Asking the right questions

But what about transparency in commercial transactions such as property sales? If I buy a house from you, should I expect full disclosure from you? You might instinctively say yes, but should I be expected to assume potentially onerous legal liability by not disclosing a defect which you subsequently discover? And would you be quite so ready to say yes if the tables were turned and you were the seller?

Jersey law and practice traditionally sided with the seller, with ‘caveat emptor’ the guiding principle. It was for the buyer to make their own investigations and little if any information was required to be provided by the seller to the buyer.

However, recent years witnessed a shift in approach, with buyers’ lawyers developing ever more lengthy sets of questions to be answered by sellers’ lawyers. Some of the questions were undoubtedly sensible and hard to object to. But others were much more controversial, requiring for example the seller to confirm that services and equipment in the property were ‘fit for purpose’, a can of worms if ever there were one. Indeed, some frequently asked questions were impossible to answer, such as the request for confirmation that the property contained no legally protected animals or birds – all wild birds in Jersey are protected apart from carrion crows, magpies, feral pigeons and wood pigeons!

Not only was some of the content of the questions problematic, but there was no consistency of approach between law firms as to who asked which particular question. Furthermore, the legal status of the answers given was unclear: how did they interact with the conveyance, with its clause under which the buyer took the property with all its defects whether hidden or apparent; what would be the legal remedy for the buyer if an answer given by the seller proved to be incorrect; for how long would the seller remain on the hook?

This uncertain and rather chaotic state of affairs was the background to the development by the Law Society of Jersey last year of the Standard Seller Questionnaire (SSQ). Drafted by the Law Society’s Conveyancing Sub-Committee, on which all the major conveyancing firms are represented, the SSQ was introduced initially on an optional basis and then, after a few months’ road testing, it became mandatory. The aim of the SSQ is to strike a fair balance between the interests of sellers and buyers, focusing on factual questions which sellers can reasonably be expected to answer. It is written so far as possible in plain English and contains clear instructions to both parties as to their entitlements and responsibilities. Experience suggests that most sellers find it straightforward to complete.

Of course, opinions will differ as to where the balance should lie between the seller and the buyer when it comes to the disclosure of information. And indeed the consensus in five or ten years’ time as to what is a fair compromise may be very different to today’s consensus. However, the important thing is that there is now a framework which can be adapted as needed to reflect any such changes. Buyers and sellers of property will always have divergent interests, and different perceptions of where the limits of transparency should be drawn, but the advent of the SSQ has brought much needed compromise and clarity to the information disclosure exercise.