Commercial Conveyancing Searches
Due Diligence
When purchasing a commercial freehold or leasehold property one of the key due diligence processes conducted by the Buyer’s solicitor is the carrying out of “Searches”.
These Searches are differentiated a the building survey (which is required in addition) and relate to enquiries raised with various public authorities to obtain more information about the property.
Whilst the Seller will provide replies to specific enquiries raised about the property, they are not required to provide other general information and the position of “buyer beware” applies. Searches enable a buyer to obtain up to date, relevant and potentially fundamental information about the property which may affect its use, enjoyment and future development. They can also reveal information the seller doesn’t actually know themselves about the property.
When are Searches Submitted?
Searches should be carried out pre-exchange of contracts so the buyer can raise any necessary enquiries arising from the Search results before they contractually commit to the purchase. After exchange it is too late to raise new enquiries. Most contracts will state that the seller transfers the property free from incumbrances other than (a) matters disclosed or which would have been disclosed by the searches and enquiries of a prudent buyer made before entering the contract and (b) matters which the seller does not and could not reasonably know about. The onus is therefore very much on the buyer to carry out all appropriate searches relevant to the property and where possible its location.
If the buyer is obtaining bank finance for the purchase, the lender will (in most circumstances) require that a full set of Searches is carried out. Cash buyers, whilst not legally required to conduct Searches, are still advised to do so. Firstly to ensure the property is fit for purpose and secondly so the buyer is aware of any matters which could impact on a future sale of the property by them – potentially to a future buyer who does have a lender.
Which Searches?
The Searches most often carried out and required by lenders are the local authority (including local land charges), environmental and water & drainage searches. In addition, there are numerous other Searches which should be considered depending on the location and the past and proposed use of the property.
Below is a table of the most common Searches and the information they can reveal about a property, a buyer should however discuss with their solicitor on a case by case basis which Searches are most applicable to the particular property they are intending to purchase.
Costs?
Search costs will vary depending on the range of Searches required for the property, however it is possible to obtain a definitive quotation for the Searches needed before they are submitted. A buyer should generally budget around £150 for a local search with a full set of ‘standard’ commercial Searches costing circa £800 - £1,000.
How long do the results take?
Searches like the water & drainage, environmental and chancel check usually come back relatively quickly. The local authority Search tends to be more complicated and whilst it usually takes around 2 weeks, it can take longer (up to 6 weeks) depending on turnaround by the particular local authority. Timescales will also vary depending on which Search Provider you use.
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Search Type |
What does it tell me? |
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1. |
Local Authority search (& local land charges)
The Local Authority Search can be obtained either directly from the local council (“Official Local Search”) or by a regulated personal search conducted by a search agent (“Personal Local Search”. As the information included in the search is public record, search agents are able to collate the information required often at a more reasonable cost (and quicker) than an Official Local Search. Search agents have become a preferred source of local authority searches and the majority of mortgage lenders accept them – although the buyer’s solicitor should always check that the buyer’s lender accept Personal Local Searches. Most Personal Local Searches also come with an indemnity insurance against errors or omissions. |
Planning and building regulations information, nearby adopted highways, if the property is listed / in a conservation area, if there are any enforcement or stop notices, FENSA’s, road schemes, local plan designations.
The additional local land charges enquiries can reveal (amongst others) matters relating to hedgerows, public rights of way, pollution & environmental notices, parks & countryside, commonland, noise abatement, hazardous substance consents. |
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2. |
Environmental Search |
If the property is subject to a risk of: contamination, radon gas, nearby landfill sites, ground instability, flooding. A more detailed flood risk search can be carried out as a separate search should the Environmental search highlight flooding as a particular issue. |
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3. |
Water and Drainage |
If the property is connected to mains water supply and mains drainage for foul and surface water, location of public sewers, is the property subject to a water meter. |
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4. |
Planning Search |
The planning history of the property (the local search is limited to planning history associated with the property address). |
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5. |
Chancel Repair |
Whether the property is liable to contribute towards repairs of the local chancel. (Since 2013 the liability should now appear on the property title this is not always the case.) |
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6. |
Coal Mining |
Applicable in certain areas of the country where coal mining was prevalent. |
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7. |
Highways |
The extent of the public highway adopted by the local authority and maintainable at public expense. It will confirm if the property directly abuts the highway or if there are any ‘gaps’ in-between -potentially creating a ransom strip (if the title does not contain any easement over such ‘gap’.) It will reveal any public footpaths and bridleways over the property. |
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8. |
Energy and Infrastructure |
If there are various infrastructure and/or transport projects in the vicinity of the property, such as solar farms, wind farms, renewable energy plants, energy exploration plants or Cross rail. |
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9. |
Commons Registration |
Particularly relevant to land in a rural area or where access is over open land or a wide verge. The search will tell you whether the land has been registered on the common land register, most common land is now ‘open access land’. Rights of common may not attach to the land being purchased, but may attach to neighbouring / surrounding land which some buyer’s may see as an issue. |
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10. |
High Speed Rail / Underground Rail |
If the property you are looking to purchase could be subject to an existing or proposed line. |
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.