C12/14: Conveyancing 3

Question 1

How does a buyer establish if the seller is entitled to sell in registered conveyancing?

Answer 1

If the title is registered at HMLR, the conveyancer will be able to download a copy of the register of title, usually via the HMLR portal. They will then need to inspect the register.

Question 2

What does ‘investigating the title’ mean?

Answer 2

A buyer’s conveyancer must ‘investigate’ the seller’s title to ensure their client understands the extend of the land, their ownership of it and any restrictions in using and dealing with the land.

Question 3

What are the property checks?

Answer 3

Check any discrepancies:

• property description
• title plan
• title number (same as contract)
• estate (freehold/leasehold?)
• boundaries

Question 4

What are the proprietorship checks?

Answer 4

Check any discrepancies:

• class of title (absolute, possessory, good leasehold)
• names of proprietors
• restrictions (e.g. Form A restriction)

Question 5

What are the charges checks?

Answer 5

Check any discrepancies:

• incumbrances (covenants/easements)
• mortgages (need to be paid off before)

Question 6

What are the three types of registers?

Answer 6

The property register: description of land and title plan + freehold/leasehold or easements/covenants

The proprietorship register: class of title, extent of state guarantee, addresses (postal, DX, email)

The charges register: mortgages, restrictive covenants, adverse easements

Question 7

What are overriding interests, give examples?

Answer 7

These do not appear on the register but may still bind a purchaser.

E.g. leases less than 7 years, or people in actual occupation.

Question 8

How would covenants be laid out in the charges register?

Answer 8

Covenants may be set out in the register in full, or they may be referenced to the deed creating them if the wording is very extensive. In the latter case, the register will refer to the deed containing the covenants as being “copy filed”. The deed must then be obtained to see the actual wording of the covenants.

Question 9

How does a buyer establish if the seller is entitled to sell if the land is unregistered?

Answer 9

Under the unregistered system, the title (ownership) of the seller is traced through title deeds belonging to the property and held either by the owner or by the owner’s mortgage lender.

The seller must demonstrate good title (called deducing title) by showing a good root (a sound legal starting point) of title which is at least 15 years old, and the title must then be proved from that root to the present. For instance, the seller could show that they bought the property in 1985 (over 15 years ago) and would produce the 1985 deed as the root of title, along with any later documents affecting the title such as mortgage deeds.

Question 10

What is a “qualifying trigger” in relation to unregistered land?

Answer 10

From 13 October 2003, previously unregistered land must be registered when one of the following events take place (“triggering” events):

• a conveyance/transfer of the freehold, or a leasehold having more than seven years left to run – this includes transfers for value, by gift, by court order or by assent (on death);
• the grant of a new lease for more than seven years;
• the grant of a reversionary lease (a lease taking effect in the future) for a term commencing more than three months after the date of the lease, irrespective of the length of lease (e.g. a lease to a student for an academic year, granted in March to take effect in September); and
• the grant of a first legal mortgage.

Question 11

What is the deadline to do first registration?

Answer 11

For compulsory first registration, the requirement is that the application must be made within two months of the relevant event (e.g. sale). The Registrar has power to extend this period if there is a good reason to do so.

Question 12

Why is it important to obtain instructions from all co-owners?

Answer 12

In order to avoid a conflict of interest which would mean that you would have to stop acting for the client.

Question 13

What is required from co-owners when they are wanting to sell?

Answer 13

As well as taking identification docs and carrying out due diligence, the conveyancer must get approval from each co-owner that they want to sell.

Once that happens, a single co-owner can take on responsibility on behalf of everyone, as long as that is in writing from everyone.

Question 14

Is a surviving co-owner entitled to sell?

Answer 14

Yes, but the conveyancer must get the evidence of the death certificate and check. They can then make an application to HMLR using form DJP and the death certificate to have the name removed from the proprietorship register. Then the co-owner will end up being the sole holder of the legal estate.

Question 15

What is a DJP?

Answer 15

A DJP is a death of joint proprietorship form that goes to HMLR with the death certificated to remove their name from the proprietorship register and make the surviving co-owner the sole holder of the legal estate.

Question 16

What is overreaching?

Answer 16

This is the legal mechanism whereby if a second trustee is appointed in the transfer, this will have the effect of transferring the interests of any behind-the-scenes beneficiary from the land to the proceeds of sale. Thus, if a buyer pays their purchase money to two or more trustees, they will take the land free of any beneficial interests.

Question 17

Does the second trustee need to be registered as a co-owner on the proprietorship register in order to sell?

Answer 17

The second trustee does not need to be registered as a co-owner on the proprietorship register. They simply need to be appointed as a second trustee in the transfer document, and they will sign the transfer along with the seller.
Remember that it will be necessary for the seller’s conveyancer to also obtain identification documents and carry out due diligence on the person who is to be appointed the second trustee.

Question 18

What is an “attorney”?

Answer 18

An attorney is a person who is entitled to appoint others to “step into their shoes” from a legal point of view.

Question 19

What is the person who is making the appointment of the attorney called?

Answer 19

The person making the appointment is called the “donor”, and the person/s who take some responsibility for dealing with the affairs of the donor is the attorney.

Question 20

What was Enduring Power of Attorney (EPA)?

Answer 20

The key features of the EPA were first its simplicity, and second it could be used to enable the attorney to handle the affairs of the donor even if the donor still had mental capacity. In these circumstances the attorney could sign documents on the donor’s behalf and deal with their banking affairs with relatively little formality. If the donor became mentally incapable, it was then necessary to register the EPA with the Office of the Public Guardian (OPG).

Question 21

When did it become impossible to make an EPA?

Answer 21

Since 1 October 2007. From then on, one can now make a Lasting Power of Attorney.

Question 22

What are the two types of Lasting Powers of Attorney (LPA)?

Answer 22

A health and welfare LPA
A property and financial affairs LPA (e.g. for selling of land)

Question 23

What is the OPG and what is the difference between the EPA and LPA concerning it?

Answer 23

Office of the Public Guardian (OPG). EPAs had to be registered with the OPG once the donor became mentally incapable. LPAs must be registered with the OPG before it can be used, unlike to EPA.

Question 24

What does the conveyancer require if someone is acting as an LPA?

Answer 24

They must have a certified copy of the power of attorney and will return the original document.

Question 25

What is the risk to the firm in relation to a beneficiary of an estate?

Answer 25

Beneficiaries will want to know the latest updates, as they will generally not receive their money until a property is sold. Beneficiaries are entitled to be kept up-to-date as to progress of the administration of the estate but this must be with the agreement of the personal representatives. A firm should not give information to beneficiaries without the consent of the personal representatives, otherwise the firm risks breaching their duty of confidentiality to their client.

Question 26

What is the risk to the firm in relation to advising a non-owning occupier?

Answer 26

Conveyancers must not advise a non-owning occupier. This may cause a conflict of interest. A non-owning occupier will be asked to sign the sale contract to confirm that they will vacate the property on completion. The seller’s conveyancer must ensure that the occupier is advised to take their own independent legal advice.

Question 27

What is the risk to the firm in relation to a gifting family member?

Answer 27

The conveyancer must make sure to comply with all regulatory and money-laundering requirements, which may bring up a gift from a family member. This is fine, as long as the gift is declared to any lender involved. The conveyancer mustn’t advise the gifter, due to the possibility of a conflict of interest.

Question 28

What is the risk to the firm in relation to a lender?

Answer 28

Often, the conveyancer will also act for the lender as well as the buyer client. This is fine, as long as they maintain their duty of confidentiality to their buyer client and must be on their guard for potential conflict of interest. The lender will also be a client of the firm.

Question 29

What is the risk to the firm in relation to a family member of an elderly/vulnerable client?

Answer 29

A conveyancer must look out for pressure or undue influence. Undue influence is the situation where a person has been pressured or coerced into taking a course of action which they did not want to take. A particular example of this is where a testator may have been pressured or coerced into changing their will in favour of the person/s applying the pressure.

Question 30

What is the risk to the firm in relation to an aggrieved party?

Answer 30

Sometimes, the client on the other side of the transaction is not able to contact their own conveyancer and will try to contact other professionals involved in the chain. The conveyancer must not give any status updates due to the conflict of interest that would arise. In this circumstance, all you can do is politely, but firmly tell the caller that you are unable to help them and suggest that they contact their own conveyancing firm and/or any estate agent involved. Ensure that you keep a detailed attendance note of any such conversation and tell a more experienced colleague.

Question 31

What is the risk to the firm in relation to a mortgage broker/estate agent?

Answer 31

Conveyancers will frequently receive telephone calls and emails from these parties chasing for progress on the transaction. If you are in any doubt as to whether or not you have your client’s authority to deal with this particular caller or email, decline to comment. If you do give information about your client which they did not want you to disclose, your firm will be in breach of its duty of confidentiality to that client. You must always seek specific authority from your client to deal with a particular caller.

Question 32

What does the property register of a registered title show?

Answer 32

The description of the land Reference to the title plan Location of registered property Whether it is freehold or leasehold Details about any easements or covenants that exist for the benefit of the land.

Question 33

What is an absolute title?

Answer 33

Absolute title also means Absolute freehold (title absolute). This is equivalent to the fee simple absolute and is essentially subject only to interests that are protected by an entry in the register and interests which are overriding. It is the best class of freehold title and the one that will be granted in the vast majority of cases.

Question 34

What is a possessory title?

Answer 34

A possessory title is an inferior grade. It does not guarantee the registered proprietor against the possible existence of other valid claims to rights over the land existing from before registration. A possessory title might be granted, for instance, where title deeds have been lost or destroyed. A possessory title can be upgraded to absolute title by the Registrar if the Land Registry is satisfied as to the title (for instance, in the example given earlier, that the deeds have been found and title is now satisfactory), or if the land has been registered for at least 12 years and the Registrar is satisfied as to the registered proprietor’s unchallenged possession for that period. Possessory titles are rare.

Question 35

What is a qualified title?

Answer 35

This is very rare but is granted when HMLR wants to guarantee the title apart from a specified defect. The specific defect will be noted on the register but the state guarantee is otherwise the same as with title absolute. Again, this type of title can be upgraded in due course if the defect is removed.

Question 36

What is contained in the charges register?

Answer 36

Any charges on the property, such as mortgages. (The entry will show the name and address of the lender, but not the amount of the mortgage.) Also contains notices of third-party rights, such as restrictive covenants, adverse easements and certain leases affecting the registered title.

Question 37

When might a possessory title be upgraded to an absolute title?

Answer 37

Once a possessory title has been registered for 12 years, if that title has not been challenged or claimed by anyone, it is possible for the registered proprietor of the possessory title to apply to HMLR to upgrade the class of title to title absolute.

Question 38

Distinguish between a Notice and a Restriction under the LRA 2002.

Answer 38

A notice protects third party rights. It will appear in the charges register to notify a potential buyer of a burden of an interest in the land, e.g. a mortgage lender. It will not prevent the legal owner from selling the property - only a restriction (Form A) can do that. A restriction is an entry on the proprietorship register which prevents a disposition (sale, transfer of an interest in a property or a new mortgage). An example of a restriction would be a Form A restriction, which notifies the buyer that there is a co-ownership situation which is held as tenants in common.

Question 39

Can a notice protect a beneficial interest?

Answer 39

No, it must be protected by the entry of a restriction on the proprietorship register.

Question 40

What is the difference between a “first registration” application with all other applications involving registered land?

Answer 40

First registration relates only to previously unregistered titles.The application is made on form FR1 and the accompanying documents are listed on form DL. The application form for dealing with registered land is an AP1 (application to change the register).

Question 41

When investigating the title, which documents (and consequent items) must be checked by the buyer’s conveyancer in the property register?

Answer 41

The property register: - Property description (e.g. 45 Mews or 45A Mews) - Title plan (boundaries as expected?) - Title number (same as in contract?) - Estate (freehold or leasehold) - Easements (right of way on foot/car, costs for buyers? E.g. maintenance of driveway) - Boundaries (e.g. neighbour fenced garden that isn’t theirs)

Question 42

When investigating the title, which documents (and consequent items) must be checked by the buyer’s conveyancer in the proprietorship register?

Answer 42

The proprietorship register: - Class of title - Names of proprietors (death/marriage certificate) - Restrictions (Form A)

Question 43

When investigating the title, which documents (and consequent items) must be checked by the buyer’s conveyancer in the charges register?

Answer 43

The charges register: - Incumbrances (matter that burden the property, e.g. restrictive covenants and easements) - Past breaches of restrictive covenants (e.g. extension built two years ago on a covenant prohibiting building work) - Anticipated breach (e.g. client wants to set up business, but covenant not allowing business purposes)

Question 44

What implications of the limited duty of disclosure arise from a buyer’s perspective?

Answer 44

The seller only has a limited duty to disclose certain legal matters to the buyer, so the buyer must make a variety of investigations prior to exchanging contracts.

Question 45

What are the two types of forms required for a local search and what are they for?

Answer 45

LLC1 - local land charges search. CON29 - enquiries of the local authority

Question 46

What is the LLC1 form?

Answer 46

It requests to search all 12 parts of the local authorities register of land charges for their area, for example a financial charge for road repairs being sought from the property.

Question 47

What are some examples of what could crop up from a local land charges search (LLC1 form)?

Answer 47

- Smoke control zones - Tree preservation orders (TPOs) - Compulsory purchase orders (e.g. if a local authority is requiring land to be sold to it, so it can widen a road) - Various planning entries/consents

Question 48

What is the difference between an official local search and a personal local search?

Answer 48

Official searches are done through a local authority or HMLR and the result would be given in the form of a certificate (only for LLC1) Personal searches can also be undertaken by commercial search companies. However, these may not be accepted by a mortgage lender. These are now regulated by the Search Code, which includes insurance requirements, competence testing and a complaints scheme.

Question 49

What would happen if a local land charge was not registered or disclosed on an official certificate. Would it still be binding and what would the buyer’s rights be?

Answer 49

If a local land charge was not disclosed on an official certificate, it would still be binding. Same if there was a mistake and it did not appear on the local authorities register due to an error. However, the buyer is entitled to claim compensation from the council if this occurs.

Question 50

Which body is taking over the LLC1 searches from local authorities. Is this the same for CON29 searches?

Answer 50

HMLR are taking over all LLC1 searches, but this can take up to 7 years. CON29 searches still go through the local authority however.

Question 51

What are the CON29 and CON29O forms for?

Answer 51

The CON29 and CON29O forms enquire into matters that aren’t registered as local land charges, but which may affect the buyer’s decision to purchase the property.

Question 52

What is the difference between CON29 and CON29O forms?

Answer 52

CON29 forms are half of the standard local search (the other being LLC1 forms). The CON29O form is for options enquiries of the local authority.

Question 53

What kinds of standard enquiries does the CON29 raise?

Answer 53

Whether: - the roads serving the property are maintained at public expense (can check up to 4 roads in total) - there are plans to build new roads nearby - certain public rights of way affect the property - there are road proposals - there are any planning permissions and breaches of planning control - it is in a conservation area - there are any proposals of railway - a community infrastructure levy (CIL) will affect the property - the property is an asset of community value (ACV) - the local authority requires the clean-up of environmental contamination of the property.

Question 54

What is an asset of community value (ACV)?

Answer 54

ACVs are properties such as pubs and village halls, which have been designated by a prescribed process as being of value to a particular community. This gives the community a right to bid to buy the asset when it is sold (e.g. so that the pub can be run by the villagers), which can delay a sale.

Question 55

What is the community infrastructure levy (CIL)?

Answer 55

CIL is a planning charge designed to help local authorities pay for new infrastructure for their areas. Most new development which creates net additional floor space of 100 m2 or more, or creates a new dwelling, is potentially liable for CIL, but there are some reliefs and exemptions. Not all local authorities have decided to charge CIL.

Question 56

What kinds of optional enquiries does the CON29O raise?

Answer 56

Whether: - The property is within a National Park - The property is within an Urban Development Area - The property is (/adjoined to) registered as common land, or a town/village green.

Question 57

Do the LLC1 and CON29 starches produce an official certificate?

Answer 57

LLC1 do, but CON29 answers do not result in an official certificate, so the local authority is only negligent in its provision of the replies.

Question 58

What is the name of the standard drainage and water enquires form?

Answer 58

CON29DW

Question 59

What is the CON29DW form for?

Answer 59

Standard drainage and water enquiries form - the local authority search doesn’t cover these questions. This form goes straight to the appropriate water company. It covers whether: - The property is connected to a public sewer - The property is connected to surface water drainage - There is a public sewer within a defined distance of the property - The property is connected to the mains water supply - There is a water meter - The water is hard or soft - And who bills the property for sewerage and water service.

Question 60

Why is a physical inspection of the property important?

Answer 60

The buyer should be advised to inspect the property before exchange and report any obvious problems. There are several reasons for this, for instance, to check: - for any physical defects (the buyer will also have been advised to have a survey); - whether there appear to be any occupiers other than the seller (the buyer’s conveyancer will also make written enquiries about occupiers); - whether there appear to be any problems with the boundaries to the property (Are they as expected by the buyer, for example, or does there seem to be a problem?); - that any fixtures and fittings the buyer has agreed to buy are actually at the property.

Question 61

When might an environmental search become necessary?

Answer 61

When there is doubt about whether there are environmental hazards to the property, e.g. it was built on a factory, a search must be carried out to ensure that there will be no future expenditure for the buyer. Many firms now regard an environmental search as standard. It covers environmental issues such as: fracking sites; solar or wind farms; and railway projects such as Crossrail or HS2 (high-speed rail network). Subsidence risk (soil shrinkage and movement due to long dry spells and climate change) (flooding is occasionally covered, but not always)

Question 62

What is a chancel repair liability search?

Answer 62

Chancel repair liability is when certain properties in risk parishes can be under a legal obligation to pay towards repairs to the chancel of a parish church. This came out of Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2003], where the Wallbanks were ordered to pay nearly £190,000 for repair.

Question 63

When should a commons registration search?

Answer 63

When the buyer is purchasing land: - Which has been very recently built on - Where the land is rural in character (or adjacent to such land) - Where it is suspected that the access to the land is over a village green or common land.

Question 64

When is a coal mining search required?

Answer 64

When a property is in an affected area, for example a coal mining area where there may be current or past coal workings.

Question 65

What is the issue with village green or common land?

Answer 65

Members of the public can use town and village greens for “lawful sports and pastimes” such as playing football or walking a dog. Registered common land is owned by someone (e.g. a council, a private individual or the National Trust), but members of the public usually have a right to roam and can use the land in specific ways such as for walking, climbing, bird watching and running. There are also activities which are prohibited such as lighting a fire or holding a barbecue. It is also possible for people to have rights of common such as rights to graze animals or to fish on the land. The commons register (under the Commons Registration Act 1965 and the Commons Act 2006) contains registrations of common land, village greens and rights of common. These would prevent a landowner from building on the land. It would also be relevant for someone buying property to know about the use of any affected land.

Question 66

What is the coal mining search form called?

Answer 66

CON29M

Question 67

Who maintains the national coal mining database?

Answer 67

The Coal Authority - this is where the CON29M forms are sent to.

Question 68

When are other mining searches required?

Answer 68

This is for other types of mining apart from coal mining. E.g. tin mining in Cornwall, Devon or Somerset.

Question 69

What are Cheshire brine searches?

Answer 69

It provides information about whether brine extraction workings affect a property being purchased in Cheshire. Some areas of Cheshire are at an increased risk of subsidence due to the presence of brine and previous mining activities. Additionally, some previous compensation pay-outs mean that some properties are not eligible for compensation in the event of further damage being identified. The salt search provides information on how these matters affect a given property in Cheshire.

Question 70

Do you usually have CON29M and Cheshire brine search reports for the same property?

Answer 70

No, the Cheshire Brine Compensation District and coalfield areas are distinctly separate, apart from a very small overlap area of about 18 km2, containing about 250 postcodes. If a property is located in this small overlap area, it will be necessary to do both a CON 29M and a Cheshire Salt Search.

Question 71

When are flood searches required?

Answer 71

Flood searches are being made more often, as there are not only the traditional hazards such as nearby rivers, but also hazards like thawing snow and saturated ground water.

Question 72

Which searches will always be made, and which searches will depend on the location of the property?

Answer 72

Essential: LLC1 - local land search (part 1 of local searches) CON29 - standard enquiries (part 2 of local searches) CON29DW - standard drainage and water enquiries form Optional: CON29O - optional enquiries Environmental search (although getting more common) Chancel repair liability search Commons registration search CON29M Coal mining search SIM - search of the index map

Question 73

What is a search of the index map (SIM)?

Answer 73

This search is made if the conveyancer wishes to check whether the land is registered or not. It is possible for a SIM search to be useful in a registered land transaction in certain defined circumstances. For instance, if official copies of the register stated that there was a right of way over a roadway, but did not identify the owner of the roadway, a SIM search might be used in relation to the roadway land to see whether it was registered.

Question 74

What is the National Land Information Service (NLIS)?

Answer 74

It is a government approved and regulated electronic land and property searches portal, managed by Land Data, a community interest company. The service aims to provide essential conveyancing information, particularly searches, through a “one-stop shop” of online facilities, thus saving time and money. Examples of services available through NLIS are: local authority searches; drainage and water enquiries; coal mining searches; flood searches; chancel repair liability searches; environmental searches; and a wide range of HMLR searches.

Question 75

What is a pre-contract “enquiry”?

Answer 75

All forms of pre-contract enquiries deal with similar issues. This is supplemented by the fittings and contents form, TA10. There are other forms of pre-contract enquiries which are broadly similar in scope.

Question 76

What is in the Property Information Form (TA6).

Answer 76

(1) Boundaries (who owns the boundaries to the property, and who maintains them, e.g. back fence) (2) Disputes and complaints (e.g. between neighbours, noise or boundary fence) (3) Notices (e.g. from government depts, like local planning authority stating that the extension does not comply with planning regulations) (4) Planning issues (copies of planning permission, e.g. loft conversion) (5) Guarantees (or warranties, e.g. a new drive, electrical wiring) or a National House Building Council (NHBC) guarantee (which protects a new-built house for the first 10 years of its life). (6) Insurance (whether it is high, or has been refused or if the sellers has made building insurance claims) (7) Environmental matters (a) Any flooding (b) The EPC. (c) Green Deal plan. (d) Radon gas tests (e) Japanese knotweed (an invasive and aggressive plant which can cause property damage). Form TA6 asks whether the property is affected by Japanese knotweed and, if so, whether there is a Japanese knotweed management and treatment plan in place. It also asks the seller to supply a copy of any insurance cover linked to such a plan. (8) Rights and informal arrangements (e.g. shared driveway or contributing maintenance to shared drain) (9) Parking (10) Other charges (e.g. for the use of a private drainage system). (11) Occupiers (non-owning occupiers). Question 11 of form TA6 asks whether anyone apart from the seller, aged 17 or over, lives at the property. (12) Services (e.g. central heating, electrical wiring, drainage and sewerage). (13) Connection to utilities and services (e.g. form TA6 asks about electricity, gas, mains water, mains sewerage, telephone and cable). (14) Transactional information (related transactions) or 1) Boundaries 2) Disputes and complaints 3) Notices and planning issues 4) Guarantees and Insurance 5) Environmental matters 6) Rights and Informal Arrangement, Occupiers, 7) Parking, Services Utilities 8) Other Charges 9) Transactional Information

Question 77

What is the legal status of representations made in reply to enquiries from the seller?

Answer 77

Replies to pre-contract enquiries are not terms of the contract, so incorrect replies will not give rise to an action for breach of contract, but liability could arise. We have seen that the seller may be liable under the Misrepresentation Act 1967. The seller’s conveyancer could, in some circumstances, be liable in negligence for incorrect replies.