Mr J bought his first home in a semi-rural area in the North of England which was in a former area of coal mining and he agreed a purchase price of £250,000.
He obtained a survey and valuation report and a separate valuation report for his mortgage lender. These reports confirmed a value of £250,000, and Mr J went ahead with the purchase.
After a conversation with one of his neighbours some months later, Mr J discovered that there was a mine shaft nearby. The solicitor he used when he purchased the property had not told him that there was a mine near his property.
Mr J contacted the Coal Authority, who own and manage coalfields and former mine workings to get a Residential Coal and Brine Report. This report is a standard search for residential properties. You can read more about residential property searches in our article, here.
The report showed that whilst there was no current coal extraction, there was a mine entry within 20 metres of the boundary. This is called the zone of influence. This is an area of ground which might be affected by coal mining subsidence if the mine entry becomes unstable. In addition, the Coal Authority plotted the location of the mine shaft to be underneath the house.
Mr J contacted his conveyancing solicitor to tell them what he found and asked why they’d not told him about the mine. They offered to get a Mine Entry Interpretive Report from The Coal Authority. This was to provide him with further detail about the risk of instability within the zone of influence of his property.
The opinion of the Coal Authority was that the main building (Mr J’s house) is within the zone of possible ground movement, if subsidence happened because of the mine entry. But the statistical risk of subsidence and likelihood of damage to Mr J’s house is small. Mr J was also told in the report that if subsidence damage did occur, he could rely on the Coal Mining Subsidence Act 1991, and the damage would be put right by the Coal Authority.
Mr J’s solicitor’s did admit that they had breached their duty because they didn’t get a Coal Authority search, but they relied on the Interpretive Report to say that there was no real risk of subsidence in future. They also said that in their experience, it was unlikely a mortgage provider would be deterred from lending because there was no evidence of subsidence and the Coal Authority’s report said that the level of risk was low. The solicitors also said that a mine shaft would not have any adverse effect on market value or saleability.
How We Helped
Mr J was not convinced by the report or the conclusions that his negligent conveyancing solicitors had come to, so he contacted Peter Almond, an experienced professional negligence solicitor.
Peter obtained an expert valuer’s report that addressed the value of the property with and without the mine shaft at the date of purchase. The valuer advised a difference in value, known as diminution, of £75,000 taking into account the adverse effect of the mine shaft.
Based on this information, Mr J instructed Peter to make a professional negligence claim against the conveyancing solicitors, who had already admitted they had breached their duty. Even though they’d admitted the breach, they continued to deny liability.
They said that Mr J was aware of problems affecting the property but had chosen to proceed without renegotiating the purchase price and that he would have gone ahead anyway even if he had known about the mine shaft. They obtained expert valuation evidence which argued that there was no diminution in value for a residential property with a mine shaft beneath it.
Because time was short (there are time limits on how long you have to bring a professional negligence claim), Peter issued Court proceedings for Mr J and he looked for damages of £75,000 plus interest and the additional sum he’d paid in excess Stamp Duty.
Our expert evidence supported the view that there was a substantial loss and included evidence to show comparable values of other residential properties in former coal mining areas affected by mine entries. His assessment of diminution in value was also shaped by the policy of lenders and insurers when informed of the presence of a mine entry in the zone of influence and under a property.
All lenders adopt a cautious approach. Some lenders will refuse to lend immediately, others may ask an applicant to pay for additional reports often including a mining engineer’s report but could still refuse to lend. Lenders who are still prepared to lend, could impose additional mortgage conditions such as a higher deposit and most people would be dissuaded from buying the property if this is the case.
In addition, brokers confirmed that insurers would seek enhanced premiums and impose tougher conditions for a property at risk. This could mean the exclusion of subsidence claims from the policy altogether or increasing the excess to £10,000 or £15,000.
Even though the conveyancing solicitors maintained that they weren’t responsible and that Mr J was not in a worse financial position because of their breach, they settled Mr J’s claim without having to go to trial.
They had clearly taken into account the substantial risk of litigation, so Mr J was paid a substantial sum in damages by the conveyancing solicitor’s insurance company, plus his legal costs.
You can see the impact of a mineshaft and the work that would need to happen to put it right. Luckily, this mineshaft entrance was under garages but if it had been under the surrounding properties, the damage would have been far worse.
If you think your conveyancing solicitor has been negligent and did not complete the correct property searches for you, you could have a claim. Meade King has successfully made professional negligence claims against solicitors for many types of claims, including buying and selling properties and Peter Almond has acted for both claimants and defendants for claims involving mine shafts.
Call us now on 0117 926 4121 or make a free online enquiry. We can help.