A solicitor will often, in the case of development sites, visit a site with their clients before exchange of contracts to inspect it. Site visits can indentify issues which may only be apparent from inspection. Some examples are:
- footpaths and potential rights of way (established by use/prescription and not on the definitive map)
- gates and accesses
- boundary discrepancies
- rubbish and chattels/items belonging to the seller or third parties
- telecoms apparatus
- presence of invasive species such as Japanese knotweed
By inspecting prior to exchange, there is the opportunity to deal with such matters in the contract or to ask the seller to deal i.e. remove rubbish and chattels, put up signs and secure the site against unauthorised access. Below are some potential issues and possibilities for resolving them.
Items abandoned on site
- The best thing to do is to cover the matter in the contract.
- If you want the seller to remove certain items, such as old cars abandoned on the site, then you can annex photographs to the contract and place the seller under an express obligation.
- You will also be able to ‘bottom out’ whether any items are in third party ownership and, if so, confirm that Torts Act notices have been served (or require the seller to do so if they have not)
- An opportunity to obtain various indemnities in the contract.
On one site visit, it was discovered the greenfield site was being grazed by sheep. Whilst not an issue in the short term as they were keeping the grass down, we needed to establish that there were no grazing rights or farm business tenancies in place and that the boundaries were secure (to prevent livestock migrating from another field).
- If such a tenancy were in place, you would have the opportunity to look at what rights the tenant may have and ascertain how to terminate the tenancy.
- The contract can be made conditional on termination of any formal rights and vacant possession.
- Another reason to check the boundaries is to ensure that they accord with the title and contract plans and the purchaser’s proposed site layout.
Sometimes a site visit may throw up a serious matter such as contamination on the site. Here, often for planning requirements, removal of such contamination may need to be signed off by an environmental health officer and such sign off may not be available until after completion.
- This is a situation where a retention could be held under the contract, which would give the purchaser security that they have funds to remedy the issue themselves if further works are required (or indeed to carry out the works if the seller is not proposing to do the same).
- Alternatively, sign off of removal of contamination could become a condition to completion or allow the purchaser to re-evaluate the price they are willing to pay for the site. This also gives the parties an opportunity to tailor the environmental liability provisions in the contract.
Rights and overriding interests
- Sometimes a site visit highlights matters which cannot be ascertained from searches, for example, dog walkers and others using the site recreationally and creating access rights (or potentially a Town and Village Green) or an occupier meaning that there could be an overriding interest.
- Overriding interests are interests which are not registered at the Land Registry, but which still bind the party who acquires the land. For such an interest to override, the interest must belong to a person whose occupation would have been obvious on a reasonably careful inspection of the site at the time of the sale and be within the purchaser’s actual knowledge.
- Where there is a concern that rights may have been established, the purchaser can look at obtaining defective title indemnity insurance. Depending on the circumstances, the seller may be willing to pay for this. This level of indemnity should reflect the gross development value of the site (or the affected part) or a funder’s valuation requirements. It should also benefit successors in title including plot purchasers and mortgagees.
- Another situation where insurance may apply is where a ransom strip is discovered between the site and the public highway, which could affect the proposed access. We have had several experiences of inaccurate index map and highways searches being provided and the Land Registry policy is that these are indicative only.
- A purchaser should also be encouraged to visit the site immediately prior to exchange as it is at this point that the condition of the site is crystallised.
- There are a number of cases where the seller has removed a valuable item prior to exchange that the purchaser believed would be included. Depending on the nature of the site, as with residential purchases, an inventory could be included. This may also be relevant on corporate/asset purchases.
- A physical inspection will confirm the existence and location of features which may be flagged by your searches and the title, such as power lines, masts, watercourses and trees. Things which may be less apparent from desktop searches include the drainage, soil type and the gradient of the land.
- For development sites, it is important to include an early access provision in the contract so that the purchaser can carry out investigations and surveys prior to completion. The purchaser may also want to seek reliance on planning reports and other technical surveys and investigations that the seller has or is able to provide.