Tuesday 10 February 2009

Uh-oh! Here comes trouble! (With added acronyms)

6 April 2009 is coming – the date from which house (and flat) sellers must have a complete Home Information Pack (HIP) in place before their property can be marketed

The HIP must contain –

  • an index
  • an Energy Performance Certificate (EPC) – or, for newbuilds, a Predicted Energy Assessment (PEA) - though marketing can start without these documents 14 days after their request if they are not yet available but are expected to be available within 28 days of the original request
  • a Sale Statement
  • a Property Information Questionnaire (PIQ)
  • for registered properties, official copy registers and title plan; for unregistered properties, a Search of the Index Map (SIM) and an Epitome of Title or Abstract of Title
  • for leasehold properties, a copy of the lease, or confirmation that it has been requested and is expected within 28 days
  • searches: a local search and a drainage and water search or confirmation that those documents have been ordered and are expected within 28 days

There are two new elements. The first is the requirement to have a HIP in place, not just commissioned, before marketing begins. The other is that the HIP must include a PIQ.

There are different versions of the PIQ for existing homes and for new homes - a new home for these purposes is a home that is being designed or constructed or which has never been occupied. – and different versions for freehold and for leasehold properties.

The forms produced by the government do not have to be used; so long as the same information is collected. This gives those who want to prepare a more comprehensive HIP an opportunity to make the PIQ more useful than the minimal form would be, but the current trend with HIPs is to do as little as possible to comply with the legal requirements, rather than as much as possible to expedite the sale process, so I will not expect anyone to try very hard to improve on the “basic” PIQ.

It should take most sellers less than ten minutes to complete the basic PIQ for freehold properties, but completing even the basic PIQ for leasehold property will be a longer, more daunting process.

The PIQ says, “The Property Misdescriptions Act 1991 (PMA) does not apply where the form has been completed solely by the seller.” There is, therefore, a clear implication that an agent who helps a seller complete the PIQ could be liable for property misdescription if the PIQ contains errors. Accordingly, it would be best for the estate agent to get the seller to complete the PIQ alone, or to get the HIP provider to deal with it or to enlist the assistance of a local solicitor or conveyancer.

Most sellers will, after some initial grumblings, complete the freehold part of the PIQ without too much resistance. However, the leasehold part is another matter completely and I anticipate that many sellers may feel the need to speak to the solicitor or conveyancer who acted when they bought the property. Be prepared for this.

(My thanks to Rob Hailstone, CEO of HIPAG – excellent HIP providers – for his assistance to me in producing this note. Any errors are mine!)

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