When you obtain a quote from your solicitor for a commercial property transaction (whether it be a freehold purchase or taking on a lease), your solicitor would normally provide you with a rough cost for property searches. However, do you know exactly what the searches are and what they cover? What is your risk if you don’t carry them out? Below is a short summary of searches which would be undertaken in every transaction. Please note however, that further searches may be required depending on the type and location of the property.
Local authority search and land charges search
A local authority search reveals important information about the property (only the property and not neighbouring properties), such as planning permissions and environmental and pollution notices. However, local authority records may go back for only a limited period and earlier planning decisions etc. may not therefore be revealed. Building Regulations consents are not normally listed but breaches of building control may be, for example where plans have been approved but there has been no final inspection of the work.
It is important that you know the history of the property as you may be liable for continuing obligations under such permissions and consents. You would also be liable for any breaches of the permissions and consents, even if you did not commit the breach yourself. The absence of relevant consents may prompt further enquiries of the seller or landlord and may lead to the need for indemnity insurance, for which the seller would normally be asked to pay.
If you would like to know what permissions/consents neighbouring properties have, it would be prudent to inform your solicitor at the beginning of the transaction so that the search area can be widened. This would be particularly helpful if, for example, you are planning to open a business where, locally, there are no competing businesses. A search of the wider area might alert you to any potential competitors if they have already obtained their planning permission, although this would normally allow use within a particular class (e.g. as a shop or an office) rather than for a specific type of business..
A search of the local land charges register shows matters such as compulsory purchase orders, tree preservation orders, planning enforcement notices and local authority financial charges registered against a property (e.g. for repayable grants).. These orders will also bind the property and may restrict development and the use of the property. They may also put a financial burden on you if payments due were not made by the previous owner/tenant.
Various other matters are covered by general enquiries of the local authority submitted with the Local Land Charges Search and specific enquiries may also be raised. If there are particular matters of concern to you about which the local authority may be able to provide information, you should mention this to your solicitor at the outset, so that suitable enquiries can be included.
The search is made with the District or London Borough Council in whose area the property is situated but the result will include information obtained from the County Council (if any), for example in relation to highways. When instructing your solicitor you should mention the names of any roads next to the property that are not apparent from its postal address, so that information about their status will be included in the search result.
Drainage and water enquiries
A drainage and water search result tells you whether a property is connected to the mains water supply and mains drainage. The replies may also show the location of public sewers within the boundary of a property and other such matters that may restrict development or increase the cost of developing the property.
Environmental and flood search
If a local authority determines that land is contaminated, and the party who caused or knowingly permitted the contamination cannot be found, the current owner or occupier of the land may be required to remedy the contamination. This can be an expensive process, so it is important to assess the risk of land being contaminated before committing to buy or lease a property.
A flood risk search gives a high level assessment of the risk to the property from the four main types of flooding (river, coastal, groundwater and surface water). It is important to know this information as it can affect the value of the property and the terms of your buildings insurance.
Chancel repair search
A chancel repair search shows whether the owner of a property may be liable to contribute towards the cost of repairs to the chancel of a parish church (which may not be the one nearest to the property) although it does not determine whether there is an actual liability. This is a complex subject requiring knowledge of church history from before the Reformation! We would advise you not to contact any parish churches directly in relation to chancel repair liability, as this may limit the availability of indemnity insurance.
If the search reveals potential liability, indemnity insurance for chancel repair liability can be obtained. Your solicitor would be able to advise you on the cost of the insurance.
If you would like to discuss this further, then please contact Lily Meyer of Morrisons Solicitors Commercial Property Team in Wimbledon on 020 8614 4590 or by e-mail on [email protected].