3 - Pre Contract Searches and Enquiries Flashcards
What is a report on title, why is it required, and who carries it out?
What is it?
- The report in which a solicitor reports to its client on the investigation of title, search results, and replies to enquiries. It can take the form of a standalone document.
Why is it required?
- The buyer’s solicitor needs to find out as much as possible about the property before the exchange of contracts. This is because caveat emptor means that once the contracts are exchanged, in general the buyer has no means of objecting to any issues that arise.
Who carries out the report on title?
- The buyer’s solicitor investigates title, raises searches and standard enquiries. If they identify any issues that require further information, they may raise additional enquiries with the seller’s solicitor (generally by correspondence).
Where does the report on title fit into a property transaction?
- The report on title typically forms part of the due diligence process during a property transaction. It is prepared by the buyer’s solicitor once all relevant searches and investigations into the property’s title have been conducted.
- It serves as a crucial document that informs the client (the buyer) of any material issues relating to the title of the property and ensures that the buyer is fully aware of any risks before proceeding with the purchase.
What will the report on title identify?
The report on title will:
- Identify material facts about the property.
- Highlight any issues with the title and their potential implications.
- Provide possible solutions or advice on how to address these issues.
- Summarise the solicitor’s findings in a clear and comprehensible manner for the client.
What does a typical contents page for a report on title include?
- Interpretation
- Scope of the review and limitation of liability
- Executive summary
- Purchase price and other contract terms
- The Property
- Matters benefiting the Property
- Matters burdening the Property
- Search results
- Replies to enquiries
- Planning and building regulations
- Insurance
- Stamp Duty Land Tax (SDLT)
- Conclusion
What limitations and disclaimers are usually found in a report on title?
Scope of Review:
The report on title is generally addressed to the client (the buyer) and is confidential to that client.
It is based on the solicitor’s review of title documents, search results, planning documents, and replies to enquiries. The solicitor is not liable for issues not revealed by these documents (e.g., a search error).
Limitation on Liability:
The report will often specify limitations on the solicitor’s liability, particularly regarding areas outside the solicitor’s expertise.
What CCS points relate to the report on title?
CCS 6.4:
Solicitors must ensure that the client is aware of all material information relevant to the matter, based on the solicitor’s knowledge.
The report on title should include all relevant details about the property that the solicitor has obtained.
CCS 8.6:
Solicitors are required to provide information to clients in a manner they can understand.
The report should be drafted in plain language suited to the client’s needs. Where necessary, the solicitor should discuss the contents with the client to ensure full understanding.
Why are pre-contract searches necessary in property transactions?
- Pre-contract searches are necessary to ensure the buyer is aware of any potential legal or practical issues affecting the property.
- These searches reveal important information about the property’s condition, any restrictions or obligations, and help avoid future disputes or liabilities that could arise post-completion.
What general types of searches are conducted in a property transaction?
Standard searches: These are typically necessary and include:
- Local authority search (CON29 and LLC1)
- Drainage and water search
- Desktop environmental search
- Chancel repair liability check
Optional searches: These may be required based on specific property risks, such as:
- CON29O (e.g., commons registration)
- Highways search
- Coal mining search
- Flood search
- Utility provider search
What is the role of National Land Information Service (NLIS) in property searches?
- The National Land Information Service (NLIS) acts as an intermediary between solicitors and various institutions, allowing solicitors to order property searches online through a registered channel provider, such as SearchFlow who you order the official searches from.
- This service streamlines the process of obtaining search results, some of which are delivered immediately, while others may still take several weeks.
What information is revealed in a local authority search (CON29)?
The local authority search (CON29) reveals information about the property’s surroundings, including:
- Granted or refused planning permissions.
- Building regulations approval and completion certificates.
- Notices served under planning legislation (e.g., enforcement notices).
- Information about roads and public rights of way (e.g., a public footpath).
- Contamination status of the land.
These enquiries help ascertain the property’s compliance with local regulations.
What is the distinction between CON29 and CON29O, and why might a CON290 be necessary?
- While the CON29 is a mandatory search for every transaction, the CON29O is optional. Both searches yield information about the property and surrounding area.
- The CON29 focuses on standard enquiries, while the CON29O allows for additional questions specific to the transaction, such as road proposals or common land inquiries.
Why is a CON290 needed? -
Allows solicitors to address specific concerns related to the property transaction, particularly in undeveloped or newly developed areas.
For instance, inquiries about the Commons Registration Act can reveal whether the property is subject to public rights, which could limit the owner’s ability to develop the land.
What does the local land charges search (LLC1) reveal?
The LLC1 search discloses matters registered as local land charges, such as:
- Details of any planning permissions or consents granted (not refused) and any restrictions on this.
- Whether the property is located in a conservation area.
- The presence of any Tree Preservation Orders.
- Miscellaneous charges, such as smoke control orders.
- Information on whether the property is a listed building.
- In every transaction the LLC1 is submitted to the local authority (usually via an online search platform such as Searchflow) together with the CON29.
Understanding these details helps assess restrictions or obligations related to property development.
Responsibility for the local land charges register is being transferred to the Land Registry, with searches currently conducted at the Land Registry where data has been transferred.
How should solicitors approach the results from the LLC1?
- Solicitors should carefully review the LLC1 results, assessing whether they align with expectations based on the seller’s actions regarding the property.
- For instance, if building works occurred recently, one would expect to see relevant planning permissions.
- If no permissions are found, it may indicate potential issues, prompting the need for retrospective planning applications.
What does a drainage and water search cover?
- A drainage and water search checks whether the property is connected to mains water and drainage, and whether foul and surface water drain into a public sewer.
- This search is conducted with the relevant water company, for instance, Yorkshire Water in Leeds.
Why is a desktop environmental search important?
- A desktop environmental search is important because it assesses whether a property is potentially contaminated, which could make the owner liable for cleanup costs.
- It also provides information on flood risks, natural subsidence, and nearby industrial land uses.
What is a chancel repair search and why is it necessary?
- A chancel repair search identifies potential liability for contributing to the repair of the local parish church’s roof, a liability that can be significant.
- If the search reveals potential liability, indemnity insurance can usually be obtained to cover this risk.
What is the purpose of a highways search?
- A highways search shows whether the roads near a property are adopted and maintained at public expense.
- This is crucial for properties where the boundary with the highway is unclear, particularly in commercial transactions, to ensure proper access rights.
When is a mining search necessary, and what is its purpose?
- Necessary when the property is located in an area with a history of mining activities, as certain locations may have a risk of subsidence due to past mining operations.
- The purpose of the search is to identify any risks or liabilities related to the presence of minerals under the property and whether compensation has been paid for subsidence issues.
This includes:
- Coal mining (CON29M): Required if the property is within a coal mining area. Identifies risks like subsidence and whether any compensation has been previously paid, meaning no future claims can be made.
- Cheshire Salt search: For properties in areas at risk of brine subsidence (mainly in Cheshire).
- Tin, clay, and limestone mining searches: Similar to coal mining searches, these are necessary in areas with historical extraction of specific minerals, such as tin mines in Cornwall and Somerset.
When are environmental searches necessary, and what is their purpose?
- Environmental searches are required when there is a potential for contamination or environmental hazards on or near a property.
- The purpose is to assess the risk of contamination and identify any environmental issues that may affect the property’s value or require remediation.
This includes:
Environmental Phase 1 Survey: More detailed than a desktop search, it includes a site inspection to assess contamination risks.
Environmental Phase 2 Survey: Conducted if Phase 1 indicates risk. Soil and water samples are tested to confirm the presence of contamination.
Flood search: Necessary if the property is in an area prone to flooding. A desktop flood search provides more detailed flood risk information than the standard environmental search.
When are miscellaneous searches necessary, and what is their purpose?
- Miscellaneous searches are needed depending on the specific features or location of a property, such as proximity to utilities, railways, or waterways.
- The purpose is to assess any impact these factors may have on the property’s use, value, or legal obligations.
This includes:
Utility providers: For new developments, checks ensure the property has electricity, gas, telecom, and broadband connections.
Railways: If a railway passes near the property, enquiries may be made to check for access rights or potential interference.
Waterways search: For properties near rivers or canals, this identifies liabilities like maintaining riverbanks, drainage rights, and potential flood responsibilities.
What are pre-contract enquiries, and why are they important in a transaction?
- Pre-contract enquiries are questions posed to the seller, usually at the beginning of the transaction, to gather information about the property.
- They help the buyer understand the property’s condition, legal status, and any potential issues before the purchase.
This includes:
Commercial property (CPSE1): Standard replies to enquiries for commercial transactions. Additional forms (CPSE2, CPSE3, etc.) may apply to different transactions.
Residential property (Form TA6): Provides information on boundaries, alterations, neighbour disputes, utility providers, etc.
Fittings and contents form (Form TA10): Specifies which items, such as curtains or carpets, are included in the sale
What role do pre-contract enquiries play in verifying information, and what are potential issues?
- Pre-contract enquiries rely on the seller’s cooperation and honesty. The seller may refuse to answer if they lack knowledge (e.g., an executor of an estate), but they cannot deliberately mislead the buyer.
- Misleading answers may result in an action for misrepresentation.
Note - “Not so far as the seller is aware”: This phrase indicates the seller’s reasonable investigations, but it does not absolve responsibility if the answer should have been “yes”
What searches are relevant to the title or the seller, and why are they important?
Certain searches relate directly to the title or seller and are crucial for investigating the property’s legal status.
This includes:
- Index map search (SIM): Required for unregistered properties or those with multiple titles. It shows registered and unregistered land within the search area but does not reveal ownership.
- Central Land Charge Search (Form K15): For unregistered properties, this search identifies charges against the seller and previous owners. It should not be confused with the local land charges register.
- Bankruptcy search (K16): Typically carried out against the seller if the transaction is below full market value, it checks whether the seller is bankrupt.
- Companies search: If the seller is a company, a search ensures it is still in existence and checks for any security interests.
What does the local search typically include?
The local search encompasses several components:
- Local Land Charges Search (LLC1): This checks the register of local land charges, revealing planning information about the property.
- Local Authority Enquiries (CON29 and optional CON29O): These standard enquiries investigate planning permissions, building regulations, and environmental concerns, providing detailed insights into the property’s legal status.
