Official vs Regulated: Search delays on a purchase, can you avoid the queue?

Once a buyer instructs a firm of solicitors to act for them in respect of a property purchase, thoughts will soon turn to ordering searches. Searches can take several weeks, if not months, to come back from various search providers and so it is prudent to order them as soon as possible once a purchase has been agreed.

But what exactly does a search do and what are a buyer’s options?

What is an official (or council) search?

A local authority, or council, can undertake various searches on behalf of buyers, including local authority (CON29) searches, local land charges searches, highways information and a search for common land, town and village greens. The fee payable for these services will differ from local authority to local authority.

A search provided by a local authority is deemed an “official” search and can be legally relied upon to be accurate. The search request will be passed around each relevant department of the council to complete and to flag any onerous issues, before being collated, normally by the land charges department, into one full search result.

The downside of an official local authority search is that they can take weeks, sometimes months, to be returned to the solicitor acting on a buyer’s behalf, and is likely to hold up legal matters in the meantime.

Similarly, water companies, or “statutory undertakers” can undertake an official drainage and water search on a buyer’s behalf. This will include a plan showing the location of any public drains and water mains and should flag any issues with connection.

Drainage and water searches generally do not take quite as long to arrive as local authority searches, but nevertheless, they tend to be slower than undertaking a personal search.

What is a regulated (or personal) search?

A regulated search (previously known as a personal search) is carried out by a personal searcher employed by a third party search company.

This person will personally search the local authority’s, or the water company’s, records and provide replies to some (although normally not all) of the standard suite of questions. Because the third party is carrying out the work, rather than the local authority or the water company, these searches are generally returned much sooner than an official search would be.

They can therefore be very useful where time is limited but before ordering them you need to check that any lender funding the transaction is satisfied with the use of a personal search – many are, but not all. This is because, a personal search result cannot be guaranteed by the local authority or water company to be accurate, as some information held by the local authority or water company may not be available to the personal searcher. Because of this risk, personal searches are often backed by an indemnity policy that would provide the buyer (and potentially its lender) with cover for the risk of an onerous entry or matter being missed by the personal searcher. However, an indemnity policy offered by a search company should be checked thoroughly by the firm of solicitors acting for the purchaser to check that it provides sufficient cover.

Other Searches

Other searches carried out on a purchase can include environmental and chancel check searches. These searches are generally only carried out by a third party search provider and therefore the question of official vs personal searches is not relevant.

Search Insurance

Instead of carrying out personal searches, and subject to a lender’s requirements, a buyer may consider whether to take out search insurance. This is an even quicker route than obtaining personal searches and there are now various different types of search insurance available. These policies can provide cover for:

• Completing a purchase without having undertaken any searches (no search insurance)
• Completing a purchase using searches which are more than 3-6 months old (search validation insurance). Each lender will have its own definition of when a search is deemed to have expired and the firm acting on the buyer’s behalf should check this
• Completing a purchase where searches have been ordered but not received prior to completion (search delay insurance).

Each bank or lender will have its own requirements in this respect and this should be checked at the outset of a transaction.

These indemnity policies will provide a buyer and its lender with cover for the risk of onerous entries being revealed by official local authority and water and drainage searches, and potentially environmental, chancel and highways searches too. If a lender is willing to accept such insurance, or if a buyer is purchasing in cash, then it is for the buyer to weigh up the benefits of taking out such a policy (i.e. a speedier transaction) versus the risk of purchasing a property which is subject to an onerous entry which would otherwise have been discovered prior to completion.

• Searches and Lenders.

The majority of buyers will require a mortgage from a bank or lender in order to complete their purchase. Each bank or lender will have its own requirements in terms of searches; as mentioned above, some will accept personal searches and search insurance, and some will not. A UK Finance bank or lender will provide this information in the UK Finance Mortgage Lenders Handbook, and the firm acting for a buyer should check this before searches are ordered. Enquiries will need to be made of any non-UK Finance lenders as to their requirements in this regard.

If a lender requires official searches, then these will need to be carried out, regardless of whether a buyer is happy to rely on personal searches.

If a buyer is purchasing in cash, then it will be up to them to decide which searches are ordered and whether they are willing to take the risk of obtaining personal searches, or indeed relying entirely on search insurance.

If you have any questions about the topics raised in this article, please get in touch info@ts-p.co.uk.