Court approves search practice

Property solicitors have breathed a sigh of relief after the High Court dismissed an argument from the Land Registry that lawyers should not take conveyancing searches at face value.

However, City firms involved in the case were criticised by the judge.

The issue arose when the sale of a City office block by Prestige Property to Scottish Provident ran into trouble because a search certificate identified parts of the property as unregistered, when in fact some were registered with third parties to the sale.

The searches had been initiated by Prestige's solicitors, London-based Kaufman Kramer Shebson, prior to its merger with Fladgate Fielder.

Freshfields, which advised the buyer, also relied on the results.

When Prestige lost 450,000 on the deal, it sued both the buyer and the chief land registrar, saying the Land Registry had a duty to indemnify for the loss, but later settled with the buyer for 50,000.

The registrar argued that searches were a 'signpost to other inquiries' and that in some cases solicitors should physically examine property.

However, Mr Justice Lightman ruled that solicitors could rely on searches, and ordered the registrar to pay 90% of the seller's losses owing to a small measure of contributory fault on the part of Freshfields.

Freshfields declined to comment.

The judge also noted that Fladgate Fielder had relied on the presumption that London firm Lawrence Graham - which acted on the previous sale to Prestige two years previously - had applied for registration of the land.

He said: 'The failure by Lawrence Graham to fulfil its obligation is totally unexplained.'

There was nobody available for comment at Lawrence Graham.

Fladgate Fielder also showed 'a lack of proper care' in not checking Lawrence Graham's actions, he said.

Fladgate Fielder partner Richard Kaufman said: 'This was to do with a technical want of care as opposed to a real want of care.

'It was to do with entrusting the other side's solicitors to take the right procedures, and the point the judge made was questioning those standard practices.'

Ken Byass, chairman of the Law Society's land law and conveyancing committee, said if solicitors could not rely on official searches, the whole basis of conveyancing would be undermined.

The Land Registry declined to comment.

Paula Rohan