Councils have earmarked millions of pounds to cover potential compensation pay-outs as part of a long-running dispute over property search fees, an LGC investigation has found.
LGC has found references to potential payments for the fees in around 30 annual accounts, issued by councils this summer.
Nine include detailed estimates of the likely cost, which collectively total almost £10m.
While authorities might not have to make these payments, the figures indicate the scale of potential settlements if realised.
In some district authorities, the costs could be substantial.
The Local Government Association is seeking a collective settlement with the firms bringing the actions and has argued the government should cover the resulting costs with New Burdens funding.
Property Search Group, which brought one set of cases against councils, told LGC the case had been resolved 12 months ago.
Another case – known as the APPS litigation – is still being negotiated and further legal actions could also be brought by other property search companies, according to statements in the councils’ financial accounts.
According to our analysis, the dispute arose in 2010 after ministers abolished a requirement for councils to charge a £22 fee for information for property transactions.
Such information was typically searches for planning or conservation issues.
As the requirement had been in place since 2005, councils had imposed charges for five years before government decided the data should be free.
This change prompted property search firms, which find this information for purchasers or their solicitors, to take action against councils to recover the payments.
Property Search Group’s business development director Stephen Murray told LGC the firm reached a settlement with the LGA on behalf of councils last year.
He said: “The charge was £22 a time, which does not sound a lot, but it was charged while competition was driving down prices to consumers and rather than pass it on most property search firms chose to absorb it and cumulatively it’s a lot of money”.
APPS could not be traced for comment.
Our analysis of the statements of accounts from a number of councils revealed that the government has awarded each council affected £34,355 to cover their costs.
But this sum falls far short of most of the contingent liabilities shown in councils’ accounts.
These range from £5m for Birmingham City Council to £31,300 for Craven DC.
Sevenoaks DC is among the few to have published its settlement.
Papers for a June 2014 meeting stated it settled the APPS claim for £56,590 against an original claim of £103,097.
The papers noted that Sevenoaks might be open to “further claims but these are unknown”.
An Allerdale DC report noted a settlement related to the APPS claim of £80,837.
North Hertfordshire DC’s accounts stated the authority had been given an indicative figure of £200,080 for the value of claims made against it, and had put aside £185,000 in an earmarked reserve.
Its accounts stated that on 30 April, solicitors acting on behalf of local authorities confirmed a final settlement agreement would be issued “in the next few months”.
This agreement would “set out the basis for settlement and the detailed terms and will make it clear that the settlement sum will be in full and final settlement of all claims (known or unknown) which claimants may have against the council”.
Neither the LGA nor the government was willing to discuss the progress of negotiations over either the claims or New Burdens funding.
An LGA spokeswoman said: “The LGA is supporting its members in defending these claims. As the claims are ongoing we are unable to comment further at this time.”
The Department for Communities & Local Government was “aware of the situation but it would be inappropriate to comment”, a spokesman said.
Peter Stuart, president of the Society of District Council Treasurers, said: “I think this real issue is very close to being settled – with some of the costs being met from the New Burdens funding.”