Stage 5: Pre-contract Searches & Enquiries Flashcards
why are these enquiries and searches important?
Buyer’s solicitor must undertake as much due diligence as possible because the principle of caveat emptor applies (i.e. buyer beware).
o Important to do this pre-contract as they can withdraw without being in breach of contract
what is due diligence?
process of gathering as much information about the property (inc. title investigation, search and enquiries) for the client before exchange
what happens once due diligence has been undertaken?
- Once complete, the buyer solicitor will write a report inc. the info, legal and practical issues for the client to consider pre-exchange
what information is the solicitor required to disclose?
- The seller is not obliged to disclose information aside from the title.
- This does not mean they can give misleading answers to enquiries.
what is the seller’s liability?
so long as they have not misrepresented, the seller will not be liable for any defects that later some to light.
what is the role of the buyer’s solicitor?
o Decide the relevant searches and enquiries and analyse results
o Produce a report for the client (i.e. buyer and/or lender) regarding the legal and practical implications of these results and title investigation
when might a negligence claim arise?
- Could be a negligence claim if there is a failure to check which leads to a loss
who else are these searches important for?
- Information also important for lender’s solicitor. If there is a different solicitor acting for the lender, they may ask the buyer’s solicitor for this information.
how will the searches be undertaken?
- The firm will be registered with a provider, they will pay for a search package, this is sent to the National Land information Service who will provide the info
what searches are relevant to all properties?
- survey and personal inspection
- local search
- water and drainage search
- pre-contract enquiries
- environmental searches
- flood searches
re: survey and personal inspection
explain this
- Should always be recommended. Different types i.e. full structural survey if client plans to undertake alterations, ‘homebuyers valuation and survey’ is cheaper and contains advice on necessary elements
re: survey and personal inspection
what will the lender require?
- Lender will always require a ‘valuation’ survey this determines whether the property can offer adequate security for the loan
re: survey and personal inspection
what is a personal inspection?
- Personal inspection will reveal more than is evident on the plan i.e. any inaccuracies or if there is a cable, drain or pathway (rare in residential)
re: local search
what is this?
- Collective term for the below:
1. Local land charges search (Form LLC1)
2. Standard enquiries of the local authority (From CON29)
3. Optional enquiries (Form CON290)
re: local search
explain local land charges search
what form is this made on?
(Form LLC1) - provides details of any financial charges or restrictions imposed by public authorities under statute i.e. planning consent, tree preservation order, conservation designation orders
re: local search
explain standard enquiries
what form is this made on?
Form CON29 - reveals planning permissions, restrictions on permitted development, contaminated land, liability for road repair, enforcement/stop notices for planning breaches
re: local search
explain optional enquiries
what form is this made on?
Form CON290 covers diverse matters i.e. environmental pollution, rights over common land, completion notices
re: local search
what do these searches relate to? what must the solicitor consider?
give an example
- Relates to the property only. There solicitor will need to consider whether enquiries of the adjoining land are necessary
i.e. if the buyer is buying the house because it has a particular view of a field, enquiries should made of the adjoining land to see if there is any proposed development on that field
re: water and drainage search
who are these enquiries made with?
- Enquiries made with the statutory undertaker i.e the water company.
re: water and drainage search
what do these searches reveal?
o If the drains and sewers are adopted (i.e. responsibility of statutory undertaker and not the property owner);
o If the property is connected to a public sewer for foul and surface water;
o If the property is connected to a public water supply
re: water and drainage search
what happens if the statutory undertaker isn’t responsible for the drains/sewers?
- If not, the buyer is responsible to maintaining which can be expensive or bringing them up to standard if the undertaker decides to adopt them
re: water and drainage search
what forms are theses enquire made on?
CON29DW residential
CommercialDW commercial
re: pre-contract enquiries of the seller
how are these usually made?
- Usually a standard set of enquiries, but additional enquiries can be made
re: pre-contract enquiries of the seller
give examples of the information which may be requested
- Enquiries may include: details of any disputes or third parties in occupation; compliance with covenants; any planning permissions; boundary maintenance
re: pre-contract enquiries of the seller
is the seller obliged to answer?
- The seller may refuse to answer enquiries put to them, relying on the caveat emptor principle (not inc. any information about defects in title). However, this is likely to deter the buyer.
re: pre-contract enquiries of the seller
when may a seller be liable?
- Any incorrect replies may amount to misrepresentation
re: environmental searches
explain these
- Different types. Most common is a ‘desktop search’ looks at plans of the area, information published by the LA and environment agency
re: environmental searches
what should be advised if contamconination is uncovered?
- If contamination is uncovered, client may want to instruct a specialist environmental surveyor or take out insurance.
- Cleaning up contamination can be expensive and the solicitor will likely be negligent if they have not properly advised
re: flood searches
where can this information be obtained?
- Information can be online, but this is not property specific. There are property-specific searches at a cost.
re: flood searches
what is the key issue?
- Key issue to uncover is whether the property can be insured at normal rates
re: flood searches
what is the position regarding insurance?
- Government-back flood insurance ‘Flood Re’ is available for residential properties but not commercial properties (inc. buy-to-let)
what searches & enquires are relevant to particular properties?
- chancel repairs search
- mining search
- canal and river trust search
- commons search
- railways
- highways
- unreg land search
- company search
re: chancel repair search
explain this
- Some property owners in a Church of England Parish where there was a medieval church & vicar could be liable to pay the costs of repairing the church’s chancel. A buyer is only bound in certain circumstances
re: chancel repair search
when is the buyer bound in reg land?
the previous transfer for value took place before 13 October 2023 (the liability to repair lost overriding interest status on this date)
re: chancel repair search
when is the buyer bound in unreg land?
it is in the title deeds or protected by a caution against 1st registration (could be lodged after completion and before 1st registration)
re: chancel repair search
when should this be done?
- Some firms therefore undertake this search in every conveyance, or they may just advise insurance
re: mining search
when and how should this be done?
- Coal mining search of the Coal Authority on Form CON29M should be made if a search of the Coal Authority’s map identifies the property is in a mining area
- Similar searches can be undertaken i.e. tin & clay in Cornwall, Devon, Somerset & Dorset; limestone in the West Midlands; brine & salt in Cheshire
re: mining search
what should be done if mining is identified?
- If identified, the solicitor should advise a surveyor is instructed to check for subsidence and Index Map search on form SIM to check the mines and minerals are not registered under separate title
re: canal and river trust search
when should this be done?
- Relevant if property is adjacent to a river or canal as the buyer may be liable for repairs of the waterway, banks, towpath etc and if there has been flooding
re: canal and river trust search
where is the information obtained from?
- This information can be obtained from the Canal and River Trust
re: commons search
when is this relevant?
- Relevant if the property is on a green-field site or village green, there might be common rights i.e. right to pasture
re: commons search
how is this undertaken?
- Optional Enquiry 22 in Form CON290 as part of the local search
re: railways
when is this relevant? what will the buyer want to know?
- Relevant if the property adjoins a railway line. Buyer will want to know if they are obliged to maintain the boundary or if there are restrictions on carrying out work near the boundary. Network rail will not answer these types of enquiry.
re: railways
how is this search undertaken?
No general search available. The buyer’s solicitor should:
o Search specific and proposed railway plans i.e. HS2
o Enquire with the seller
o Check reply to enquiry 22 CON29 in the local search as this might reveal a proposed scheme
re: highways
when is this relevant?
- Relevant if there may be private ownership separating the property & highway
re: highways
how is this search made?
- Enquiry 2 of CON29 on local search will provide information about the roads adjoining the property but this won’t include verges, pavements, forecourts etc
- The solicitor can send a plan to the highway authority and ask them to confirm on the plan where the boundaries of the public maintainable highways are (i.e. areas which the highway authority maintain)
re: highways
why might the buyer need more information than that provided on CON29?
- The buyer might need information about the verges etc if the property is going to be redeveloped. The buyer will need to know who owns the verge etc because if a third party owns this, it could create a ransom strip (i.e. a small piece of land that blocks access to the property)
re: unreg land search
what does this involve?
- An Index Map Search (‘SIM’) and a Land Charges Department search against the seller and previous estate owners
- SIM is also used where there is a mines/minerals reservation in the title
explain company search
- Companies House to be checked if the seller is a company. This will confirm whether they have capacity to contract and any fixed/floating charges
what additional searches will the lender do?
Lender’s solicitor will also do a bankruptcy/insolvency search just before completion, but it is also common to do this before exchange
o Individual Form K16 to Land Charges Department
o Company company search
how is bankruptcy checked of an individual?
Form K16 to Land Charges Department
how is bankruptcy checked of a company?
company search
what issues are commonly uncovered from search results and replies?
Planning Permissions (PP)
Road Adoption
Tree Preservation Orders (TPO)
Smoke Control Orders
Conservation Areas
Occupiers
re: planning permission
how would this be uncovered?
LCC1 result gives summary of any PP.
re: planning permission
what must the buyer’s solicitor do if revealed?
o Check with the seller whether the PP has been implemented, any conditions and if they have been complied with (enforcement action can be taken up to 10 years after the breach)
o Obtain a copy of the PP from the LA or seller
o Check the CON29 for enforcement and stop notices and CON290 for completion notices to check enforcement proceedings haven’t been taken
re: road adoption
how would this be uncovered?
- CON29 of the local search
re: road adoption
what may this reveal?
info about roads & highways i.e:
o Whether an adjoining road is a public highway. If not, there is no automatic right of use and the LA does not pay for its maintenance. The solicitor would need to establish the buyer’s right to use the road i.e. an express easement and any private obligation to pay
o Whether the LA plans to adopt the road and if so, whether the frontagers (i.e. the buyer), will need to contribute to the cost of bringing it up to standard. The solicitor will need to find out the expected date and cost.
re: tree perseveration orders
how is this uncovered?
- Revealed under LLC1 result
re: tree perseveration orders
what must the buyer’s solicitor do?
o Tell the client it is a criminal offence to lop or fell the tree without LA consent
o Raise an enquiry with the seller
o Obtain a copy of the TPO and check it has been complied with
re: smoke control orders
how is this uncovered?
Revealed under LLC1 result.
re: smoke control orders
what is the purpose and when might this be uncovered?
- Purpose is to restrict the use of non-smokeless fuels in domestic fireplaces.
- Might be a problem if the property has a fireplace the buyer wants to use.
re: conservation areas
how is this uncovered?
Revealed under LLC1 or CON29.
re: conservation areas
what must the buyer’s solicitor do?
- Buyer must be informed it will be difficult to change the property.
re: occupiers
what may the buyer require if this is uncovered?
- The buyer’s solicitor must require the seller to obtain agreement to release their rights and vacate the property from the occupier.
- Usually dealt with in the contract.
