Pre-contract searches and enquiries Flashcards
(19 cards)
What is the purpose of pre-contracts searches and enquiries?
Buyer must be fully informed of any issues with the property, as the principle of ‘buyer beware’ (caveat emptor) applies
This means the seller is not obliged to say anything if they aren’t asked it
Buyer’s solicitor must therefore carry out thorough due diligence process + it informs the lender too
Give an overview of the searches/enquiries that will be relevant to every property, regardless of location/age etc
- Survey and personal inspection
- Local search
- Water and drainage search
- Pre-contract enquiries of the seller
- Environmental search
- Flood search
What does survey and personal inspection entail?
1) A professional survey should always be recommended to the client
- Lenders giving a mortgage will require one
2) Lender will always require a borrower to pay for a valuation, which assesses if the property is adequate security for the loan
3) They can get a full structural survey which provides a detailed commentary on the structure (relevant if the property is old or visibly damaged)
4) Homebuyers’ valuation combines valuation and structural survey, but is less detailed
5) Personal inspections by B’s solicitor are very rare for residential conveyancing; only for high value commercial transactions normally
What does the local search entail?
1) Local land charges search, standard (+ optional) enquiries of local authority are known as the local search
- Should be raised on every sale and purchase of property (bar optional enquiries)
2) Local land charges search details financial charges or restrictions imposed by public authorities, like planning consents, tree and conservation area orders
3) Standard enquiries reveal planning permissions, restrictions on permitted development, whether land is contaminated and liability for road repair
- Use this to check for information about roads and public highways adjacent to the property
- Where highways are not maintainable at public expense and have no plans to be adopted by a public authority, it means there is **no automatic right to use the road, and the LA is not paying for its maintenance **
4) Optional includes environmental notices and rights over common land
What does the water and drainage search entail?
Standard drainage and water enquiries are raised with a water company
If drains and sewers are adopted, they are the water company’s responsibility
What do pre-contract enquiries of the seller?
Standard questions asked of seller include:
- Whether S has had any disputes regarding the property
- Any third parties occupying the property
- Compliance with covenants in the title
- Any planning permissions
- Issues about boundary maintenance
- For commercial, VAT status of property
What does the environmental search entail?
1) Important to carry out, as solicitor may be negligent if they don’t advise on risk and liability if property is found to be on contaminated land
2) A desktop search is most common – carried out by a specialist environmental search company, it looks at all plans of the area, LA and Environment Agency information
3) If there’s a risk that the land might be contaminated, the buyer may consider commissioning a physical survey of the land to be carried out by a specialist environmental surveyor
- They take soil samples, analyse them and recommended what can be done to clean up the land to avoid contamination
What does the flood search entail?
1) Needed where a property is close to a river or the coast, but surface water flooding is more common
2) Insurance against flooding is available for most residential properties through a government backed scheme (Flood Re)
- Not available to commercial properties
3) Can check some information for free on Environment Agency and Land Registry website
4) Key thing to check is whether property can be insured at normal rates
Give an overview of the searches/enquiries that will be relevant to specific property transactions
- Chancel repairs search
- Mining searches
- Canal and River Trust search
- Commons search
- Railways
- Highways
- Unregistered land searches
- Company search
- Bankruptcy/insolvency search
What does the chancel repairs search entail?
1) The owners of certain properties in a Church of England parish where there has been a medieval church with a vicar could be liable to pay the cost of repairing the chancel of the parish church
2) In registered land, chancel repair liability lost overriding status on 13 October 2013, but will bind a buyer if the previous transfer for value occurred prior to that date
3) In unregistered search, buyer only bound if it is referred to in title deeds
- Often more cost-efficient to obtain insurance against the liability than obtaining the screening search
What does the mining search entail?
Coal mining search of the Coal Authority will confirm if the property is in an area where mining has, or is likely to, take place; whether these underground workings may cause subsidence problems and whether claims for subsidence damage have been paid before or are pending
Subsidence occurs when the ground under a building collapses or sinks lower, damaging the foundations and causing cracks in the structure above
What does the Canal and River Trust search entail?
If property is adjacent to a river or a canal, B needs to be aware of liability for repairs to the maintenance of the waterways, banks and tow paths, as well as whether the property has been affected by flooding
Check Canal and River Trust information
What does the commons search entail?
Optional enquiries in local search can show common rights, such as right to pasture
What does the railways search entail?
Buyer of land will want to know if they have obligations to maintain the boundary features separating the property from the railway line and whether there are restrictions on building work next to the line
Pre-contract enquiries of S might not raise answers, so can ask Network Rail about specific proposals
What does the highways search entail?
B solicitor can send a plan to relevant highways authority, asking for the boundaries of the publicly maintainable highways to be marked
If there is a road which hasn’t been adopted/isn’t maintained at public expense, if LA adopts the land, they ask all adjoining landowners to contribute to the upkeep of the road
Furthermore, if the road isn’t public highway, there’s no automatic right to use it and the LA won’t pay for maintenance, therefore an easement will be needed to allow the client to use the road
What does an unregistered land search entail?
An Index Map Search (‘SIM’) and a Land Charges Department search against the seller and previous estate owners will be necessary in any purchase of unregistered land
What does a company search entail?
If seller is a company, should check Companies House to see if they have capacity to enter, check identity of current company officers and to see if there are floating/fixed charges that need discharging on completion
What does the bankruptcy/insolvency search entail?
1) Solicitor acting for a lender should make a search against the borrower to ensure there are no bankruptcy or insolvency proceedings affecting them
- Send a K16 form to Land Charges department in Plymouth for individual borrowers
- Company search for a company
What are some general common matters that a buyer’s solicitor may see/should be aware of?
1) Planning permissions – B solicitor will need to check if there is PP for the construction of any building on the property and whether there are any planning conditions attached to the permission + if there are existing breaches which could be enforced against prospective buyer after completion
2) Road adoption – local search should be checked for information about roads and public highways adjacent to the property
- Where highways are not maintainable at public expense and have no plans to be adopted by a public authority, it means there is no automatic right to use the road, and the LA is not paying for its maintenance
3) Tree preservation orders – shown as a local land charge in the local search; buyer needs to be aware as it is a criminal offence to lop or fell a tree subject to TPO with LPA consent
4) Smoke control orders – shown as a local land charge in the local search; restricts the use of non-smokeless fuels in domestic fireplaces
5) Conservation areas – if the property is in an area like this, it will be more difficult to change the property
6) Occupiers – occupiers might be able to claim an equitable interest or a tenancy in the property, so the contract usually asks them to vacate on or prior to completion
