The purpose of property searches is to ensure that no stone is left unturned, and to unearth information about the property you are planning to buy. Obtaining property searches is an essential step in the process of buying a property, and will allow you to find out and deal with any unexpected issues before exchange of contracts.
There are some searches that need to be carried out for almost all properties. These are local authority, water and drainage, and environmental searches. Often other additional searches will be carried out, which largely depends on the location of the property which you are looking to purchase and whether it is to be developed. Examples of such other searches are: mining, flood, chancel repair, utilities and HS2 searches. Our job as your solicitor is to carefully review the results, report to you on our findings and flag any potential issues which you should be aware of.
So far so good. But what are the possible issues surrounding the process of property searches? What do you need to think about as a buyer?
What if there is an error in the search?
What happens if there is an incorrect reply or an error in the results of your property searches? Thankfully this is rare in practice but if it arises, in short, it depends on the type of search which contains the error. With regard to a search of the local authority, the local authority will not accept liability for any errors in the replies unless the error is the result of negligence.
In a case some years ago, it was held that an incorrect response to a local authority enquiry as to whether a road with an adjacent verge was maintainable at public expense was not negligently provided, even though the council’s underlying records were inaccurate. However, in a more recent case the local authority was found liable to a developer purchaser who had relied on a local authority search result which failed to reveal that part of the property searched against was a highway maintainable at public expense.
The position is the same when it comes to water and drainage searches. That is, no liability is accepted except in cases of negligence and then only up to a specified limit. When it comes to water service companies it is important to check their terms and conditions, as the extent of liability can differ greatly between the different companies.
Who can rely on the searches?
Searches are usually carried out for the person buying the property or the person who acquires an interest in it (such as a lender). However, in commercial transactions it is becoming more common that the seller’s solicitor carries out the searches which are then provided to the buyer’s solicitor as part of a sale pack. As a purchaser, can you still rely on these searches?
Who can rely on the search results will depend upon the terms and conditions of each particular search and provider. When it comes to a local search, any liability for negligence can be relied upon by the person who raised the enquiries, the person on whose behalf the enquiries were raised and any other person who has knowledge of the replies when they acquire the property. Therefore, a buyer who relies on a local authority search obtained by the seller will still be owed a duty of care by the council providing the search results.
When it comes to water and drainage searches, the answer is not that clear cut. The extent of the water service company’s liability will differ depending on which company provides the search. Again, it is therefore important to check their terms and conditions.
In addition, if a seller’s solicitor has submitted the property searches via a search provider (which is often the case), special terms may also have been agreed with the service provider regarding liability and reliance on searches by third parties. It may therefore be advisable that contact is made with the seller’s solicitor for confirmation that the search provider will accept liability in relation to third parties relying on the searches.
Best before date?
Do searches have a best before date? What happens if the transaction continues longer than expected, can the searches obtained still be relied upon? Property searches provide a snap-shot of information about a property as at the date of the search, and give no protection period. Generally, search results that are more than two to three months old should not be relied upon, but this might also depend on other circumstances such as the nature of the property, the purchasing party’s intentions in relation to the property and the requirements of any lender.