Property searches are a critical part of the due diligence process and can protect you against making expensive mistakes!
This note is intended to explain the importance of searches in property transactions so that you can decide whether or not to instruct us to carry them out for you. A full search package can cost up to £1,000 plus VAT and may take as long as three weeks to obtain and therefore can add significantly to the cost and time it takes to complete a transaction. However, a negative result revealed by a search could have very serious implications in terms of the value and your enjoyment of the property and it is better to know about those issues before you commit. The decision as to whether to undertake searches is therefore not an easy one to make.
Local Authority Search
Whilst commonly known as the Local Authority Search this search actually comprises two separate searches; Enquiries of the Local Authority and Local Land Charges.
Enquiries of the Local Authority cover a wide variety of matters for which the local Council have responsibility including planning permissions, building regulations, public highways, public rights of way, mineral consultation and common land. The replies we receive are likely to indicate whether a property has planning permission and if it does it will allow us to obtain a copy of the permission to establish whether it contains any conditions which might affect your occupation. The replies will record any recent building works undertaken on a property. Any major road proposals will be revealed and public footpaths or bridleways affecting the property will be shown by reference to a plan.
A Local Land Charges search is likely to reveal the existence of Council grants which are secured on the property, planning enforcement history, planning contribution agreements, tree preservation orders and listed building status.
The environmental search is carried out on a “desk-top” basis in that the search provider looks at publicly available information to form an opinion as to the likely environmental status of a property. No inspection is made or samples taken. The search results usually contain a conclusion which states whether or not the information revealed is likely to lead to the property being classed as contaminated land under environmental legislation. Whilst the use of the search is limited because of its desk-top nature it does provide a useful screening tool. If you acquire a property which has environmental problems you could potentially be held liable for the costs of cleaning up any contamination or pollution and so this search is recommended.
Drainage and Water Search
This search is undertaken with the local water company and one of its primary functions is to establish that a property is connected to mains water and drainage. It can also be used to help locate the position of mains water and drainage pipes which may affect a property.
Chancel Repair Liability Search
This rather curious search is undertaken to establish whether or not there is a risk of a property being subject to a “chancel repair liability” which is a legal obligation to contribute towards the cost of repairing the chancel in the local parish church. Despite the arcane nature of the obligation it is unfortunately a very real liability which has caught property owners out over the years.
TRANSACTION/LOCATION SPECIFIC SEARCHES
In some cases we will ask the Highways Department at the local Council to provide a map showing the extent of the highway adoption in proximity of a property so as to establish whether the boundary of the property immediately abuts the public highway. We will also ask the Highways Department to confirm whether they are aware of any proposals to carry out works to the highway.
We will undertake searches with the relevant electricity, gas and telecommunications providers so as to establish the availability of these services and whether any of them cross the property concerned.
Coal, Cheshire Brine, Post Office Tunnels, etc
Sometimes the properties that we are looking at require very location specific searches. For example, in parts of the country which have a coal mining history we need to undertake a specialist search with the Coal Board to assess the risk of potential mining subsidence and in some parts of Cheshire we need to carry out a search to establish whether the property may be at risk because of historic salt extraction.
There are numerous other searches that are offered by search organisations these days, so we will always consider what other searches we think may be appropriate for you and will discuss this with you when we consider the matter.
As part of due diligence on the property we will also check the title to the property to make sure that the landlord owns it and that there are no restrictions or charges or other matters within the title that could adversely affect the property and your plans. We will also raise preliminary enquiries with the landlord’s solicitors. This is in order to obtain up to date information about the property, outgoings and other practical matters.
The results of the searches mentioned above provide us, and by consequence you, with a huge amount of information about a property. In some cases the information will be of little consequence but in others it could result in the need for additional contractual protection, the need for an insurance product or a price reduction. In some cases the result of a search could lead to the decision being taken not to proceed. The following examples provide a flavour of some of the potential issues which may arise:
- A planning permission is revealed which contains a condition prohibiting or restricting the proposed use of the property.
- A planning enforcement notice is revealed which could lead to the local Council requiring the property to be demolished.
- A previous contaminative use could result in a costly remediation exercise.
- A mains sewer passing through the property could prevent or increase the cost of any future development of the property.
- A gap between a property and the highway may lead to a ransom situation.
We accept that the cost of searches and the time that they take to obtain can sometimes make them a rather unattractive proposition, particularly with lower value or urgent transactions, but we have many examples of where the results have proved to be of fundamental importance. We strongly believe in giving our clients a great degree of control over how their transactions are dealt with and therefore the decision as to searches is always one for you to make, save where a bank or other funder is involved who will insist upon them.
Our property team handles hundreds of business moves every year for clients across the country. Every property move is unique and we offer a range of service options allowing clients to decide how much they would like us to be involved in the process. To discuss a business move please call or email one of the partners in our property team, Karron Whitter or Rachel Booth.