Do I need searches when I buy, remortgage or transfer a house?
When you are buying your new home, we understand that you want to spend all of your available budget on the house of your dreams rather than the ancillary costs. However, as we have highlighted in previous articles, choosing the cheapest option may not necessarily be the wisest decision when you take into account the financial investment you are making.
THE PURPOSE OF SEARCHES
Our advice is that you should always carry out all necessary searches, such as a local authority search, environmental search and drainage and water search. This is not an exhaustive list but they are the most common searches carried out in conveyancing transactions. We also recommend that you take out a chancel repair search and, depending on the result and the date of the last sale transaction of the property, an indemnity insurance policy.
The local search result will:
- Reveal if any works have been carried out at the property and whether planning permission and/or building regulation approval was obtained
- Disclose any planning refusals and certification for any other notifiable works i.e. new windows or electrics
- Confirm who maintains the roads and footpaths surrounding the property
- Detail if the property is subject to any land charges, such as a Community Infrastructure Levy (CIL). The last thing you would want to receive as the new owner, would be a demand from the local authority because a seller has failed to pay the CIL on a new build property
Word of warning: the seller may offer to provide a lack of planning and/or building regulation approval indemnity insurance. However, this would only cover you for any enforcement action undertaken by a local authority. If the worst was to happen and the building collapsed because a load bearing wall was removed without lintel support, there is a risk that your buildings insurance may not pay out because there was no evidence of the relevant consents.
If the local search does not reveal these consents, then the seller should seek a regularisation certificate to prove the works are compliant and safe, regardless of whether or not they undertook them.
An environmental search will:
- Reveal if the land has been potentially classed as contaminated due to current or past use – As many properties are built on brown field sites we have seen environmental searches fail due to contamination risks. This could affect your ability to sell the property in the future
- Detail any potential flood risk or other environmental matters, such as being in an area susceptible to ground stability issues, or being near a landfill site
The drainage and water search will:
- Reveal if the property is connected to mains water, surface water drains and sewers.
- Indicate, so far as the water authority’s records are up to date, where the pipes are in relation to the property. This is important to ensure that rights exist in the title deeds to use the pipework between the property and the mains should they be some distance away. In addition, it is important to ensure these pipes have not been built over by conservatories or extensions.
RISKS
By not carrying out searches we will not be able to ascertain the saleability of the property in the future. Your future buyer’s lawyer may well undertake searches you rejected and find something in the results that affects the saleability or the value of the property.
You may not plan to sell the property for a long time but searches are an ancillary cost you should not try to save from your budget. You may pay for it in the long run!
Another thing to bear in mind when it comes to searches, is that the option of having them can be taken out of your hands. This can depend whether you are buying, re-mortgaging or transferring a property.
BUYING
If you are purchasing a property and are relying on mortgage funds then your lender will require you to have searches. You may even be expected to take out additional searches such as a mining search or an extended flood risk report.
If, however, you are a cash purchaser and not relying on mortgage finance, then you will have the choice as to whether or not to put in place searches.
REMORTGAGING
If you are looking to re-mortgage a property which you currently occupy, you will have substantive knowledge of the property and any alterations or risks. In these circumstances, whether you need searches will very much depend on whether your new mortgage lender requires them or if they will accept search indemnity insurance.
Your mortgage broker can check whether the mortgage lender will accept search insurance as this could save you a few hundred pounds. However, be sure to discuss all options with your financial advisor as the mortgage lender which offers you the best product may not accept search insurance and you need to be sure you are getting the best possible deal overall.
TRANSFERRING
There may be a variety of reasons why a property is being transferred. It could be held in one spouse’s name but you want to add the other, you may have inherited it and wish to keep the property or it may be transferred to you under an Order of the Family Court following a divorce settlement.
If the transfer of the property is for one of these reasons and mortgage finance isn’t required, then you can choose whether or not to undertake the searches.
If you are looking to buy a new home, transfer a property or remortgage then call GA’s award-winning conveyancing team on 01752 203500. You can also email me directly via donna.butler@GAsolicitors.com.
Donna Butler, associate