Investigation of Title Flashcards
What is ‘investigation of title?’
1) The process of establishing who owns the property and whether there are rights or rules which could affect the owner’s use or enjoyment
2) Buyer’s solicitor will need to check seller owns the property and whether there is anything that burdens their title which would deter the buyer (restrictive covenants etc)
- Buyer’s lender will want to know the same, in case they need to sell the property on the open market
3) Seller’s solicitor will need to check seller’s title to anticipate problems and to produce a first draft of the contract for sale
Give an overview of how title is investigated for registered land
1) Seller’s solicitor needs to obtain copies of the register of title for the property (called ‘official copies’)
2) They also need to get a copy of the Land Registry plan for the property, known as the ‘title plan.’
3) Deduction of title means seller must prove ownership of the sale property to the buyer – this is done by producing documentary evidence of title to the buyer
4) Title is deduced before exchange and seller should provide buyers with official copies that are less than six months old, at their own expense
5) Official copies show
- Title number of the property
- Edition date – date when Land Registry last updated the title
- Search from date – the specific date of the official copies showing entries subsisting on the register at a certain time
- Entries from three registers
i) The Property register
ii) The Proprietorship register
iii) The Charges register
What does the Property Register show?
Contains a description of the land by reference to the postal address and title plan
Shows if title is freehold or leasehold
May indicate there are easements or that certain rights you would normally expect, have been excluded (rights of light and air over adjacent land)
What does the Proprietorship Register show?
Identifies current owners and their address
Identifies class of title, which is determined by LR when property first registered; three types:
- Absolute title – registered proprietor has vested in them the legal estate, subject only to the entries on the register, overriding interests etc
- Possessory title – proprietor is in possession of the property, but has lost the title deeds or is claiming through adverse possession; proprietor is subject to all adverse interests existing at date of first registration
- Qualified title – there is a specific identified defect which the Registrar feels cannot be overlooked or cured by the grant of absolute title
May indicate the price paid for the land by current owners
Identifies restrictions on owner’s ability to sell
What does the Charges Register show?
Identifies the incumbrances – solicitor will look for:
(i) covenants affecting the property, which can be restrictive or positive
(ii) easements affecting the land, such as a right of way over the property
(iii) charges over the land, most commonly mortgages
(iv) leases granted over the whole or part of the property
(v) notices registered by third parties claiming an interest in the property
What is a noteworthy point about how mortgages appear in the Charges register?
There will be two entries, one mentioning the charge and one mentioning who is the lender.
If there is a date in brackets (18th December) - this is the date the mortgage was registered
If, after this, it says ‘Charge dated 30th November’ - this is the date the charge was entered
Give an overview of how title is investigated for unregistered land
Title is proved via paper title deeds (S provides copies to B before exchange and originals on completion where whole property sold; or gives certified copies on completion if part of property sold)
Deducing title for unregistered land involves examining the paper deeds used to transfer ownership in the past (includes conveyances, mortgages, deeds of gift and land charges searches)
S’ solicitor must check whether any transaction in the property’s history should have triggered first registration of title – if it should have been, seller will be required to register it before any transaction proceeds
What are the two key documents needed for investigation of title in unregistered land?
1) Good ‘root of title’ (document from which to begin title investigation)
- Usually, the most recent document that satisfies all requirements of a good root of title
- Once identified, can ignore older documents unless it refers to an earlier conveyance + 3rd party right as this will probably bind the buyer
2) S’ solicitor will then prepare an ‘epitome of title’ (schedule of all documents from and including the root to the present day)
- Documents should be numbered and chronological
- Copies of each document attached to epitome
What are the requirements for a good root of title document?
Root of title must:
- (a) deal with or show who owns the entire interest (legal and equitable) that is being sold by the current owner
- (b) contain a recognisable description of the relevant land
- (c) do nothing to cast doubt on the seller’s title
- (d) be at least 15 years old
What types of documents are most likely to be chosen as good roots of title?
Conveyance on sale (best) or legal mortgage are generally most acceptable if requirements met
Current buyer will check back for 15 years and the buyer under the root conveyance should have done the same – can be confident for 30 years back – no double guarantee with deed of gift/assents
What should a conveyance say to indicate it is dealing with the entire legal estate and equitable interest in the land?
‘WHEREAS’ stating that the Vendor (seller) is ‘seised of the property … for an estate in fee simple and is selling the same to the Purchaser’ (buyer). The conveyance should also state that the Vendor conveys the land as ‘beneficial owner … unto the Purchaser’
Once a good root of title has been established, what should subsequent title deeds be checked for?
1) Chain of ownership – should be unbroken from the owner in the root to the present seller, as legal estates can only be transferred by deed, so there should be documentary evidence of every change of ownership
2) Description of land – title deeds need to be checked to ensure consistent description throughout
3) Stamp duty – this was payable on many conveyancing documents prior to December 2003, also Inland Revenue required conveyances on sale to be sent to them and they stamped it with ‘particulars delivered’ or PD (conveyance not properly executed without this)
- Check right amount of stamp duty was paid at time of transaction
4) Incumbrances – check for easements and covenants
- Easements may say ‘excepting and reserving’
- Covenants may say ‘subject to’ and can be restrictive or positive
5) Execution – most documents need to be executed as a deed, so formalities for execution as a deed must be complied with. Deeds must:
- (i) Be in writing
- (ii) Make it clear on the face of it that it is a deed
- (iii) Be signed by the person granting the interest in the presence of a witness who ‘attests’ the signature
- (iv) Be delivered as a deed
- Seller will always execute a conveyance to pass the legal estate in the land
6) Land Charges searches
Give details of Land Charges searches for unregistered land
Restrictive covenants will only bind unregistered land if they are correctly registered as a land charge at the central Land Charges Department in Plymouth
Most common land charges protect the following interests:
C(iv) - an estate contract
D(ii) - a restrictive covenant
D(iii) - an equitable easement
F – a Home Right
A solicitor must ensure that valid searches have been made against the names of all the estate owners revealed in the epitome of title and the attached documents, even if their period of ownership pre-dates the root of title
Various third party rights might be revealed in an investigation of title for either registered or unregistered land. Give an overview of the types of interests that might be revealed.
Easements
Mines and minerals, exceptions and reservations
Declaration as to rights of light and air
Co-ownership
Restrictive covenants
Positive covenants
Unknown covenants
Mortgages
Leases
Notices
Home rights
Give details on easements and where details of these will be noted
1) Common easements include rights of way, rights of drainage and rights of support
2) In registered land, easements burdening the property appear in the Charges register or in Property register if easements that burden are mixed with those that benefit
- The Property register will also note financial obligations to contribute attached to easements that benefit the property, such as a right to use a neighbour’s driveway, subject to paying one half of the maintenance costs
- Buyer should be made aware of the need to contribute to the costs of maintenance (Halsall v Brizell)
3) In unregistered land, easements are usually granted or reserved immediately in the first operative paragraph of the conveyance
Give details on mines and minerals, exceptions and reservations and where details of rights relating to these will be noted
1) Seller may have excepted or reserved out of a sale, the mines and minerals beneath the surface, along with a right to come onto the land to extract them
2) In registered land, this will be noted in the Property register
3) In unregistered land, this will appear in the conveyance itself
- A mining exception means the seller doesn’t own any mines or minerals underneath the surface of the property and cannot transfer them to the buyer
- Enquires should be made as to whether the right has been exercised in the past and by whom
- Solicitor should conduct an Index Map search at the Land Registry to check whether the mines and minerals are registered under separate title
Give details on declarations as to rights of light and air
If a landowner sells a part of the land and retains another, they may declare that the part they sell does not enjoy these rights over the part they retain, so they can develop unencumbered, for example by blocking off light to the buildings in Part A
Buyer should be informed and asked if this reservation of rights to light and air causes concern
How can property be held by a couple?
Where two or more people co-own a property, the legal interest can only be held under a joint tenancy
Equitable interest can be owned as joint tenants or tenants in common
- Joint tenants – They have equal interests and when one joint owner dies, the other automatically becomes sole owner of whole property, irrespective of what the deceased’s will says
- Tenants in common – can have equal or unequal shares and when one dies, the share passes according to the will or intestacy rules
How can co-ownership affect the sale of a property?
1) In registered land, it can be assumed that equitable interest is held as a joint tenancy, unless a restriction appears in the Proprietorship register
- This would look like - ‘the Proprietorship register contains a restriction stating that no disposition by a sole proprietor of the land (not being a trust corporation) under which capital money arises is to be registered except under an order of the registrar or of the Court.’
- Where a tenant in common dies, another legal owner (trustee) needs to be appointed to overreach the equitable interest of the deceased co-owner before completion – the restriction above means the tenant in common cannot sell it alone
2) In unregistered land, the conveyance to joint buyers will state whether the equitable interest is to be held as joint tenants or tenants in common
3) A missing co-owner must be a party to the sale contract and transfer of the property
4) Where co-owner is dead, seller’s solicitor will need a certified copy of the death certificate
Give details on restrictive covenants and where details of these may be noted
1) These prevent land being used in certain ways and are usually binding on successors in title – they run with the land
2) In registered land, they appear in the Charges register
3) In unregistered land, they appear in the conveyance and will only be binding if validly registered as a D(ii) Land Charge against the original covenantor’s name
- Can be checked with a Land Charges search
How can a buyer’s solicitor deal with a restrictive covenant?
(a) Ask the seller if they know who currently owns the property with the benefit of the covenant and, if this information is available, ask that owner if the buyer can come to some arrangement with them over the proposed use, such as a permanent release of the covenant or a one-off consent
- This solution may not be appropriate if, for example, the covenant is very old and the person with the benefit of the covenant cannot be easily identified because the land has been sold off in parts
(b) Obtain a restrictive covenant insurance policy for the proposed breach of covenant.
- This is a commonly used and cost-effective solution, but may not be appropriate if the person with the benefit of the covenant is likely to know that they have the benefit of the covenant and object to the proposed use (such as the immediate neighbour)
- Would likely only be get insurance if the covenant is over 50 years old
(c) Apply to the Upper Tribunal (Lands Chamber) for modification or discharge of the covenant under s 84 Law of Property Act 1925, on the grounds that the covenant is obsolete or confers no practical benefit of substantial value or advantage (or is contrary to the public interest) and the loss of the covenant can be compensated in money
- This may not be a quick or cost-effective option and the outcome is at the discretion of the tribunal.
Give details on positive covenants and where details of these may be noted
1) These oblige the covenantor to carry out works or incur expenditure
2) In registered land, they appear in the Charges register
3) In unregistered land, they appear in the conveyance
4) Always binds the original covenantor, but not a successor in title – they don’t run with the land like restrictive ones do
- However, there is likely an indemnity covenant on the buyer, so if the buyer breaches the covenant and original covenantor is sued, they can recover losses from the buyer
- Can check if the current seller gave an indemnity covenant to their seller when they purchased the property – for registered land, check the Proprietorship register
- Buyer’s solicitor should ask the seller if they have been complying with the covenant and if anyone has tried to enforce it
- Buyer will likely have to give a covenant to provide indemnity to the seller if they breach
Give details on unknown covenants
1) Sometimes, the nature of covenants and wording is unknown, maybe if the earlier deed has been lost
2) In registered land, the entry in the Charges register will show the details weren’t available when the property was first registered
3) In unregistered land, existence of covenants may be apparent on the face of the conveyance
- Usually, assume covenants are restrictive and binding on buyer – obtaining an indemnity insurance policy is often the most cost-effective approach
- Seller should disclose this defect in title
Give details on mortgages and where details of these may be noted
1) Seller usually intends to discharge it using the proceeds of sale immediately after completion and buyer won’t commit to purchase unless they are satisfied that the seller’s mortgage will be discharged on completion
2) Registered property will have two entries for a mortgage in the Charges register (one for date of charge and the other stating the lender’s identity)
3) In unregistered land, a mortgage will appear as one of the title deeds in the epitome of title
- Buyer will only worry about one that isn’t discharged; should have a ‘vacating receipt’ on the back to show its discharged
4) Buyer’s solicitor should check the contract states the seller is selling the property free of the mortgage and that the seller’s solicitor gives an undertaking to discharge the mortgage immediately on completion
Give details on leases and where details on these may be noted
1) Existence of a lease is only an issue if the buyer is expecting vacant possession, as the tenant will have possession and control of the property for as long as the lease lasts
2) In registered land, the grant of a lease for a term of more than 7 years requires registration under separate title number; they are also regarded as 3rd party interests that should be registered against the landlord’s title
- They appear as notices in the Charges register of the landlord’s title
- If they are protected this way, by the date when the transfer of the property to the buyer is registered, they will bind the buyer
- If not registered, it won’t bind, but may qualify as an overriding interest if the tenant has occupation
3) In unregistered land, a legal lease (other than parol lease for 3 years or less), will have been created by deed and be one of the title deeds in epitome of title
- Parol lease has no formalities and will be binding with or without buyer’s knowledge
4) Legal leases for a term not exceeding 7 years and equitable leases where the tenant is in actual occupation may be enforceable as overriding interests
5) If a lease is revealed by the title investigation, buyer should be made aware, and they should check its existence and terms are compatible with their intended use of the property
Give details about notices
1) A notice is an entry in the Charges register, relating to a burden of an interest affecting a registered estate or charge
2) They can be agreed or unilateral
- Agreed – added to register with agreement of registered proprietor
- Unilateral – registered proprietor has refused consent or hasn’t been asked
3) Entry of a notice doesn’t guarantee the interest is valid or that it exists
- Seller’s solicitor should be asked what the unilateral notice relates to
- Buyer can then walk away from the transaction or refuse to proceed until the seller deals with the unilateral notice
- Buyer can require seller to get the notice cancelled by Land Registry
Give details about home rights
1) Statutory right for a non-owning spouse or civil partner to occupy the matrimonial home
2) Home right doesn’t create an interest in land
3) In registered land, a home right will bind a buyer if it is protected by a notice in the Charges register by the date when the transfer of property to the buyer is registered
4) In unregistered land, a home right must be protected as a Class F land charge to be binding on a buyer
5) If a home right is found, the seller should be required to obtain from the non-owning occupier a release of all rights in the property and agreement to vacate on or prior to completion
