Conveyancers role is not ‘to do nothing’ on climate change – reaction to Practice Note

Many thousands of hours have gone into the Law Society’s Climate Change Practice Note (PN) which has been ‘deeply considered’ and recognises the ‘limited’ role conveyancers have to play in climate change. The note itself highlights ‘solicitors are not qualified to advise on physical risks’ adding professional indemnity insurers may not cover such advice to clients. 

Although conveyancers have a ‘limited’ role to play in advising on climate change; their role is not to do nothing says Head of the Environmental Team at Capital Law, and a Director of GeoData Labs Stephen Sykes.

In conversation with Today’s Conveyancer Sykes, one of a number of contributors to the PN, said choice facing the profession, and the Law Society, were to ignore climate change, and it’s inevitable impact on land, buildings and infrastructure; or to recognise its relevance to home buyers, owners and lenders. Describing the PN as a ‘measured’ response to the increasing impact of climate, he said the objective was not to ‘overburden busy and beleaguered conveyancers’ by producing overly complex guidance, but provide practical guidance which fits into existing workflows.

To that end he, and others, see the inclusion of climate information within search information as key to the process.

Over the last few years, we have seen over 1.1 million transactions using our ClimateIndex analysis, which gives us a solid indication that conveyancers have already been reporting on climate change risks. For those, the introduction of this Practice Note will unlikely change their practices in any way. But for any conveyancer who has been waiting until this was launched, it offers practical guidance on how to approach this topic. It’s our view that climate change is just an extension of the more traditional environmental risks, such as contaminated land or flooding.

said Catherine Shiers, Customer Engagement Director at Groundsure, welcoming the clarity the PN provides.

Section 3.2 of the PN provides advice on a property checklist as a ‘summary of what solicitors should consider doing about climate risk in property transactions’; section 3.3 outlines what a retainer might include, with some sample wording provided and a reminder to reiterate to clients conveyancers are not qualified to advise on the physical risks of climate change. Instead expert advice should be sought with Section 5 outlining some key contacts and organisations to whom clients can be signposted.

“One of the key takeaways from the Practice Note is that property lawyers are not expected to advise on the technical risk or the physical impact of climate change risks but to report the legal implications of any potential liabilities that may follow from climate risks identified in an optional climate risk search.”

says Landmark Legal Managing Director Chris Loaring.

“At Landmark, we’ve long supported property lawyers and the wider legal profession with robust environmental data and technical insights. As the industry continues to evolve, we remain committed to working in partnership with legal firms to enable them to support their clients with confidence. This includes training and customer support in relation to queries arising from climate risk searches.”

Shiers concurs

In practice, a conveyancer should explain that climate risks may impact their property, whether this is the ability to sell, insure or mortgage or the more tangible issues of enjoyment and use. They should also explain that climate searches are available to them, and in the majority of cases, are automatically included within their search pack (as part of their environmental search). It’s also important for the conveyancer to make it clear to their client that they are not climate experts, but there are people, like Groundsure, who provide a helpful service to explain any risks or concerns to anyone involved in the transaction, or just to offer a friendly ear and help guide them through the process.

And write everything down, warns Sykes. If the client doesn’t want one of these searches, make a note. You can explain that the searches are out there. You can’t force them to if they don’t want to use it, but make sure you’ve got a record of providing the information. Although the PN doesn’t explicitly outline what might happen if firms fall foul of the guidance, Sykes warns a practice note is a ‘statement of good practice.’ It’s implicit if you don’t follow the guidance provided, and your client suffers loss you’re ‘up against it’ and you could end up in litigation.

While flood has dominated many of the climate change headlines, the PN alert conveyancers to the risks associated with

• ground stability/subsidence (clay ground swell/shrink)
• coastal erosion
• flooding (groundwater, coastal, river, surface and tidal)
• sea level rise
• water stress (when the demand for water is higher than the amount available or when poor quality restricts water use)
• heat stress (excessive heat in buildings)
• wildfire risk
• physical damage to the property from extreme weather events

all of which might not only impact the property but critical infrastructure like transport and utilities. The PN goes on to say these influence insurability, sales, leasing, development or financing and can potentially reduce a the value and enjoyment of a property.

“It is important clients understand that physical risks could impact their property in the future, possibly even in the short to medium term.”

adds the PN.

Shiers says it can be difficult to pinpoint exact areas where climate change is more of a concern but broadly suggests obvious locations like cliffside properties and those in flood plains are susceptible. Less obvious are areas such as London and the South East which could be impacted by increasing subsidence risks due to the shrink-swell nature of clay soils.

‘Transition Risks’ associated with activities to related to the 2050 net zero targets are also included n the PN which says any risks which have an ‘adverse impact on anyone with an interest in property, which can affect property values or marketability, transaction costs, or lead to financial penalties or reputational damage’ should be considered; using the example a property that currently complies with relevant legislation may no longer comply following future legislative changes, with adverse consequences – with Building Regulations and Minimum Energy Efficiency Standards Regulations (MEES) as examples of transition risks.

Although firms’ responsibilities to report on the detail of climate change, the PN is clear subject to client instructions, it is the role of the lawyer to ‘advise on the legal implications of potential liability or legal risks arising from physical or transition risks. Specifically, those identified on the particular transaction by the parties, advisers or search results.’ Examples cited include

• planning conditions being imposed to make a proposed development more flood resilient. This could limit property use or increase development and maintenance costs
• a landlord suffering a penalty (financial or reputational) as a result of MEES

The challenge for conveyancers is there is almost a ‘butterfly effect to the impact of climate change; the idea that something small could have a much larger, and sometimes unintended consequence. Take for example an example of a landfill and an extreme weather event mobilises the contamination in that landfill causing downstream problems. A changing climate could have unexpected consequences says Sykes.

But the numbers are too big to ignore. As many as 1m properties are going to be impacted by climate change by 2050; there is likely to a five fold increase in properties affected by coastal erosion from 10,000 currently to 40/50,000 by 2050. And the lenders have upwards of £100bn of property liability on their mortgage books an are under increasing pressure from the Bank of England to stress test their portfolios.

“The publication of the PN represents a significant milestone in helping firms to integrate climate change considerations into everyday practice. We were pleased to contribute to its creation, recognising the careful balance required to incorporate climate-related risk information within a property transaction whilst ensuring property lawyers are provided with clear-cut and manageable best practice to follow.”

concludes Loaring. Shiers adds

The big elephant in the room is that this is just another thing for conveyancers to do, and we completely understand that. Conveyancers are not climate specialists, nor are they experts in other areas such as AML or contaminated land. That’s why specialist tools and products exist to support conveyancers and their clients, allowing them to rely on experts such as Groundsure in these areas. Our top tip: Use an environmental search that already includes climate and ensure your chosen provider offers example client care letters and clauses for conveyancers to simply copy and paste into their reporting mechanism.

The reality is 95,96,98% of properties will go straight through on these climate change searches with no issues identified suggests Sykes. This is a significant risk, but it’s not a regular risk.