Flashcards in Initial stages of the transaction and investigating registered title Deck (34):
What are the main enquiries which the buyer's solicitor must conduct at the initial enquiries stage?
Buyer's solicitor must:
1) Investigate Title
2) Complete local searches and;
3) enquire about the Title plans to the Seller
Why is a title investigation important and what are you trying to mainly uncover?
In line with caveat emptor principle. Buyer must beware!
It consists of:
Investigating title documents
And uncovering unregistered rights
What are the three types of documents which are included in title documents?
Copies of full documents (referred to in official copies but whole details are not in register)
What are the 5 key elements contained in the official copy?
What are the 5 essential elements you need to look for in the header?
1. Title number of the property
2. Edition date (date of last amendment)
3. Date and time of issue (of official copies) -ie. search from date
4. Land Registry office dealing with title
5. Check official copies are recent (search from date) and title number corresponds with heads of terms contract.
What are the five things you need to look for in the property register and title plan?
1. Check whether property is freehold or leasehold
2. Extent of property with reference to title plan
3. Check for exclusions: Eg. easements and rights benefitting the property, including rights of way, sewage and drainage (adequacy, maintenance and adoption)
4. Check description of land matches description in the heads of terms/contract
5. Check whether exclusions of land will affect the client's intended use of land
As the buyer's solicitor, if you find in property register exclusions to the land, what are the four things you need to consider and inform the buyer of?
And what search might you need to conduct?
1) Adequacy: Whether the exclusions affect the access of land and is it adequate for the client's intended use?
2) Maintenance: Whether the client will need to maintain the land, and pay for maintenance. If so, how much was contributed in the past (doesn't matter if seller hasn't contributed any to date)? How much will need to be contributed in the future and how often?
3) Adoption: Whether there is a possibility local authority will adopt this excluded part of the property.
-Need to conduct a CON29R search.
4) Need to note any other rights which may be unregistered at enquiry stage!!!
If you conduct a CON29 search and you find that the local authority has plans to adopt the rights over a road that abuts the property, what do you need to do?
You need to inform and warn the buyer that they may need to pay to upkeep the roadway and also that they may need to put the road into a suitable standard condition prior to adoption.
What happens if you have a right of sewage and drainage?
Water Industry (schemes for adoption) regulations transfer private sewers to statutory water and sewage companies as of 1 October 2011
What is an easement?
A right to cross or otherwise use someone else's land for a specified purpose.
What if you find that the property has a right of easement? What is the most important thing you need to consider?
Adequacy: how can the right of way be accessed? by foot, or with other vehicles? Whether the easement runs from the property to a public highway? What are the limitations of use? Do these limitations adversely affect the buyer's proposed use of the property? outline possibility of approaching the person with benefit and negotiate the variations if needed.
Maintenance: Get surveyor to check what the current state of the property is in to ensure general adequacy for purchaser's intended use.
Adoption: advise purchaser that private roads can be adopted and made into highways. Purchaser will need to know whether they need to pay to repair the road before adoption.
What if you find that the property has a right of drainage and water to and from the property across third party land? What is the most important thing you need to consider?
Adequacy and maintenance: Need to get surveyor to verify that the purchaser is entitled to all the necessary rights: ie, a right to lay/construct pipes and use them, as well as repair and maintaining them.
Adoption: See water industry regulations 2011
Make sure the pipes are lateral, i.e. they run through third party land but only serve the purchaser's property. Carry out searches to see if lateral drains have also been adopted.
What are the five things you need to look for in the proprietorship register?
1. Check to see if title is absolute (i.e good)--if not must let client know
2. Check if seller in the heads of terms contract is also the registered proprietor; if not, who is?
3. Check if seller in Companies House to verify whether co. number matches with Heads of Terms contract.
4. Check for indemnity covenants (in relation with positive covenants in charges register).
5.Check who registered proprietor is.
When checking the proprietorship register, who would be the possible registered proprietors? Why is this important?
-Joint owners (up to four) who may have beneficial interest in the property either as JT or TICs
Those who may be registered or unregistered include:
-Personal rep of deceased registered proprietor
-Attorney acting under a power of attorney
-Mortgagee exercising its power of sale
You need to know who will execute the sale, who the monies will be paid to, and what documents need to be given to land registry to give effect to the change in ownership.
When checking the proprietorship register, what does it mean when you see that there is a 'RESTRICTION'?
It can mean two things:
-that the people selling the property are TICs and not JTs; OR
-that the bank or lender has put a restriction to ensure no other mortgages or leases will be entered into the register without its consent
When checking the proprietorship register, if owners are joint tenants, what documents do you need to provide to land registry?
All owners are alive then all co owners must sign document.
If one of the owner has died then the surviving JT(s) can execute the sale since they have beneficial and legal interest.
Need to obtain official copy of death certificate of the deceased JT and provide to land registry.
If one of the co owner dies, then the deceased's legal title and beneficial interest in the property automatically passes to the survivor through survivorship.
Therefore sole surviving JT can execute the contract and purchase deed by himself because he has legal and beneficial ownership.
When checking the proprietorship register, if property is held by TIC, what documents do you need to provide to land registry?
If all owners are still alive then all TIC's must execute the purchase and contract deed.
If there was a death of TIC: You will need to provide LR with:
1. official copy of death certificate
2. the deed of appointment of the second trustee (whose name will appear on purchase deed with the surviving TIC)
If one of the owners died, then his legal interest in the property will pass to the co-owner but the beneficial interest will pass to whomever is in their will , according to the rules of intestacy.
This beneficial interest will pass to the second trustee who may be appointed in deed of appointment.
Payment of the purchase money will go to both trustees who will execute the contract and purchase deed.
When checking the proprietorship register, if property is held by an individual, what documents do you need?
You need to see the signed deed and pay directly to him.
When checking the proprietorship register, if property is held by a personal representative, what documents do you need to give to land registry?
Personal representative(s) is responsible for executing the sale of contract and purchase deed.
Required to give the Grant of Representation document of deceased owner to land registry.
Monies only need to go to PR, which will overreach all beneficial interests.
Personal representative(s) responsible for administering estate of the deceased individual.
Buyer buys from the personal representative if sole owner has died (usually appointed by will), overreaching all beneficial interests.
Must check that PR has been properly appointed by the Probate Service seeing official Grant of Representation.
Monies to PR overreaches all beneficial interests is the exception to the general rule that to overreach beneficial interests, the monies on sale have to be paid to two trustees.
When checking the proprietorship register, if property is held by an attorney, what documents do you need?
This is a person authorised by another person to act on his behalf in dealing with his property. This authority is conferred by a deed called the power of attorney.
Only need to deal with power of attorney.
However, need to see and send to LR:
1. power of attorney has been validly granted under s. 1 power of attorney act
2. Need to see the power has not been revoked.
3. you need to see official original power of attorney document!! because:
s.5(4) Power of Attorney Act 1971, if POA was granted less than 12 months before being exercised, there is a presumption of validity.
However, if exercised after 12 month it was granted, buyer should make statutory declaration that it was not aware of any circumstances revoking power.
When checking the proprietorship register, if property is held by a mortgagee exercising a power of sale, what documents do you need?
Under s. 101 LPA 1925, power of sale is given to every lender whose mortgage is made by deed.
s85 of LPA 1925 provides all legal mortgages must be made by deed.
Power of mortgagee to sell arises at legal date of redemption ie. 6 months from the date of the mortgage deed.
Power becomes exercisable only under one of the three circumstances specified by s 103 LPA 1925:
1)Notice requiring payment of the mortgage money served on borrower
2) Some interest under the mortgage is in arrear and unpaid for two months
3) Breach of some sort of provision of the mortgage deed.
What do you need to look for in the charges register?
1. Easements burdening the property? if so, how will they affect buyer's intended use of the property?
2. Restrictive covenants burdening the property? if you think there was a potential that they may have breached this restrictive covenant, need to ask seller if they have consent to build and ask for proof of consent. If they have already been breached, how will the breach affect buyer?
3. Positive covenants burdening the property? if so need to ask whether the buyer will be bound?
4. Mortgages burdening the property and if so will they be discharged?
5. Check whether there are any leases over the property and whether buyer is buying subject to these leases.
Do positive covenants bind the new buyer of a property? Where do you find whether there are any positive covenants that bind the property?
Generally positive covenants do not run with the land and bind buyers of a new property, but check the proprietorship register and if there is an indemnity covenant, then you know buyer will be bound.
When checking the charges register and you find that there are mortgages on the property, what do you do?
You will need to check whether the transaction money will be used to discharge existing mortgage.
Get undertaking from seller solicitor and ensure Form DS1 is recieved, as proof that there will be a discharge of the existing mortgage.
If there are several mortgages attached to property you need to use a form for each mortgage.
For a sale part however, you need to use form Ds3.
Do restrictive covenants bind the new buyer of a property? Where do you find whether there are any restrictive covenants?
Burden and benefit runs with the land Tulk v Moxhay.
May be set out in charges register or separately filed.
What are the three options you must you inform the buyer of if you find out that the seller has breached a restrictive covenant?
Restrictive covenants generally run with the land and are binding on future buyers (Tulk v Moxhay)
1) If the covenant is old (50+ years) ask the seller to purchase a restrictive covenant insurance to cover the breach (must not contact person with benefit).
2) Where covenant is recent (less than 50 years), contact PWB and ask for retrospective consent as risk may be too high and insurance is likely to be unattainable (this may be included as a special condition in the contract).
3) Apply to the Lands Tribunal under s.84 LPA 1925 for waiver, discharge or modification of the RC.- worst option as time consuming, expensive and no guarantee of success-last resort.
Whichever option is chosen, the obligation on the seller should be documented in the contract by way of a special condition so that the issue is resolved before completion!
What options must you inform the buyer of if you know that the buyer's future plans may possibly result in a future breach of a restrictive covenant?
1) If the covenant is old (50+ years) the best option is to ask the seller to purchase a restrictive covenant insurance to cover the breach (must not contact person with benefit).
2) Where covenant is more recent (less than 50 years) insurance co. advise buyer to contact PWB and ask for consent as risk may be too high and insurance is likely to be unattainable (this may be included as a special condition in the contract).
3) Apply to the lands tribunal under s.84 LPA 1925 for waiver, discharge or modification of the RC.- worst option as time consuming, expensive and no guarantee of success-last resort.
***Same options for past breachers, except this time, buyer is expected to pay for this.
If breach is fundamental to the buyer's plans consider a conditional contract if the seller agrees.
What options must you inform the buyer of if you find out that the seller has breached a positive covenant?
The burden of a positive covenant does not generally run with the land.
Must check the proprietorship register to see if there is an indemnity covenant.
If so, he will probably bind the buyer as well because he will be expected by the seller to also give an indemnity covenant.
If not enforceable then no further action required.
If enforceable then if it is remediable, get seller to remedy past breach by way of a special condition in contract or seek possible price reduction.
If not remediable, get insurance (if old) or seek retrospective release from PWB.
Lands tribunal not available for past breaches of positive covenants.
What options must you inform the buyer of if you find out that the buyer may breach a positive covenant?
Same as above.
If the future breach is fundamental to the buyer's plan, consider a conditional contact if the seller agrees.
Land tribunal is not available!
What is an overriding interest?
The general rule is that all interests and rights over a piece of land have to be registered with the land.
Otherwise, when anyone buys that piece of land, the interests will not apply to the purchaser, and the rights will be lost.
Overriding interests are the exception to this general rule. Overriding interests need not be registered to bind any new owner.
What is an example of a right which may not be registered in the registry?
Will this unregistered interest be overriding (ie. bind the purchaser)?
Para 3, Schedule 3 LRA 2002 provides that legal easements override sale of registered land.
Para 1, Schedule 3 LRA 2002 provides that leases less than 7 years will be overriding.
What is the significance of the Water Industry Regulations 2011?
Lateral drains (drains serving a single property which run outside of the property's boundaries) and private sewers have been transferred to the statutory and sewerage companies as of 1 October 2011. Owners of property no longer need to rely on private rights from the date of adoption (applies to residential and commercial property).
What should you do if you spot on the property register that the right of way granted is the only access into the property and that there is also a right of drainage and sewage right underneath that right of way? What should you do?
Alert the purchaser that this could affect the only means of access to the property.