Missed Covenant Triggers Home Buyer's Nightmare

A woman whose purchase of a seaside home became a nightmare owing to a dispute with neighbours triggered by a conveyancing solicitor's negligence will receive some compensation for her loss – but not as much as she had hoped for.

The woman had paid £460,000 for the property, but her solicitor failed to inform her of a restrictive covenant which prevented her from making any exterior alterations without her neighbours' consent. She was in the midst of installing a swimming pool, organising an extension and making other alterations when her neighbours objected.

A lengthy and increasingly bitter row followed, in which her neighbours threatened to seek an injunction to stop the works. No complete resolution was ever reached and mortgage lenders ultimately took possession of the property, which was sold on a distressed basis for £390,000.

The woman sued the local law firm for which the solicitor worked. A judge found that he had been negligent in a number of respects and ordered the firm to pay more than £180,000 in damages and to compensate its client for the cost of the abortive works that she had carried out on the property.

Ruling on the law firm's challenge to that decision, the Court of Appeal noted that the solicitor had undoubtedly been negligent. The woman was entitled to compensation to reflect the cost of the works and the difference between the price she had paid for the property and its then market value, subject to the covenant.

However, in reducing her damages entitlement, the Court found that the solicitor's negligence had not caused other losses that she sustained, including legal costs she had incurred in defending her neighbours' injunction application and the difference in the price she paid for the property and its distressed sale price. The case was returned to the County Court for a re-assessment of the woman's damages.

Cases such as this are, thankfully, rare. However, solicitors are required to carry professional indemnity insurance in order to protect their clients and the law firm's insurers will ultimately pick up the bill.
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