#3229 - Freehold Registered Land - Property Law and Practice

Freehold Registered Land

1. Pre-exchange

Taking Instructions

Obtain documentary proof of client’s identity

Does the individual have authority to act for the client company?

Address professional conduct issues [see chart]

Checks for ID – to avoid money laundering and mortgage fraud. Make checks and keep records.
Acting for buyer and lender / seller and buyer etc – conflicts of interest

3. Next steps:

Obtain title deeds from seller and deduce title.

Registered land – get official copies - OC1 [SCPC 6.1.2]. Must be less than 6 months old. Seller pays.

Ascertain mortgage redemption figure if there is a mortgage
Prepare pre-contract package and send to buyer’s solicitor for approval:

The draft contract – showing what land the seller is selling and on what terms he is prepared to sell it
Evidence of Seller’s legal title of property – to prove he owns it
Results of pre-contract searches which the seller has made and other info about the property
Info on planning permission [if relevant]

Surveys [Caveat emptor]

1. Valuation by lender

2. ‘Home buyer’s valuation and survey report

3. Full structural survey: detailed commentary of structure and condition of the property. Advise according to:

Cost of survey; AND
How old is property? [e.g. over 100 years?]
Is it high value?
Is mortgage low in proportion to overall costs?
Is it a conventional property or unique in some way?
Is it a commercial transaction?
Does buyer intend to alter / extend property?
Is property attached to another property?

Arrange finance (is there a mortgagee; what is offer?)

Obtain terms of estate agent

Proposed use of property

Fees – client care letter issues

Other:

Obtain estate agent particulars
Contact details of buyer’s solicitor
Preliminary deposits?

After initial meeting

Client care letter & letter to client confirming instructions
Contact all other parties involved in transaction – seller solicitor, estate agents, lender for your client – head correspondence with “SUBJECT TO CONTRACT”
Obtain estate agent’s particulars to put on file
Attendance note

Pre-exchange searches& enquiries [BUYER]

Caveat emptor = buyer beware
Seller has limited duty to disclose certain matters
Searches / enquiries to ensure that the transaction is transparent and buyer knows as much as possible about what he is buying.

Local Land Charges Search + fee [LLC1]

Local authority will keep a Local Land Charges Register [open to public inspection]
Send to correct Council in which property is situated
Send duplicates if posting [attach plan if necessary].
Receive certificate and advise accordingly
Search reveals any entries kept by council [e.g. Tree preservation order etc]

Local Authority Enquiries (specific / practical questions)

CON 29R (Regular) – enquiries relevant to every transaction
CON 29O (Optional) – more specialized enquiries [only some will be relevant]

Post in duplicated (plan attached if necessary)
Send to appropriate council where property is situated.

Possible issues that may arise in LLC1 and CON29R/O

Tree Preservation Order	Obtain more information from local authority Inspect documents – how many trees? What are the specifics Inspect the land itself – where is tree situated? Will it effect buyer’s plans for the property? S.201 Town and Planning Act 1990 – order takes effect immediately: If it appears to a local planning authority that a tree preservation order proposed to be made by that authority should take effect immediately without previous confirmation, they may include in the order as made by them a direction that this section shall apply to the order.
Is property on a conservation area?	Conservation area means the character of the area will be preserved. Planning permission will be harder to obtain. More limitations on use of the land. Planning permission issues? Change of use issues? Development plans of buyer? Does it suggest anything about the value of the property? i.e. more valuable . Obtain more information from originating authority. Is the charge still enforceable? Has planning permission been granted in past – does this suggest local authority are not adverse to all development.
Planning applications	Buyer does not want to be liable for any mistakes / breaches Accepted or refused? [If refused – what does this suggest about future applications? More likely to be refused] Is it granted subject to conditions? Consider time limits / have conditions been fulfilled? Does it comply with Building Regulations
Planning permission	What is date – is it still current because Planning permission is valid for 3 years Has work been carried out? [Look to CON29 – building regulation approval and completion certificate. ACTION: obtain copies and check that all the certificate / Building Reg approval documents correspond. Get copy of Planning permission from seller / local authority Check that work has been completed in accordance with the conditions
Building Regulations	Definition: needed for any structural changes to a property. For health and safety. STAGE ONE: Submit full plans/ Building notice application STAGE TWO: Building Control Officer will inspect work once completed. Issue completion certificate. Checks to be completed by buyer’s solicitor: Has approval been granted (for stage 1) Is there a completion certificate? (stage 2) This must be obtained at seller’s expense not buyers. Demand inspection before exchange of contract. Has time expired since approval was given? ACTION: obtain copies and check that approval and certificate relate to work referred to in the planning permission.
Maintenance of any roads	Who pays for upkeep? Has seller paid or will buyer be liable?
Public footpaths	Where is it? Problematic?
Rights of common	People have the right to use land – owner not able to fence it off for private use. ACTION for the above: ALWAYS obtain further details and a plan showing location of road etc.
‘Other’	Minor road widening Adopted road EXAM: Identify the issue Set out facts that are relevant – dates etc Obtain copies / what checks need to be made? What further details are you looking for. E.g. road widening – where is the road? How wide? How long will works go on for? How will this affect our client? APPLY to the facts! What liability will the client incur by going ahead with transaction.

Water and Drainage [CON 29DW]

Send to Water Service company servicing the property. [Include Fee]
Is property connected to a public water supply.
Does water drain to public sewer
Drainage – fowl water sewer / septic tank?
Is there a water main within boundaries of property

Environmental search

Is there any contamination in the land?
Potential expense of clean up liabilities
Dangers to occupier / owner
If yes – Use an ‘Environmental Desktop Audit’ – hire someone to check the land and provide details of the problem.

Other (only if appropriate in the circumstances):

Chancel repair search – get insurance. Is property in a local village next to a bug church.?
Mining Search
Company search – if seller is a company.
Flooding search – check with environmental agency.
Railways search – are there nearby railways?

Pre-Contract enquiries: [Commercial Property Standard Enquiries - CPSEs]

From buyer to seller’s solicitor.

Purpose: to elicit from the seller information which he is not bound to disclose. The seller is obliged to reply honestly.
This will shift liability onto seller – if something is later discovered which was not disclosed. (Buyer usually has liability – caveat emptor)
Flag up any issues and ask seller if there is a potential problem / additional enquiries.

1	Boundaries
2	Adverse rights
3	Access to property
4	Fire safety
5	Compliance with building regs
6	VAT status of transaction

SELLER - Deducing Title / BUYER – Investigate Title

Seller’s solicitor applies for Official Copies – Form OC1. Send this to buyer.
Buyer’s solicitor – investigate title. Check for any existing problems that have not been resolved by seller. Raise any requisition on title if necessary. Compare contract to OS1.

Does property have “good and marketable title”?

Property Register: all benefits the buyer is getting. What is included in the title?

Description of property – does it match?

Benefits

Proprietorship Register: class of title and identifies the owner.

What class of title?

1	Absolute: Land if sold free of incumbrances except those which appear on the register and any overriding interests.
2	Possessory: Seller has acquired title through long possession. This is good title against everyone except that person who owned it before.
3	Qualified: Absolute title with ONE defect unresolved.

Restrictions on the use of land!

Tenants in Common / co-ownership

Restriction on disposition – e.g. mortgage

Indemnity covenants – indicating a chain

Cautions [abolished by LRA 2002 but still around]

Charges register: Incumbrances / burdens on the title.

Covenants: restrictive and positive [these will be registered covenants – therefore binding].

Mortgages over property

Easements

Buyer’s Objectives when investigating title:

B must check that the seller is entitled to sell what he is purporting to sell
B can ascertain whether there are any potential problems – helps with smooth passage of the transaction.
If there are problems with title – buyer can withdraw their offer - as contract is not binding yet.

Checklist:

Thorough examination of OC1
Investigate to...

#3229 - Freehold Registered Land - Property Law and Practice

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