The Ombudsman's final decision:
Summary: The Council agreed to deal exclusively with Mr X when he was buying a house from it. Mr X then spent £2,000 on searches and a survey. The Council received a higher offer and withdrew from the sale to Mr X. The Council will repay Mr X the £2,000 and pay him £250 for his time and trouble.
- Mr X complains the Council agreed to deal exclusively with him when buying a house from it. He says he then spent £2,000 in associated costs. He says the Council then reneged on its agreement.
The Ombudsman’s role and powers
- We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- We investigate complaints about councils and certain other bodies. Where an individual, organisation or private company is providing services on behalf of a council, we can investigate complaints about the actions of these providers. (Local Government Act 1974, section 25(7), as amended)
- If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
How I considered this complaint
- I considered the complaint Mr X made and discussed it with him. I asked the Council for information and considered what it provided.
- Mr X and the Council had the opportunity to comment on a draft version of my decision before I made a final decision.
What I found
- A council can sell land it owns for the “best price reasonably obtainable”. (Local Government Act 1972 s123.)
- Anyone can ask a planning authority to say if the use of land is lawful. If the applicant provides the planning authority enough information to satisfy it the use is lawful, it must issue a “certificate of lawful use”. (Town and Country Planning Act 1990 s191&192)
- The Council decided to sell a house it owned on the open market. It accepted an offer from Buyer 1, but the sale fell through. It put the house back on the market and on 16 October 2018 accepted an offer from Mr X for the full asking price. The Council used an Estate Agent (“the Agent”) to deal with the sale.
- On 18 October 2018 Mr X asked the Agent what Surveyors he would recommend, and the Agent recommended a company.
- On 30 October the Council sent Ms X’s Solicitor documents about the sale, including a draft contract. On 6 November Mr X’s Solicitor returned the contract with some amendments and asked some questions. The Council replied on 20 November and apologised for the delay. The Council had not amended the contract.
- Mr X wanted to establish if the use of land attached to the house as a garden was lawful. The County Council is not the planning authority, so could not give him a certificate of lawful use. On 30 October 2018 the Council said it would give him a statutory declaration about the use of the land of the garden. Mr X could then give this to the District Council, the planning authority, as evidence for an application for a certificate of lawful use.
- Mr X agreed once he had the statutory declaration, he would exchange contracts conditionally. The condition was the District Council giving a certificate of lawful use for the garden.
- Emails between Council officers show the Council knew how important the certificate was. The emails say if the use of the land as a garden was not lawful, this would leave the house with about 1 metre of garden. The Council would then have to revalue the house and anticipated a large reduction in its value.
- On 21 November 2018 the Council asked Mr X’s Solicitor to draft the statutory declaration. Mr X’s Solicitor provided the draft on 23 November.
- On 27 November Buyer 1’s Solicitor contacted the Council with a revised offer for the house at the full asking price. He said he was ready to exchange contracts and he had the deposit ready.
- On Wednesday 28 November the Council contacted Mr X’s Solicitor to ask if Mr X could exchange contracts the following week. It said this was because the Council had received another offer which it would have to consider if it did not have an early exchange with Mr X.
- Mr X then contacted the Agent in a series of emails and telephone calls on 28 and 29 November questioning the deadline. The emails say the Agent told Mr X he assumed the Council wanted to avoid dealing with the other offer. The Agent said: “I did say to them there is no point in placing an unachievable deadline.” Mr X said he had not done the property searches yet as he wanted the Council to provide the statutory declaration. Mr X said he would do the searches now but only if he knew the Council was not going to “pull the plug” on the sale. He said it would take a week to get the searches. The Agent said Mr X should suggest an exchange date he could make. Mr X suggested the end of the following week, if “everyone gets their finger out”. The Agent replied: “Agreed”.
- Mr X then emailed his Solicitor to say he had spoken to the Agent and agreed he would move quickly to exchange subject to the following actions. The Council providing the statutory declaration and other outstanding information; and that completion would happen when Mr X had the certificate of lawful use. The Agent has a copy of this email.
- Mr X says during a telephone call, the Agent agreed to deal exclusively with him. The Council says it has no notes made by the Agent or its Officers of telephone conversations they had with each other or Mr X.
- The Agent then emailed the Council to say Mr X had not yet applied for the searches so could not exchange until the end of the following week at the earliest. The Agent said he had concerns about a conditional exchange and if Buyer 1 was willing to make an unconditional exchange the Council should consider it.
- On 29 November Mr X’s solicitor emailed the Council. She said Mr X was keen to exchange. She had applied for the searches. She said Mr X needed the Council to complete and swear the statutory declaration as the garden was the most important issue for him. She said Mr X could exchange conditional contracts within the next two weeks.
- The Council replied that it wanted to exchange the next day (Friday 30 November). Mr X’s Solicitor replied the intention was to exchange within two weeks. She said it was imperative the Council dealt with the statutory declaration. The Council replied the sale might fail and it would let her know.
- The Council emailed the Agent asking him to tell Mr X he was at risk of losing the property if he delayed in exchanging contracts. The Council said it intended to decline Buyer 1’s offer but if he came back with a higher offer, it must consider it. The Council said the only outstanding matter from it was the statutory declaration, which the Council had not yet signed. The Agent replied he had spoken to Mr X who “will continue with the purchase as quickly as possible”. He asked the Council to sign the statutory declaration.
- On 30 November Mr X asked the Agent to get the Council to deal with the statutory declaration.
- On 4 December Mr X’s Solicitor asked the Council’s Solicitor if it intended to continue with the sale to Mr X so she could progress. The Council’s Solicitor replied he thought the sale was off and he could not get any instructions. He said as soon as he did, he would let Mr X’s Solicitor know.
- On 5 December 2018 the Agent told Mr X the Council was dealing with the statutory declaration. The Council sent the declaration to Mr X’s Solicitor on 6 December.
- On 7 December the Agent emailed the Council to say Mr X had arranged a survey for the following week. He said “this is complete news to me” he asked if the Council had heard from Buyer 1.
- On 10 December the Council told its Solicitor to continue with the sale to Mr X as soon as possible. It said it wanted to encourage Mr X to act quickly because of the risk of a higher offer.
- On 11 December Mr X’s Solicitor asked the Council some questions arising from the survey. She sent a follow up question on 18 December.
- On 17 December Buyer 1 made an increased offer for the house. On 19 December the Council withdrew the sale from Mr X. Mr X asked the Council to consider meeting his abortive costs from 28 November onwards. The Council said it would consider this.
- The Council accepted the offer from Buyer 1. The Council made a conditional exchange of contracts with Buyer 1 in February 2019. Between December 2018 and February 2019 Mr X kept in contact with the Agent and the Council about his request for costs. The Council said it was waiting to see if the sale to Buyer 1 continued. The Council turned down Mr X’s request on 6 March 2019.
- On 7 March 2019 Mr X made a formal complaint. He understood some costs he incurred were at his own risk. However, he held the Council responsible for the costs he incurred after it agreed to deal exclusively with him.
- The Council replied on 19 March. It said it only accepted Mr X’s offer on the basis he would exchange contacts within four weeks of it sending the draft contract. It said this happened on 30 October but four weeks later his Solicitor said he could not complete for two weeks and she had not applied for searches. It said Mr X was not ready to exchange when it received the other offer and had not had a survey done.
- Mr X asked the Council to move his complaint to stage two. He said the Council had agreed to deal exclusively with him but then had not acted on outstanding points preventing him from exchanging quickly.
- The Council asked its Solicitor for his comments on the complaint. The Solicitor said he had only offered exclusivity to Mr X if he could exchange urgently but he could not do so.
- The Council sent its stage two response to Mr X on 15 April 2019. It did not refer to his complaint about dealing exclusively with him and did not tell him what the Solicitor said. Mr X again asked the Council to comment on the exclusivity. It replied on 15 May 2019 that Mr X undertook the survey and searches at his own risk.
- In response to my enquiries the Council says it intended to sell the house to Mr X but then it received a better offer it had to accept. It says it never agreed to deal exclusively with Mr X. It says it wanted to sell the house to Mr X quickly after Buyer 1 made another offer.
- Any delay in progressing the sale was because the Council did not deal quickly with the request for a statutory declaration. It took three weeks for it to ask Mr X’s Solicitor to draft the declaration. It then took nearly two weeks for it to swear and return the declaration, by this time Buyer 1 had made a counteroffer. I cannot say with any certainty the Council would have sold the house to Mr X if it provided the declaration sooner, but it is possible.
- The Council and the Agent gave Mr X contradictory information and deadlines. On 28 November 2018 the Council asked if Mr X could exchange the following week. Mr X spoke to the Agent who said the Council should not give unachievable deadlines. The Agent agreed a deadline of the end of the following week with Mr X, dependent on the Council providing the statutory declaration. Mr X sent the Agent a copy of his email to his Solicitor with his understanding of the agreement. The Agent did not dispute this.
- The Council did agree to deal exclusively with Mr X. The Council and Agent made no notes of any telephone conversations, but it is clear telephone conversations took place. Mr X says during a telephone conversation on 29 November the Agent agreed to deal exclusively with him. The Council’s Solicitor says the Council agreed this if Mr X exchanged urgently. Because the Council and its Agent have no notes of telephone conversations, I cannot know if anyone made Mr X aware of any conditions. I can say whoever told Mr X this, did not follow it up with an email to explain any terms of the exclusive arrangements or what urgent meant.
- Mr X went ahead with the searches based on his conversations and emails with the Agent on 28 November. However, the next day the Council said it wanted to exchange contracts the next day; even though it had not done the statutory declaration. This is fault as it had agreed a different deadline through the Agent, and Mr X had now ordered the searches.
- On 29 November 2018 the Council told Mr X’s Solicitor the sale might fail, and he would let her know. The Council did not update Mr X’s Solicitor but on 6 December it provided the statutory declaration. Mr X still thought the Council was dealing exclusively with him. Mr X then arranged a survey.
- Internal emails show on 10 December the Council wanted its Solicitor to ask Mr X to move quickly because of the risk of a higher offer. No-one passed this message to Mr X or his Solicitor.
- Mr X acted with caution. He did not spend money on searches and a survey until he was sure the Council would sign the statutory declaration. The Council led Mr X to believe it would deal only with him, so Mr X committed to the expense. On balance, I find Mr X committed to the expense of the searches and survey because the Council led him to believe it would deal exclusively with him.
- The Council withdrew from the sale when Buyer 1 made a higher offer. On 19 December 2018 Mr X asked the Council to cover his costs from when it said it would deal exclusively with him. It took until 6 March 2019 for the Council to refuse this request.
- The Council was at fault for the way it dealt with Mr X’s complaint. Its response of 19 March 2019 is wrong. The Council did not tell Mr X on 30 October he had to exchange contracts within four weeks. Mr X has a survey done before the Council received a higher offer. In its stage two response it did not deal with Mr X’s complaint the Council had agreed to deal exclusively with him or tell him what its Solicitor said. The Council put Mr X to unnecessary time and trouble.
- To put matters right for Mr X within one month of my final decision the Council will:
- Apologise to Mr X.
- Pay Mr X £2,000 for the expense he went to after the Council agreed to deal exclusively with him.
- Pay him an additional £250 for his time and trouble.
- The Council is at fault and had caused injustice to Mr X. It has agreed to provide a remedy for this have recommended a remedy for this. I have completed my investigation and closed the complaint.
Investigator's decision on behalf of the Ombudsman