Investigating Title and Pre-Exchange (Freehold)

Question 1

What are the initial stages of a freehold transaction? (PCON)

Answer 1

Client instructions; client due diligence; ensuring authority to act for multiple parties; conflicts check.

Question 2

How can a property purchase be funded?

Answer 2

Cash; Mortgage; or money from sale of another property.

Question 3

What tax affects residential properties?

Answer 3

SDLT (England); LTT (Wales); CGT (if not a principle private residence)

Question 4

What tax affects commercial properties

Answer 4

SDLT (England); LTT (Wales); CGT; VAT (100% if less than three years old, optional if more)

Question 5

What is ‘caveat emptor’ and its practical implications?

Answer 5

‘Buyer beware’ - Buyer buys a property subject to all incumbrances they could have reasonably discovered.

Question 6

What does caveat emptor not apply to? In which case what does the seller do?

Answer 6

Caveat emptor does not apply to incumbrances that the buyer could not have reasonably discovered.

E.g. if there was a nuisance on the adjacent property that wasn’t active when the buyer inspected the land.

Question 7

When is the caveat emptor principle relaxed?

Answer 7

When the seller has misrepresented the state of the property. Must be a written, rather than oral, representation.

Question 8

What are the sellers’ solicitors priorities in the initial stages?

Answer 8

Provide title to the buyer, prepare a draft contract and reply to standard enquiries.

Question 9

What are the buyers’ solicitors priorities in the initial stages?

Answer 9

Investigate title, undertake searches, review replies to standard enquiries and raise further enquiries.

Question 10

What does the buyers’ solicitor do upon completion of their investigation?

Answer 10

They draft a report on title for the buyer, who then decides if they want to continue with the purchase.

Question 11

What does it mean to ‘deduce’ title?

Answer 11

It means the sellers solicitor provides the proof of title (proving that the seller can actually sell the property) and the buyer inspects this.

Question 12

Why do buyers inspect title at the land registry?

Answer 12

Shows whether the seller can sell the property and if there are any rights or burdens affecting the property.

Question 13

What are the three official copies?

Answer 13

Property register;

Proprietorship register;

Charges register

Question 14

What is in the property register?

Answer 14

Description of the property and identifying any rights benefitting the property.

Question 15

What are the four considerations when there are rights affecting a property?

Answer 15

(i) Whether the right is adequate for the purpose it serves;

(ii) Whether the right requires maintenance costs for the buyer;

(iii) Whether the burden has been registered on the servient lands’ charges register; and

(iv) If it is a private road, whether there is a potential of the local authority adopting it and expecting the ‘frontager’ to pay for its upkeep.

Question 16

What is in the proprietorship register?

Answer 16

Includes details of the registered proprietor, the class of title, any restrictions and a possible indemnity covenant.

Question 17

What are the classes of title?

Answer 17

Title absolute: No issues with the sellers ownership/ability to sell;

Qualified title: Potential issues, e.g. if there is a missing deed for an easement;

Possessory title: E.g. where someone has acquired a property via adverse possession and have no deeds etc.

Good Leasehold title: Tenant cannot provide evidence of landlord’s title to land

Question 18

What is a possible restriction on the proprietorship register?

Answer 18

Tenants in common restriction, meaning the property cannot be sold without the approval of all beneficial owners.

Can be overreached by paying to two trustees or by seeing a death certificate of the TIC.

Question 19

What happens if there is an indemnity covenant in the proprietorship register?

Answer 19

Then the buyer, if they go through with purchase, would be required under the standard conditions to give the seller an indemnity covenant.

Question 20

What is on the charges register?

Answer 20

Anything that burdens the property, e.g. a mortgage, easement, covenant etc.

Question 21

What are the assumptions with restrictive and positive covenants on the charges register?

Answer 21

If it’s restrictive - assume it binds

If it’s positive - unless there is a mention in the proprietorship register, it will not bind.

Question 22

What happens if a covenant has already been breached by the seller of the property?

Answer 22

Then the seller should provide an indemnity policy to the buyer at their expense.

Question 23

What impact could a covenant have on your advice to the client?

Answer 23

It could mean you advise them against buying the property, e.g. if there is a restrictive covenant against the sale of alcohol but they want to build a hotel.

Question 24

What are the remedies for when a covenant affects the land?

Answer 24

Indemnity insurance;

Discuss release with the person whose land benefits;

(Restrictive) Apply to the upper tribunal.

Question 25

How does a seller deduce title in unregistered land?

Answer 25

Epitome of title. This is a schedule of relevant deeds and documents, particularly the root of title.

Question 26

What requirements must the root of title fulfil?

Answer 26

Must:

(i) Be more than 15 years old;
(ii) Cast no doubt on seller’s title;
(iii) Describes the property;
(iv) Deals with legal and beneficial title.

Question 27

What search is conducted to ensure the property is:

• unregistered; and
• no registered land encroaches on the title?

Answer 27

Index (SIM) search.

Question 28

What does planning permission relate to?

Answer 28

Any development on a property.

Question 29

What is ‘development’?

Answer 29

Carrying out any building operations to the exterior of a building or change of use to a different use class.

Question 30

How can a buyer check planning permission?

Answer 30

To see if there is consent: LLC1;

To check refusal/approval: CON29

Question 31

What are the four enforcement options of a local authority if someone has breached planning permission?

Answer 31

Enforcement notice (gives 28 days to remedy the breach - if not complied with, council can remedy the issue and charge the cost to the land owner);

Stop notice (with enforcement notice - ends activities in breach of planning control);

Breach of condition notice;

Injunction

Question 32

What are the time limits for enforcement action?

Answer 32

4 years: Operational development without enforcement action; change of use to a single dwelling house;

10 years: Any other change of use or breach of planning condition.

Not applied stringently if the development has been hidden.

Question 33

Say if the buyer has purchased a property in breach of planning controls, what can be done to mitigate the situation?

Answer 33

Indemnity insurance;

Retrospective planning permission;

Comply with condition

Question 34

What do building regulations control relate to?

Answer 34

Health and safety aspects of buildings being constructed or altered.

Question 35

What are the 3 powers local authority’s have for breach of building regulations? What time limits are there?

Answer 35

Enforcement notice: One year, 28 days to enforce then the local council can remedy the work and expense to the landowner;

Prosecution: Two years from completion, 6 months to prosecute from discovery, unlimited fine;

Injunction: No limit for unsafe work.

Question 36

Say if the buyer has purchased a property in breach of building regulations, what can be done to mitigate the situation?

Answer 36

Indemnity insurance;

Regularisation certificate;

Remedial works