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Do I Have To Declare Subsidence When Selling?

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Yes by law you are required to declare subsidence when selling a house. For the past six years, the sale and description of a property have been regulated by the Consumer Protection Against Unfair Trading Rules (CPR).  If you mislead a buyer, you could be sued.

Under these rules, sellers are required to disclose all relevant information about the property to potential buyers, both the good and the bad.

This ensures that buyers have all the necessary facts to make an informed decision. Failing to disclose important information that is later discovered during a survey or discussion can result in prosecution, as withholding such information is considered a criminal offence.

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Do I need to declare subsidence to prospective homebuyers?

If you are selling a house with subsidence, it is important to disclose this information to potential buyers. Whether your property has experienced subsidence in the past or is currently affected by it, hiding this issue serves little purpose.

It is in the best interest of all parties involved to be fully transparent about the property’s subsidence history as early as possible. By doing so, everyone is aware of the facts and can make an informed decision about proceeding with the sale.

Being open about subsidence helps build trust and a proactive working relationship with the buyer and their solicitor.

This approach also filters out potential buyers who are not deterred by historical subsidence, saving time and preventing any significant impact if they decide to withdraw from the sale.

Disclosing subsidence early on minimises the risk of a property chain breaking later if the buyer discovers the issue and backs out, possibly jeopardizing your plans to purchase a new home.

Ultimately, attempting to conceal the problem can lead to a breakdown of trust and may even cause the buyer to walk away from the sale.

Do I Have To Declare Subsidence When Selling?
Disclosing subsidence early on minimises the risk of a property chain breaking later if the buyer discovers the issue and backs out, possibly jeopardizing your plans to purchase a new home.

Can a buyer find out my property has subsidence if I don’t tell them?

A buyer will likely discover any subsidence issues, even if you don’t disclose the details.

There are several opportunities for the buyer to uncover that the property has or is suffering from subsidence during the transaction.  These include coal mining and mining searches. The buyer’s solicitor will conduct various property searches to uncover any potential issues with the property before the buyer commits to the purchase.

A coal mining report will indicate if the property is within 20 meters of any areas previously used for mining, which can increase the risk of subsidence.  These are some examples of where a buyer can find out about subsidence problems:

  • Environmental search is another search conducted by the buyer’s solicitor on behalf of the buyer. This search aims to identify any environmental risks that may affect the property and its surrounding area, such as ground stability and subsidence.
  • If the Environmental Report raises concerns about subsidence, the buyer’s solicitor may recommend obtaining a Homecheck Mining and Subsidence Report. This report will indicate if the property is located in an area prone to subsidence due to soil shrinkage and will provide a risk rating.
  • Survey reports carried out by chartered surveyors may also indicate potential subsidence issues in a Home Buyer Survey or a Building Survey. Although surveyors cannot confirm the presence of subsidence, they can suggest that the prospective buyer obtain a structural engineer report to obtain a definitive answer.
  • Structural engineers, on the other hand, are qualified to assess the property and determine if it currently or previously experienced subsidence problems. They can also advise if the property needs to be monitored for signs of subsidence, particularly in cases where it is not clear.
  • When arranging their insurance coverage, buyers may face difficulties if there have been previous subsidence claims on the property. Insurers have access to a central insurance database where information about past claims is available.

It is important to note that property searches do not confirm the presence of subsidence. Instead, they highlight the risk to the buyer and their solicitor.

In such cases, the buyer may request the surveyor to conduct a more detailed examination for signs of subsidence. If subsidence is suspected, the buyer will likely engage a structural engineer to carry out an assessment and provide a definitive answer.

Now that you understand the importance of disclosing any current or past subsidence issues to potential buyers, let’s go through the necessary information you should provide.

What information should I disclose to potential buyers?

The Seller’s Property Information Form (TA6) is a legal document completed by the seller.

Its purpose is to provide prospective buyers with detailed information about the property. Section 5 of the form specifically asks sellers to provide details about any building works that have been carried out.

This includes information about underpinning (5.1(h)), other remedial works (5.1(i)), and any claims made under a guarantee or warranty related to the work done.

You need to provide information about any claims you have made on your building insurance for underpinning or other subsidence remedial works. Please include these details in section 6 of the form.

In addition to Form TA6, it would be helpful to also provide the buyer’s solicitor with the following documents:

Even after providing all these documents, it is highly unlikely that your buyer’s lender will lend on the property.

Quote for Subsidence Repairs
Prospective buyers may have difficulty finding home insurance from regular insurance companies for a property with a history of subsidence.

Quote for Subsidence Repairs

It is not required however, obtaining a quote for the costs of remedial works can be a helpful way to show prospective buyers what they will be taking on and assist them in making a fair and reasonable offer.

Prospective buyers may have difficulty finding home insurance from regular insurance companies for a property with a history of subsidence. To be prepared to address their inquiries, it is a good idea to do some research beforehand so that you can provide them with helpful suggestions.

Even better, if you are selling a property with ongoing subsidence, reach out to your current insurer and inquire about transferring the claim to the new buyers with their authorisation.

This will save the buyers the costs of the remedial works and allow them to offer you a higher price in return. Just make sure to agree on who will cover the insurance excess.

Do I need to declare subsidence to home insurers?

If you suspect or discover that your property has subsidence, it’s important to notify your insurer as soon as you become aware of the problem. You also have a responsibility to inform your insurer about any subsidence issues when you first take out your policy and each time it renews.

The Financial Ombudsman Service’s article on Misrepresentation and Non-Disclosure confirms that you must take reasonable care to avoid making any misrepresentations.

Your insurance company will guide you on what to do next, depending on how severe the damage is. They may want to monitor your home for some time to find a long-term solution.

Most insurance companies will still cover subsidence on your property after a claim, as long as the repairs were done under their supervision or with their approval. However, be prepared for your excess and premiums to increase after making a subsidence claim.

What information should you provide to an insurer if you are trying to get insurance on a property with historic subsidence?

Your current insurance provider may not be able to provide continued coverage, and therefore you will have to seek alternative coverage.

The Association of British Insurers suggests considering the use of a specialist broker if this is the case. If you are trying to obtain insurance for a property that has experienced historic subsidence, it is important to provide your insurer with the following information and supporting documents:

  1. The date when the property was affected by subsidence.
  2. The cause of the subsidence.
  3. The actions taken to address and resolve the issue.
  4. Whether the structure was fully or partially underpinned.
  5. Any additional ground movement that has occurred since the completion of the remedial work.
  6. Any claims made for subsidence repairs, including the dates and amounts of the claims.
  7. Copies of any relevant surveys such as structural building surveys, home buyers reports, Certificate of Structural Adequacy, and reports from structural engineers, if available.

Is there a time limit for having to declare a previous subsidence claim to your insurer?

For most insurance policies, you usually have a time limit for declaring previous claims. When it comes to subsidence claims, there is no time limit. This means that even if the subsidence claim was made 20 years ago, you should still disclose it to your insurer.

Should I use a loss assessor?
Losing trust can also result in buyers being less inclined to work with you to find a fair solution if they feel they have been deceived.

What are the consequences if you fail to disclose subsidence to a potential buyer or your insurer?

There can be significant consequences if you do not disclose subsidence to potential homebuyers or your insurance company:

Loss of trust

If you don’t fully disclose any subsidence issues to potential buyers, they may start to question what else you might be hiding from them.

This lack of transparency can lead to further delays, as the buyer and their solicitor are likely to raise additional inquiries about the subsidence, which could have been addressed upfront. If the process drags on for too long, the buyer may become impatient.

Losing trust can also result in buyers being less inclined to work with you to find a fair solution if they feel they have been deceived.

The buyer will probably want to negotiate a lower sale price to account for the subsidence, any necessary repairs, and the impact this will have on the property’s future marketability.

When buyers have been provided with all the relevant information from the beginning, they are much more likely to be open to compromise on the sale price during negotiations.

Buyer walking away from sale

If the sale has not yet been completed when the subsidence issues are discovered, the buyer may choose not to proceed with the sale.

Misrepresentation claim

You might be liable for a claim for misrepresentation if you inform a buyer in the Seller’s Property Information Form that there are no defects with the property, but the buyer later discovers subsidence issues.

If the buyer’s claim for misrepresentation is successful, you would have to compensate the new owner for damages.

These damages would be calculated based on the difference in value between what the buyer would have paid for the property if they had known about the subsidence, and what they paid for it. In addition to any legal fees, you would be responsible for paying this amount.

It is important to note that choosing to hide information from potential buyers can result in costly consequences.

Insurer charging more for a policy
The worst-case scenario is if your insurer decides to cancel your insurance policy because you didn't disclose important information.

Charging more for a policy

If the insurer had known about the subsidence but still offered you the policy at a higher cost, they may only provide coverage for the portion of the premium you paid.

For instance, if you paid a £100 premium when you should have paid £200, you paid only half of the premium. Therefore, the insurer will only cover half of your claim.

Offering different terms

If the insurer still offered you the policy but with different terms, they have the right to apply those terms retrospectively if it is discovered that you did not provide accurate information when answering their questions.

As a result, your subsidence claim may no longer be covered if you no longer meet the additional conditions that have been retrospectively applied to your policy by the insurer.

Insurance can be cancelled

The worst-case scenario is if your insurer decides to cancel your insurance policy because you didn’t disclose important information.

If your insurer wouldn’t have offered you the policy in the first place had they known about the subsidence issues that you failed to mention, they can cancel your home insurance policy.

According to the Financial Ombudsman Service, the policy will be cancelled from the date the misrepresentation occurred.

This could be at the start of the policy or a later renewal if the subsidence problem happened after you got your policy. If you intentionally give your insurer incorrect information, they may not have to refund you for any insurance premiums you’ve paid.

This means you’ll be out of pocket and might have to find up to £50,000 to fix your subsidence problem.

Selling a property with subsidence
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