Why are pre-contract searches needed when buying a property?

Whether a search is required and what searches are required depends on where the property is located and if a mortgage is required. The most common searches include the Local Authority and Land Charges search, the Water and Drainage search, the Environmental search and the Chancel Repairs search.

Once these initial searches have been put in hand, it may be relevant to apply for further searches depending upon the results given in the preliminary searches. For instance, the environmental search may reveal a high risk of flooding in which case a further flood search may be required.

Other searches that may be of some relevance in purchasing a property would include a Coal Mining Search, an Index Map search or a Commons Registration Search. When purchasing from a company, a Company search will be required.

Are pre-contract searches always required?

The answer to this is no, if you are a cash buyer. As cash buyer you may prefer to take out indemnity insurance in place of the usual searches and enquiries. This is more so the case where there is an urgent need to exchange contracts within a short period of time. However, purchasers must be aware of the risks on a future sale of the property.

For example, if no preliminary searches were carried out, there would be no way of knowing whether an adverse entry was revealed by any of the pre-exchange searches. For example, Enforcement Notices could be revealed on the Local Land Charges Register, or flooding or ground instability could be revealed by an Environmental Search. If these adverse entries are revealed by any future purchaser’s searches, any indemnity insurance taken out at the time of purchase will not protect a seller against any resulting reduction in the value of the property.

If a mortgage is required to assist in the purchase, searches will be required. When submitting the lenders Certificate of Title for draw down of mortgage advance funds (under the Council of Mortgage Lenders Handbook) solicitors are required to report on any adverse entries that may have been revealed by pre-exchange searches. Some lenders will accept indemnity insurance but not all. However, indemnity insurance (if acceptable by the lender) will only protect the lender and not the purchaser.

Buying a property is on the basis of buyer beware

The word caveat emptor (“let the buyer beware”) is commonly used in conveyancing transactions for good reason. A buyer takes the property as it is and exchanges on the basis of having obtained clear pre-contract searches and enquiries. In the event any issues come to light following exchange of contracts, it would be very difficult for a buyer to withdraw from the contract without serious consequences. For this reason, lawyers consider it essential to carry out pre-contract searches and enquiries in a purchase transaction.

IBB’s team of property solicitors can advise on all aspects of buying, selling and mortgaging property. We are always happy to speak to you about the progress of your sale/purchase on the telephone at any time. For more information or advice from our residential conveyancing solicitors in Buckinghamshire, call us today on 03456 381381 or email conveyancing@ibblaw.co.uk .