This High Court case serves as a powerful cautionary tale against opportunistic buying from vulnerable sellers and emphasises the absolute necessity of strict legal compliance and transparent conduct in property transactions.
Background:
Mr. and Mrs. Solaja owned a property where they lived with their children until 19 October 2022, when the property was repossessed by their mortgagee, Santander UK PLC, following unsuccessful efforts by the Solajas to suspend a warrant of possession.
Mr. Essien, a consultant for AX365 Property Services (AX365) Ltd. (a company sourcing buyers for homeowners facing eviction), identified the Solajas through court lists. On 18 October 2022, he cold-called Mrs. Solaja. The next day, the day of the repossession, he arrived uninvited at the property, presenting himself as someone who could help and advise the Solajas in their distressed situation. He advised a quick sale due to accruing bank charges and the Solajas' significant equity. He also offered to help with accommodation and secure a cash advance from a buyer. Mr. Solaja also claimed that Mr. Essien recommended James Solicitors.
Mr. Essien took photographs and circulated the details of the property to AX365's list of prospective buyers. Initially, Quick Property Sale (QPS) Ltd. made an offer of £420,000, and another investment company offered £434,000. Half an hour later, QPS offered £436,000. In the email, it was stated that the buyer would exchange contracts immediately by releasing the funds required to redeem the mortgage in full. On 21 October 2022, the Solajas signed an agency agreement with AX365. On the 25th of October 2022, they entered into a written agreement with QPS to sell the property to the company for £436,000 with a clause that the property would be sold with vacant possession.
Santander subsequently discovered that QPS was the intended buyer and advised the defendants in November 2022 that it would not approve the sale, citing its policy not to deal with third-party buyers after repossession and concerns about the solicitors' conduct. The defendants subsequently decided not to proceed with the agreement on the basis that the bank refused to sell the property to QPS and instructed that the deposit be returned to QPS.
QPS then started proceedings for specific performance of the agreement and damages.
Decision:
The High Court dismissed the claim on the basis that the contract for sale was unenforceable under the Law of Property Act (Miscellaneous Provisions) Act (LPA) 1989, that the agreement was obtained through undue influence, and that it was impossible to perform. The Court noted that Section 2(1) of the LPA 1989 mandates that contracts for the sale of land must be in writing and incorporate all expressly agreed terms in one document. Indeed, the written agreement itself stipulated that the £231,000 deposit was to be held by James Solicitors as a stakeholder.
The Court also found that the Solajas had not received adequate legal advice to rebut the presumption of undue influence arising from their relationship with Mr. Essien. The Master was satisfied that Mr. Essien used the Solajas' "very vulnerable position" to create a relationship of trust and confidence to procure their entry into a transaction from which he and AX365 would benefit. This established the first limb for presumed undue influence.
QPS's failure to transfer the beneficial ownership of the deposit monies, preventing the Solajas from redeeming the mortgage and thus giving vacant possession, rendered the agreement impossible to perform. The Solajas were therefore entitled to treat themselves as having been discharged from the agreement. However, the Solajas failed to prove that Mr. Essien acted as QPS's agent for the purpose of the misrepresentations. Therefore, their defence based on misrepresentation could not succeed.
Implications:
This decision contains strong messages regarding the formation of land contracts, the standard of conduct expected from those dealing with vulnerable parties, and the practicalities of property transactions involving mortgagees in possession.
This case is a stark reminder that all expressly agreed-upon terms for a land contract must be incorporated into the written document(s). Any crucial oral or implied agreements not reflected in the signed contract can render the entire agreement unenforceable.
For companies targeting homeowners facing eviction, be aware that directly contacting individuals identified from court lists, cold-calling, arriving uninvited, and offering help in a crisis creates a strong presumption of influence.
This case clarifies that once a mortgagee has repossessed, they are not obliged to deal with a third-party buyer.