U2. FH Pre Contract - Deduction and Investigation of Title

Question 1

What are the 2 main pre contract steps?

Answer 1

1. Deduction and Investigation of Title
2. Searches and Enquires

Question 2

What is Investigation of title?

Answer 2

The title of the property is checked/examined to ensure:

1. The seller is entitled to sell, and
2. The title is good and marketable, with all the necessary rights and with no materially adverse incumbrances (such as easements/covenants burdening the property)

Question 3

Who carries out Investigation of Title and why?

Answer 3

The Sellers Solicitor carries out investigation of title for 2 reasons:

1. To Pre Empt the buyers requisitions
2. To be able to deduce the title.

The Buyers Solicitor carries out investigation for title:

1. To ensure the seller is able to sell
2. To ensure the property is good and marketable to the lenders (ie if they had to sell it, would not make a loss)

Question 4

What is deduction of Title?

Who carries out Deduction of title?

What must come before deduction of title?

Answer 4

Deduction of title is where the seller solicitor provides the buyers solicitor with proof/evidence of the sellers ownership by showing either:

1. Title Deeds (For unregistered land)
2. Offical Land Registry Copies (For registered land)

The Sellers Solicitor must carry out investigation of title in able to deduce title.

Question 5

What 2(3) things does the Sellers Solicitor produce to do ‘Deduction of title’?

What must they be?

Answer 5

The Sellers Solicitor produces deduction of title by showing:

1. Official Copies of the Registers of Title (‘Official Copies’)
2. A Copy of the title plan filed at HM Land Registry. (‘Filed Plan’)
3. They must also provide any documents referenced to in the above documents where the full details are not set out on the registers.

THEY MUST BE OFFICAL COPIES (NOT PHOTO COPIES) NOT OLDER THAN 6 MONTHS

Question 6

What forms are used by the Sellers Solicitor to apply to HM Land Registry for the documents for deduction of title?

Answer 6

1. Offical Copies and Filed Plan use 0C1 Form
2. Any Documents regered to in title that are not on the charges register use 0C2 Form

Question 7

What 3 Registers make up the Registers of Title (Offical Copies) ?

Answer 7

1. Property Register
   (Describes the property, its extent, and benefiting rights)
2. Proprietorship Register
   (Shows ownership, class of titles, and restrictions)
3. Charges Register
   (Contains adverse matters affecting the property, such as incumbrances or covenants that burden it)

Question 8

What 4 things compose the title number of official copies?

Answer 8

1. 2 or 3 numbers representing the area
2. A number
3. an edition date (when title was last updated, for example last ownership transfer)
4. Search From date
   (The specific date the official copies were issued by HM Land Registry. After this date, the buyer cannot raise requisitions (questions) on title until after exchange of contracts)

Question 9

When does a Possessory Class of Title usually arise?

What is it?

Answer 9

This would arise where the landowner cannot produce sufficient documentary evidence to prove their ownership. It allows for someone else to submit evidence to claim as the legal owner.

If the missing documents are found, or if you stay in possession for a further 12 years without anyone else claiming ownership, you can apply to upgrade to an absolute title

This normally happens where the title deeds were lost prior to first registration, or the owners title is based on adverse possession.

Question 10

What is Qualified Class of title?

When does it usually arise?

Answer 10

This will be granted is there is a specific defect in title and will be stated on the register.

For example, missing title documents containing unknown covenants

Question 11

What is Good Lease Hold (a class of title)?

Answer 11

This will occur if someone tries to register their leasehold interest for the firm time, but the freehold estate has not yet been registered.

Question 12

What must the seller provide to deduce title (prove ownership) of registered land?

Answer 12

Must show an Epitome of Title (which is the title deeds and documents) which must demonstrate good root of title.

Title deeds showing Good Root of Title must:

1. Be at least 15 years old
2. Deals with all legal and equitable interests in the property (ie refers to fee simple by the transferor as benefical owners)
3. Provides an adequate and identifiable description of the property
4. Does not cast doubt on the title.

Question 13

What things are title deeds, and so can provide an epitome of title for deduction of title? (proving ownership of unregistered land in precontract)

Answer 13

Title deeds include:
1. conveyances (the best)
2. deeds of gifts
3. Assents
4. Mortgages
5. Land Charges Searches
6. Ancillary Documents

They must show good root of title.

Question 14

When proving ownership of registered land v unregitered land, one requires official copies. Which type of land requires official copies?

Answer 14

Registered Land requires official copies of the ‘Offical Copies of the Registers of title and Filed Plan.

Unregistered land requires copies of the title deeds and documents.

Only for sale of the whole are official copies provided (not sale of the part) and this will be on completion.

Question 15

On Receiving the Title Deed and Documents following the sellers solicitors deduction of title to prove ownership, As part of the buyers solicitors investigation of title, what 3 things should the buyers solicitor double check?

Answer 15

1. Good root of title
2. Not already registered (this is done my carrying out an index map search, known as SIM)
3. Should it of been registered already

Then the solicitor must check 6 other things on the documents themselves …

Question 16

What 6 things must the Buyers Solicitor Check on the Title Deeds and Documents during their investigation of title for unregistered land?

Answer 16

1. Check there is 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 documents have been properly stamped
4. Make sure all documents have been properly executed
5. Check for incumbrances (easements and covenants burdening) and ancillary rights (easements benefiting the property)
6. Check Land Charges Searches

Question 17

When investigating title for unregistered land, the buyers solicitor must ensure the proper execution of title deeds and documents.

What is the proper execution?

Answer 17

All Conveyancing of land must be made by deed otherwise they are void for the purposes of conveyancing the legal estate.

The requirement for deeds vary if the deed was made before 31st July 1990 or after:

After 31st July 1990 -

1. In writing and clear on the face of it that it is intended to be a deed
2. Signed in the presence of a witness who attests (witnesses) the signature
3. Delivered as a deed

Before 31st July 1990 - ‘Signed, Sealed, and Delivered’

Question 18

What 3 criteria must a deed for conveyancing made after 31st July 1990 meet?

Answer 18

1. In writing and clear on the face of it that it is intended to be a deed
2. Signed in the presence of a witness who attests (witnesses) the signature
3. Delivered as a deed

OTHERWISE IT WILL BE VOID FOR THE LEGAL TRANSFER

Question 19

What must the deed for conveyancing made before 31st July 1990 be made by?

Answer 19

‘Signed, Sealed, and Delivered’

Question 20

What are the Most Common rights likely to be registered on the Land Charges Register?

Answer 20

C(IV) - Estate Contracts

D(II) - Restrictive Covenants

D(III) - Equitable Easements

F - Home Rights

Question 21

How does the buyers solicitor check the Land Charges Regsister during an investigation of title of unregistered land?

Answer 21

Land Charge searches are made using a K15 Form and must be made against all of the estate owners mentioned in the documents within the epitome of title for their years of ownership.

Question 22

After Deducement and Investigation title, what can be the affects on any ‘problems found’?

Who should the problems be reported to?

Answer 22

1. Effect of problems found:
   -Ability to register property or disposition
   -Financial Implications
   -Liability for costs
   -Value of the property, its use, enjoyment, marketability
   -Value as security for lending purposes.
2. Reported to:
   -The Buyer
   -Their Lender
   -In some circumstances, the surveyor

Question 23

What 2 things should the buyers solicitor do if following investigation of tile, Mines and Minerals are excluded from the title?

Answer 23

1. Undertake 2 searches
2. Raise further enquires on the seller’s solicitor

Question 24

What 2 searches should the buyer’s solicitor undertake if the following investigation of tile, Mines, and Minerals are excluded from the title?

Answer 24

1. Coal Mining Search
2. Index Map Search (to ascertain if the mining rights are comprised in a registered title, and if so, who owns them

Question 25

What 4 further enquires should a buyers solicitor raise on the sellers solicitor if following investigation of tile, Mines, and Minerals are excluded from the title?

Answer 25

1. Who has the benefit of the rights?
2. Have the rights been exercised in the past and has any compensation been payable?
3. Is the seller aware of any proposals to exercise such rights
4. Has the property suffered from structural problems such as subsidence, landslip, or heave?

Question 26

What are Ancillary Rights?

Answer 26

Supplementary or subordinate rights arising from a primary right. This right exists depending upon or reasonably linked to a main right

Question 27

What must be checked if on investigation of title the buyers solicitor discovers rights benefiting the property?

What 3 further enquires should be raised by the buyers solicitor to the sellers?

Answer 27

That the property has the benifit of all necessary ancillary rights required for the benefit, and that they are sufficient.

FURTHER ENQUIRES:

1. Have there been any problems or disputes with regards to the exercise of the rights or the payment towards them?
2. Have there been any notices with regards to the rights?
3. Have any contributions towards maintenance been paid or requested, and are an costs anticipated?

The Sellers solicitor should be informed of any significant potential maintenance liability so it can be assessed as part of the survey.

Question 28

What must the buyers solicitor do if the sellers name is different to the registered proprietors following investigation of title?

Answer 28

They must get the relevant evidence explaning the disparity:

Death of a Co-Owner - Death Certificate

Sale by Personal Representative - Grant of Administration of Estate

Marriage or Civil Partnership - Marriage Certificate or Civil Partnership Certificate

Question 29

What does Co-Ownership of a property give rise to?

What is the affect of this?

Answer 29

Co-Ownership always gives rise to a trust of land , which separates the legal and equitable interests.

Question 30

When there is Co-Ownership of a property, and so a trust of land, how will the legal and equitable interests be held?

Answer 30

The Legal Ownership will always be owned as joint tenants.

The equitable ownership may be owned by Joint Tenancy or Tenancy in common.

Question 31

In property, what rights does legal ownership vs equitable ownership give?

Answer 31

The Legal Ownership concerns who may convey the legal estate (who signs/executes the transfer)

The Equitable interest convers who is entitled to the proceeds of sale

Question 32

What is a joint tenancy?

Answer 32

Joint tenants own the whole interest together.

They do not own separate shares, they own everything together, but nothing individually.

The right of survivorship applies, and so you cannot leave a beneficial share under a normal will or on intestacy. This means a joint tenancy usually ‘trumps’ a will, and the whole of the property will automatically pass to the survivor on death.

Question 33

What are Tenants in Common?

Answer 33

Tenants in common own separate undivided shares of the equitable interest (Which may be equal or unequal)
The right of survivorship does not apply, thus the deceased beneficial share will pass in accordance with their will or under the intestacy rules

Question 34

What is the 3 main diffrences for Joint Tenants and Tenants in Common?

Answer 34

1. Seperation of Shares

For Joint Tenants, the undivided shares are owned together, they both own the whole together, and own nothing individually

For Tenants in common, the undivided shares are owned separately (equably or unequiably)

2. The Right of Survivor Ship

For joint tenants, the right of Survivorship applies, meaning when one dies they cannot pass their share in a will, it goes to the survivor

For Tenants in common, this does not apply. Thus, they can leave their shares to someone in their will

3. Interests it applies to

Joint Tenancys can be applied to both legal and equitable interests

Tenants in Common can only apply to equitable interests

Question 35

When do you need to acsertain if the equitable interest of property is held as joint tenants or tenants in common?

Answer 35

If one Co-Owner has died, then it is necessary to ascertain whether the equitable interest was held as joint tenants in common.

Question 36

How will you know if an equitable interest of a property is held as joint tenants or tenants in common if the property is registered?

Answer 36

In registered land, the position is equity follows the law’ and so co-owners will hold the equitable interest as joint tenants, unless there is a Form A Restriction in the Proprietorship Register.

Question 37

How will you know if an equitable interest of a property is held as joint tenants or tenants in common if the property is unregistered?

Answer 37

In unregistered land, express words in the conveyance to the owners will state whether they hold the beneficial interest as joint tenants in common.

Question 38

What must you do in all cases for all land types if there has been the death of a co-owner?

Answer 38

Buyers solicitor must obtain a death certificate from the sellers solicitor.

Question 39

In registered land, where there has been a death of 1 Benefical Joint tenants , can the surviving owner convey the property?

Answer 39

The Surving Co-Owner can convey the property unless there has been a Form A restriction on the register

(DEATH CERTIFICATE ALWAYS REQUIRED)

Question 40

In Unregistered land where the tenants are beneficial joint tenants, when can the surviving owner convey the land?

Answer 40

The Surviving Co-Owner can convey the property following the three conditions are met:

1. There is no memorandum of severance endorsed on the conveyance to the joint tenants

® 2. There are no bankruptcy proceedings registered against any of the joint tenants at the land charges registry

® 3. The transfer by the surving joint owner states that the survivor is soley and benefically entitled to the land
If the above is not possible, an additional trustee must be appointed so that the equitable interested is overreached.

(DEATH CERTIFICATE ALWAYS REQUIRED)

Question 41

Where there has been a death of beneficial tenants in common, how can the property be conveyances?

Answer 41

If acquiring from a sole surving co-owner, a second trustee (legal owner) needs to be appointed to overreach the equitable interest of the deceased co owner. This can be done either in a separate deed, or by a simple provision in the transfer, but must be provided for in the contract as an obligation on the seller.

(DEATH CERTIFICATE ALWAYS REQUIRED)

Question 42

If there are multiple personal represenatives for a property being sold, can only one transfer/convey the property?

Answer 42

All Personal Representatives must be joined into the transfer/conveyance.

Therefore if any have died, a certified copy of the death certificate is required.

Question 43

How can personal represenatives transfer an estate with registered title ?

Answer 43

1. They can convey the property if they have applied to be registered as proprietors.
2. They can pass the legal estate to beneficiaries under assent, vesting the legal estate into the beneficiary rather than transferring it.

In such a case, the buyers solicitor must not complete until provided with a certified court issued grant of representation.

Question 44

When is a grant of representation required for a for personal representatives to transfer/convey a registered property?

Answer 44

Where the PR are not registered proprietors, and so vesting the property rather than transferring it

Question 45

What is the risk when an unregistered estate title deeds are via assent or simply a personal representative is seeking to transfer a unregistered estate?

Answer 45

The risk with unregistered land is that the property may have been disposed of more than once, and as the buyer is not entitled to see the will, they may not be sure that the person who the property was first assented to was the properly entitled person.

Question 46

What 5 things should be checked on the sale of Personal Represenatives of unregistered land?

Answer 46

1. A certified grant of representation
2. All Prs are joined into the conveyance / assent
3. There is no memorandum of a previous disposition endorced on the grant of representation
4. That a memordaom of conveyance will be endorsed on the grant of representation
5. That the conveyance to the buyer cotains a s.36 statement (that there has been no previous dispositions (assents or conveyances) of the same land have been made) and an acknowledgement for production of the orignal grant

Question 47

What must the sellers solicitor do if the class of title is not an absolute title before exchange of contracts?

Answer 47

If the title is not absolute (possessory or qualified), the buyers solicitor must request them to upgrade the title with HM Land Registry (such as finding and providing missing documents)

However, if this is not possible an Indemnity Insurance must be taken out at the sellers expense to protect the buyer, the buyers mortgage, and any successors in title.

The indemnity policy must be inline with the lenders requirements, cover the full amount, and increase inline with inflation

Question 48

What is a restricition on title?

Why are they significant?

Answer 48

Restrictions stop any disposition (transfer of interest) without compliance with the restrictions terms.

The most common are:

A Form A Restriction - Ie the equitable ownership of joint owners is tenants in common

Restriction to protect mortgagee - Ie no sale without payment of mortgage

Question 49

What is a declaration of light and air?

Where would they be found?

Answer 49

It is common, of the sale of a part of land, for the seller to keep the rights of light or air over the land so that they can freely build.

Such a declaration would be found in the property register (For registered land) or the title documents within the epitome of title (for unregisteredland)

In such cases, the buyers solicitor should raise a specific enquiry onto the sellers solicitor as to the extent of the land benifiting (Retained land) if not apparent from title documents.

Question 50

What should be done if pre contract it is discovered the land has a decleration of light and air?

Answer 50

the buyers solicitor should raise a specific enquiry onto the sellers solicitor as to the extent of the land benifiting (Retained land) if not apparent from title documents.

Question 51

What is an incumbrance?

Answer 51

An incumbrance is a claim or interest in a property that is held by someone other than the current owner.

Incumbrances can limit the use or transfer of a property, and can affect its value or marketability.

Some examples of incumbrances include: Mortgages, Easements, Property tax liens, and Wayleaves.

Question 52

When are undischarged mortgages not a problem for buying a property?

What should the buyers solicitor do at the pre contract stage?

Answer 52

If 2 conditions are met:

1. An undertaking is in place to discharge them on completion, as part of completion information and undertakings.
2. They are not included in the list of specified incumbrances within the contract.

Thus, in the pre contract stage the buyers solicitor should raise a resquisition of the sellers solicitor that a suitable undertaking will be provided before completion, to discharge the charges on or before completion and provide evidence of discharge so that the buyer may be registered as a proprietor with any restrictions being removed?

Question 53

Where are information of mortgages found in during the investigation of title?

Answer 53

Registered Land
○
2 entries on the charges register - 1 referring to the date of charge, and 1 giving details of the proprietor of the charge (ie the bank)

Unregistered Land

	○  A copy of the mortgage itself will be provided as one of the documents within the epitome of title.

Question 54

Where are binding restrictive covenants found?

Answer 54

Registered Land

On the charges register

Unregistered Land

On the charges register, registered as a Class D(II) Land Charge

Question 55

What are the 3 options avaliable if when looking to buy a property, it is discovered in investigation of title that there are problematic restrictive covenants?

Answer 55

1. Ascertain from the seller who has the benefit of the covenant so that they can be approached with a request to release or vary the covenant or provide a one-off deed of consent
2. Make an application to the upper tribunal lands chamber for modification or discharge under s.48 LPA 1925
3. Ask the seller to provide a restrictive covenant indemnity policy for the benefit of the buyer, the buyers mortgagee, and their respective successors in title.

The best method is the last one, as approaching the benefiting person or applying for a discharge/modification may invalidate any indemnity insurance policy if they are needed.

Question 56

What is a positive covenant?

Answer 56

Positive Covenants require the owner of land to positively do something, which typically involves the expenditure of money.

Question 57

Can positive covenants bind new buyers?

Answer 57

Positive Covenants do not run with the land, but may be indirectly binding through a chain of indemnity covenants.

Thus, it must be established if the current seller had an indemnity covenant, because if they do they will probably insist on the buyer having an indemnity covenant.

In Unregistered land, the covenant will appear in the conveyance itself.

In Registered land, the Indemnity Covenant will appear in the proprietorship register

Question 58

What is a missing covenant?

What should the buyer do if there is a missing covenant discovered in the precontract stage during investigation of title?

Answer 58

There may be Covenants referred to, but the details of the covenants are unknown, often because of a lost or missing deed.

In such a case, the buyer should insist on an indemnity insurance policy to cover the risk and should raise additional enquires referring to restrictive and positive covenants in general terms (as specified incumbrances cannot have requisitions until after exchange of contracts).

Question 59

What is an Adverse Right / Easement?

Why should they be checked?

Who should they be reported to?

Answer 59

The burden of legal easements run with the world , thus any adverse rights / easements (easements burdening the property) must be carefully checked to ensure they are not onerous.

In all circumstances, they should be reported to the buyer, and their mortgagee.
If they are onerous, they should also inform the surveyor.

Question 60

When will existing leases bind a new buyer of the freehold?

What should be done in the pre contract stage?

Answer 60

Leases of more than 7 years must be noted against the landlords title in the charges register.

However, legal leases of 7 years or less or equitable leases where the tenant is in actual occupations may be overriding interests, binding the new buyer.

Thus, it should be ascertained whether there are any tenants or other third party occupants, so that additional enquires can be made.

Question 61

What are Notices and Home Rights?

What should the buyers solicitor do in the precontractual stage?

Answer 61

Notices are used in registered land to protect third party interests, such as estate contracts or the rights of non-owning spouces or civil partners to occupy the property.

Notices are registered in the charges register.

For unregistered land, a Class F Land Charge can register a Home right.

If they are there, they are binding. Thus the buyer should seek an undertaking or contractual agreement for removal of the notice / land charge on or before completion and the interested party should also waive their rights in the property in the contract.

Question 62

If there are mutliple conveyancing options avaliable, what is the best one to use to deduce title?

Answer 62

The most reccent one, as long as over 15 years