Title Investigation - Registered Land

Question 1

Deducing title

Answer 1

Mean the process of proving ownership to a would-be buyer. In this context, title means proof of ownership.

The seller’s solicitor deduces title.

Question 2

Title documents

Answer 2

1. Land Registry official copies of the register
2. Land Registry title plan
3. Copies of any documents referred to, but not already extracted in the official copies of the register

Question 3

Registers in the official copies

Answer 3

A. Property Register: describes the property and any rights BENEFITTING the property (eg covenants or easements)

B. Proprietorship register: gives the registered proprietor’s (owner’s) name and address, the class of title and entries affecting ownership

C. Charges register: lists rights burdening the property (eg mortgage, covenants, easements and leases)

Question 4

Investigating title

Answer 4

Buyer’s solicitor investigates title - this is done by checking the Land Registry official copies, title plan and other documents referred to on the register. The aim is to:
- check that the seller has the legal right to sell the property
- ensure the property is adequate for the buyer’s intended use
- ensure that there are no title defects that could affect the value of the property or the ability to sell in future

Question 5

What is in the property register?

Answer 5

Property Description:
- states whether the property is freehold or leasehold
- describes the property by its address and reference to the title plan
- the buyer’s solicitor should always send the buyer a copy of the title plan so that the buyer can confirm it agrees with their understanding of the size and location of the land they are buying.

Rights benefiting the property:
- Right benefitting the property will be set out in the property register
- They may be extracted meaning that all the relevant text is shown and there is no need to refer to the document itself
- Alternatively the property register may refer to a bundle of rights in a document which is filed. The seller’s solicitor should provide a copy of any filed documents (either from the pre-registration deeds or from the Land Registry)

Question 6

Common rights in the property register

Answer 6

None: not an issue but check land has access from public highway without need for a private right of way

Right of way: this will be needed if the property does not abut the public highway without crossing other private land. In old houses, there is sometimes a right of way on foot to a communal outside toilet.

Rights to run services: This right may cover gas or water pipes, drains, electrical cables, optic fibre cables, may need to run across neighbouring land. They will not be necessary if the connection is made direct to the main pipe, cable under the highway

Right of light: Right to enjoy the natural light which passes over someone else’s land and into eg a window. This right can be granted expressly by deed or acquired by prescription.

Excluded rights: Property register will also refer to rights that are not included. A common example is an exclusion of the minerals underneath the land. This should be reported to the buyer but is not usually a serious issue.

Question 7

Four issues to be considered for rights of way

Answer 7

If the property has the benefit of a right of way, then there are four issues that must be considered:
- registration of the burden
- adequacy
- maintenance
- adoption

Question 8

Registration of the burden

Answer 8

The benefit of the right of way is registered if it appears on the property register.

To be enforceable, the burden must also be registered against the land over which the right of way passes (the servient land).

Question 9

Adequacy

Answer 9

Adequacy may be legal or physical. E.g. a right of way by car only would not be suitable for a warehouse that requires lorry deliveries.

On the other hand, a right of way for all vehicles does not help if it is too narrow to be negotiated by a lorry so inspection is advisable.

Question 10

Maintenance

Answer 10

Even if the right does not say so, a person using a right of way is obliged in common law to contribute towards its maintenance.
Inspection and enquiries should assess how this is likely to affect the buyer.

Question 11

Adoption

Answer 11

An adopted highway is a public highway maintainable by the local authority at its expense.
If a private road is adopted, then the frontagers are required to pay the costs of bringing the road up to adoptable standards.

Question 12

Class of title

Answer 12

Class of title appears as a subheading of the proprietorship register, not as a numbered entry.

Class of title indicates how satisfied the Land Registry is with the registered proprietor’s proof of ownership to the property.

Land Registry guarantees its titles with compensation so the class of title is important.

Question 13

Different classes of title

Answer 13

Title absolute (freehold or leasehold): best and most common. It indicates no issues - the proprietor has satisfied the Land Registry that it is the true and proper owner of the property.

Qualified title (freehold or leasehold): is where there is a specific defect in the title. E.g. where a dees known to contain covenants was missing on first registration.

Possessory title (freehold or leasehold): granted when the registered proprietor has shown that they have physical possession of property but has no title deeds or is claiming through adverse possession.

Good leasehold title: granted when the leasehold cannot provide evidence of the landlord’s title to the land. It can often be upgraded easily if the landlord’s title has been registered since the grant of the lease.

Question 14

What if the property has qualified title, possessory title or good leasehold title?

Answer 14

• Should report it to their client and explain what it means
• Check the mortgage lenders’ requirements (will they accept inferior title)
• consider and advise on obtaining title indemnity insurance to cover risks
• consider the possibility of upgrading to title absolute if missing documents can be located

Question 15

The registered proprietor

Answer 15

The person or persons names on the proprietorship register. May be:
- an individual
- a company
- a limited liability partnership
- any combination of the above up to a maximum of 4 legal persons

Question 16

The registered proprietor: individual

Answer 16

Register will set out the individual’s full name and address for service

Question 17

The registered proprietor: company

Answer 17

The proprietorship register will set out the company name, company number and registered office address.

Buyers solicitor should verify these details with a Companies House search.

Question 18

The registered proprietor: LLP

Answer 18

The proprietorship register will set out the LLP name, number and registered office address.
The buyer’s solicitor should verify these details with a Companies House search.

Question 19

The registered proprietor: Co-owners

Answer 19

A combination of individuals, LLPs or companies up to a maximum of four may be registered proprietors.

Generally, all co-owners will be required to sign the contract and execute the purchase deed.

Question 20

Matters that appear on proprietorship register:

Answer 20

• Class of title
• Registered Proprietor(s)
• price paid or stated value of the land (if acquired on or after 1 April 2000)
• Any indemnity covenants (to observe positive covenants)
• Any restrictions on the registered proprietor’s right to sell the property

Question 21

How can you check how beneficial interest of a property is held?

Answer 21

If co-owners have notified the Land Registry that they hold as beneficial tenants in common, then the Land Registry will add a restriction to the proprietorship register.

Restriction: prevents the Land Registry from registering certain dealings (eg sale by a sole owner, mortgaging) against the title unless the terms of the restriction are complied with.

Question 22

What is there is no restriction on the proprietorship register?

Answer 22

You can assume that the co-owners hold jointly.

Question 23

What is there is a restriction on the proprietorship register?

Answer 23

You can assume that the co-owners hold as tenants in common, but be careful that you:
- check that it is a tenancy in common restriction and not another type (eg a restriction imposed by mortgage lender to prevent sales without the mortgage being discharged)
- are aware the co-owners may change the way that they hold the property and convert from beneficial joint tenants to beneficial tenants in common (and vice versa) at any time during their ownership

Question 24

What happens when a joint proprietor dies?

Answer 24

Joint tenancy: right of survivorship applies and the surviving joint proprietor takes the legal title to the property. The LR will register them as the sole legal owner. (no restriction in place anyways)

Tenancy in common restriction: LR will leave restriction in place unless the owner proves that they have become beneficially entitled to the whole of the property as well.

Question 25

Co-ownership implications for title investigation

Answer 25

If all co-owners are living/in existence then they should all be asked to sign the contract and execute the transfer deed.

Surviving beneficial joint tenant: they should be asked to sign the contract and execute the transfer deed. Should also provide a certified copy of the deceased joint tenant’s death certificate

Surviving beneficial tenant in common: if selling the property then they will need to appoint a second trustee (often solicitor) to sign the contract with them and execute the transfer deed with them. They should also provide a certified copy of the deceased tenant in common’s death certificate.

Question 26

Why does the surviving beneficial tenant in common need a second trustee?

Answer 26

The buyer can take the property free from any beneficial interests provided:
- the property is transferred by at least two trustees
- the purchase price is paid in good faith

The buyer then overreaches the beneficial interests.

Question 27

Charges Register: Interests which burden the property

Answer 27

Mortgage: in favour of lender
Usually an undertaking is given on the completion to discharge this so that the buyer takes free of mortgage

Leases: These would normally be expected from the agent’s property description but should always be reported together with their terms

Easements: The land may be subject to rights of way, rights of light, rights of service media. These should always be reported to the client.

Covenants (restrictive or positive): The burden of restrictive or positive covenants will be listed in the charges register.

Question 28

Registration of mortgages

Answer 28

• A legal mortgage must be created by deed
• Legal mortgages must be entered in the charges register otherwise the mortgagee (lender) will not have a legal interest and a buyer would take the property free of the mortgage.
• The lender usually also requires a restriction in the proprietorship register to prevent the mortgagor (the owner) from selling the property without the lender’s consent

Question 29

Mortgage entry on charges register

Answer 29

Usually two entries in the charges register. The first is the date of the mortgage and the second is the name and address of the mortgagee.

Question 30

Making sure the property is sold mortgage free

Answer 30

Should:

1. check early on in enquiries that the seller will have sufficient funds to clear the mortgage
2. ensuring that it is a term of the contract (before exchange) that the mortgage will be redeemed on completion and
3. obtaining an appropriate undertaking from the seller’s solicitor to redeem the mortgage from the proceeds of sale on completion

Question 31

Covenants on charges register

Answer 31

If covenants appear on the charges register it means that the property has the burden of those covenants (if the property has the benefit of any rights then they appear on the property register).

Covenants may be restrictive, positive or unknown.

From the buyer’s point of view, typical problems with covenants are:
- the existing use of the land is in breach of covenant
- the buyer’s proposed use of the land would be a breach of the covenant

Question 32

Restrictive covenants

Answer 32

Assume for conveyancing that they are binding on the property.

Whether or not it is restrictive depends on its effect (not necessarily its wording) - it must prevent you from doing something.

Question 33

Positive covenants

Answer 33

An obligation to do something - usually requires time and money.

Positive covenants are not always binding.
- check if there is a chain of indemnity

Question 34

Indemnity covenant

Answer 34

An indemnity covenant means a covenant given by a buyer to a seller to observe the positive covenants.

Effect if this means they are bound by the positive covenant and will likely insist that the buyer enters into an indemnity covenant with them.

Question 35

Chain of indemnity

Answer 35

Positive covenants are personal and do not bind the land, therefore they can only be enforced against the original covenantor.

In a chain of indemnity, each new owner gives the seller an indemnity to observe the covenant so that if it is broken then then the original party to the covenant (who would be sued due to privity of contract) can sue the person who gave them the indemnity and so on down the line.

Note: this is only as strong as the weakest link - if someone goes missing etc this will not work. OR if at any point a seller has neglected to obtain an indemnity covenant the chain will be broken.

Question 36

Unknown covenants

Answer 36

Title documents may refer to a covenant by description but the actual covenant is unknown.

Buyer’s solicitor should assume they are restrictive and take appropriate action so the buyer is protected.

Question 37

Buyer’s options for dealing with covenants

Answer 37

1. Where the land’s current use is in breach of the covenant, but no objection has been received, it is simplest to obtain an indemnity insurance policy (usually at the seller’s expense)
2. Approach the person with benefit (PWB) for consent to the breach of covenant - may be difficult to identify/trace pwb and they pay refuse or require payment.
3. If the covenant is restrictive (ONLY), then an application can be made to the upper tribunal (lands chamber) to discharge the covenant. This is expensive and time consuming and rarely practical.
4. It is usually more of a problem when the buyer’s proposed used would breach the covenant. It is then more difficult to get insurance as the risk that an objection will be received is less ascertainable. Approaching the PWB may be an option, but insurance should be tried first as insurers usually require that no contact has been made with the PWB.

Question 38

Registered title summary:

Answer 38

• title shown by official copies and title plan
• official copies neatly categorise property, proprietorship and charges
• title plan shows extent of property
• other deeds and documents extracted on the official copies or filed at the Land Registry
• Change of registered proprietor is usually quick (within a week or two)