs.
Further, a seller may respond to protocol forms that are included within the pack without taking legal advice, potentially leading to unintended misrepresentation. For example, a question in the Property Information Form (PIF) may require the seller to confirm whether knotweed is present at the property. Without legal advice, the seller may be tempted to answer ‘no’, as this is what they believe to be true. However, this could result in a potential misrepresentation claim if it later transpires that knotweed was present. This recent case highlights the importance on this matter when a seller was found to have misrepresented the presence of Japanese knotweed on their £700,000 London property and was subsequently (and successfully!) sued for over £200,000!
Jo Malcolm, Director and Licensed Conveyancer explains: “The costs associated with the BIP are typically upfront and in addition to legal fees. Furthermore, timescales are subject to a range of factors and it is not as simple as assuming the BIP will speed the process through.
“Ultimately, taking all of this into account, the BIP may not be in the best interests of the buyer despite its initial appeal. If the process is to be formally reimplemented, I would prefer to see a regulated and consistent government led scheme for the introduction of a new style HIP, with fixed costs.”
If you are looking to buy or sell a property we can provide the expert help and guidance you need contact us here or give us a call 0114 2945 360.