Why do I need searches when I purchase a commercial property?
Updated: Jan 21
When you buy or lease a property, the caveat emptor principal applies. This roughly means “let the buyer beware”. The seller or landlord is generally under no obligation to disclose physical defects in the property to you. You should find out as much about the property as possible before you commit yourself . Such information is obtained from making proper pre-contract searches and enquiries.
The searches will assist you in building up a complete picture of the property. With the results of the searches and the enquiries we raise with the seller or landlord, you will be able to weigh up any risks before making a commercial decision to proceed or not.
We recommend the following searches:
1. Local Authority search (cost varies approx. £150-£300)
This search will reveal lots of useful information known at the time of the search including but not limited to:
(a) planning information - if the use of the property is authorised and whether any planning consents or building regulations have been made, granted or refused.
(b) whether the access road serving the property is maintained at the public expense or private?
(c) whether any new roads are proposed within 200 metres.
(d) whether the property is in a conservation area.
(e) if any part of the property is common land or if public footpaths run through the property.
2. Drainage and water search (cost varies approx. £100-£200)
This search will reveal if the property drains to a public sewer and if the property is on the mains water. If it’s a private drain then repairs could be expensive. It will also tell you if there is a water main or public sewer within the boundary.
3. Environmental and Flood search (cost varies approx. £150-£250)
If the property is deemed as contaminated then the law states that the person who caused the pollution pays. If they can’t be traced, the current owner or occupier may be liable to pay remediation costs.
4. Highways search (cost varies approx. £50)
This shows the extent of the publicly maintained highway to make sure there is a legal right of access to the property and there are not private strips of land in between that may require someone else’s consent to cross.
5. Chancelcheck search (cost approx. £15)
This will tell you whether you are liable under a historic law to contribute towards the upkeep of the local church. If the property is liable, this liability is split between all the owners and occupiers in the vicinity of the local church. If it’s a built-up area, the liability is significantly reduced, and indemnity insurance is available if a liability is found (usually at a cost of under £100).
Some of the search results can have potentially significant financial implications. We appreciate the full search package is costly. You do not have to carry out all, or any of the searches, however we recommend you do so. However, if you chose not to have them, we will not be liable for information that may have been revealed in those searches that later cause you problems or unexpected financial liability.
For a short, low rental, internal only lease this will perhaps not justify the cost of an environmental search. Equally, some tenants prefer to rely on rights granted in the lease regarding services and choose not to carry out a water or drainage search.
If you are buying a building or leasing an entire building for a significant period, we strongly recommend full searches. If you are obtaining a mortgage, your lender will require them.
The note above is not exhaustive and is guidance only. It does not constitute legal advice. The search package will vary depending on the particular property and will require discussion with your solicitor.
5 January 2021
MY BUSINESS COUNSEL