'Legal Landscape' - Why do I need a planning search?
Darren Donnithorne and Stephanie Matthews from Marshall Diel & Myers Limited Property & Estate planning team answer your property related questions and issues in this monthly edition of 'Legal Landscape' with Marshall Diel & Myers Limited.
Question: Why do I need a planning search?
In Bermuda, before you purchase a property, there are a number of searches which your lawyer will carry out on your behalf to ensure that the property is good and marketable and free from encumbrances.
A “planning search” is one of these important searches. The purpose of this search is to establish whether any development contrary to the Development and Planning Act 1974 (the “Planning Act”) has been carried out on the property. The search request is submitted to the Department of Planning, together with the requisite fee (currently $588.00), and upon processing the request, an Enforcement Officer from that Department will attend the property to carry out an inspection in order to establish whether any unlawful development has taken place.
Why is it the purchaser’s responsibility to conduct this search? The contract for the purchase of the property will incorporate a number of standard conditions by reference to the Bermuda Conditions of Sale. Those conditions will include a warranty from the vendor that no development, which typically includes the carrying out of building, engineering or other operations on the property or any material change of use, has been carried out on the property without planning permission first having been granted, or otherwise in contravention of the Planning Act. However, it is the purchaser’s responsibility to enquire of the Department of Planning as to the truth of that warranty.
What happens if unlawful development has occurred? The purchaser may rescind the contract to purchase the property at the vendor’s cost, or the purchaser may confirm his or her desire to proceed with the purchase, subject to a reduction in purchase price with the sum being agreed by the parties or otherwise determined by arbitration.
What happens if the purchaser fails to conduct the Planning Search? The Bermuda Conditions of Sale specifically provide that the vendor is not liable for any unlawful development at the property, despite the warranty provided, if the purchaser does not complete the planning search. If any unlawful development is discovered after the purchaser acquires the property, the purchaser will have to accept responsibility for the same and may be subject to enforcement action. It may surprise some readers to discover that many of these structures are not just the lop-sided, off-centre pool house built without permission or reference to a tape measure. More often than not, they are common garden storage sheds or retaining walls which, on inspection by the lay person, do not give cause for concern but have been built without planning permission.
So for the relatively modest cost of the planning search, a purchaser can fully avail themselves of the warranty provided by the Bermuda Conditions of Sale and protect against the risk that the vendor has undertaken any development at the property in breach of the Planning Act.
A further point worth noting is that section 62 (2) of the Planning Act provides that if no response to the planning search is received from the Department of Planning within 28 days of the date that it is submitted, any unlawful development can remain as it will be deemed to have received planning permission.
As is often the way with these things, a relatively small cost brings peace of mind and could save an expensive headache in the future. So be sure to enquire with your attorney as to the searches that must be conducted and the results of these searches.
This article was written by Darren Donnithorne (Senior Associate & Head of the Property and Estate Planning Team) and Stephanie Matthews (Associate of the Chartered Institute of Legal Executives).
This column is for general guidance only. It should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.
If you have any property questions or issues, please contact us at firstname.lastname@example.org or email@example.com. We would be happy to work with you to help you navigate the legal landscape in Bermuda, and you may even find your question featured on propertyskipper. We look forward to hearing from you!