Stage 2: Deduction of Title

Question 1

what is deduction of title?

Answer 1

the seller’s obligation to prove ownership of the property

Documents should be less than 6m old and generally shared before exchange of contracts

Question 2

what is the first step?

Answer 2

• First step is to always check whether the land is registered or if there is a pending application for first registration.

Question 3

what may a solicitor uncover when checking if the land is registered?

Answer 3

o There may be a caution against first registration. This is a warning there is an interest in the land.

Question 4

how is proof of ownership of registered land obtained?

Answer 4

• Seller downloads a copy of the register and gives this to the buyer

Question 5

what is the pre-contract package?

Answer 5

• The seller usually sends proof of ownership and the draft contract to the buyer at the same time (the ‘pre-contract package’)

Question 6

re: registered title

what is the official copy?

Answer 6

HMLR register of title

Question 7

re: registered title

what is the title plan?

Answer 7

HMLR copy of property plan

Question 8

re: registered title

what information is on the official copy?

Answer 8

o Edition date = when title was last updated by HMLR (i.e. mortgage or sale)
o Search from date = date and time the OC was obtained
o Property register
o Proprietorship register
o Charges register

Question 9

re: registered title

what information will be on the property register?

Answer 9

• Address, title plan, freehold/leasehold
• Any easements or rights benefitting the land (i.e. grant to right of drainage)
• Certain exclusions from title i.e. exclusion of right to light, exclusion of mines and minerals (would need to do a mining search)

Question 10

re: registered title

what information will be on the proprietorship register?

Answer 10

• Current owners’ their address, class of title
• If sold after 1 April 2000 the price the current owners paid
• If the current owners gave an indemnity covenant
• Any restrictions on the owner’s ability to sell (i.e. pre-2003 cautions and inhibitions, post-2003 notices and restrictions)
• Class of title

Question 11

re: registered title

what information will be on the charges register?

Answer 11

• Identifies incumbrances on the land i.e. covenants, easements, charges over land, leases, notices

Question 12

who and when determines class of title?

Answer 12

This is determined by HMLR on registration.

Question 13

re: registered title

who guarantees title and what is the effect of this?

Answer 13

• State guarantees title and so if there is a defect with title compensation may be payable.

Question 14

re: registered title

what are the classes of title for freehold land?

Answer 14

1. Absolute
2. Possessory
3. Qualified

Question 15

re: registered title

explain absolute title

Answer 15

best title. proprietor’s ownership is unequivocal and cannot be challenged (subject to any entries on the register)

Question 16

re: registered title

explain possessory title

Answer 16

proprietor is in possession but has lost the deed or claiming adverse possession. The proprietor will be subject to all adverse interests existing at the date of first registration.

Question 17

re: registered title

explain qualified title

Answer 17

HMLR think there is a specific defect which the Registrar feels cannot be overlooked / cured by grant of absolute title.

Question 18

re: registered title

what effect does the title have?

Answer 18

Title will affect securing a loan

Question 19

re: registered title

is title fixed?

Answer 19

• It is possible to upgrade title.

Question 20

re: registered title

what does a restriction indicate?

Answer 20

• A restriction indicates that the proprietor’s ability to sell the property is limited/they must satisfy something before disposal

Question 21

re: registered title

what form can a restriction take?

Answer 21

• Restriction can be permanent, time-limited, absolute or conditional

Question 22

re: registered title

give some examples of some of the main restrictions

Answer 22

• Co-ownership restrictions
• Lender restrictions
• Restriction by court order

Question 23

re: registered title

explain co-ownership restriction

Answer 23

if the BI is held as TIC, there will be a restriction

Question 24

re: registered title

explain lender restrictions

Answer 24

bank’s consent would be required if they are leasing or selling part of the property. Not required if selling the whole property as the loan will be paid on completion and restriction will be removed.

Question 25

re: registered title give an example of restriction by court order

Answer 25

i.e. not to sell the house in family proceedings

Question 26

re: registered title explain notices

Answer 26

* Notices are how third-party interests are protected. These will need to be cleared from title before the property is purchased.

Question 27

re: unregistered land what are the stages to deduction of title?

Answer 27

1. Seller (or possibly mortgagee) provides solicitor with title deeds 2. The seller’s solicitor will assess the title deeds to determine whether any of the transactions should have triggered first registration. If so, the property will need to be registered. 3. Seller’s solicitor ascertains good root of title (GROT). 4. Seller’s solicitor prepares epitome of title

Question 28

re: unregistered land what are title deeds?

Answer 28

* Title deeds = deeds which prove ownership and ownership history inc. conveyances, mortgages, assents, deeds of gift

Question 29

re: unregistered land what are the requirements for good root of title?

Answer 29

Requirements for GROT: o Shows who owns the entire interest (inc. legal & equitable) being sold; o Contains a recognisable description of the land; o Does nothing to cast doubt on the seller’s title; and o Is at least 15 years old

Question 30

re: unregistered land if the conveyances states ownership of the entire interest, what will it say?

Answer 30

 The conveyance will state the Vendor is ‘seised of the property…for an estate in fee simple and is selling to the purchaser’ and the land is being conveyed as ‘beneficial owner to the purchaser’

Question 31

re: unregistered land what is the preferred GROT?

Answer 31

Conveyances (preference) and legal mortgages are generally the best root of title because they effectively offer a ‘double guarantee’

Question 32

re: unregistered land why are conveyances/mortgages the preferred GROT?

Answer 32

o This is because when the property was sold/mortgaged the buyer/lender would have investigated title for a minimum of 15 years. As the current buyer is also looking back at least 15 years, there is a cumulative minimum of 30 years’ worth of searches. Where the property is gifted, it is unlikely such investigations took place and so no double guarantee.

Question 33

re: unregistered land how many GROTs are needed?

Answer 33

* Only 1 GROT is needed, once it has been identified older documents are not necessary, except documents which refer to third party rights in an earlier convenance (the buyer’s solicitor is entitled to call for a copy of this)

Question 34

re: unregistered land what is the epitome of title?

Answer 34

* This is a schedule of documents from GROT to present.

Question 35

re: unregistered land what structure should the epitome of title take?

Answer 35

* The list should be numbered and in chronological order + documents enc.

Question 36

re: unregistered land what should the solicitor check when preparing the EOT?

Answer 36

o Unbroken chain of ownership from GROT to present seller. o Consistent description of land o Stamp duty o Incumbrances o Execution

Question 37

re: unregistered land explain EOT 'unbroken chain of ownership'

Answer 37

 If there has been a change in ownership, land can only be transferred by deed so a copy of the deed would be needed.  If the proprietor passed away, the property would vest in the PR and so GOR would be needed to needed to evidence their authority.

Question 38

re: unregistered land explain EOT 'stamp duty'

Answer 38

complex but in summary, if a previous purchaser did not pay stamp duty, they may not have acquired a valid legal title to the property. The new purchaser wouldn’t be liable to pay the monies owed, but the defect in title could pass to them.

Question 39

re: unregistered land explain EOT 'incumbrances'

Answer 39

o (i.e. easements and covenants)  ‘expecting and reserving’ suggests and easement, ‘subject to’ suggests and incumbrance

Question 40

re: unregistered land explain EOT 'execution'

Answer 40

ensure formalities were complied with i.e. deeds must be in writing, clear they are a deed, signed in the presence of 2 witnesses and delivered as a deed. Pre-1990 deeds had to also be sealed by the maker before it was signed. If not, it could not convey legal title.