You bought your home after the environmental search was reported as satisfactory. Years later, you put the property on the market and your buyer commissions a new search.
This time the result recommends further action because of possible contaminated land. The buyer’s solicitor raises enquiries, the lender may need to be consulted and a previously straightforward sale begins to stall.
How can your environmental search have passed when you bought, but your buyer’s search now produces a different result?
Has contaminated land appeared during your sale or remortgage?
When I Bought explains what the search result may mean, what documents to find and why the advice you received when purchasing could matter now.
A failed environmental search does not necessarily prove contamination
The expression “failed environmental search” is commonly used, but it can be misleading. Many environmental searches are desktop screening reports. They compare the property against datasets concerning historical land use, landfill, industrial activity and other environmental matters.
A result recommending “Further Action” does not necessarily establish that the garden or the land beneath the house is contaminated. It usually means the search provider cannot screen out the identified risk without another step.
That step might involve:
- clarification from the search provider;
- examining planning or local authority records;
- reviewing earlier remediation evidence;
- a specialist desktop assessment;
- site investigation or soil testing where appropriate; or
- considering indemnity insurance if the buyer and lender will accept it.
Equally, a “Passed” result from the original purchase should not automatically be treated as proof that the land was completely free from contamination. The meaning of the rating depends upon the report, the provider’s methodology and the information available at that time.
Why can two environmental searches reach different results?
Two reports concerning the same property can produce different outcomes without the physical condition of the land having changed.
Different search providers may use different methodologies
Providers do not necessarily use identical datasets, search areas, risk models or thresholds. One provider may issue a pass while identifying historical land use in the body of the report. Another may recommend further action because it evaluates the same information differently.
New information may have become available
Additional historic mapping, planning records, regulatory information or details about a nearby site may have entered the datasets since the original purchase.
The data may have been corrected or reinterpreted
A tank, former works, landfill or industrial use may have been plotted differently. A search may also identify a risk close to the property rather than contamination within its legal boundary.
The buyer may have ordered a different product
The original and subsequent reports may not be directly comparable. A more detailed residential report could examine matters that a basic product did not address in the same way.
The proposed use may have changed
A report that was acceptable for the property as it stood may not answer questions arising from a proposed extension, redevelopment or other work that would disturb the ground.
A real sale can be placed at risk
In one recent online discussion, a participant described almost losing a house sale after the buyer’s search reported contaminated land within a few metres of the property. The issue continued for nearly twelve weeks while further information was obtained. The seller also feared losing the property they were purchasing.
The example illustrates why this is not merely an argument between search providers. Until the result is understood, the buyer may be concerned about health, value and future marketability. The buyer’s lender may also need evidence before treating the property as acceptable security.
What should the seller do?
The first task is to obtain the actual reports rather than relying on statements that one “passed” and the other “failed”. Compare:
- the name and version of each search product;
- the rating and the provider’s explanation of what it means;
- the precise site, former use or feature said to create the risk;
- whether that feature is within the property or merely nearby;
- the date and source of the underlying information;
- the further action recommended; and
- any limitations or assumptions stated in the reports.
The seller’s conveyancer can then ask the buyer’s solicitor exactly what remains unresolved. Is the buyer seeking reassurance? Has the buyer’s lender imposed a condition? Does the search provider offer a review or risk assessment if additional information is supplied?
Those questions should be answered before money is spent on unnecessary reports or insurance.
Be careful before contacting the council or commissioning tests
Further investigation may be essential where there is a genuine concern about health, environmental harm or redevelopment. It should not be avoided simply to preserve the possibility of insurance.
However, homeowners should take appropriate advice before contacting an authority, arranging intrusive testing or applying for an indemnity policy. Certain enquiries or new information may affect the availability of insurance. Conversely, a policy does not establish that the land is safe or uncontaminated. It only responds to the risks, losses and parties defined by its wording.
What did your conveyancer tell you when you bought?
If the new search identifies a risk that existed when the property was purchased, the original file becomes important.
Relevant questions include:
- Which environmental search was obtained?
- Did it identify the same former use, tank, landfill or industrial site?
- What did the rating mean under that provider’s methodology?
- Did the report recommend further enquiries or investigation?
- Were those recommendations followed?
- Was an indemnity policy obtained, and whom did it protect?
- Were you warned that development or disturbing the ground could raise the issue again?
- Were you told about the possible effect on a future sale or remortgage?
The fact that your mortgage completed does not answer all of those questions. Your lender may have had different requirements, the report may have been treated in a particular way or an arrangement may have enabled that transaction to proceed without resolving the underlying uncertainty.
What did the original mortgage lender require?
Mortgage-lender instructions are revised over time and are not uniform across the market. What the buyer’s lender requires today may not match what your lender required when you bought.
The Lexsure Lender Archive contaminated land page helps establish the historical lender requirements recorded for a particular lender and completion date. That evidence may be relevant when reconstructing how the original purchase was handled.
An older About Conveyancing review of mortgage-lender instruction changes also illustrates that lenders have revised their requirements concerning environmental and contaminated-land reports.
The important distinction
A different search result does not by itself prove that the property is contaminated, that the original report was wrong or that the original conveyancing was negligent.
It does justify investigating why the results differ, what the current buyer and lender require and what information and advice were available when the seller bought.
For an owner whose sale is at risk, the question is not simply whether one report passed and another failed. It is whether the issue was already visible, whether it was properly investigated and whether the buyer was warned that it could return as a problem on a later sale or remortgage.
For the wider steps to take when contaminated-land concerns are delaying a sale or remortgage, read Contaminated Land Concerns: What to Do When Your Transaction Stalls.
This article provides general information and is not legal, environmental, surveying or mortgage advice. Search methodologies and lender requirements vary and change.