Leading environmental QC releases climate change advice

07 September 2022

“It’s time for lenders to update their conveyancing guidance” says Groundsure CEO.

Environmental analytics business Groundsure has announced the latest legal climate risk advice it has received from Stephen Tromans QC, the leading practitioner in environmental law in the UK.

Tromans says the attitude of lenders to climate change risks is critical. His guidance states conveyancers acting for lenders owe a duty to pass on to them information which may affect their security. If the lender requires an assessment of climate change risk in the letter of instruction this is a contractual responsibility for conveyancers.

Elsewhere he shows solicitors and licenced conveyancers owe a duty to clients to provide warning and advice as to risks which they are, or should be, aware of and which may adversely affect the property being purchased.

The advice states 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’ guidance suggests that the emergence of search tools — such as Groundsure’s ClimateIndex™ — means there is a clear practical step which conveyancers can take to advise their client in respect of climate risks. He also recommends 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.

He also warns that failure by the conveyancer to follow these practices may result in damages claims for professional negligence, increased insurance premiums, and possible reputational damage. Furthermore, he submits that while conveyancers can exclude climate risk from the retainer, this would be a very unattractive course to take given the client’s fully informed consent would be required and that this would necessitate 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.

Dan Montagnani, the CEO of Groundsure said:

“Stephen Tromans QC is recognised as the practitioner in environmental law in the UK and is known as the author of the leading texts on the subject. This important intervention marks a watershed moment in ensuring clients are protected through their legal advisors on the potential forward impact of climate change on the property transaction.

“It’s time for lenders to update their conveyancing guidance. Lenders need to request that their panel conveyancers follow this advice. There is no question in my mind that this impacts their TCF compliance.

“Some 30 per cent of residential and 20 per cent of commercial transactions already have ClimateIndex™ contained within the existing conveyancing searches at no extra cost. Lenders should be benefiting from this via the report on title from the conveyancer and stipulating its requirement and importance at the point of instruction.”

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