22 July, 2019
On all Commercial Property transactions it is recommended that standard pre-contract searches are carried out, whether they are absolutely essential does depend on the type of transaction proceeding. For example, should you be purchasing a commercial property with a lender involved then searches must be carried out, as this is a requirement of all lenders. However, if you were a cash purchaser then searches are not compulsory but are always highly recommended.
The standard pre-contract searches include the following:-
Local Search: This search reveals matters relating to the Property and in particular, the matters relating to the planning i.e. whether or not it has any planning permission for the current use and other matters relating to the immediate neighbourhood, i.e. whether or not roads are adopted, if there are any proposals for demolition in the area, compulsory purchase orders, etc.
Water & Drainage Search: This search reveals whether or not the Property is connected to the mains, sewers and water mains. It also reveals the location of the pipes and whether any run within the boundaries of the Property.
Coal Search: If required, dependant on the location of the Property, the Coal Search will reveal matters relating to past underground coal workings in the area and whether or not the Property is located near any mineshafts. This search will also reveal the last date of workings of coal near to the Property and whether or not the Coal Authority is determining whether to grant a licence to remove coal using underground methods.
Environmental Search: An environmental search reveals whether or not the land or neighbouring land have been contaminated. The search also reveals whether or not there have been any complaints from the Environmental Agency or other authorities regarding the state and condition or the use of the Property or any neighbouring property.
Chancel Search: A Chancel Search is carried out in order to determine whether a property has a potential chancel repair liability. A chancel repair liability means that the Property falls within an area, which could be called upon to pay a proportionate amount of any costs required to repair the chancel (the top part) of a Church in the area. The search however does not reveal which Church it would be, should the result state that the Property did have a potential chancel repair liability. The potential liability can be extensive and in a case from 2003 saw two property owners held liable for repair in the cost of £186,986! However, an indemnity insurance can be obtained should the search reveal that the Property is in an area that has a potential chancel repair liability.
SIM Search: Also known as a Search of the Index Map is a search of the Land Registry's mapping records. This search is carried out in order to identify whether the Property is registered and reveals all title numbers for the Property.
Whilst the above-mentioned searches are the main pre-contract searches required by a lender and recommended, there are also other additional searches that may be required. These include a Gas Search which reveals details of any gas pipes under, on or over the Property and equipment of gas pipes within the vicinity of the Property, an Electricity Search which reveals details of any electricity installations on or over the Property and again any equipment and electrical installations within the vicinity of the Property and lastly, a commons registration search which will reveal whether the land contains any common land or may be registered as a town or village. All of these searches on average take between 5 - 10 working days to be returned once submitted.
As mentioned above, these searches are not compulsory if you are a cash purchaser but are always highly recommended.
For more information contact Henry Prescott in our Commercial Property department via email or phone on 0333 207 1163. Alternatively send any question through to Forbes Solicitors via our online Contact Form.