climate risk

Leading KC spells out conveyancers’ climate risk duty of care

An environmental lawyer has suggested property practitioners owe a duty to clients to provide warning and advice around climate risk which may adversely affect the property being purchased.

Stephen Tromans KC has warned conveyancers that failure to follow proper due diligence when it comes to climate change could result in damages claims for professional negligence, increased insurance premiums, and possible reputational damage.

The advice stated a conveyancer’s duty depends on the nature and sophistication of the client and that it will be higher for residential clients than experienced commercial clients. Given climate risks are much more likely to be apparent to a conveyancer than to a lay client, a conveyancer should be aware of these risks and should as part of their retainer take steps to warn their clients and advise on steps to respond to the risk.

Tromans also recommended conveyancers make use of commercial search tools given the conveyancer’s duty is to undertake searches for the client, and communicate the results and their implications to clients in the Report on Title.

The guidance acknowledges that while conveyancers can exclude climate risk from the retainer, he considered it a “very unattractive” course to take given the need to obtain the client’s fully informed consent. He warned that any exclusion would require “a full and clear explanation of climate risk, including physical damage, possible future risks on insurance, acceptability of the property as lending security, and effects on market value”.

He also points to the emergence of search tools, such as Groundsure’s ClimateIndex™, as a means of providing clients with the necessary information around climate change risk.

Commenting on the opinion, Dan Montagnani, the CEO of Groundsure, said:

“Stephen is generally recognised as the leading practitioner in environmental law in the UK, so his words carry weight and should command the attention of property lawyers. We all understand the realities of climate change — never more so than this summer — but this is a clear wake up call for senior partners, risk and compliance managers.

With greater scrutiny on climate litigation and increasing focus by lenders on the impact of climate on loan decisions, this legal opinion places greater weight on using available analysis from companies like Groundsure to signpost potential issues as part of client advisory.

As ClimateIndex™ analysis is automatically included in our key residential and commercial reports it makes it easy for firms to refer to potential risks up to 30 years ahead using our unique modelling. Given this clear opinion and the anticipated guidance updates from The Law Society and lenders, it would be a very brave lawyer that chose to overlook this advice.”

A full copy of the legal opinion, together with a one page summary and questions that framed the response can be found here.

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