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E-searches – liability for negligence? |
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As more property searches are carried out via the National Land Information
Service (NLIS), thought needs to be given as to the potential liabilities for
defective searches.
If an LA makes a mistake in completing a conventional postal (paper)
search, then it will usually be liable for negligence; moreover, liability will not
extend simply to the solicitor who made the search, but to the person who
will be relying upon that search (ie the client or mortgagee). But what
happens if another party is inserted into the search-processing chain? With
e-searches, the search goes through one of the three NLIS channels (MDA
TransAction On-line; SearchFlow; TM Property Search), which then processes
the search via the NLIS hub. Does this arrangement alter the potential for a
negligence claim? For instance, will the LA admit liability in the way it would
have done with a paper search? What about the terms and conditions of the
NLIS channel provider? Will protection still extend to the person relying upon
the search, and not merely the person who ordered the search?
As yet, there are no clear answers to these questions. In practice, most
conveyancers seem to accept that the practical reality is that any claim will
probably fall within the scope of their professional indemnity insurance policy (and thus the risk becomes part of the solicitors’ overhead). Other firms,
who are not sanguine about the position, may prefer to also carry out paper
searches (as a backup), but it seems that some of the larger firms are now
requiring amended terms and conditions from the NLIS channels. As we
understand it, they will all offer ‘enhanced’ terms and conditions (which
include extended liability) in return for larger fees.
Firms using NLIS should at least be aware of these potential problems, even
if the vast majority will simply continue to rely upon their own professional
insurance. What seems clear, however, is that it is an issue that will have to
be addressed as part of the move towards e-conveyancing (and it could
conveniently be included as part of the changes being introduced via Home
Information Packs). Source: Practicallaw.com.
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January 2006 |
