Equity Release – Your Top 10 Questions Answered In our Residential Conveyancing department we are often asked by our clients to give them advice when they are considering Equity Release Schemes. In this Blog, Arlie Asbury, one of our Licensed...
What are Conveyancing Searches all about?
Conveyancing searches are often a mysterious topic to a home buyer.
Searches are enquiries submitted to various authorities which provide you with more information about the property you are looking to purchase. These authorities include Local Councils, the Environmental Agency, Coal and Water Authorities.
Do I actually need searches?
A cash purchaser, although unadvisable to do so, may proceed without searches. If however you are buying with a mortgage, you are under an obligation to the lender to obtain searches.
Some lenders may accept an Indemnity Insurance Policy as an alternative to searches, however this is becoming less favourable as the insurance usually only covers any loss of value to a property or any essential expenses resulting from something which would have been revealed had the search been carried out. It does not prevent any action being taken and does not usually provide compensation for any inconvenience.
What searches do I need?
The Council for Mortgage Lenders Instructions state “all conveyancing searches a prudent solicitor would carry out” are required in every purchase transaction.
Thus the particular searches you require depend largely on the location of the property you are intending to purchase, and although most searches are optional, it is best practice to obtain them.
All conveyancing searches require at least a satisfactory search result from the Local Authority, a Drainage & Water search, an Environmental search and a Land Registry Priority search before completion.
In addition there are other optional searches such as a Coal/Brine Mining Search or a Commons Search that can be undertaken dependent upon the geographical location of the property.
What do the Searches reveal?
1. The Local Authority Search
This search provides information relating to the property that you are buying only, and does not cover the surrounding area. A Local Search can be more or less detailed depending on the Council, however usually contain the following:-
- A List of relevant entries on the Local Charges Register
- Planning Permissions (granted or refused)
- Building Control History
- If the highways adjoining the property are publically maintained
- Any Enforcement Action
- Restrictions on permitted development
- Nearby Road and Rail Schemes
- Conservation area
- Contaminated Land
- Radon Gas information
- Tree Preservation Orders
- You can also ask additional questions relating to public rights of way, pollution notices etc.
The Cost of the search is payable by the buyer and can vary from council to council. The average cost of a local search in this area is usually between £100 and £150.
The time scale for the search to be completed also varies around the country from same day to several weeks. In this area the average timescale for receipt of a Local Search is 2-3 weeks.
The Local search will not however reveal specific information about any nearby development or proposals and as your conveyancing lawyer does not normally visit the property you are intending to purchase. You must therefore inform your conveyancing Lawyer if you are concerned about any potential development surrounding the property so they can make further enquiries on your behalf.
A Local Search is also time sensitive, so will not cover any proposals submitted after the date of the search and is usually only valid for the purposes of a conveyancing transaction for 6 months.
You can also visit the Councils Planning Office or their online site to obtain further background information should you so require.
2. Water & Drainage Search
A set of standard questions are sent to the Water Company responsible for the property to enquire about:-
- Whether the sewers are adopted
- The proximity and location of the public sewers
- If there is a sewer running through the property
- If the property is connected to water mains
- If foul water and surface water drainage from the property drains into a public sewer
- The location of the water mains
The cost of a Water & Drainage search can also vary depending upon the authority and the search provider, although the average cost in this area is £40-60.
3. Environmental Search
This is a commonly used search which will identify any risk within 500 meters of the property such as flooding, subsidence, landslides, landfill, waste sites and potentially contaminated sites.
The cost of Environmental Searches also vary depending upon the search provider and detail required, the average cost in this area being £50-100.
4. Coal Mining and Brine Report
A Mining Report is only carried out if the property is situated in an area of previous or current mining history. In additional it will show if there are any underground coal/brine workings, mine entrances that may cause subsidence, whether compensation for subsidence has been paid in the past or repairs carried out, or if there any outstanding claims.
The cost of a Mining/Brine report can also vary depending on the search provider, and the cost in this area can be anything up to £50.
It should be noted however that searches are intended to cover the legal aspects of a conveyancing purchase only, as Conveyancing Lawyers do not requisition a Survey and will not report on the physical condition of the property and therefore an independent Surveyor must be instructed for this purpose.
What happens if a search reveals an issue?
If you do discover something about the property then this could be used to negotiate a price reduction or arrange for indemnity insurance to cover for any potential issues should they arise, as your Conveyancing Lawyer is under an obligation to obtain clear searches on behalf of your lender as part of their due diligence.
Cash Purchaser – to do or not to do?
Your home will probably be the most expensive thing you buy in your life costing hundreds of thousands of pounds, so surely spending approximately £200-300 on searches for peace of mind is a good investment?
However often the decision not to undertake the searches is based on buying a property on a tight budget, but you must be mindful of the fact that this may cost more in the long run, so it is surely better to pay a bit of money up front to protect your home and to ensure that nothing will come up in the event you decide to sell or re-mortgage.
Do I lose the money paid for the searches if the transaction falls through?
Unfortunately yes which is why your solicitor will usually ask you for a payment on account to cover the costs of the searches.
What is Search Protect Insurance?
Here at Fishers we are fortunate enough to be able to offer an exclusive Search Protect Insurance Policy which will reimburse you with your search costs up to a maximum of £300 should the purchase fall through, through no fault of your own.
The circumstances under which you would be reimbursed are as follows:-
- If the property is withdrawn from the market by the seller due to reasons beyond your control
- If the vendors receive and accept an offer from another buyer which is a minimum of £1,000 greater than the offer previously accepted from you and you are not prepared to increase your offer (gazumping).
- If the vendor is not legally entitled to sell the property or to transfer the interest to you.
Further circumstances under which you will be reimbursed are as follows:-
- The mortgage lenders survey or valuation identifies rectification work which needs to be carried out which exceeds 5% of the sum you have originally offered and which has been accepted.
- The mortgage lender applies a retention on the mortgage high exceeds 5% of the sum you have offered and which has been accepted.
- The property sustains damage during the period between exchange of contracts and completion where the rectification work exceeds 5% of the property value
- The local Authority Search reveals one of the following about the property:-
- It is the subject of a compulsory purchase order
- It is in a flood plain
- It is on contaminated land
- It is over a mining area
- You or the person buying the property with you dies and the survivor is unable or unwilling to continue with the purchase. You are given notice of redundancy, relocation or diagnosed with a terminal illness and are unable or unwilling to continue with the purchase.
The cost of Search Protect Insurance is £10 plus VAT and can be put in place by Fishers when the searches are requested.