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Commercial Searches and Enquiries

What searches and enquiries do I need to undertake as part of my commercial property due diligence and why? What do I need to know about commercial property searches and enquiries if I am selling commercial property?

What searches and enquiries do I need to undertake as part of my commercial property due diligence and why? What do I need to know about commercial property searches and enquiries if I am selling commercial property?

The legal principle of caveat emptor (“buyer beware”) means that a buyer or tenant of property cannot withdraw from a transaction once contracts have been exchanged just because they find out something about it which they do not like. Even a tenant of property on a short term lease can find itself liable for unexpected  expenditure so it is important for buyers or tenants to know as much about a property as possible before committing themselves to a lease or a purchase.  This is achieves through undertaking thorough commercial property due diligence

In the rest of this note “buyer” will also be used to denote “tenant” and “seller” will also include “landlord”.

Commercial Property Searches

The number of potential commercial property searches that can be carried out when purchasing commercial property is potentially huge and reflects the huge variety of issues that can affect a property.  The aim is not merely to find out what issues are likely to break a deal but to ensure that all parties are aware of what risks affect a property and who will take responsibility for that risk should it ever occur in practice. Most of the risks can be dealt with to the satisfaction of both buyer and seller if they are spotted early enough in the process. The only way to find out if certain issues affect a property is to undertaker property due diligence including making enquiries and carrying out commercial property searches.  For this reason, commercial property searches and enquiries are an integral part of the conveyancing process and we would never advise a buyer to proceed without undertaking the following searches as a minimum:

For more information

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email geoffrey.cotterill@everymanlegal.com

Local land charges and a local authority search

This will identify all the charges registered in the local register that affect the property and other information about the property and its immediate surroundings. This will include planning permission information, building regulation consents, planning agreements, adoption of roads, conservation areas and tree preservations orders.

Commons registration search

This will identify whether the Property or any part of it is registered as a common. If it is then all/part of the property will be subject to third party rights such as grazing rights, potentially impossible to develop, subject to access problems or regarded as “access land” for the purposes of rights of way legislation.

Drainage and water enquiries

The replies to these will reveal important information about the water and drainage services at the property, including whether it is connected to the mains water supply and mains drainage and the location of these.

Environmental Data Search

This report will assess the environmental risks affecting the property, including the risk of it being designated as ‘contaminated land’. This can have important consequences for you as, if land is contaminated, and the party who caused or knowingly permitted the contamination cannot be found, you, as the current owner or occupier of the land may be required to remedy the contamination.

Chancel Repair Search

This will indicate whether there is a risk that you, as owner of the property, would have to contribute towards the repair of a medieval church chancel. Most properties in England may have a liability and although a change of the law means that it is becoming less relevant, it is still possible  to receive an unexpected repair bill!

There may be other commercial property searches that you should undertake depending upon the location of the property, the use to which you intend to put it and the information revealed by the other searches and enquiries. These include flood searches, mining & subsidence searches, energy & infrastructure searches, highways searches, radon searches and utilities searches. As some search results can take around 4 weeks to be returned (even when these are ordered online) we would always want to submit the initial searches as early in the due diligence process as possible.

Our dedicated team of solicitors, based in Witney, Oxfordshire, would be happy to answer your questions.

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How much will these commercial property searches cost?

A standard set of commercial property searches will cost in the region of £1,000 plus VAT.  For a short lease, this may seem an unnecessary expenditure but the opposite will be true if an unexpected bill or objection to your use of the property occurs after completion.

Commercial Enquiries (CPSE1)

Commercial enquiries are simply questions that are asked of the seller. These are asked either in standard form (known as CPSE1) or specifically by a buyer’s solicitor in order to supplement searches and other information received about the property.

Raising enquiries is essential as a buyer needs to know as much about the property as it can before committing itself to the transaction.  It will be too late to pull out once contracts are exchanged so enquiries are used to supplement information already received or revealed.

The CPSE1 standard enquiries are a very detailed document and the temptation is for sellers to give misleading or inaccurate replies to the questions. Although the onus is on a buyer to carry out all necessary property due diligence before purchasing a property, if a seller gives inaccurate replies to an enquiry then the seller may find himself the subject of a claim for misrepresentation.

If an issue is revealed by enquiries then it is easier (and quite often cheaper) to deal with the issue as early in the process as possible.

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