One essential element of the due diligence undertaken on the acquisition of a development site is whether or not the land immediately abuts a roadway adopted as public highway.
This is fundamental for direct pedestrian and vehicular access to the property (together with the ability to develop the site with construction vehicles in the first instance), for the provision of services to the site and to provide visibility splays to the highway. This should be considered both where there is ransom land between the site and the highway and where there is land adjacent to the site, which, whilst the site has direct access to the highway, could mean that visibility splays would be needed over third party land.
Title investigation, searches, overlays and inspections therefore need to be carried out to discover any issues discovered.
The due diligence must include not only a Local Authority (LA) search which will provide some highways (and public footpaths) information, but also a Highways Search must be conducted direct with the relevant Highways Authority. In Gooden v Northamptonshire County Council (2001), Gooden acquired a site as a result of a LA search which confirmed that a strip of land abutting the property was a highway maintainable at the public expense. Four months after the purchase, the developer received a letter from the LA informing him that the strip was not in fact adopted as a public highway. Gooden attempted to sue the LA. The case was dismissed because it was held as not reasonable for the LA to know that the search result was required to decide if a new access road could be created for the development. This was outside the boundaries of a ‘standard enquiry’. The practical implication of Gooden is that a specific additional enquiry must be raised where the developer's reason for asking about highway status is to determine whether a proposed development will have sufficient access.
An area of land between the adopted highway boundary and the site boundary (whether registered or not) could mean that there is no lawful right to access and services from the highway to the site unless rights across that land can be established.
Defective title indemnity insurance, the acquisition of prescriptive easements or adoption of the land by the Highways Authority may be required to enable the development of the site.
To obtain indemnity insurance, the seller needs to prove that it has been able to access the site without objection from the owner of any ransom land. The policy would need to be for an indemnity limit of the gross value of the site once developed. This is essential, not only for the developer and the construction of the dwellings, but also for each of the plot purchasers once the dwellings are built and sold. Indemnity insurance can be the quickest way of tackling the issue; it does not remove the problem but provides compensation should any issues arise.
If the owner of the ransom land is known, it may be possible to negotiate the grant of appropriate rights in return for a payment. Further to the decision in Stokes v Cambridge Corporation (1961), this is typically about 1/3 of the profit obtainable for the development site following the unlocking of the ransom land.
Particular care must be taken in entering into discussions with ransom owners as discussions may invalidate the insurance policy where one has been obtained, or make it impossible to later obtain insurance if an approach has been made.
If the seller has been using the ransom land as an access to the site (and possibly for the passage of services) for several years, the seller can be required to provide a statutory declaration as to its use of the land as part of obtaining quotations for insurance.
To obtain an easement by prescription, the seller would need to prove continuous user of the ransom land for access and services for a period of at least 20 years. It would also need to prove that any use of the ransom land had been without force, without secrecy and without permission (nec vi, nec clam and nec precario).
If the right of access cannot be established or if it would be insufficient to serve the site once developed then it may in certain circumstances be possible to request that the land be adopted as public highway.
Where land is not already being used as public highway, the usual route to adoption is for the landowner to enter into an agreement with the highway authority to dedicate the land as highway pursuant to Section 38 of the Highways Act 1980. Although if there is no known owner this is not possible, s228 of the Highways Act 1980 may assist as it empowers a Highway Authority to adopt street works on a private street. The developer, or seller, may undertake works on the ransom land to create a private street where one does not already exist.
These solutions are all likely to be costly to some degree. It is therefore essential that these issues are addressed in the early stages of the transaction so that agreement for the payment of the solution can be agreed between the parties.