Investigation of Tittle Flashcards
Why does tittle need to be investigated?
The sale contract, the seller promises to sell the property ‘free from incumbrances’ unless the seller states otherwise, so any incumbrances need to be identified and specified in the contract at the earliest possible stage.
Seller’s solicitor needs to obtain copies of the register of title for the property (official copies) and a copy of the Land Registry plan for the property (title plan). - must be less than 6 month old.
The Property Register
Description of the land - address, title plan and whether it is freehold or leasehold.
Lists any rights that benefit the property and any exclusions - e.g. right to utilities; exclusion of an easement or right to object to neighbouring development restricting their right to light or air.
Might indicate easements and any financial obligations to contribute to the easement.
Mines and minerals exclusion - they belong to someone else.
The Proprietorship Register
Lists the current owners and their address and class of title:
a. Absolute - most common. Registered proprietor has vested in them the legal estate subject only to the entries on the register, overriding interests and where the proprietor is a trustee, minor interests of which they have notice, such as the interests of the beneficiaries under the trust.
b. Possessory - proprietor is in possession of the property but has lost the title deeds or is claiming through adverse possession.
c. Qualified - Specific identified defect.
Might state the price paid by the current owners if purchased after April 2000.
Any Indemnity covenant and restrictions on the owners ability to sell.
What does an Indemnity covenant on the Proprietorship Register mean?
Evidence of a chain of indemnity covenants.
E.g. The transfer to the proprietor contains a covenant to observe and perform the covenants in the Charges register.
Examples of a restriction on the owner’s ability to sell listed on the Proprietorship Register mean?
- Tenancy in common - no disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court - a second trustee will need to be appointed if one owner is dead.
- Mortgage restriction - No disposition of the registered estate by the proprietor of the registered estate is to be registered without the banks written consent.
The Charges Register
Identifies incumbrances and anything that burdens the land:
a. Covenants - restrictive or positive.
b. Easements
c. Charges over the land - mortgages
d. Leases
e. Notices - registered by third parties claiming an interest.
Issues with an Easement in the Charges Register
Rights of way, rights of drainage and rights of support.
Buyer will need to contribute to the cost and maintenance of the easement if they want to use it- Halsall v Brizell [1957].
Buyer’s solicitor should ask whether the seller has been contributing and how much, and if any disputes have arisen.
Buyer should instruct a surveyor to inspect the land to establish whether it is useable and in good condition.
Issues with mines and minerals exceptions and reservations
Seller does not own any mines and minerals under the surface of the property and cannot transfer them to the buyer.
Inquiry should be made as to the ground stability and as to who is able to exercise this right and if it has ever been exercised in the past.
Buyer’s solicitor should also check whether the mines and minerals are registered under a separate tittle to identify the owner and associated rights.
Declaration as to rights of light and air
Prevent the buyer from blocking light to their part of the land.
How do you spot tenants in common
Registered land - assumed that the equitable interest is held as a joint tenancy unless a restriction appears in the Proprietorship register.
The sellers are joint owners
Both joint owners must be a part to the contract.
If one has died, seller’s solicitor will need to provide a copy of the death certificate. The remaining sole owner can transfer the property alone.
The sellers are tenants in Common
If one has died, another legal owner needs to be appointed to overreach the equitable interest of the deceased co-owner.
Provided the buyer pays the purchase price to at least two trustees on completion, the equitable interest of the deceased co-owner will be overreached and the buyer will take the property free of it. No need to appoint a second trustee where there are two or more legal owners remaining
Issues with restrictive covenants
Prevent land from being used in particular ways.
Binds successors - run with the land.
Buyers solicitor should consider the following:
1. Ask the seller if they know who owns the property with the benefit of the covenant. Ask if they can come to an arrangement over the proposed use, such as a permanent release of the covenant or a one-off consent.
2. Obtain a restrictive covenant insurance policy for the proposed breach. - commonly used and cost effective but not if the person who benefits is likely to object to the proposed use.
3. Apply to the Upper Tribunal (Lands Chamber) for modification or discharge of the covenant on the grounds that it is obsolete or confers no practical benefit. - not quick or cost effective.
Positive Covenants
Obliges the buyer to carry out works or incur expenditure.
Binds the original covenantor but the does NOT run to a successor.
BUT when the original covenantor sold the property they probably required the buyer to give an indemnity covenant - if the buyer breached the covenant and the original covenantor was sued directly for the breach, they could recover their losses from their buyer. Likely to have been repeated creating a chain of indemnity. - in proprietorship register.
Buyer will be required to give an equivalent indemnity covenant in the transfer of the property, so the buyer will be liable to the seller in contract if they do not observe and perform the positive covenant. Provision for this must be made in the contract.
Unknown covenants
Presume they are restrictive and binding on the buyer.
Obtaining indemnity insurance will often be the most cost effective way to deal with these covenants.
Mortgages
Charges register.
Lender may have put a restriction in the proprietorship register preventing the borrower from making a disposition of the property without the consent of the lender.
Buyers solicitor should check that the contract states that 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.
Leases
For more than 7 years requires registration in its own right with a separate title number. Will also be registered against the landlord’s title.
Will appear as a notice in the Charges register.
Legal leases for a term not exceeding seven years and equitable leases where the tenant is in actual occupation may be enforceable as overriding interests.
If a lease is revealed by the title investigation the buyer’s solicitor should report it to the buyer and check that the existence of the lease and its terms are compatible with the buyer’s proposed use of the property.
Notices
Entry in the charges register in relation to the burden of an interest.
Agreed or unilateral: agreed notices are put on the register with the agreement of the registered proprietor, unilateral notices are used where the registered proprietor has refused to consent to the entry or has not been asked about it.
Notice does not guarantee the interest is valid or that it exists and does not give the person who registered it any rights over the property. It only serves to ensure that the priority of the interest is protected against subsequent interests.
Buyer may require the seller to get the notice cancelled by the Land Registry before exchange of contracts.
Home Rights
In registered land, a home right will bind a buyer if it is protected by a notice in the Charges register.
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.
