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#10267 - Investigation Of An Unregistered Title - Property Law and Practice

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Investigation of an Unregistered Title ¿Why Investigate?

Seller’s Investigation Buyer’s Investigation Lender’s Investigation

  • S’s solicitor must draft the contract of sale

  • Allows sol to embody the detail of the title

  • Solicitor can anticipate and deal with any problems that may arise

  • Save money, time, guarantee smooth transaction, win a client

  • Act in the client’s best interest

  • Ensure the seller is able to transfer the title (owns and can sell)

  • To identify any defects or problems in the title (restrictive covenants, easements)

  • The buyer could then raise them as requisitions

  • Issues shall be resolved before exchange

  • Ensure the property is worth the money advanced

  • Ensure no defects will devalue the property

  • Sol may act for buyer and lender

  • In commercial, borrower’s sol may be required to give lender a ‘Cert of Title’

Investigation of an Unregistered Title

Investigation of title to unregistered land comprises:

P 130

  1. Index Map search at Land Registry under Form SIM + plan of property + fee (search will show if land is registered or is subject to a pending application or caution against first registration P 35)

  2. Examination of documents in epitome

  1. Root is as provided for by the contract (if wrong doc provided ask for the correct one)

  2. Unbroken chain of ownership

  3. There are no defects in the title which will adversely affect the buyer/lender

  1. Verification, i.e. inspection of the original deeds (generally done at completion)

  2. Checking for evidence of occupiers (inspection of the property)

  3. Pre-completion searches (same as registered land)

Deduction of title

(“DT”)

P 123

  • DT = seller’s obligation to prove to buyer his ownership of the interest which he is purporting to sell

  • Title to unregister land (i.e. ownership) us proved by the title deeds held by:

  • The Seller Client (if there is no mortgage on the land), or

  • The Mortgage Lender (if there is a mortgage on the land)

  • Seller will prepare an epitome (i.e. schedule of documents comprising the title) for buyer

  • Title of unregistered land begins with what is called a good roof title.

  • At Common Law a good root of title commences with a good roof of at least 15 years s.44LPA 1925.

1. Find the Root of Title

P 124

“A good root of title satisfies s.44”

  • s.44 LPA 1925 = Root of title found in the most recent documents that have dealt with the property. The root of title must:

    1. It must be at least 15 years old (i.e. going back 15 years)

    2. It must show ownership of the whole of the legal or equitable interest that is being sold

    3. It must contain a recognisable description of the property

    4. It should not contain anything that casts doubt on the legitimacy of the title

  • A short root of title (which is less than 15 years) may be mutually agreed upon; however the buyer will be bound as if he’d been given a 15 year root. Consider defective title insurance

  • Documents that could be included in the ‘root’:

  1. Conveyance on sale (i.e. this deed transfers ownership of legal & equitable interests in land)

  2. Legal mortgage (i.e. may satisfy s.44 LPA 1925 but is rarely used as root of title)

  3. Deed of gift and assent of land will suffice (but not ideal, it is unlikely that donee did a 15 year search of the title to confirm ownership thus cannot add a 15 year search of good title)

  • The most recent document that satisfies the 4 requirements of root of title will usually be selected as the root of title for that particular sale.

  • P 131 Buyer bound by matters revealed by root of title, not by pre-root matter, but , buyer may :

  1. When a doc is executed by an attorney, buyer is entitled to a certified copy of Power of Attorney

  2. When property is described by reference to a plan in a pre-root doc, buyer can request m

  3. When property sold SUBJECT TO matters contained in a pre-root doc (e.g. covenants/maps) buyer is entitled to a copy of those matters (i.e. entitled to get the covenants even if pre-root)

2. Prepare an Epitome (ET) of Title includes:

P 125

An ET is a chronological list of all documents dealing with ownership up to the present day. It usually (but not always) ends with the document that vested ownership to the current seller. ET includes:

  • Copies of the relevant documents should be attached

  • An unbroken chain of ownership must be shown (see below)(including Powers of Att and Probates)

  • Documents that need not be included:

    1. Marriage certificates

    2. LCD search certificates (but it is good practice to include them)

    3. Expired leases

    4. Documents that pre-date the good root (s.45 LPA)

  • Ensure the description of the land in the plan matches the property being sold
The epitome must be provided to B’s Solicitor at an early stage of the transaction. At this stage the BSol will receive photocopies and at completion the BSol’s will receive the originals in order for the Buyer to send to the Land Register to register the buyer as the new owner SCPC 6.1.3. (Does not apply if the seller is selling part (A notarised copy of the deeds will be provided instead of the original deeds))

After identifying the root, trawl through the documents and think of the following matters i.e.chain of ownership:

  1. Links in the chain P 131

    • Is there documentary evidence of an unbroken chain of ownership up to the present seller from A to B, from B to C (e.g. transfer deeds for every transaction)? If not, it is a defective title

    • Check that all mortgages have been discharged (except the current one)

  2. Stamp duties P 132

    • If epitome contains pre-01/12/03 documents of ownership transfer (not assents or powers), check that they’ve been stamped correctly with the stamp duty (if it’s a conveyance, also check that the Inland Revenue has stamped it, too)

    • If it’s not done, ensure that the seller rectifies the problem (at seller’s expense). Contractual provision Requiring the buyer to meet the costs of putting the defect right will be void (s.177 Stamp Act 1891)

  3. Description of the land

    • Ensure the documents in the epitome relate to the land being sold (important where a Sale of Part)

  4. Incumbrances

    • The seller should disclose incumbrances that burden the land (i.e. covenants and easements)

    • These should have been set out in the contract – do they match up?

    • All incumbrances should have been deduced (even if a pre-root)

    • “excepting and reserving…” indicates an incumbrance or reservation on the land

    • “subject to…” indicates that the land was already bound and that subsequent buyers may be bound as well.

  5. Searches

    • Must search against the names of all the legal owners (not lenders) who appear in the epitome

    • For the period that they owned the land (even if their period of ownership predates the root of title)

    • You can rely on previous searches made on previous conveyances

    • If in doubt, regarding the who owned when, err on side of caution search back to 1926

    • Results are returned on Form K18

    • The following will only bind if they are registered with LCD P 145:

      1. Restrictive covenants (D(ii))

      2. Equitable easements (D(iii))

      3. Puisne mortgage (C(i))

      4. Estate contract (C(iv))

      5. Right of Occupation under Family Law Act 1996(F)

  6. Discharged Mortgages

    • Banks: s.115 LPA provides a receipt (AKA Vacating Receipt) endorsed on the mortgage deed. It is evidence of a discharge of the Mortgage – but it must be signed by the lender and the name of the person who repaid the mortgage. (won’t apply to the current seller’s mortgage as it is not yet discharged)

    • Building Societies: receipt signed by someone authorised by the BS and in the form of wording required by the Building Societies Act 1986

  7. Execution

  • Have all the documents in the epitome have been correctly executed? Formalities for execution are :

If Pre 31/07/1990 Deed On or after 31/07/1990 Deed

By an individual

  • Signed, sealed (red circle) and delivered (intention)

By a company

  • Company seal on the document in presence of a Co.’s secretary and a director; or

  • Valid if executed in accordance with the Co.’s Articles

By an individual

  • Signed, witnessed by two, intended and delivered

By a company

  1. Company seal affixed and it clear on its face that it is a deed. Witnessed and attested by two

  2. Signed by two directors (or a D and a secretary), and document is expressed to be executed by the company not the directors personally

  3. Only post-06/04/08, executed by a single director and witnessed and attested by one
Issue/Document Risk/Why Action
Power of attorney is more than 1 year before conveyance under the power Defective root of title unless purchaser of property sold under power of attorney gave a statutory declaration within 3 months of completing the sale of a subsequent sale Need statutory declaration that within their knowledge the power of attorney had not been revoked when he bought it

  • Conveyance by power of attorney (PoA) without certificate of power of attorney. P 141

  • Any other deeds executed by PoA

 Defective title Ensure to obtain a certificate certifying power of attorney/or get a certified copy of the power.

Pre 1926 covenant – if in conveyance buyer has notice of it and so not equity’s darling and so binds the land

Or covenant contained in earlier conveyance

“SUBJECT TO”

 Don’t know what it is and could affect potential development uses

1st check if conveyance containing covenant can be obtained

If problematic apply to Lands Tribunal for it to be removed or seek consent of owner

If don’t know what they are then obtain insurance

P 145 Covenants contained in conveyance

“HEREBY COVENANTS”

T&F Note Distinction between Positive and Negative/restrictive Covenants on P 23

-ve covenants

+ve covenants will...
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