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David Kempster provides an overview of the main climate risks and why conveyancers and commercial real estate lawyers need to take heed of the important legal opinion from Stephen Tromans KC on advising clients, which underpins The Law Society Guidance.
Risks change over time. Climate risk analysis is now an essential part of understanding the forward risk on clients’ land and property transactions.
Exclusive to Groundsure, one of the UK’s leading environmental law practitioners, Stephen Tromans KC, has provided a legal opinion on a firm’s duty of care to advise residential and commercial property clients on climate risk. It’s essential reading for all conveyancing practitioners and available to download free now.
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In this video, Stephen Tromans KC, discusses what advise should real estate lawyers give clients on the impacts of client change. And if Solicitors have a duty of care to advise about climate change impacts on property transactions.
The Bank of England/Prudential Regulatory Authority required lenders to undertake stress tests on their back books to ensure that they were not unduly exposed by climate change. The Bank now views Climate Change as a Tier 1 lending risk.
In order to maintain compliance to their regulator, lenders are now looking at how to ensure that new consumer and commercial business is screened. At our climate change conference in June 2022, Matt Jupp – principal of Mortgage Policy at UK Finance clearly stated that lenders would be reviewing their guidance to conveyancers for environmental risks in the future.
The Law Society released its guidance to firms in April 2023 which covered the broad principles of law firm ESG risk management, operational carbon footprint tracking and considering the ethical issues of engaging with potential or existing clients that are carbon-intensive.
Sector-specific guidance for residential and commercial conveyancing is being developed by the Law Society and is planned to be released during 2024. This will give more practical advice on the climate search data available and how to discharge duties through identifying any risks and communicating to clients in a compliant manner.
In this video, Seb Charles from Aardvark Planning Law, outlines some of the considerations in play for property sector guidance.
Insurers will be paying greater attention to firms’ exposure and will want to see clear risk and compliance measures in place on climate advice as part of their wider ESG policy from the highest levels down through the organization.
This will apply especially to conveyancing through the data, education and tools that are used to advise clients of potential risks. Stephen Sykes, Environmental Lawyer at Capital Law, outlines some of the implications in this video.
RICS has had guidance on “sustainability” in the Red Book for a number of years and provides advice to members on what they “should” comment on with respect to potential issues with the property that could be impacted on and its degree of sustainability.
They currently provide valuations on the basis of current market value, which has a precise definition and does not project forward to any impact on future value due to climate change. This position may change but law firms will be likely required by lenders to use available climate data in environmental searches to flag any risks.
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