Property 5

Question 1

When are pre-contract searches completed?

Answer 1

After the buyer’s solicitor has sent the client care letter to their client, obtained client identification, and carried out due diligence regarding the buyer’s funds.* The solicitor will usually ask the buyer to pay a sum of money on account for searches and other disbursements. The cost of the pre-contract searches is incurred upfront. * The buyer’s solicitor will submit the searches early in the transaction.

Question 2

What is the general purpose of pre-contract searches?

Answer 2

• For the buyer’s solicitor to gather practical information about the property. * This information, as well as information on matters of title, will be included in a report to the buyer. The buyer can then make an informed decision as to whether they wish to purchase the property.

Question 3

How are pre-contract searches applied for?

Answer 3

• Direct application to the entity involved (e.g. the local authority or the relevant water company)* Online search providers, and many solicitors use these services to apply for all required searches at the same time. This generally saves both time and money for the client.

Question 4

What are the types of pre-contract search?

Answer 4

Every case* Local Search 1. Local Land Charges (General and Specific Financial Charges, Planning Charges, Listed Building Charges)2. Enquiries of Local Authority3. Optional Enquiries of Local Authority * Drainage and Water Search* Environmental SearchTransaction-specific searches* Search of Index Map* Bankruptcy Search* Company SearchLocation-specific searches* Coal Mining Search* Chancel Liability Search Physical inspection of the propertyProperty Information Form is also a ‘search’Enquiries raised by the buier’s solicitor

Question 5

What is the local search?

Answer 5

A search that gathers information held by the local authority in which the property is situated. The Law Society publishes forms that may be used to make these enquiries.There are 3 parts to the local search:* Local Land Charges* Enquiries of Local Authority* Optional Enquiries of Local Authoirty

Question 6

What is covered by the local land charges part of the local search?

Answer 6

It seeks to reveal whether there are any local registrations made against the property by the local authority which would in some way burden the property. There are 12 types of charges that may appear on the local land charges register, but the most commonly occurring are as follows:* General and Specific Financial Charges* Planning Charges* Listed Building Charges

Question 7

What are general and specific financial charges in the context of the local land charges search?

Answer 7

Charges owed to the local authority in relation to the property for example:* an improvement grant or * a situation in which the local authority has paid fees for a homeowner to go into local authority care pending the sale of the property. They would not necessarily appear on the Charges Register of the title to the property if a relatively modest sum is involved.

Question 8

If general and specific financial charges are discovered in the context of the local land charges search, what should the buyer’s solicitor do?

Answer 8

Raise this as an enquiry and ask the seller’s solicitor to:* undertake to repay the charges from the sale proceeds and * procure the removal of the charges from the local land charges register.

Question 9

What are planning charges in the context of the local land charges search?

Answer 9

Any planning agreements and entries against the property relating to development of the property, such as extensions.This part of the register also reveals any Tree Preservation Orders affecting the property. Such orders protect against the lopping or falling of a protected tree without local authority consent. Contravention can lead to a fine and is a criminal offence.

Question 10

What are listed building charges in the context of the local land charges search?

Answer 10

The listed building charges part of the register will reveal any ‘listed building’ status in relation to the property. A listed building’ typically is a building of historic significance, and the ability to make changes to a listed property is restricted.

Question 11

What is the difference between the local land charges register and the land charges register?

Answer 11

• The search of the local land charges register is conducted by the buyer’s solicitor as a pre-contract search to gather practical information about the property. * The search of the land charges register is conducted by the buyer’s solicitor during the pre-contract stage as a means of investigating title and determining whether there are any third-party rights to the land. Do not confuse the two.

Question 12

What 7 things will be revealed by the standard enquiries of the local authority?

Answer 12

• Roads: Whether the road fronting a property is adopted by the local authority (in which case the user has an automatic right of way over it, and the road will be maintained by the local authority)* Public Rights of Way: Any public rights of way across the property enjoyed by members of the public (in which case the owner cannot refuse access to the public); * Planning: Detailed planning information, including planning entries and buildings regulations con- sents. * Whether there are any proposed road, rail, or traffic schemes which might impact on the property* Whether there are any outstanding planning or enforcement notices* Whether the property falls in a conservation area * Whether the property is subject to compulsory purchase (i.e. subject to being acquired by a local authority without consent of the owner).

Question 13

The buyer’s solicitor’s local search reveals that a road fronting the property is not adopted by the local authority. What is the buyer’s solicitor required to do?

Answer 13

Raise an enquiry to establish how the roadway is maintained. The buyer’s solicitor should also make a careful investigation of title to check that the property enjoys a legal right of way over the road in question. If not, this would be a serious title defect and indemnity insurance and statutory declaration by the seller may be required.

Question 14

What are the 5 most common optional enquiries of the local authority?

Answer 14

These will only be answered if requested specifically and an additional fee is paid. The most common searches include whether:* Any road proposals have been made by private bodies, i.e. whether a private company rather than the local authority is proposing to alter or improve an existing road in the locality* Any major gas pipelines affect the property* The property is a house in multiple occupation* Any environmental pollution notices have been served* The property abuts common land and town or village green “Commons registration search”

Question 15

If the land abuts or is adjacent to land that has been designated common land or a town or village green or is a new build (that is, a property being built on formerly undeveloped land), what type of search will be required?

Answer 15

A common land and town or village green enquiry should be made. * There may be restrictions on access over common land in addition to restrictions on developing or enclosing common land. * This designation also may give people in the locality the right to use the land for recreational purposes. Such restrictions on the land would be of great significance to a buyer or lender and must be reported.

Question 16

What is revealed by a drainage and water search?

Answer 16

Whether a property is connected to the public water supply and public foul drainage system.* The buyer’s solicitor will send a drainage and water search to the local water company which enables the buyer’s solicitor to establish details about water supply, metering, and the proximity of a public sewer. * If the property is not connected to these services, the buyer’s solicitor should raise this issue as an enquiry of the seller’s solicitor.

Question 17

Why is an environmental search particularly important?

Answer 17

• Landowners are responsible for paying the clean-up costs for any contaminated land they own. This is the case even if the current landowner did not cause the contamination. * This is a desktop search that can be conducted by the buyer’s solicitor and will reveal such issues as current and former use of the land.

Question 18

When is a search of the index map carried out?

Answer 18

If the title is unregistered, the buyer’s solicitor will carry out a search of the index map. * This search is made by sending the property’s address or plan identifying the property via the HMLR’s online portal for a fee.* The search result reveals whether the property is fully or partially registered.

Question 19

When is a bankruptcy search carried out?

Answer 19

If the buyer is getting a mortgage* The buyer’s solicitor will often carry out an online bankruptcy search against the full name of the buyer(s) as part of the solicitor’s pre-contract searches usually via the HMLR’s online portal. (The bankruptcy register is one of the land charges registers).* This will reveal any pending or actual bankruptcy orders against the buyer. * Such a result must be reported to the lender and the transaction will probably fail as the lender will not lend to someone who is facing bankruptcy.

Question 20

Why are company searches carried out?

Answer 20

If the seller is a company, a company search (conducted via Companies House) is necessary. This reveals whether:* the company is subject to any winding up or liquidation proceedings and * the company is authorised to deal in the sale and purchase of land. The company search will also reveal attachment of any fixed or floating charges with respect to the company.

Question 21

Why is a coal mining search carried out?

Answer 21

If the property is in an area where coal mining is or has been carried out, this search reveals whether there is (or has been) any such work within the locality of the property. * This is important because coal mining shafts could seriously affect the stability of the property and might cause a buyer to withdraw from the purchase. * Similar considerations apply in relation to brine extraction and other forms of mining, such as tin or silver.

Question 22

Why is a chancel liability search carried out?

Answer 22

A property might be subject to an ancient obligation to contribute to the upkeep of the chancel of a church in the locality (the chancel is the part of a church which contains the altar). * This potentially very costly liability can still attach to properties even after many years. * This is a desktop search which will identify whether the property is at risk of the charge. If a property is found to be at risk of this liability, indemnity insurance is usually the solution.

Question 23

What physical inspections of the property should be carried out?

Answer 23

• A survey of the property carried out at the beginning of the transaction. * A physical inspection of the property i.e. buyer should visit the property and look for any potential problems or issues e.g. evidence of a right of way or a person in occupation, problems with the physical condition of the property. They should also check that any fittings and contents that they expect to be left at the property on completion are present.

Question 24

Which document provided by the seller in the contract package is considered to be part of the buyer’s pre-contract searches and enquiries?

Answer 24

Property Information Form

Question 25

What is the process of ‘raising enquiries’?

Answer 25

If the buyer’s solicitor identifies any questions, requires a title defect to be remedied, or if the buyer wishes to clarify issues contained in the title, PIF, and search results, the buyer’s solicitor will put these questions and issues to the seller’s solicitor.

Question 26

What is done with enquiries made by the buyer’s solicitor and the relevant responses before exchange of contracts and why?

Answer 26

• A copy is sent to the buyer for their perusal and comment prior to exchange of contracts. * The buyer’s solicitor should not proceed to exchange of contracts until all enquiries have been answered to their satisfaction. Buyer will not be able to withdraw from the transaction after exchange without penalty if any of these issues only come to light after exchange (unless there has been a misrepresentation by the seller).

Question 27

What is the CPSE?

Answer 27

The Commercial Property Standard Enquiries is the commercial equivalent of the PIF. * They can be used for commercial freehold or leasehold transactions. * The CPSE enquiries are a range of pre-printed enquiries that a tenant’s or buyer’s solicitor will send to the solicitor on the other side for completion and return.* This will be done at the beginning of the transaction.* There are additional supplemental forms intended to be used with the main enquiries depending on the nature of the transaction e.g. if a property is sold subject to existing tenancies or if a lease is being granted or assigned, extra forms will be used.

Question 28

What are the 10 key issues covered by the CPSE?

Answer 28

The CPSE are designed to provide practical and detailed information about a commercial property and the transaction. They are more comprehensive in scope than the PIF and cover issues such as: * Boundaries* Rights benefiting and burdening the property* Physical condition of the propert* Utilities and services* Fire safety and means of escape* Planning and building regulations* Environmental issues* Occupiers and employees* Insurance* Any disputes regarding the property.