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False Claim to Be a Cash Buyer Ruled Fraudulent in Ground-Breaking Case

In coming to the aid of a frail and elderly householder, the High Court has ruled in a landmark case that she was on the receiving end of a fraudulent misrepresentation when a would-be purchaser of her home was falsely described to her as a cash buyer.

A copy of a contract before the Court indicated that the woman, aged in her 80s, had signed a contract agreeing to the sale of her home for £840,000. Following a purported exchange of contracts, the purchaser, an investment company, launched proceedings against her, seeking an order requiring her to complete the transaction.

In rejecting the company's claim, the Court found that a director of the company had represented to her, via an estate agent, that it was a cash buyer. The natural and ordinary meaning of that phrase is, the Court noted, a purchaser who intends or expects to buy a property without the assistance of a secured loan or finance.

The representation was not true when it was made in that the company's intention throughout was to obtain a mortgage or some other form of secured finance. There was no evidence that it was in a financial position to complete the purchase in cash. In finding that the representation was fraudulent, the Court concluded that the company knew it was not in fact a cash buyer.

The Court also upheld the woman's case that, due to non-compliance with Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, there was in fact no valid exchange of contracts. It found that a conveyancer acting for the company did not hold a duly signed contract at the time of the purported exchange.