Investigation of title Flashcards
Why is title investigation critical for buyers, sellers, and lenders in property transactions?
- For Buyers: Ensures the seller owns the property, identifies encumbrances (e.g., restrictive covenants, easements), and confirms the property can be used as intended.
- For Sellers: Anticipates potential title issues that could delay the sale and ensures the property is sold ‘free from incumbrances’ unless specified otherwise in the contract.
- For Lenders: Ensures the property can be sold on the open market to cover the loan if the borrower defaults.
Outline the key steps in investigating the title to freehold registered land.
- Obtain official copies of the Register of Title and Title Plan from the Land Registry.
- Review the Property Register for description, title type (freehold/leasehold), and rights (easements or exclusions).
- Analyze the Proprietorship Register for owner details, class of title, restrictions, and indemnity covenants.
- Examine the Charges Register for incumbrances like mortgages, leases, covenants, or third-party notices.
What are the implications of each class of title for a buyer or lender?
- Absolute Title: Offers full security and is acceptable to buyers and lenders.
- Possessory Title: Suggests missing title deeds or adverse possession; may carry risks of adverse claims.
- Qualified Title: Reflects unresolved defects; lenders may refuse loans, and buyers could face difficulties in resale.
What is the process of deducing title for unregistered land, and what role does the ‘root of title’ play?
- Obtain title deeds, which include conveyances, mortgages, or other legal documents proving ownership.
- Identify a root of title: A document meeting the following requirements:
- Deals with the full legal and equitable interests.
- Contains a clear property description.
- At least 15 years old.
- Prepare an epitome of title, listing all documents from the root to the present day.
- Conduct searches for land charges and check for incumbrances.
What specific information is included in the Property, Proprietorship, and Charges Registers of official copies?
- Property Register:
* Property description and title type.
- Details of easements benefiting the land.
- Exclusions, such as rights of light or air.
- Proprietorship Register:
* Owner’s name and address.
* Class of title and any restrictions.- Price paid if sold since April 2000.
3. Charges Register:
* Encumbrances (e.g., covenants, easements).
* Leases or mortgages affecting the property.
* Third-party interests protected by notices.
- Price paid if sold since April 2000.
What specific aspects of title deeds are reviewed during the investigation of unregistered land?
- Chain of Ownership:
- Ensure an unbroken chain of legal ownership from the root of title to the current seller.
- Verify that each transfer was properly executed using deeds (legal requirement under s.52 of the Law of Property Act 1925).
- In cases where an owner has died, confirm the transfer by personal representatives (e.g., via probate).
- Property Description:
* Ensure the property’s description remains consistent across all deeds.
* Look for discrepancies in plans, especially in cases of conveyances of part, where the property was originally part of a larger estate.
* Verify boundaries and any associated rights (e.g., easements). - Stamp Duties:
* Confirm that correct stamp duty was paid at the time of each transaction.
* Check for embossed stamps or “Particulars Delivered” (PD) stamps on conveyances. Transactions without proper stamping may indicate potential fines or invalidity. - Incumbrances:
* Identify any burdens or obligations on the property (e.g., easements, covenants).
* Look for clauses such as “EXCEPTING AND RESERVING” (reserved rights by previous owners) or “SUBJECT TO” (obligations imposed on future owners).
* Review documents for any restrictive or positive covenants and ensure they are enforceable. - Execution:
* Confirm the proper execution of deeds as required under s.1(2) of the Law of Property (Miscellaneous Provisions) Act 1989.
* Ensure the document:
* Is in writing.
* Clearly states it is a deed.
* Is signed by the parties in the presence of a witness who attests the signature.
* Has been delivered as a deed.
- Land Charges Searches:
- Verify that third-party rights (e.g., restrictive covenants, equitable easements) were correctly registered as land charges with the Land Charges Department.
- Conduct searches for all past estate owners revealed in the epitome of title, using Form K15. Searches must cover the entire period of ownership, and in case of doubt, extend to 1926 when the land charges system began.
Why are land charges searches essential in unregistered land, and how is the root of title identified?
- Land Charges Searches: Identify registered third-party interests (e.g., restrictive covenants, easements). Use Form K15 to search estate owners from 1926 onward.
- Root of Title: Select the most recent document satisfying legal requirements (e.g., a conveyance or mortgage) as the starting point for investigation. Must include legal and equitable interests and avoid casting doubt on ownership.
What are easements, and how should they be handled during a title investigation?
Definition: Easements grant rights to use or access parts of neighboring properties, such as rights of way, rights to drainage, or support. They may also impose obligations on the property owner, such as maintenance contributions.
* Action:
- Locate Easements: Check the Charges Register (registered land) or operative clause of the conveyance (unregistered land).
- Assess Impact: Confirm that the easement supports the buyer’s intended use (e.g., vehicular access, nighttime use).
- Maintenance Obligations: Investigate shared maintenance responsibilities under the rule in Halsall v. Brizell (1957).
- Raise Inquiries:
- Has the seller contributed to maintenance in the past?
- Have there been disputes over the easement’s use or cost-sharing?
- Inspect the Easement Area: Engage a surveyor to evaluate the condition of the easement area (e.g., driveway, drainage) and estimate repair costs.
- Advise Buyer: Inform the buyer about rights and obligations, potential disputes, and associated cos
What are mines and minerals exceptions, and what steps should be taken if they appear?
Mines and minerals exceptions reserve rights to subsurface materials, allowing others to extract resources like coal or minerals.
Action:
1. Identify Exceptions: Look for entries in the Property Register (registered land) or the conveyance (unregistered land).
- Assess Implications: Confirm who owns the rights and if they include the right to enter the property for extraction (profit à prendre).
- Conduct Searches:
* Perform a coal mining search for stability and subsidence risks.
- Conduct an Index Map search to identify the registered owner of mines/minerals.
- Inform Buyer: Explain potential risks (e.g., subsidence, trespass claims) and advise on further investigations if necessary.
- Investigate History: Check whether mining rights have been exercised in the past or are likely to be exercised in the future.
How do rights of light and air affect a property, and what steps should be taken during an investigation?
Exclusions to rights of light and air are often included in transactions where the seller retains adjacent land to allow for future development without interference.
- Locate Exclusions: Review entries in the Proprietorship Register or transfer documentation (e.g., deed).
- Investigate Adjoining Land: Determine the location and ownership of retained land that might benefit from the exclusion.
- Assess Impact:
* Does the exclusion align with the buyer’s intended use (e.g., window placement)?
* Could future development impact the property’s value or utility? - Advise Buyer: Discuss potential implications of blocked light or air access. If significant, consider alternative options.
What issues can arise with co-ownership, and how should they be resolved?
Co-ownership occurs when two or more individuals hold legal title, either as joint tenants or tenants in common
- Determine Ownership Type:
- In registered land, check for restrictions in the Proprietorship Register indicating a tenancy in common.
- In unregistered land, review the conveyance for co-ownership terms.
- Missing Co-Owners:
* If alive, they must participate in the sale.
* If deceased, provide a death certificate or probate documentation. - Overreaching: Appoint a second trustee if the equitable interest is held as tenants in common. Ensure the buyer pays the purchase price to two trustees to overreach the equitable interest.
- Verify Severance: Check for evidence of severance (e.g., memorandum or bankruptcy proceedings). If severed, address equitable interests accordingly.
What are restrictive covenants, and how can they be addressed during a title investigation?
Restrictive covenants limit land use (e.g., no non-residential use). They bind successors in title if properly registered.
- Locate Covenants: Review the Charges Register (registered land) or conveyance (unregistered land).
- Advise Buyer: Discuss how the covenant aligns or conflicts with their intended use.
- Mitigation Options:
* Negotiate release or consent from the covenant holder.
* Obtain restrictive covenant insurance to cover breach risks.
* Apply to the Upper Tribunal (Lands Chamber) for modification or discharge if obsolete or impractical.
What are positive covenants, and how should they be handled?
Positive covenants require action or payment (e.g., maintaining walls). The burden does not automatically bind successors in title.
- Chain of Indemnity: Check for indemnity covenants in the Proprietorship Register or conveyance.
- Buyer’s Obligation: Ensure the buyer gives an indemnity covenant to the seller in the transfer, continuing the chain.
- Condition Check: Engage a surveyor to inspect any property affected by the covenant (e.g., shared walls).
- Compliance History: Ask the seller about their compliance and any enforcement actions.
What steps should be taken if a title investigation reveals unknown covenants?
Unknown covenants are obligations referenced in title documents but lack detailed wording due to lost deeds.
- Assume Binding Nature: Treat them as restrictive and enforceable unless proven otherwise.
- Obtain Insurance: Recommend restrictive covenant insurance to protect against future claims.
- Disclosure in Contract: Ensure the seller discloses the defect to prevent future buyer objections or rescission.
How should existing mortgages and leases be handled during a title investigation?
- Mortgages:
1. Identify Entries: Check for registered charges in the Charges Register or mortgages in the conveyance.
- Ensure Discharge: Confirm the seller’s solicitor will discharge the mortgage at completion using sale proceeds.
- Contractual Protection: Include an undertaking in the contract requiring mortgage discharge.
- Leases:
1. Identify and Verify Terms: Confirm lease existence and compatibility with the buyer’s intended use (e.g., investment vs. vacant possession).
- Investigate Duration: Check registration status for leases exceeding seven years or assess enforceability as overriding interests for shorter terms.
