#4827 - Initial Steps In A Property Transaction - Property Law and Practice

• Title is deduced by the seller’s solicitor. He does this by collating the title documents, reading them, and ensure the seller owns the property and is entitled to sell it.

• He then sends to the buyer’s solicitor.

• Caveat Emptor – let the buyer beware – the seller has a limited duty of disclosure, so the buyer must investigate and deduce title to ensure the property is suitable.

  • Therefore, the buyer’s solicitor must carry out investigations to identify the extent of the property, the rights benefiting the property, the extent of 3^rd party rights, whether the seller has good title and ensuring the property can be used for the intended purpose.

1. To fully investigate title, the buyer’s solicitor must check the official copies of register, the title plan and any other documents referred to in the register

2. He must also check for any unregistered 3^rd party interests by carrying out pre-contract searches and enquiries.

1) The Official Copies

FIRST CHECK: look at the top box on the OC containing the date and time of issue.

Describes the property and any rights benefiting it.

• Does the plan satisfy client expectations? Is it what the client thought it would be?

Outlines any easements BENEFITING the property:

• Rights of Way: get a copy of the deed for right of way from seller or LR.

  • Adequacy: are there any limits (i.e. vehicular or foot only, time limits, physical condition). Does it satisfy the client’s needs?

  • Maintenance: always mention and suggest you ask seller how much he has been paying.

  • Adoption: always bring up - this could have long-term benefits as council maintains, but short-term expense as it can be very expensive to bring the road to standard. Check CON29R for LA intention and the enquire as to the cost implications.

• Drainage: is this adequate for the client?

• Rights required: usually to join the highway/road or to access the property – check the title plan. If a right is needed, give practical advice on how to obtain rights (i.e. discover who owns the land and see if you can get a deed of easement).

Specifies the class of title and identifies the owner. It will also note any indemnity covenant given by the proprietor and any restrictions on disposal.

• Class of Title: always check – should be title absolute (shows proprietor is true owner of the property and can dispose freely). Title Qualified is where the proprietor’s ownership can be established for a limited period, or is subject to reservations (e.g. certain documents missing).

  • ss.9-10 LRA 2002 establishes class of title.

• Names of Proprietors: do they match? (if company check CH). When did they buy? (if recent, ML concerns and also means you may need to get replies from previous owner as current proprietor’s replies a little pointless).

  • Co-ownership: if the property has more than 1 owner check if:

    • Joint Tenants: when one dies, the deceased’s interest passes to survivor. The survivor can then sell the property himself. Evidence of a death certificate required by LR.

    • Tenants in Common: when one dies the legal estate passes to survivor but the beneficial interest passes to deceased’s will. Therefore, the deceased’s interest must be overreached by an appointment of a second trustee. This requires a deed of appointment and a death certificate to the LR.

  • Personal representatives: responsible for administering the estate of a deed individual. Buyer needs to see a Grant of Representation.

  • Mortgagee selling property: entitled to via s.101 LPA which gives power to every lender whose mortgage is made by deed (s.85 all legal mortgages made by deed). The power arises on the legal date of redemption (six months after date of mortgage deed) and becomes exercisable under s.103 LPA. Check power is exercisable.

• Indemnity Covenants: relevant to positive covenants in the Charges Register (seller may have given one when they bought the property).

Contains and charges or matters affecting the land. s.29(2) LRA outlines what will bind a buyer of reg. freehold land.

• Mortgages: must be discharged on completion. Get undertaking from seller’s solicitor – ensure form DS1 received as proof post-completion.

• Restrictive covenants – these run with the land.

  • Check: for past or current breaches by the seller and future breaches by the buyer.

  • Remedies for breach: this is based on the age of the covenant:

    • Old (over 50yrs): restrictive covenant insurance to cover the breach. It should be arranged without contacting PWB (person with benefit). Note: if recommending insurance comply with FSMA.

    • New: ask the PWB for consent/release/medication of the covenant. If you cannot contact PWB, get insurance.

    • Restrictive covenants – apply to the Lands Tribunal under s.84 LPA for waiver/discharge of the RC. This cannot be used for positive covenants and can be a timely process.

• Positive covenants – these do not run with the land.

  • Check for an INDEMNITY COVENANT in the proprietorship register = binding

  • SCS 4.6.4/SCPC 6.6.4 – require that a buyer gives an indemnity covenant in the purchase deed.

  • Remedies: attempt to require the seller to remedy the breach or ask for a reduction in price. If breach not remediable then look into insurance or contacting the PWB.

• Unregistered interests overriding registered dispositions – check by carrying out a physical inspection of the property and raising enquiries with the seller.

  • Schedule 3 LRA lists the unregistered interests which override a sale of registered land.

    • Easements burdening the property: advise client as to nature and extent of the easement.

  • s.62 LPA ensures the buyer takes the property together will such rights, but it must be added to the register.

2) Searches and Enquiries

Check the title plan and information known about the property. Know what each search reveals and explain why you would do it.

• Inspection/survey of property – this is done by the buyer who will instruct a surveyor and conduct personal searches. It is important to look for signs of 3^rd party occupation (as this amounts to an overriding interest).

  • Gordon v Selico – the seller mustn’t conceal defects or it could amount to misrepresentation.

• Pre-Contract Enquiries of the seller (usually CPSEs) – these are a set of pre-contract enquiries which crucially ascertain whether there are any unknown unregistered 3^rd party interests.

• Local Land Charges Search (LLC1) – application for an official search of the register of local land changes. It reveals matters such as:

  • Planning permission and details

  • Tree preservation areas

  • Conservation areas

  • Listed building

  • Smoke control order

• Local Authority Enquiries (CON29R and CON29O) – this is done at the same time as LLC1 and is a list of standard enquiries such as:

  • Planning and building regulations – reveals whether planning permission or building regulations were refused or granted subject to conditions and reveals pending applications. It only gives reference numbers so cross reference with LLC1.

  • Road adoption

  • Contaminated land notices

• Commercial Drainage and Water Search – these are dealt with by the relevant water service company for the area. The standard form is CON29DW.

• Desktop Environmental Search – this is done to check if the property has ever been used for contaminative use or is likely to flood.

  • If contamination is found, conduct a Phase I Survey (site visit) and possibly a Phase II Survey (soil samples).

• Chancel Repair Search – this only affects parishes where there is a medieval church.

• Local Authority Optional Enquiries (CON29O)

• Phase I and II Survey’s (see above)

• Company Search – if seller is a company check company number, that it isn't insolvent

• Index Map Search (SIM) – this looks for any 3^rd party titles and ascertains the identity of neighbours

• Coal Mining Search (CON29M)

• Telecoms/other utility searches

• Highways authority search – checks the exact boundary of the highways abutting the property (ransom strips)

3) Planning

• Check that any current use is permitted under planning legislation.

• Also check whether past works were permitted under planning legislation.

• Advise buyer on any proposed building works

• Consider aspects such as conservation area/listed building/consent of PWB if restrictive covenant on title/tree preservation

The need for planning permission is held in s.57 TCPA: planning permission is required for a development which is defined in s.55 as the carrying out of building works on the land or making any change in material use of any buildings or land.

Exemptions:

• Certain types of building works/changes of use are exempted in the GDPO. Pt. 1 Sch. 2 GDPO lays out the types of building works exempt on a residential property. For commercial properties Pt. 2-3 Sch. 2 is much more limited.

• The change of use is also exempt if it remains in the ...