Never Buy or Rent a Commercial Property Without Searching

You’re thinking of putting money into a commercial property. Perhaps by purchase, perhaps by lease; in either case it’s a financial investment and no decision involving money should ever be made without examining the facts. ALL the facts. That means engaging a solicitor who knows what she or he is doing – that is, a property solicitor experienced in commercial property transactions with a sound understanding of what can go wrong – conduct the necessary searches. Failure to do so can be disastrous for the future of your business.

What sort of question does an experienced property solicitor expect a search to answer?

First, there are local authority searches. This property you’re thinking of taking on – what can it be used for? What, in legal terms, is the “permitted use” of this property and will you be within that permitted use if you set up in business there? This is a serious matter; businesses have suffered serious financial implications because they attempted to operate in a place where their kind of business was not allowed and, after they’d put money into the place, they were prevented from trading there.

A local authority search will also tell you:

  • Whether any work and/or payments are outstanding under existing planning permissions (when you take possession by purchase, that obligation will be yours)
  • Whether the property breaks planning law and/or building regulations (you’d have to deal with the problem)
  • What payments are or will be due to the local authority for making up roads, drainage and sewerage works, repair or demolition of dangerous buildings and a host of other possible charges
  • Is the property in a conservation area; is the building listed; are there tree preservation orders? Any of these can affect how (and, indeed, whether) you can use the property
  • Does the property have right of access to the public highway? There’s no problem if there’s direct access to the highway, but if it can only be gained by crossing someone else’s property then is there a documented and enforceable right to do so? If not, how do you plan to get in and out?
  • Are there road development plans that would either require compulsory purchase of the property or damage accessibility in some way? And, while looking at that, does a compulsory purchase order already exist?
  • What about environmental notices? If the site is subject to pollution, has an order been served requiring work to get rid of it? That can be very expensive and you’ll want to understand the cost fully before committing your own money to the acquisition.

Depending on location of the property, other searches are or can be important:

Drainage and Water

Does the site have access to mains water and sewerage? If not, what arrangements are made – and at what cost?

Environmental Search

Is there now or may there be in future any liability for pollution? Does existing pollution prevent the property from being used for the purpose you want to use it for? Is there a flood risk? What about plans for neighbouring properties – will they come to represent a pollution threat?

Chancel Repairs

This is often not taken seriously and it can be a monster. Buyers of land that was once part of a rectory or glebe (an area once set aside to support a parish priest), may be responsible to pay for repairs to the parish church in question, and those repairs can involve large sums of money. There have been highly publicised cases recently in which the liability was beyond the owner’s ability to pay. Insurance is available but you need to know whether the potential liability exists.

Subsidence due to past coal and limestone mining

Parts of Shropshire, for example, are subject to both of these; a search will tell you whether you are exposed to risk.

Other people’s rights

All sorts of rights have been granted or simply grown up over the centuries: grazing rights; rights of way; rights of recreation – and all of them could seriously inhibit your ability to use the property in the way you intend. Once again, you need to know. A search will tell you.

Waterways and flood searches

If the property is in the area of a canal, the owner may be liable for maintenance and flood protection, to say nothing of fishing rights, rights of way and water extraction rights. Even outside a canal area, flooding is an increasing risk and you should not enter into a land purchase or lease until you know the situation with regard to that property.

Land Registry

Where the property is not registered with the Land Registry, the exact boundaries must be established. Where there is Land Registry registration, the boundary plan for the proposed transaction must still be checked against the plan on file at the Registry to ensure there is no conflict with someone else’s property rights.

Signing a contract to buy or lease a property is fraught with the potential for expensive error. Don’t sign anything until you are confident that a competent solicitor acting for you has checked everything that needs to be checked.

If you don’t already have someone you know you can rely on, contact Lynn or Katie at Excello Law, on 0845 257 9449. We’ll be delighted to look over your plans and make sure that you are investing safely.

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Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.