FLOOD SEARCH FAILURE – Homescreen search report
The complaint
The Buyers located a property which they wanted to buy. Once they had made an offer they instructed a search provider to carry out a ‘Homescreen’ search report on the property. The Buyer wanted to check if the property would be at risk of flooding.
The Search Provider did as instructed and carried out a Homescreen search. They came back with the results of the search which did not highlight any potential risk of flooding to the property. They also reported that no action was required and gave the Buyers the impression that the property was not at risk of flooding. Happy with the search results, the Buyer went ahead with the purchase of the property.
However, shortly after completing the purchase of the property it flooded. Causing thousands of pounds worth of damage.
Following this, the Buyer’s legal representative ordered a flood search. The second search reported that the overall flood risk to the property was ‘high’ as there was a historical record of flooding and moderate risk of ground water flooding.
The Buyer was not happy that the two reports were so different and was annoyed that the first search had not picked up the associated flood risk. The damages caused by the flood incurred costs of approximately £20,000 in replacing the damaged items and protecting the building from future risk.
Investigation
The search provider’s obligations when compiling the search report are set out in paragraph 2 of the search code which states that they are required to act with integrity, and carry out a search with due skill, care and diligence which includes accurately reporting on the most up-to-date available information and risk associated with the property. They are also required to provide complete search results based on a search of all legitimate, commercially, and readily available sources. They are then also required to make clear in advance which sources of information were commercially and readily available, which additional sources of information could be obtained, identifying any additional cost or time delay involved and to highlight where required information is unobtainable.
The first search provider did not dispute that the new report differs to the flood risk report but did explain that their report did not include a groundwater flooding assessment risk or information about historical flood events as they were outside the scope of the search.
The search provider initially adhered to the requirements in paragraph 2 of the code. However, they did not demonstrated that they made it clear which sources of information were assessed and which additional sources of information could be obtained to calculate the overall risk of flooding to the property.
The search providers provided in large text on the front of the report that a flood risk had not been identified and that no action was required. Consequently, this gave the readers of the report the impression that the property was not at risk of flooding. The statements in this respect were misleading.
The search provider made it clear on the products section of their website that the report they offered met the law society’s practice notes requirement for examining the risk to contaminated land. However, they failed to ensure that this information was also reported in the search or that it was explicitly stated that their flood risk analysis should not be relied upon as an accurate overview of the overall flood risk.
Had the buyer known that the property had a high flood risk, this would have constituted key material that would have altered the buyers transactional decision, either to withdraw or negotiate their offer to purchase.
Outcome
The buyer was supported with compensation of £5,000. They experienced significant avoidable aggravation, inconvenience, and financial loss as a result of the short comings in service. The worst case scenario of the property flooding, a situation which could have been avoided had occurred shortly after completion of the purchase. The search provider’s failure to include information about the scope of the report in the search rendered it of little practical benefit to the buyer and negated their attempts to conduct due diligence.
The buyer explained that they were totally reliant on the expertise and information provided by the property professionals that were instructed as they had issues going on in their family which meant their time was being consumed elsewhere. In addition, the flooding of the property was of utmost important to the buyer as they planned to live with their disabled sibling and had previously withdrawn from a prospective purchase after a high-risk flood report was brought to their attention. This was taken into consideration and therefore another reason why the complaint was supported.
Award: £5,000