Which pre-contract searches do I need when buying a commercial property?
When buying a commercial property, it is vital to ensure all mandatory searches are carried out, aswell as any additional checks needed for the specific property. The required searches will vary depending on the property’s location and whether it is bought with cash or a mortgage.
Why are pre-contract searches carried out?
The purpose of pre-contract searches is to gain a complete picture about a property before purchase.
The results of such searches give buyers of commercial properties all the knowledge they need about the property and land. Once the title deeds have been acquired, the buyer will be liable for any charges, so it is essential to check the details carefully to avoid nasty surprises in the future.
Are pre-contract searches compulsory?
Searches are mandatory if a commercial property is bought with a mortgage and optional if purchased with cash.
Although cash buyers are not required to undertake searches, they are still affected by anything that would have been revealed. Remember that any indemnity insurance taken out at the time of purchase will be invalidated if adverse entries are later discovered by future purchasers’ searches
What are the most common searches?
Standard searches include Local Authority and Land Charges, Water and Drainage, Chancel Repairs, Environmental, and Energy Performance Certificates.
Local Authority Search and Local Land Charges Register
The Local Authority Search is an extensive search of the local authority’s records. Local land charges are generally financial charges or restrictions on the use of land. Such restrictions might not be obvious from a basic inspection.
These searches will reveal any entries on the register such as:
- Planning applications
- Enforcement notices
- Light obstruction notices
- General or specific financial charges
- Listed buildings
- Smoke control orders
- Tree preservation orders
The Local Authority Search covers a single property only and will therefore not investigate neighbouring properties. This means it will not reveal any planning applications relating to properties or land in the area. A separate, non-compulsory search, known as a Planning Search, can be conducted for this.
Drainage and Water Search
A Drainage and Water search will check that foul water and surface water drain to a public sewer. This information can help assess the risk of flooding.
It will also investigate whether there are public sewers, mains or drains within the boundary of the property, whether the property is connected to the water mains, who provides the water and sewerage services, and how the water is charged.
Chancel Liability Search
Some properties are liable to contribute towards the costs of maintaining and repairing the local parish church. This practice, which dates back to the sixteenth century, can result in repair bills running to hundreds of thousands of pounds, so it is important buyers know their property is not affected.
A basic environmental search is a desktop survey and does not involve a physical inspection of the property.
Checking past uses of the property and its surrounding area, and whether those past uses are likely to have led to contamination, has financial and safety benefits. Landowners have a statutory obligation to clean up contaminated land, which can lead to hefty clean-up costs, while any contamination may pose a danger to occupiers.
Energy Performance Certificate
Energy Performance Certificates (EPCs) are compulsory for most commercial properties and must be provided free of charge to the buyer or tenant when the property is sold or let.
An EPC contains:
- Information about a property’s energy use and typical energy costs
- Recommendations about how to reduce energy use and save money
- An energy efficiency rating from A to G
Here to advise
If you need any guidance when navigating these searches, our dedicated team are here to help. Get in touch on email@example.com