Landlord Pays for Failing to Mention Asbestos in Pre-Contract Responses

When selling or leasing property it is absolutely vital to answer pre-contract inquiries accurately and the consequences of not doing so can be severe indeed.

In one case, a tenant of warehouse premises was awarded seven-figure compensation after asbestos was discovered shortly after the lease was signed.

In reply to the tenant’s inquiries prior to execution of the lease, the landlords stated that they were unaware of any environmental problems relating to the premises. The landlords had in fact received an email from a specialist firm which reported a health and safety risk arising from the presence of asbestos. Soon after the lease was signed, the tenant discovered the asbestos problem and very substantial remedial works were required before it could take up occupation.

The High Court acknowledged that landlords do not generally warrant the state or condition of premises before they are let and that it is for tenants to make their own inquiries, by survey or otherwise. However, the statement that the landlords knew nothing of any environmental issues, when they had in their possession information that clearly pointed to a serious problem, amounted to a misrepresentation.

A term of the lease stated that the tenant acknowledged that the lease had not been entered into in reliance on any statement or representation made by the landlords. However, the Court found that that provision was highly unreasonable and did not enable the landlords to escape liability. The tenant was awarded the costs of the remedial works and of arranging alternative warehouse accommodation during the period that it took to complete them.

First Tower Trustees Limited & Anr v CDS (Superstores International) Limited.