When buying or taking a lease of a commercial property, we are often asked whether we would recommend that a buyer or tenant obtains usual commercial property searches.
Why conduct searches?
The risk to a buyer or tenant of not carrying out searches is that if something adverse comes to light after completion of the purchase or lease then they are not able to reverse the transaction and may have to expend additional time and money in correcting any issues. Such issues have the potential to affect the occupation of the property, its market value, or the ability for the buyer to raise finance against the property in the future; they may even put off future buyers or tenants.
Below is a list of the standard searches a buyer or tenant might consider and what these reveal.
1. Local land charges search
A search of the local land charges register shows matters such as compulsory purchase orders, tree preservation orders, planning enforcement notices and financial charges registered against a property. The search result provides a snapshot of the register on the date of the search. Local land charges registered after the date of the search will still bind a property.
2. Local authority search (including any optional and additional enquiries)
A local authority search reveals important information about a property, such as planning permissions and building regulation consents, proposals for road schemes, environmental and pollution notices and whether any part of the property is registered as common land or as a town or village green. A local authority search only reveals matters that affect the property being searched against. It will not disclose matters that affect neighbouring properties.
3. Drainage and water enquiries
The replies to drainage and water enquiries show whether a property is connected to the mains water supply and mains drainage. The replies may also show the location of public sewers within the boundary of a property and other such matters that may restrict development.
4. Combined Environmental and Flood risk search
If a local authority determines that land is contaminated, and the party who caused or knowingly permitted the contamination cannot be found, the current owner or occupier of the land may be required to remedy the contamination. This can be an expensive process, so it is important to assess the risk of land being contaminated before committing to buy a property.
An environmental data search can be used to establish the risk of land being contaminated, by collating information from regulatory bodies, floodplain data and a review of current and historic land uses. This type of search is also known as a “desktop search”. An environmental data search does not include a site visit or testing of soil or groundwater samples.
A flood risk search gives a high level assessment of the risk to the Property from the four main types of flooding (river, coastal, groundwater and surface water). It is important to know this information before committing to buy a property, as it can affect its value and the terms of buildings insurance.
5. Coal mining search
A coal mining search provides details of past, present and future coal mining activity at a property. The search also indicates if there are mine shafts on the property and whether any mining activities may cause subsidence.
6. Chancel repair search
A chancel repair search shows whether the owner of a property may be liable to contribute towards the cost of repairs to the chancel of a parish church. We would advise not to contact any parish churches directly in relation to chancel repair liability, as this may limit the availability of indemnity insurance.
7. Highways Search
A Highways Search identifies whether or not the Property directly abuts a highway maintainable at public expense i.e. adopted highways. In addition, the search reveals whether or not the Property is affected by any privately maintained roads, traffic schemes, traffic alerts or rights of access that could affect the use and occupation of the Property.
It is at the buyer or tenant’s discretion as to whether they want all, some or none of these searches however they should carefully consider the need for searches and let their solicitors know as early as possible if they are required or not.
If you’re considering buying or taking a commercial lease and would like some guidance, please don’t hesitate to contact our Commercial Property team.