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Searches and Search Indemnity Guidance

Introduction

We strongly recommend that searches are carried out in a purchase transaction to ensure that all relevant information is available to you to assist you in your decision whether or not to proceed with the transaction.

Although we would always advise that searches are carried out, in some cases, search indemnity insurance may be an alternative to be considered.

In most cases we are required to carry out searches to protect you and ensure that we comply with your mortgage lender's requirements. However, some lenders will, as part of the package offered to you, put in place search indemnity insurance. You should be aware that, in such cases, the Lender may put search indemnity insurance in place which only protects them. This would leave you without any protection whatsoever against matters which may adversely effect your enjoyment of the property, result in a reduction in the value of your property or even make the property unsaleable.

The type and extent of searches carried out can depend upon the type of property and the area in which it is located. For example, Brine Extraction was a major industry in the Cheshire area resulting in potential ground instability etc. Therefore a Cheshire Brine Search would be carried out against properties in the Cheshire area. Our local equivalent is coal mining and in almost all cases in the North East, a coal mining search will be advisable. Likewise, the types of searches carried out for a rural dwelling may differ from those required for a suburban dwelling. We will assess the position in each case and can suggest additional searches that may be required to give a better picture of matters that affect the property.

We have summarised the type of information that is available in each of the searches but the details are by no means exhaustive. The examples given below are simply to give an indication of matters that can discourage buyers from proceeding with a purchase of a particular property and are given to highlight some of the considerations you should make. The information we receive varies in depth but gives an idea of issues about which you can then make your own further enquiries or where an additional search may be appropriate. When we have the search results for your particular property, we will advise you specifically in relation to the information revealed as far as we have the expertise to do so and you can then make any additional enquiries that you wish to do so and/or decide whether the property is suitable.

Finally, we would stress that the information revealed in the searches is relevant only to the position at the date of the search. This is mostly relevant to the Local Search as Council activity and proposals can change at any time.      

Searches

We carry out the following searches on your behalf automatically I order to comply with your mortgage lender's requirements and we have summarised below the information that they provide:

i.              Local Authority Search ("Local Search"):

This search provides information about Local Authority activities, plans and proposals that affect the property at the date the search is made. The information supplied only relates to the property and not surrounding land. The Local Authority provide a Certificate which guarantees the information provided and if any information is incorrect they must account to you for certain losses suffered by you as a consequence of that incorrect information.

The Search provides information such as: planning permissions and building regulations approvals granted in respect of the property; local authority responsibility for highways, any proposed road, traffic or railway schemes; pending compulsory purchase, details of the contaminated land register; financial liabilities registered against the property; details of any enforcement action taken or outstanding in respect of the property; whether the property is situated in a smoke control, conservation or tree preservation areas etc.

Certain optional additional information can also be requested, such as, whether there are any public footpaths that affect the property. It is therefore important for you let us know whether the property is situated near open spaces, countryside, railways and similar or more unusual features.

An example of an entry may relate to traffic calming measures. The search may reveal that a traffic calming scheme is intended by the local council for the street on which the property is located. Although the information will be limited to the existence of the proposed scheme, this provides you with an opportunity to speak with the local authority and satisfy yourself that there are no road humps intended in front of the property which may disrupt your parking etc.

ii.            Mining Search:

This search is made at the Coal Authority and confirms whether any past mining activities affect the property, whether there have been any past subsidence claims, whether there are any shafts or adits located in the vicinity of the property and whether coal reserves exist that may be mined in future.

In the North East, Coal Mining has been a major activity and it is not unusual to find that properties have been built over mine shafts or entries. This can have various implications depending whether the shafts have been filled or not . Where stability is in issue, a further optional search can be carried out and we have explained this later in the "Optional Searches".

iii.           Drainage Search:

The search is made to the Local Water Authority and confirms the position and location of public sewers and water supplies in relation to the property; confirms whether the sewers and supply are maintained at the public expense; whether the property suffers low water pressure and whether there is any statutory agreement in place in connection with the adoption of sewers into the public expense or in relation to building over existing pipes/sewers.

The location of public sewers and the apparatus connected to them, such as pumping stations etc, can have an impact on a property. For example, the inconvenience of replacement or repair works or leakages should be considered together with overflow and blockage issues should a pumping station fail.

Another consideration is the location of the public sewer that the property connects into. You must remember that there is usually a private section of drain from the property to the public system and the further away the public sewer the greater your potential liability should there be a fault or problem with the private section.

iv.           Environmental Search:

This search is carried out by specialist Environmental Surveyors and details the past and present uses of the land which may result in contamination risks, loss of amenity or the property being defined as Contaminated Land. Under recent legislation, the "polluter pays principle" was introduced and this means that where the original polluter can't be found (eg. past industrial land user), you will be responsible for the costs in cleaning up your land or other land/water polluted by your land as the current owner of that land.

Although the search may confirm that the property is not situated on Contaminated Land as defined by the statute and therefore giving rise to the risk to health and liability for clean-up, it will also reveal whether there are any land uses nearby that could be problematical. An example of this would be a property located near a landfill site or animal products processing plant which could result in foul smells and/or gas emissions or the property may be located near to an electricity substation or mobile telephone mast, which is some opinions can be injurious to health.

Search Indemnity Insurance

Search indemnity insurance is provided by specialist insurers and the cover and conditions may vary between each provider. Commonly, the following will be covered:-

  • Loss sustained as a result of adverse entries which would otherwise have been revealed had a search been carried out at the day of exchange or completion.
  • Loss usually means the value of any financial charges revealed or a properly calculated reduction in market value of the property.

Cover is usually conditional upon you having no knowledge of the potential entry; in the case of environmental matters, that the land is not listed in the Contaminated Land Register; and that cover is not available to you under your household insurance policy.

Some insurance policies will only cover an absent Local Search whereas others will cover the absence of the Local, Mining and Drainage Searches.

The limit of cover available is usually determined by the purchase price of the property or amount of mortgage advance.

We always recommend searches over search indemnity as the financial cover does not always solve the problem and can be a small consolation where matters come to light which then render the property otherwise unsaleable.

Examples of Additional Optional Searches

We have set out some of the optional searches that are available to you either as a matter of choice or because it is apparent that additional information is required. As with all searches, some will be more relevant to a particular property in a particular area than others:-

i.              Chancel Repair Search

Chancel Repair Liability can affect any property within a Parochial Church Council area (being former rectorial land with a pre-Reformation Church). In a nutshell, a property owner in such an area can be called upon to fund the repair of the Church or its Chancel. The Chancel being the area over which the Church Rector once officiated and such area is potentially widespread. Only the National Archives hold the records relating to the boundaries and tithe rents that can affect a property in this regard. The National Archive Chancel Records can only be searched one day a week between certain hours which makes a formal search totally impractical and excessively expensive.

 

Although in many cases the liability is likely to be small a recent case, involving Mr & Mrs Wallbank who owned farmland within a chancel boundary, is a warning to us all. As they were the only other property within the chancel boundary, they were required to pay the £400,000 bill for repairs to the local Church and Court costs. This case together with the change in Land Registration Rules enacted recently means that Chancel Repair Liability is once again a potential problem for property owners.

We can obtain a search via ChancelCheck© which uses data already accumulated to determine whether there is no liability or a potential liability. Where a potential liability is found, an insurance policy can be taken out to protect the property owner against the liability should a claim be made by the Parochial Parish Council or other qualifying body in future. The insurance policy premium is a one-off premium and they start at £45.87 up to £355.88 depending on the term of the policy, the value of the property and whether or not the policy is to cover future owners of the property.

ii.            Mining Interpretive Report

This search can be carried out where your Mining Search has revealed that the property is located on or very near to a mine shaft. This additional search gives further details of the shaft, whether treated or filled and gives an opinion on the ground stability as a consequence of the existence of the shaft. This therefore clarifies the potentially adverse information in the Mining Search relating to the existence of the shaft and assists you in deciding whether you are comfortable with the position.

iii.           Flood Report

This report can be carried out generally or where your environmental search or free Environment Agency Flood Check assessment suggests that the property is located within a flood risk area. The report gives details of flooding and extreme flooding (both in relation to tides/rivers "fluvial" or surface water "pluvial"); whether there are any flood defences and whether the property benefits from those defences. This will then provide an overall picture of the flood risk relating to that particular property and its surrounding area and insurability as a result.

iv.           Ground Stability Report

This is similar to the Mining Interpretive Report mentioned above but this search can be carried out as a stand alone search to determine the likely subsidence risk to a property associated with all different types of historical mining and extraction activities including the likes of coal, fireclay, brine, boreholes, landslide, landfill as well as natural hazards that may exist due to the composition of soil and clay or rock types on which the property is situated.

v.             Plan Search Report

This report gives details of the planning applictions on Local Authority record relating to the area immediately surrounding the property. For example, such a search would reveal whether there is currently a planning permission for a local supermarket nearby or residential development planning permission for the fields to the rear or a garage extension intended next door, etc. In addition to planning permissions, the report will also reveal any current land use designation or development plans. The search will also reveal whether the property is situated on a listed floodplain.

For more information, contact our expert solicitors on 0191 5666 500 or complete our short online enquiry form.

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