To search or not to search

8 June, 2018

The ‘usual’ searches

‘Caveat Emptor’, otherwise known as ‘buyer beware’, is the legal principle which governs the contracts for the sale and purchase of property. In short, the onus falls on the buyer’s conveyancer to carry out searches over land (and in some cases adjoining or neighbouring land), to ensure that the prospective buyer is fully aware of any issues which may have an adverse effect on the property that they are hoping to acquire.

 

Obtaining appropriate searches is an essential step in the conveyancing process and applies to both residential and commercial transactions. It is a well known fact amongst conveyancers that the ‘usual searches’ normally include local authority, environmental, water and drainage, chancel repair and highways. Whilst these are perhaps the most common, there now appears to be a myriad of less well known and more unusual searches.

 

Whilst searches are not a legal requirement, given the multitude of options currently on the market, conveyancers need to be offering their clients a more in-depth choice when it comes to additional information that is readily available. However, in an ever changing conveyancing process, conveyancers are now faced with the problem of how to decide which searches are relevant without incurring unnecessary costs to the client and without exposing themselves to any liability should they chose to opt out of a potentially crucial search.

 

Alternative searches

Alternative searches now range from thorough water and drainage searches, to detailed agricultural and forestry searches, to coal, clay, limestone and tin mining searches. All these examples can give a more comprehensive overview of the property, but not all are applicable to every transaction.

 

Different searches are required depending on the location of the property. Search providers are now using map plotting systems in order to prompt conveyancers to consider the quirkier threats which may affect the property and its surrounding area.

For example, if the property is in London, you may need to consider the underground network; or if situated in Liverpool, the potential risk of subsidence due to a vast web of concealed tunnels. Even the risk of the great crested newt in a high risk flood area could have a serious implication on the value of a property. Once in situ, they are not only difficult to remove, but it is illegal, as they are listed as a protected species.

 

Although easier said than done, conveyancers need to be aware of the matters affecting the area within which they are practicing. Whilst this cannot always be the case, if any of the ‘usual searches’ reveal a further action point, or any information is made available to the conveyancer during the process, then it is at this point that a conveyancer needs to consider the risk and advise the client as to the benefit (or not) of carrying out a further search.

 

Substantial enquiries of the seller and indeed the client and their surveyor could also alert the conveyancer to issues which only a specific search would reveal.

 

Conveyancing is already fraught with risk and it is the duty of the conveyancer to be prudent when advising on potential issues so that the buyer can make as much of an informed decision as possible. It is no longer the case that the ‘usual searches’ will suffice and conveyancers need to be seen to be at least offering these extra services.

 

What would be the implication if conveyancers determined that additional searches were not applicable to the property and what would the consequences be?

More often than not, a client’s main concern is to make sure that there is nothing which would adversely affect the value of the property. Given that there is no legal obligation on a seller to provide information that would otherwise be revealed by a set of searches (a seller is only under a limited duty to disclose latent incumbrances and defects in title to a buyer), it is all the more important that the conveyancer has fully advised the client and has given the client suitable options.

 

If a conveyancer fails to carry out a search which consequently has a negative impact on their client, they are potentially exposing themselves to a negligence claim.

 

The case of Orientfield Holdings Limited v Bird and Bird LLP [2015] EWHC 1963 (Ch) highlights the importance of a solicitor’s duty to disclose information to their client. The case concerned a residential property being purchased at just over £25 million. Searches revealed that substantial development was due to occur nearby. The solicitor acting failed to communicate this information to their client prior to exchange. When the client discovered the plans for nearby development, they tried to rescind the contract but could not recover their deposit in full. As such, the client brought a claim against the solicitor and the court held that the solicitor had breached their duty by not passing on the information and was ultimately responsible for the loss incurred by the client.

 

In order to limit a conveyancer’s liability, it is imperative to make sure that any issues are flagged to the client as soon as they are revealed. Attendance notes and/or correspondence should be correctly documented to confirm that advice has been given to the client and to confirm if the client has chosen to pursue any further action, or not.  

 

It is also worth mentioning that the retainer with the client should set out exactly what is included in relation to searches and advice being given. If this changes then an up to date retainer should be agreed.

 

Finally, remember to ask clients at the beginning of the transaction if they have any specific concerns so that they can be addressed quickly and if they are found to be a ‘deal breaker’ then you will have saved time and money for both you and your client.  

 

For more information contact Roberta Organ on 01892 506 286 or roberta.organ@crippspg.co.uk 

This article first appeared in Estates Gazette in April 2018.