Pre-contract searches and enquiries - Flood and mining searches

Learning Outcomes

This article outlines key location-specific pre-contract searches and enquiries concerning flood risk and mining activities. It details the purpose, procedures, and implications of these searches in property transactions. After reading this article, you should be able to identify when flood and mining searches are necessary, interpret their results, and advise clients on the potential impacts on property value, insurability, and intended use, ensuring compliance with due diligence requirements for the SQE1 assessment.

SQE1 Syllabus

For SQE1, you are required to understand the purpose and practical application of key pre-contract searches and enquiries, specifically focusing here on those related to flood risk and mining history. Your revision should cover:

• Identifying when flood and mining searches are appropriate based on property location and history.
• Understanding the information revealed by standard reports (e.g., CON29DW, Environmental Searches, CON29M, Coal Authority reports).
• Assessing the implications of identified flood risks (e.g., on insurance, value, lending) and mining hazards (e.g., subsidence, structural stability).
• Advising clients on the results and necessary further actions or precautions.
• Recognising the solicitor's duty of care in relation to these searches.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which search form specifically includes enquiries about drainage and water connections to a property?
   1. LLC1
   2. CON29
   3. CON29DW
   4. CON29M
2. A CON29M search would be most relevant for a property located in which type of area?
   1. An area known for coastal erosion
   2. A designated conservation area
   3. An area with a history of coal mining activity
   4. An area prone to surface water flooding

3. True or false? A standard environmental search report will always definitively state whether land is legally designated as 'contaminated land' under the Environmental Protection Act 1990.

Introduction

Beyond the standard searches applicable to nearly all property transactions, certain location-specific risks necessitate further investigation. Flood risk and the legacy of past mining activities represent significant potential hazards that can affect a property's value, structural integrity, insurability, and suitability for a buyer's intended use. Solicitors must identify when these risks are relevant and conduct appropriate searches and enquiries to advise clients properly. This article examines the key searches related to flood and mining risks, the information they provide, and the practical implications of their findings for conveyancing practice, particularly in the context of advising clients and satisfying lender requirements.

Flood Risk Searches

Investigating flood risk is a critical part of pre-contract due diligence, particularly given the increasing frequency and severity of flooding events attributed to climate change. Failure to adequately assess and advise on flood risk can have severe consequences for the buyer and potential liability for the solicitor.

Purpose and Importance

The primary purpose of flood searches is to identify the likelihood and potential severity of flooding from various sources affecting the property. This information is important because:

• Physical Damage: Flooding can cause significant damage to property structures and contents.
• Insurance: Properties in high-risk areas may face difficulties obtaining affordable buildings insurance with flood cover, or may face high excesses. The availability of insurance is a key concern for mortgage lenders.
• Value and Marketability: Flood risk can negatively impact property value and make it harder to sell in the future.
• Lender Requirements: Mortgage lenders usually require solicitors to investigate flood risk and may refuse to lend or impose special conditions if the risk is deemed too high.

Types of Flood Risk

Solicitors should be aware of the different types of flood risk that can affect a property:

• River Flooding (Fluvial): Occurs when rivers burst their banks.
• Coastal Flooding: Caused by high tides and storm surges affecting coastal areas.
• Surface Water Flooding (Pluvial): Results from heavy rainfall overwhelming drainage systems, particularly in urban areas with large impermeable surfaces.
• Groundwater Flooding: Occurs when the water table rises above ground level, potentially affecting basements and foundations.
• Sewer Flooding: Happens when sewer systems are overwhelmed, often during heavy rainfall, causing sewage backup.

Key Flood Searches and Reports

Several searches provide information relevant to flood risk:

• CON29DW (Drainage and Water Search): While primarily focused on connections to public water supply and sewers, this search (submitted to the relevant water company) can indicate risks related to public sewer flooding and reveal the proximity of public sewers which could potentially impact flood risk.
• Environmental Search: Many standard desktop environmental reports (obtained from commercial search providers like Landmark or Groundsure) include an initial assessment of flood risk from rivers, the sea, surface water, and groundwater. They often provide a risk rating (e.g., low, medium, high).
• Specialist Flood Risk Reports: If the initial environmental search indicates a moderate or high risk, or if the property is in a known flood-prone area (e.g., near a river or coast), a more detailed, property-specific flood risk report should be obtained from a specialist provider. These reports offer more granular data, including historical flood records, proximity to watercourses, flood defence information, and specific risk levels for different flood types.

Key Term: Flood Risk Assessment
An evaluation, often included in environmental or specialist flood reports, of the likelihood and potential impact of different types of flooding on a specific property, usually categorised into risk levels (eg low, moderate, high).

Interpreting Flood Search Results

When flood risk is identified, the solicitor must:

• Report to Client and Lender: Clearly explain the findings, the type and level of risk identified, and the potential consequences. The lender must be informed as per their specific requirements (often detailed in the UK Finance Mortgage Lenders’ Handbook).
• Advise on Insurance: Advise the buyer to make immediate enquiries about the availability and cost of buildings insurance including flood cover. Difficulties obtaining insurance can halt a transaction, especially if a mortgage is involved. The existence of schemes like Flood Re (for eligible residential properties) should be noted, but its limitations understood.
• Recommend Further Action: Depending on the level of risk, recommend a specialist flood survey or advise the client to reconsider the purchase.
• Contractual Implications: Consider if any contractual provisions are needed, although sellers are unlikely to agree to accept liability for future flooding.

Worked Example 1.1

You act for a buyer purchasing a riverside cottage in England. The standard environmental search reveals a moderate risk of river flooding and a low risk of surface water flooding. The seller's Property Information Form states they are unaware of any past flooding. The buyer is obtaining a mortgage.

What further steps should you advise the buyer to take?

Answer: You should advise the buyer of the identified moderate river flood risk and its potential impact on insurance availability/cost and property value. You must report the findings to the lender. Advise the buyer to:

1. Make immediate enquiries with insurers regarding the availability and cost of buildings insurance including flood cover.
2. Consider commissioning a specialist flood risk report for a more detailed assessment.
3. Discuss the findings with their surveyor, if one has been instructed. Depending on the insurance situation and the detailed report, the buyer may wish to reconsider proceeding or attempt to renegotiate the price, although the seller is unlikely to accept responsibility for future flood risk.

Mining Searches

Historical mining activity across England and Wales presents potential risks to property stability due to ground movement (subsidence). Identifying these risks through appropriate searches is important, especially in known former mining areas.

Purpose and Relevance

Mining searches aim to identify whether a property is located in an area affected by past, present, or future mining activities (primarily coal, but also others like tin, limestone, clay, and brine). The key concern is the risk of ground instability and subsidence caused by underground workings or mine entries (shafts and adits).

Key Term: Subsidence
The gradual caving in or sinking of an area of land, often caused by underground mining activities removing support for the surface above.

Identifying mining-related risks is important for:

• Structural Safety: Assessing potential damage to the property's foundations and structure.
• Insurability: Determining if specific risks like subsidence are covered by buildings insurance or if specialist cover is needed.
• Mortgageability: Lenders may be hesitant to lend on properties with significant, unmitigated subsidence risk.
• Development Potential: Underground workings can restrict future development or extensions.

Types of Mining and Relevant Searches

• Coal Mining: The most widespread risk. The official search is the CON29M, submitted to the Coal Authority. It reveals:
  • Past underground and opencast workings near the property.
  • Proposed future underground workings.
  • Location of nearby mine entries (shafts/adits).
  • History of subsidence claims within the vicinity.
  • Whether the property is in an area where the Coal Authority has granted licences for future coal extraction.
• Other Mining: Depending on the location, searches for other types of mining may be necessary:
  • Tin Mining: Specialist searches in Cornwall and Devon.
  • Limestone Mining: Relevant in parts of the West Midlands; enquiries often made via the local authority.
  • Brine Extraction/Salt Mining: Primarily Cheshire; specialist searches available.
  • Clay Extraction: Relevant in specific areas (e.g., Cornwall, Devon, Dorset).
  • Note: If the property title (revealed during investigation of title) reserves mineral rights, this may also prompt specific mining-related enquiries or searches.

Impact of Mining Search Results

Positive results indicating nearby mining activity or subsidence risk require careful consideration:

• Report to Client and Lender: Explain the findings and potential risks. Lenders often have specific requirements regarding properties in mining areas.
• Insurance: Check if standard buildings insurance covers subsidence, particularly mining-related subsidence. Specialist cover or higher premiums/excesses may apply.
• Further Investigation: A mining surveyor or structural engineer may need to assess the property's stability.
• Coal Authority Claims: If coal mining subsidence damage occurs, claims for repair or compensation can typically be made to the Coal Authority. The CON29M reveals past claims, which might affect future claims or indicate ongoing issues.

Worked Example 1.2

You act for the buyer of a house in Nottinghamshire. The title investigation reveals no specific mineral reservations. A CON29M search reveals past underground coal workings nearby (last worked 70 years ago) and one recorded mine entry 150 metres away. No subsidence claims are recorded for the property itself, but claims were made on neighbouring properties 10 years ago.

How should you advise the buyer?

Answer: Advise the buyer about the past mining activity and nearby mine entry. Explain the potential, albeit possibly low, risk of future subsidence, highlighting the past claims on neighbouring properties. Recommend that the buyer:

1. Ensures their proposed buildings insurance policy specifically covers subsidence, including that caused by coal mining.
2. Instructs their surveyor (if any) to pay particular attention to any signs of existing structural movement during their inspection.
3. Understands that while past claims on neighbouring properties don't guarantee future issues for this property, it indicates potential ground instability in the area. The age of the workings (70 years) may reduce the current risk. Report the findings to the mortgage lender, who may have specific requirements or require confirmation of adequate insurance.

Practical Considerations

Timing and Validity of Searches

Pre-contract searches, including flood and mining searches, should ideally be carried out as early as possible in the transaction after receiving instructions and funds from the buyer. Search results have a limited shelf-life; lenders typically require searches to be no more than six months old at the date of completion. If there is a significant delay between obtaining searches and exchanging contracts, updated searches may be necessary.

Reporting to Client and Lender

It is important to report the results of all searches clearly and promptly to both the buyer client and any mortgage lender involved. The report should explain the significance of any adverse findings and recommend appropriate next steps. Failure to properly interpret or report on search results can lead to negligence claims.

Exam Warning

Do not confuse location-specific searches like CON29M (mining) or specialist flood reports with the standard CON29 (enquiries of local authority) or LLC1 (local land charges) searches. While CON29 might reveal some related information (e.g., contaminated land notices), it does not replace the need for specific flood or mining searches where the location warrants them. Ensure you identify the correct search needed for the specific risk identified in a scenario.

Revision Tip

Focus on the practical consequences of adverse search results. For SQE1, understanding why a flood risk or past mining activity matters to the buyer (impact on value, insurance, safety, lender willingness) and what action the solicitor should advise is more important than memorising the precise contents of every possible search report.

Key Point Checklist

This article has covered the following key knowledge points:

• Flood and mining searches are location-specific pre-contract enquiries essential for due diligence in relevant areas.
• Flood searches identify risks from rivers, sea, surface water, groundwater, and sewers, impacting insurance, value, and lending. Key searches include CON29DW, environmental reports, and specialist flood reports.
• Mining searches identify risks from past, present, or future mining (coal, tin, brine etc.), primarily focusing on subsidence. The CON29M (coal) is a key search in relevant areas.
• Positive results require careful reporting to the client and lender, investigation of insurance implications, and possibly further specialist reports or surveys.
• Solicitors have a duty of care to identify the need for these searches, interpret results correctly, and advise clients appropriately.
• Searches should be undertaken promptly and remain valid for lender purposes (typically within six months of completion).

Key Terms and Concepts

• Flood Risk Assessment
• Subsidence