Stage 4: Investigating Title Flashcards
what is investigating title?
- i.e. the process of examining legal ownership and third-party rights
what is the possible consequence if title is not properly investigated?
o Failure to properly advise is likely to be negligent
who investigates title?
Primarily undertaken by the buyer’s solicitor upon receipt of the EOT, but the seller’s and lending bank’s solicitor may also need to investigate title and advise of any issues
what are potential issues which may be discovered by investigation (reg & unreg land)
- easements
- mine and mineral exceptions and reservations
- declarations as to right to light and air
- co -ownership
- positive and restrictive covenants
- indemnity covenants
- unknown covenants
- mortgages
- leases
- home rights
what is an easement?
- i.e. right of way, rights of drainage, rights of support
re: easement
where would this be recorded in reg land?
Charges reg. May also appear on the Property reg if:
o HMLR have lifted the text from the conveyance and the easements that burden and benefit the land are mixed; or
o There is a financial obligation attached to the easement
re: easement
where would this be recorded in unreg land?
usually in 1st paragraph of conveyance
re: easement
what is the role of the buyer’s solicitor?
o If there is a financial obligation attached to the easement, inform their client they must pay to use the easement
o Explain the easement and ascertain if it would hinder them
o Raise an enquiry with the seller to find out how much and how frequently they have been paying and details of any disputes
o Advise the client to instruct a surveyor to inspect the land
re: mines and minerals
what does ‘excepted’ mean?
a previous seller kept ownership of the mines and did not transfer them. This means the current seller cannot transfer them to the new buyer because they do not own them. An encroachment by the new buyer will be trespass.
re: mines and minerals
what does ‘reserved’ mean?
a previous seller created a profit à prendre and retains the right to extract them. The current seller can transfer the land, but it will be subject to the reservation.
re: mines and minerals
where would these be recorded in reg land?
property register
re: mines and minerals
where would these be recorded in unreg land?
conveyance
re: mines and minerals
what is the role of the buyer’s solicitor?
o Make enquiries as to who is able to exercise this right and if it is exercised
o Carry out a coal mining search
o Index Map search and LR on Form SIM to check whether the mines and minerals are owned under separate title
re: declarations as to right of light and air
explain this
i.e. a landowner sells part of their land and they declare in the transfer that the land has no right to right of light/air over the retained land. This allows them to build freely on the retained land. Whereas, if this exclusion had not been inc. and they built on the retained land which overshadowed the sold land, the owner of the sold land could seek an injunction/damages
re: declarations as to right of light and air
where would this be recorded for reg land?
Proprietorship register
re: declarations as to right of light and air
what is the role of the buyer’s solicitor?
o Make enquiries about the extent of the adjoining land
o Explain this to the client to ascertain if this will be a problem for them
re: co-ownership
how is the legal interest held?
always held as JTs. This cannot be severed.
re: co-ownership
how is the equitable interest held?
can be JT on TIC.
re: co-ownership
what happens to ownership on the death of a co-owner?
Legal interest will always pass to the surviving co-owners because they are JTs and so survivorship applies.
Equitable interest:
If JT > to the other co-owners (by survivorship)
If TIC > under will/IR
re: co-ownership
what is the presumption in relation to the equitable interest?
- It is presumed the EI is held as JTs unless there is evidence to the contrary
re: co-ownership
how would co-ownership be recorded in reg land?
JTs unless there is a restriction on the Proprietorship reg. in the following terms “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.
re: co-ownership
where would co-ownership be recorded in unreg land?
ownership will be in the conveyance
re: co-ownership
where one co-owner has died, when can the surviving co-owner transfer the property alone?
- If the EI was held as JTs, the surviving owner can transfer alone (this is because they own the entire legal and equitable interest by survivorship)
re: co-ownership
when the equitable interest was held as JTs and a surviving co-owner is transferring registered property, what can the buyer presume?
the buyer can assume the tenancy was not severed before death if there is no entry on the Proprietorship reg.
re: co-ownership
when the equitable interest was held as JTs and a surviving co-owner is transferring unregistered property, what can the buyer presume?
buyer can assume JT was not severed where:
o There is no written record of severance on the conveyance;
o There are no bankruptcy proceedings against either of the JTs at the Land Charges Registry; and
o The surviving JT gives a statement in the transfer that they are solely and beneficially entitled to the land
re: co-ownership
where the equitable interest is held as TIC, what happens when the surviving owner wants to transfer the property?
this depends how many owners there are.
If there is more than 1 owner, there will be no problems.
If there is only 1 TIC, another legal owner (called the ‘second trustee’) will need to be appointed to allow for overreaching to take place unless the deceased’s share is passing to the co-owner by will or IR
re: co-ownership
when is overreaching not necessary?
if there is more than one TIC
or if there is only one TIC, but the deceased’s share is passing to them by will or under IR
re: co-ownership
if the interest is passing to the surviving owner, what is required?
o If the interest is passed to the surviving co-owner, this will need to be proven by GOP and assent from the PRs
re: co-ownership
how can a 2nd trustee be appointed?
- The appointment can be made in the transfer or by separate deed
re: co-ownership
what is necessary for overreaching to take place?
- appointment of a 2nd trustee
- The buyer must pay the purchase price to at least two trustees for the overreaching to take place.
re: co-ownership
how does overreaching work?
- The buyer must pay the purchase price to at least two trustees for the overreaching to take place. The buyer then takes the property free of the EI.
o The EI then comes off the property and attaches to the money. The co-owner and second trustee must distribute this in accordance with TIC.
re: co-ownership
what is the role of the buyer’s solicitor?
- Establish whether the EI is owned as JT or TIC
- If the property is being sold by only 1 owner, make enquiries into the other owner. If they are alive they will need to be party to the contract.
- If the other seller has died a certified copy of the death certificate is required
- Ensure there is provision for the appointment of a 2nd trustee (if applicable)
re: restrictive covenants
where are these recorded for reg land?
charges register
re: restrictive covenants
where are these recorded for unreg land?
in the conveyance in/immediately after the 1st paragraph.
re: restrictive covenants
when will a charge on unreg land be binding?
o If the RC was granted post-1925 it will only be binding if it was validly registered as a D(ii) Land Charge against the name of the original covenantor
re: restrictive covenants
what is the role of the buyer’s solicitor?
Advise the client as to:
o Continue with the purchase and live with the RC;
o Attempt to negotiate with the person who owns the land which has the benefit of the covenant i.e. agree usage, permanent release or one-off consent
o Obtain RC insurance for potential liability for breaching the RC
o Make an application to the Upper Tribunal (Land Chamber) for the RC to be modified or discharged
re: restrictive covenants
when is attempting to negotiate with the covenant owner a good and bad option?
Appropriate if the person is easily identifiable and willing to negotiate
Less appropriate if the covenant is very old. Identifying the person may be difficult and/or alert them to rights they didn’t know they had, giving rise to objections or compensation
re: restrictive covenants
what are the advantages and disadvantages or RC insurance?
Advantage cost-effective & convenient (no need to contact RC-owner)
Disadvantage if the RC-owner is likely to object, the insurer may refuse or if the buyer/seller has already contacted the RC-owner they may refuse
re: restrictive covenant
what are the advantages and disadvantages of making an application to the upper tribunal?
Good if RC is old or RC-owner won’t negotiate/insurance isn’t an option.
Drawback expensive & outcome is at discretion of the court
re: restrictive covenant
what is the liability of the new owner?
- The new buyer is liable for unremedied breaches of RC by the previous owner so they should protect themselves i.e. enquiries, insurance
re: positive covenant
explain how these are binding
- The original covenantor (OC) is always bound by the burden of the PC, successors in title are not automatically bound by the PC
- This means if a successor breached the PC, the OC is liable for the breach i.e. the OC is sued for the breach, not the person who committed the breach.
re: positive covenant
how do people protect themselves?
- To protect themselves, the OC will usually seek an indemnity covenant (IC) from their successor. This means if the successor breaches the PC and the OC is sued for this, the OC can recover their losses from the successor.
- Subsequent owners will seek an IC, creating a chain of indemnity
re: positive covenant
where are these recorded in reg land?
charges register
re: positive covenant
where are these recorded in unreg land?
conveyance
re: positive covenant
what is important to remember about registration and liability?
- NB: registration/mention of a PC does not make a successor liable for a breach of PC. Successors are only liable there is an indemnity covenant
re: indemnity covenant
what is this?
- i.e. a promise to perform the RC/PC and indemnify the seller for any loss if they fail to do so. Can be used in relation to RC and PCs, but it is more relevant to PCs because they do not run with the land.
Therefore, the OC would be liable to pay compensation for all PC breaches committed by subsequent successors without any recourse if there was no IC.
re: indemnity covenant
where is this recorded in reg land?
IC will be in the Proprietorship register as follows, “the transfer to the proprietor contains a covenant to overserve and perform the covenants in the Charges Register and of indemnity in respect thereof”
re: indemnity covenant
where is this recorded in unreg land?
the conveyance
re: indemnity covenant
what is the role of the seller’s solicitor?
- The seller’s solicitor must make sure there is provision for the IC in the contract to ensure the seller can sue the buyer for any breach (i.e. breach of contract)
re: indemnity covenant
what is the role of the buyer’s solicitor?
o Inform the client of the obligation
o Advise a surveyor check the current condition of the subject of the RC/PC
o Enquire whether the seller has been complying with the NC/PC and if anyone has tried to enforce it
re: unknown covenants
what is this?
- i.e. the property is subject to covenants but the nature of it is unknown e.g. the deed has been lost. The buyer is still bound by the unknown covenant.
re: unknown covenants
how should these be approached?
- Safest option is for the buyer should treat it as a RC and consider protections i.e. insurance, application to Land Tribunal
re: unknown covenants
how are these recorded in reg land?
Charges register e.g. ‘the conveyance dated X contains restrictive covenants but neither the original conveyance nor certified copy was produced on registration’
re: unknown covenants
how are these recorded in unreg. land?
conveyance i.e. ‘SUBJECT TO the covenant contained in the conveyance dated X’, but the conveyance is lost.
re: unknown covenants
what is the seller’s solicitors role?
- Seller should make sure provision is provided for this in the contract
re: mortgages
what is the position?
- Rarely a problem as usually discharged on completion
re: mortgages
where is this recorded in unreg land?
document in the EOT
o Only concerned with mortgages which have not been paid off
o Discharged mortgages usually have a vacating receipt (unreg. land only)
re: mortgages
where is this recorded in reg land?
- 2 entries on Charges reg.
1) date & purpose of charge
2) identity of lender
o Lender may also put restriction on Proprietorship reg. to prevent borrower disposing of the property without consent.
re: mortgages
what must the buyer’s solicitor do if there is a subsisting mortgage?
o Ensure the contract states the property will be taken free of the mortgage
o Get an undertaking from the seller’s solicitor that they will discharge the mortgage immediately on completion
re: leases
when will this be a problem?
- Only a problem if the buyer is not expecting this because the tenant will have possession and control for as long as the lease lasts
re: leases
how are these recorded in reg land?
More than 7 years to run registered with separate title & under the Charges. reg on the landlord’s FH title.
The following leases might be protected as an overriding interest:
Unreg. lease for more than 7yrs and the tenant is in occupation
Lease of less than 7 years and the tenant is in occupation
Equitable leases where the tenant is in occupation
NB: overriding interests apply to registered land only.
re: leases
how are these recorded in unreg land?
legal leases (other than parole leases) are created by deed and so this should be with the epitome of title.
re: leases
what is the position regarding parole leases?
- In reg and unreg land, parole leases do not require formalities so are binding even if the buyer did not know about it (tenant must be in occupation)
re: leases
what is the role of the buyer’s solicitor?
o Check the terms of the lease are compatible with the buyer’s intended use
re: home rights
what is a home right?
- i.e. statutory right for non-owning spouse/CP to occupy the matrimonial home
re: home rights
do these bind the buyer?
- Does not create an interest in the land. Buyer is only bound if it is registered
re: home rights
where would a home right be registered in reg land?
charges register
re: home rights
where would a home right be registered in unreg land?
Class F Land Charge
re: home rights
what is the role of the buyer’s solicitor?
o Require seller to obtain a release of all rights and agreement to vacate on or prior to completion from the non-owning spouse
re: notices (reg land only)
what is this?
- Entry in the Charges reg. of an interest affecting the estate or a charge
re: notices (reg land only)
what form can this take?
- Can be agreed or unilateral (i.e. proprietor refused consent or was not asked)
re: notices (reg land only)
what effect does this have?
- This notice just makes buyers aware of the interest, it doesn’t prove that the interest is valid or enforceable. It does not give them rights over the property.
re: notices (reg land only)
what is the role of the buyer’s solicitor?
o Enquire as to the substance of the notice
o Explain the options to the client i.e. walk away from transaction or refuse to proceed until the seller deals with the notice. The seller would need to get the notice cancelled by HMLR before exchange.
what must the buyer’s solicitor do in relation to unreg land?
- The buyer’s solicitor must check there is no pending application for first registration and undertake a Land Charges Search
re: land charges search (unreg only)
what is the purpose of a land charges search?
- Some incumbrances only bind unregistered land if they are registered as a land charge at the Central Land Charges Department
re: land charges search (unreg only)
how are charges registered?
- Charges are registered against the name of the legal estate owner bound by the incumbrance at the time i.e. a search would not need to be done against a lender because they are a legal owner (unless they are in possession)
re: land charges search (unreg only)
what will the solicitor need to search and how?
- The solicitor will need to check all of the names identified in the EOT, even if their ownership pre-dates GROT (unless they can rely on valid searches done by others in the past)
- Form K15 is used and each estate owner is searched citing the period they owned the land (years only). If this is unknown, the search is up to 1926
re: land charges search (unreg only)
what are the most common class of land charges?
Most common class of land charge and the interest they protect:
* C(iv) estate contract
* D(ii) restrictive covenant
* D(iii) equitable easement
* F home right
