The Energy Bill is currently passing through Parliament and is expected to receive Royal Assent later this year. Amongst other provisions, it sets out the legal framework for the Green Deal, the Government’s new flagship environmental policy under which it is hoped that up to 14 million home owners will be encouraged to install energy efficiency measures by the provision of low interest loans. Fourteen million homes represents more that half of the total homes in Britain therefore conveyancers will come across properties which have been improved under the Green Deal everyday. Despite this, the Green Deal has so far passed under the radar of most conveyancers.
There are important legal implications for conveyancers which result from the Green Deal and if lawyers are not aware of them they risk embarrassment at best or a negligence claim at worst. The issues arise from the fact that the seller of an improved property has certain duties to a purchaser.
Obtaining a Revised EPC After Green Deal Improvements
Following completion of improvements completed under the Green Deal, section 11 of the Energy Bill requires the Green Deal provider to issue an updated energy performance certificate reflecting the improved efficiency and the details of the Green Deal plan including the amount of the loan repayments. Conveyancers will need to make sure these revised certificates are supplied/obtained during the sale/purchase process.
Buyer’s Obligation to Take Over Repayments
The debt due under a Green Deal loan attaches not to the individual improver but to the “fuel bill”. In other words the new owner is liable for the repayments and obviously the conveyancer needs to advise his client of this and of the loan terms. Not only is it part of the conveyancer’s obligation to his client to provide all of the information relevant to the property but the seller is under a legal duty to disclose details to the buyer.
Duty on Seller to Disclose Green Deal Plan
Section 12 of the Energy Bill relates to disclosure by the seller to the buyer of the fact that the property has been improved under the Green Deal. This obligation is discharged by provider the buyer with a copy of the updated EPC. Section 14 is much more onerous. This places an obligation on the seller (and so effectively his conveyancer) to ensure that the contract contains an acknowledgement by the buyer of his liability to take on the Green Deal payments in place of the seller, in the form of a special condition.
Failure to include such a clause in the contract can lead to the buyer being freed from liability which in turn leads to the Green Deal provider having a right to recover the balance owed from the seller. Obviously a seller sued in this situation is going to look to his conveyancer for compensation.
Conveyancers would do well to study the Energy Bill and its impact on conveyancing transactions and to put plans in place to deal with it in practice.
Solicitors etc who do not declare or find this clause of GD may be liable for negligent mistatements. The previous owners may also find themselves on the end of a court action for failing to declare this. They say that the debt is with the property, but it is a person who pays it and if they have been lied to then I find it hard to accept that the GD or power companies can make them pay under such circumsatnces. Indeed the debt must go flying back to the previous owners for misleading the sale.
On sale of a GD dwelling the debt must be paid in full or declared. This again is an after thought of a muddled admiinistration.
Much better idea taken by the government on introducing the green deal scheme at the low interest loans for every people.