pre contract - deduction and investigation of title

Question 1

what is meant by a good root of title in the context of unregistered freehold titles?

Answer 1

a good root of title is defined in s44 LPA 1925 as a document that’s
- at least 15 years old
- deals with the whole of the legal and equitable/beneficial interest in the property
- provides an adequate and identifiable description of the property
- doesn’t cast doubt on the title

Question 2

where will ancillary rights and restrictive covenants usually appear in a registered title?

Answer 2

they will usually appear in the property register, whereas adverse rights usually appear in the charges register, but may also be mixed in with ancillary rights in the property register

restrictive covenants appear in the charges register

Question 3

explain the necessary land charges searches on the acquisition of an unregistered freehold title?

Answer 3

where land has unregistered title, land charges searches (using form K15) must be made against all estate owners mentioned in the docs within the epitome of title for their years of ownership (unless search results have already been provided as part of the epitome of title)

if the precise dates of ownership are unclear, the BS should search back to the earliest date from which the relevant the relevant estate owner could have owned the property, or 1926 (the date the system was introduced)

all versions of names within the deeds and the correct counties must be searched against =

Question 4

on a sale by the last surviving beneficial joint tenant, where title is registered, it will be necessary to appoint an additional trustee to receive the capital monies

true or false

Answer 4

false

in land with unregistered title, on a sale by the last surviving beneficial joint tenant, it will not be necessary to appoint an additional trustee to receive the capital monies and good title may be given, if evidence of death (certified copy of death certificate) is provided

Question 5

what do the requirements for distinguishing between deduction of title and investigation of title differ according to?

Answer 5

they differ according to whether there’s registered title or unregistered title to the property

Question 6

What is registered title?

Answer 6

where the sellers title is registered at HMLR

title is deduced by the SS providing to the BS official copies of the registers of title, as well as a copy of the title plan and official copies of any docs referred to and filed under the title

Question 7

what is unregistered title?

Answer 7

where the sellers title isn’t registered at HMLR

title is deduced by the SS providing to the BS an epitome of title, which is comprised of copy paper title deeds and docs

Question 8

investigation of title is an important first step by the SS as a precursor to deduction of title. What does it allow them to do?

Answer 8

it allows them to pre-empt any potential issues that are likely to be raised by BS, specify the relevant incumbrances in the contract and consider possible solutions to problems at an early stage

Question 9

what will the BS do?

Answer 9

carry out their own investigation of title, raise requisitions on title, and will need to make sure that the SS resolves any issues

Question 10

who needs to be satisfied that the title is good and marketable and in accordance with its requirements?

Answer 10

the buyers lender - so that they may be able to sell the property in the event of default by the buyer/borrower, to cover the outstanding debt

Question 11

from december `990, it became compulsory throughout all of england and wales to register title to land on sale or change of ownership.

true or false

Answer 11

true

Question 12

is it still possible to come across unregistered land?

Answer 12

yes - following the LRA 1925, reg was introduced on a piecemeal basis, starting with the main metropolitan areas and cities

therefore unregistered titles may still be encountered, particularly where land hasn’t changed hands for well over 30 years

Question 13

REVISION TIP

Answer 13

HMLR Practice Guide 1: First Registrations

confirms when first registration became compulsory in areas throughout england and wales. this should always be consulted when dealing with unregistered land in practice to ascertain whether the title should have been registered previously (because registration was compulsory in the relevant area at the time of an earlier disposition, eg transfer of ownership)

if so, the SS should be asked to do everything necessary to procure registration before the transaction proceeds

Question 14

title is deduced meaning

Answer 14

ownership is proved

Question 15

how is title deduced for registered title?

Answer 15

SS provides official copies of registers of title and copy of the title plan filed at HMLR\

must also provide official copies of any docs referred to in the registers and filed at HMLR, where the full detail isn’t set out in the register

Question 16

what is the requirement of the law society when it comes to the documents for deduced title?

Answer 16

it’s a requirement of the Law Society Conveyancing Protocol that the docs must be official copies (not photocopies) and must be no more than six months old when issued

Question 17

which forms are used to apply for official copies and filed plan, and official copies of docs referred to in the title?

Answer 17

OC1 - official copies and filed plan

OC2 - official copies of docs referred to in the title

Question 18

can applications for official copies and filed plan be submitted online for firms with access to HMLR online services (HMLR portal)?

Answer 18

yes

Question 19

PRACTICE EXAMPLE

you act on the sale of a freehold property, title to which is registered ay HMLR. an entry in the property register states that the ‘property has the benefit of the rights granted by but is subject to the rights reserved in the conveyance of the land in the title dated 14 Nov 1990 (copy filed)’ the title is also subject to the restrictive covenants in a conveyance of the land in the title dated 26 September 1928, and these are set out in full in the charges register.

what action must you take to deduce title?

Answer 19

you must deduce title by providing official copies and a copy of the title plan

you must also produce an official copy of the conveyance dated 14 Nov 1990, so that the buyer has full info about the rights (HMLR has a copy filed)

you don’t need to provide an official copy of the conveyance dated 26 September 1928 as the covenants are set out in full in the charges register

Question 20

What is meant by official copies?

Answer 20

official copies of the registers of title carry a title number, which is unique to the title and comprised of two or three letters relating to the administrative area (eg WM is for west mids), followed by a number, edition date (when title was last updated - eg following the last sale) and a precise search from date

Question 21

what are the three separate registers which comprise the registers of title?

Answer 21

1) property register
2) proprietorship register
3) charges register

Question 22

once received the BS must review the official copies as part of the process of investigation of title. what must the BS do as an initial step?

Answer 22

check that they are official copies and are less than six months old

Question 23

what is the search from date

Answer 23

the specific date and time on which the official copies were issued by HMLR

Question 24

is the buyer usually permitted, under the contract, to raise requisitions on title after exchange of contracts?

Answer 24

no they are not usually permitted to do so other than in respect of matters appearing on title after this date

Question 25

what does the property register do?

Answer 25

describes the property, its extent and rights benefitting the property

Question 26

what kind of info does the property register include?

Answer 26

• whether freehold or leasehold (tenure)
• description, with ref to title plan (for residential - this will be full postal address)
• any exclusions/limitations on the title (eg in former mining areas it’s common for mines and minerals and associated rights of working to be excluded from the title)
• rights benefitting the property (eg easements that the property has the benefit of)
  it’s also possible that rights burdening the property could be included here (eg an entry might state that the property has the benefit of the rights granted by, but’s subject to the rights reserved in, a specific conveyance, a copy of which is filed at the LR
• declarations as to light and air

Question 27

when reviewing the property register, what is important to verify?

Answer 27

the tenure and extent of the property - check they’re consistent with the memorandum of sale and buyers and lenders expectations

any exclusions should be pointed out and client should be asked to confirm their understanding as to the boundaries

should also be checked whether the property has all the necessary rights benefitting it, and additional enquiries concerning them should be raised

Question 27

whose job is it to check that the property description within the contract is consistent with that in the official copies?

Answer 27

the buyers solicitor

Question 28

What does the proprietorship register include?

Answer 28

• details as to the ownership of the property, the class of title and any restrictions on dealings
• name and addresses of registered proprietors
• for dispositions registered after 1/4/2000, the price paid by current owner
• whether an indemnity covenant was given by the owner on the purchase

Question 29

Is the class of title state guaranteed?

Answer 29

yes

Question 30

what type of class is absolute title?

Answer 30

• best and most widespread class
• state guarantees the title, generally subject only to entries appearing on the registers of title and overriding interests
• LR will have approved landlords title

Question 31

Possessory title

Answer 31

• usually given where title deeds were lost prior to first registration, or owners title is based on adverse possession
• subject to any adverse matters at the date of first registration

Question 32

Qualified title

Answer 32

given where there’s a specific defect in title referred to in the registers of title
(eg a missing title document containing unknown covenants), such that absolute title can’t be given

Question 33

good leasehold title (leasehold only)

Answer 33

given where HMLR approves the leasehold title but not landlords title

Question 34

What do restrictions do?

Answer 34

they restrict or prevent dealings with the title

Question 35

what are the two most common types of restriction to be encountered in practice?

Answer 35

1) Form A restriction (sometimes arising in co-ownership)

2) restriction to protect a mortgagees interest

Question 36

What are overriding interests?

Answer 36

interests that, although not substantively registrable, can bind a purchaser

Question 37

what do overriding interests include?

Answer 37

interests of persons in actual occupation, local land charges, legal easements arriving by virtue of long user (prescription) and legal eases of seven years or less

Question 38

is the existence of overriding interests usually ascertained through pre contract searches and enquiries?

Answer 38

yes

Question 39

what does the charges register contain?

Answer 39

adverse matters affecting the property
(ie incumbrances or things that burden it)

includes the following:
- mortgages and charges
- covenants burdening the property
- easements over the property
- leases
- notices

Question 40

In land with unregistered title, how is title deduced/ownership proved?

Answer 40

by the SS providing an epitome of title to the BS

Question 41

what is the epitome of title comprised of?

Answer 41

copy paper title deeds and docs and must evidence a good root of title

Question 42

the sellers solicitor must investigate title to ascertain the root of title. What is the first step?

Answer 42

to obtain the original title deeds and docs and then confirm that the property hasn’t previously been registered

would be best practice for SS to conduct an index map search at this stage

Question 43

what are title deeds comprised of?

Answer 43

conveyances, deeds of gift, assents, mortgages, land charges searches and sometimes ancillary docs (such as old pre contract searches and copy planning docs))

Question 44

who normally owns title deeds?

Answer 44

owner, sols, or sellers mortgagee if land is subject to a mortgage

Question 45

Who usually provides the title deeds to the SS?

Answer 45

the mortgagee will usually provide them to SS subject to an undertaking to hold them to their order and not deal with the property without their consent or discharge of the sums secured by the mortgage

Question 46

what is an epitome of title?

Answer 46

a list of material title deeds and docs, set out in date order, starting with the root of title and including other docs cross referred to in it

Question 47

example

Answer 47

the root of title may say the property has the benefit of easements or is subject to the easements/covenants set out in the earlier conveyance (which aren’t set out again in the root of title), or may even define the property by ref to a plan annexed to an earlier conveyance

in these circumstances these docs would need to be included in the epitome of title so that the buyer has full info about the title to the property

it’s also good practice to include old land charges searches that are available

Question 48

are copies of the docs (not originals) attached to the epitome of title at this stage?

Answer 48

yes

Question 49

on a typical sale of the whole of the land comprised within the title - when are the original documents handed over?

Answer 49

on completion

Question 50

On a typical sale of part of the land comprised within the title - what is handed over on completion?

Answer 50

certified copies of the original docs

Question 51

What is a good root of title defined as in S44 Law of Property Act 1925?

Answer 51

the ss must find a good root of title when investigating the title deeds and docs

good root of title:
- at least 15 years old
- deals with whole of legal and equitable/beneficial interest in the property (ie refers to the transfer of the fee simple (freehold) by the transferors as beneficial owners
- provides an adequate and identifiable description of the property
- doesn’t cast doubt on the title

Question 52

once the root of title has been ascertained for the purposes of the epitome of title, can the other docs be set aside?

Answer 52

yes - unless they are cross-referred to in the root of title

Question 53

what is the best doc for a root of title?

Answer 53

a conveyance (transfer of land) because the property will usually have been transferred for value, often between unconnected parties

there will therefore be the double guarantee that the title will have been investigated before on the previous purchase

Question 54

can a mortgage be used when selecting the root of title?

Answer 54

yes but is less satisfactory because it doesn’t usually contain all title info (eg details of incumbrances)

Question 55

can a deed of gift or an assent (transfer of property by personal reps) be used as a good root of title?

Answer 55

yes but they don’t usually have the added benefit of the ‘double guarantee’ of a conveyance, so not the best root of title

Question 56

PRACTICE EXAMPLE

A sol acts on the sale of a freehold property, title to which is unregistered at HMLR. the title deeds and docs are comprised of:

• land charges searches
• assent to current seller, daed 15 March 1972, provides the property is defined in the conveyance dated 12 Feb 1967
• mortgage dated 30 Jan 1975
• conveyance dated 12 Feb 1967, provides the property is defined on the plan annexed to the conveyance dated 15 March 1952 and has the benefit of the rights referred to and fully set out in the conveyance and is subject to the restrictive covenants referred to and fully set out in the conveyance
• the conveyance
• a conveyance dated 28 Dec 1942

Which doc provides the best and most appropriate root of title and which docs should be included in the epitome of title?

Answer 56

• the assent should be a good root of title but 1967 conveyance will be best and most appropriate, as it will provide the usual double guarantee

check textbook

Question 57

once received, the buyers solicitor must review the docs in the epitome of title as part of the process of investigation of title - what should they do as an initial step?

Answer 57

they must check there’s good root of title

Question 58

The buyers sols will also want to check the property isn’t already registered and there are no cautions against first registration - how can this be ascertained?

Answer 58

by carrying out an index map search (SIM)

they should also check whether the property should have been registered before

bs must now examine the title deeds and docs

Question 59

what is the approach to examine the title deeds and docs?

Answer 59

1) check there’s a clear and unbroken chain of ownership to the current seller

2) make sure the property description is clear and consistent

3) check that all docs have been properly stamped

4) make sure all docs have been properly executed

5) check for incumbrances (eg easements and covenants burdening the property) and ancillary rights (easements benefitting the property)

6) check land charges searches

Question 60

the chain of ownership must lead to the current owner (clear and unbroken chain of ownership)

Answer 60

• spelling should be checked, ss should be asked to account for any missing links from root of title
• evidence of any deaths (certified copy death certificate)or changes of name (certified copy marriage certificate) will need to be provided
• for a disposition by PRs, certified copy of grant of representation should be obtained

Question 61

the property description must be clear and consistent throughout the title docs and should also be reflected in…

Answer 61

the contract

Question 62

Prior to the into of SDLT in december 2003 ( a tax on land transactions) there was a system of stamp duty in place (tax on docs). What did this regime involve?

Answer 62

sending certain conveyancing docs to the stamping authorities, where they would receive physical stamping

Question 63

what were the two types of stamp duty?

Answer 63

1) ad valorem - payable on the value of a conveyance on sale
lower value transactions were exempt or subject to a reduced rate, if there was a certificate of value in the document confirming the value didn’t exceed the relevant threshold
this was not payable on mortgages after 1971 an deeds of gift or assents after the end of April 1987 (provided there was a certificate of exemption in the document)

2) Inland Revenue Particulars Delivered stamp - required conveyances on sale (and some other docs) to be stamped from 1931

Question 64

REVISION TIP

Answer 64

for sqe purposes it isn’t necessary to know the exact rules for stamping particular docs at particular times

in practice this is something that can be ascertained using tables within practitioner texts

you should be aware of the need for conveyances on sale to be properly stamped for both ad valorem and PD, depending on the rules that were in operation at the time of the previous land transaction

if any docs aren’t stamped properly stamped, seller should remedy this at their expense, dealing with the payment of any interest or penalties

Question 65

generally all conveyances of land must be made by deed otherwise they are void for the purpose of conveying a legal estate

true or false

Answer 65

true

s52 LPA

Question 66

for deeds after 31 July 1990, the requirements of a deed are set out in s1(2) LPA 1989. This provides the documents must be…

Answer 66

• in writing and clear on the face of it that it’s intended to be a deed (eg expressed to be executed as a deed, or otherwise clearly stated)
• signed in the presence of a witness who attests (witnesses the signature)
• delivered as a deed (ie the executing party intends to be bound by the deed - this is presumed following execution)

Question 67

for deeds before 31 July 1990, the requirements of a deed were that it had to be signed, sealed, and delivered. Was sealing a strict requirement for the proper execution of a deed?

Answer 67

yes - sealing was usually affixing a red circle to the execution clause

Question 68

the seller/transferor must always execute transfers of land. true or false

Answer 68

true

Question 69

the buyer/transferee only need to execute transfers of land when they’re making a new declaration (eg a declaration of trust as to co-ownership of the equitable interest or a declaration as to light and air) or entering into a fresh covenant (eg an indemnity covenant)

true or false

Answer 69

true

Question 70

ANCILLARY RIGHTS AND INCUMBRANCES