Associate Megan Harris, in our Commercial Property team, breaks down the importance of property searches in commercial property transactions.
If you are buying or taking a lease of a shop, office space, warehouse or other commercial property or piece of land, property searches are an important part of the legal process. They can reveal issues which may not be obvious from a viewing or from the draft documents. For businesses, identifying those issues early can help avoid unexpected cost, delay and disruption, and can also assist in deciding whether the property is suitable for the business before becoming legally committed to the purchase or lease.
Why property searches are important
In commercial property transactions, buyers and tenants are advised to carry out proper due diligence. Searches can reveal restrictions, environmental concerns and practical issues affecting the use, value or future plans for the property. For example, they may identify limits on alterations, a lack of planning permission for works or the current use, a proposed road scheme nearby or a risk of flooding. For businesses working to a tight budget and timetable, that information can be especially valuable.
The searches required will depend on the property, its location and its proposed use and we can advise which searches we recommend based on the circumstances of the property. The following are the most common searches carried out in commercial property transactions.
Local authority search
A local authority search result includes planning permissions, building regulations, enforcement notices and road schemes. For example, whether previous works were approved or whether there are any restrictions affecting signage or permitted use.
Environmental search (including flooding)
An environmental search can identify issues such as contamination, landfill, ground stability and other environmental concerns. A flooding search gives a detailed picture of flood risk from rivers, surface water or other sources. This can be particularly relevant where stock, equipment or customer access may be affected.
Drainage and water search
A drainage and water search confirms whether the property is connected to mains water and sewerage and whether public sewers may run through the site. This can be important if the business intends to alter or extend the premises, as works over or near to a public sewer generally require consent.
Highways search
A highways search helps establish whether roads, footpaths and accessways are publicly adopted and the extent to which they are adopted. For a business relying on deliveries or customer access, this can be a significant point.
Chancel repair search
A chancel repair search checks whether there may be a historic liability to contribute towards repairs to a parish church. Although this is unlikely, it is sensible to identify it early and obtain an insurance policy to mitigate the risk.
Index Map search
An index map search is used to check whether land is registered at the Land Registry. This can reveal any gaps in registered land, overlapping titles or unknown leases. If these are revealed it may mean that there are third party rights over the land to consider or that the seller does not own all of the land being sold.
Utilities search
A utilities search can reveal the location of pipes, cables and other service media affecting the property. This is useful where redevelopment or alterations are proposed, as the location of apparatus can affect cost and layout.
Conclusion
Property searches are an important part of the due diligence process when buying or leasing commercial premises. They can reveal issues affecting value, use, cost and future plans, allowing businesses to make informed decisions and address any concerns at an early stage.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
