PLP Chapter 5 Notes – Unregistered Title PDF

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Property Law and Practice - Chapter 7 Notes - Unregistered Titles
Relevant to SGS 6. Covers CLC Searches, Stamp Duty, Root of Title etc....

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PLP Ch5 Notes – Unregistered Title Compulsory Registration Buyer’s solicitor must check whether the title to the property the buyer is proposing to buy should have already been registered.  Sale or mortgage of unregistered land triggers first registration of title.  Some locations have been subject to compulsory registration since 1 December 1990.  If there has been a s/m since this date, title should have been registered.  Check the date on area of property became subject to compulsory first reg.  If S/M has occurred since this date, seller must retrospectively apply for title registration.  Raise an enquiry  require problem to be rectified at seller’s expense.  Two-month time limit = seller does not have legal title. Epitome of Title Various old deed titles show:  History of land  Who has owned it  How beneficial title is held where there are co-owners  Rights and encumbrances attach/affect land Must only select RELEVANT documents with details about property. Bundle is referred to as epitome. Seller is required to show epitome = Deducing Title. On completion, originals are handed over. Deducing title to Unregistered Land Seller’s solicitor collates all documents (examined to ensure seller is entitled to sell.) Must provide enough information to confirm that seller has legal and beneficial title to property. Buyer registered with ‘Title Absolute’. Must include:  Root of Title: Conveyance to current seller – Dated pre-1 December 1990.  Any documents cross-referred to in Root of Title (satisfy exceptions in s.45 LPA).  Copies of other relevant documents e.g. deeds, leases.  If no conveyance  need deeds/copies of relevant documents.  Documents evidencing change of name.  Copies of legal mortgages/ discharge of mortgage. Investigating title to Unregistered Land Must investigate title to see; right to sell, what land, what rights attach, what burdens.  Ensure GOOD Root of Title; all documents executed.  Look to find legal rules relating to the passing of benefits and burdens.  Find out details of burdens affecting the property and if they bind your client.

Root of Title

Ensure seller has included good root of title = proves seller has legal and beneficial title to the property. Dated pre- 1 DEC 1990 Check seller did not acquire property after date.  If there is a conveyance dated after the date of compulsory first registration, title to the property should have already been registered.  Should insist on conveyance on sale or legal mortgage. Contains description for property to be identified Land Reg must be able to identify property being purchased  by plan included with root of title or earlier pre-root conveyance.  Cross ref is acceptable provided earlier document is included in epitome. S.45 LPA Deals with both legal and equitable interest in the property being conveyed Ensure legal interest is validly transferred to seller  Conveyance was by DEED, validly executed and stamped.  If legal interest passed to the seller, presumed that equitable interest also passed. Casts no doubt on the seller’s title Examples:  Missing power of attorney where seller/buyer executed under POA.  No evidence of death e.g. certificate or grant of probate.  No evidence of change of name e.g. missing certificates.

Execution of Documents

s.54 LPA requires all documents transferring interest in land to be deeds. Formal requirements to qualify as deed:  Clear that it is a deed, should be referred to in the document.  Validly executed as deed.  Executed as whole/physical document.  Delivered as deed with intention to be bound by deed. Valid Execution as Deed Pre- 31 JULY 1990 Individual  Conveyance to be signed, sealed, delivered and witnessed. Company  Executed in accordance with Articles, seal affixed in presence of 2 directors. Post- 31 JULY 1990 Individual  LPMPA; Signed in presence of witness (attests), delivered as deed. Company  s.36 CA; Company seal affixed, witnessed by 2 directors, signed by 2. By Power of Attorney Signed ‘XY as attorney for AB’ Signed ‘AB by his/her attorney XY. If root of title has not been correctly executed, SS must arrange for it to be done before transaction can proceed.

Stamp Duty

Check correct amount of ad valorem stamp duty was paid at the time the relevant conveyance was completed. Lower rate than highest rate to apply  conveyance/transfer needs to contain certificate of value. Clause in conveyance confirming that consideration did not exceed relevant threshold. All conveyances should have:  Ad Valorem Stamps  Cert of Value  Or BOTH Should also include ‘particulars delivered’ stamp as evidence that conveyance has been submitted to HMRC within 30 days of completion. Problems with unstamped conveyance Cannot form good root of title. Inadmissible as evidence. Penalties / interest payable. Breaks chain of title. Insist that seller arranges for conveyance to be stamped and pays any penalty/interest before completion. Include special condition to this effect in contract.

Complete chain of documents showing title passing to seller – ‘casts no doubt’ No unexplained gaps in transmission of title. Must investigate any inconsistencies and request evidence to confirm.

The Property and its Benefits

Buyer’s solicitor must:  Check the description in both contract and transfer accords with property being bought. Identify any rights which are to be granted expressly at the time of sale.  Check for easements already enjoyed by seller which benefit the property. E.g., granted by deed, pursuant to s.62 LPA, implied by necessity, acquired by prescription.  Check for any easements the seller may be in the process of acquiring. Via precontract enquiries or by physical inspection. Burdens affecting the Property Central Land Charges (CLC) Many third-party rights are protected by registration at CLC Registry. s.3(1) LCA  states that ‘a land charge shall be registered in the name of the estate owner; whose estate is to be affected. Person whose land is burdened. CLC Searches must be carried out against correct names.  All estate owners referred to in the epitome.  Pre-root estate owners of which the buyer has notice. Search done using form K15, reveals any CLC entries against name of person searched against for period searched against.  No results =K17  With entries = K18 Search needs to specify a ‘search period’.  Person can only burden while they own it  search applies from date acquired, to date disposed.  If these dates cannot be ascertained from epitome, search should be made from date of previous conveyance, If date of disposal cannot be ascertained, the search should be made to the date of acquisition by the next known estate owner. It is possible for buyer to be bound by charges registered against former estate owners who were not discovered.  The buyer will be compensated by the state, but only if the buyer’s solicitor has carried out CLC searches against all estate owners.  If an estate owner has died, must search beyond the date of death up to the date of the next sale. Buyer’s solicitor must also check that each conveyance completed within the ‘protection period’ (15 working days) from date of search result. Buyer must obtain an ‘office copy’ of the entry creating the land charge to confirm:  The subject matter of the charge  The document which the charge was created  The extent of the land which is affected by the charge  Name and address of person who applied to register it Common LAND CHARGES CLASS C(I)  ‘Puisne mortgage’

CLASS C(IV)  ‘Estate Contract’ CLASS D(II)  ‘Restrictive Covenant’ CLASS D(III)  ‘Equitable Easement’ CLASS F  Spouses matrimonial right of occupation Other burdens not registered as CLC’s SIM Search Important in unregistered land, buyer’s solicitor should carry this out before EOC to see if  Already registered  Subject to pending application to do so  Subject to a caution against first reg  Subject to pending application for first reg If search result reveals entries, would indicate some other party is claiming an interest in land. Buyer’s solicitor needs to investigate before sale can proceed. Mortgages First legal mortgage will bind purchaser for value without need for registration. Mortgage not registerable  protected by deposit of original title deeds held by lender. Second (Puisne) Mortgage not protected by deposit of original title deeds. More difficult for buyer to discover. Only protected by Class C(I) is registered. Buyer must ensure CLC searches completed. If a mortgage over a property is not released at completion, the property will be transferred subject to the mortgage. Discharge of mortgages over unregistered land should be done either by: a) a separate deed of discharge; or b) a validly executed receipt on the face of the mortgage deed itself. When discharge will take place on or after completion, the buyer should obtain an undertaking from the seller’s solicitor in two parts: (a) (b)

to remit the funds required to redeem the charge (i.e. in accordance with the lender’s redemption statement); and to forward the receipted mortgage/legal charge within a short, specified timeframe (typically ‘immediately’ or ‘within two working days of receipt’). This is the evidence of discharge in unregistered conveyancing (rather than the forms DS1/DS3 used in registered conveyancing).

Positive Covenants Do not run with the land, bind successors indirectly  chain of indemnity. Seller will want an indemnity covenant from buyer. If contract includes SCPC 7.6.5, buyer will have to give indemnity.

Unregistered interests overriding first registration

s.11(4) LRA 2002 provides that buyer may also be bound by unregistered interests which override. Schedule 1 LRA 2002  unregistered interests which override first registration  bind a buyer of the affected unregistered title whether or not s/he has notice of them. a) Non-reg Leases of -7 years Sch12 LRA  Lease of 20 years granted in 2000 = overriding interest when granted before. Today = would not be overriding. b) Interests of Persons in Actual Occupation Right of persons in receipt of rents but not in occupation is no longer an interest overriding first reg. c) Legal Easements Legal easements will override first registration under Schedule 1 LRA 2002, and as there is no class of land charge for a legal easement. Equitable  it will not override, and to bind the land it must be registered as a D(III). Easements which burden the Property Find out whether property is burdened by any easement. If easement is legal  will override first registration. Report to client about easement, ensure no interference. FR1  Disclose charges  charges remain legal only if on register. Easements which benefit the Property Find out if the Property has the benefit of any easement. Report on this to your client and make sure that it is adequate for their needs. Check whether the servient land is registered.  check that the burden of the easement has been noted in the Charges Register of that servient land. If it has not been then this is a serious problem which the seller’s solicitor must sort out before completion.  If the servient land is not registered, the seller’s solicitor must register a caution against first registration to ensure that the burden of the easement will be registered when an application is made for first registration of the servient land.

The seller/people disposing of land in different capacities

Current seller – sole individual to whom latest conveyance in epitome of  usually no issue. Buyer should be aware of following issues which may arise in unregistered conveyancing. Co-ownership – buying from beneficial joint tenants All joint tenants alive/existing: all must sign the contract and execute the conveyance in order to pass the legal estate. Co-ownership – buying from tenants in common All tenants in common alive/existing: all must sign the contract and execute the conveyance in order to pass the legal estate. Buying from a company Carry out a company search to check that the company exists and is not insolvent. Check there are no fixed or floating charges affecting the property Check no entry regarding winding-up of the company or the appointment of a receiver or liquidator. The buyer’s needs Do not wait until the reporting stage to inform the client of potential major issues (e.g. evidence of contamination, planning liabilities, defects in title). It is important that the client is aware of the risks of proceeding with the purchase or proceeding with certain actions/solutions.

Searches (see paragraphs 6.1 and 6.2) Covenants (positive and restrictive covenants and easements/third party rights (see paragraph 6)

Ad valorem/Certificate of Value/PD stamp (see paragraph 4.3) Root of title (see paragraph 4.1) Execution of Documents (see paragraph 4.2) Discharged Mortgages (see paragraph 6.3.2)

Post-completion and First Registration s.4 + s27 LRA 2002  set out the requirement to register a sale of land. Application for first registration must be made within two months of completion (see s.6(4) LRA 2002).

Ensure that the buyer obtains “Title Absolute” on first registration. 1. a good root of title; 2. all (validly executed and correctly stamped) documents necessary to show the seller’s title to the property (e.g. conveyances, death certificates, powers of attorney, documents referred to in any conveyance(s), discharged mortgages etc.); 3. miscellaneous items such as all search results – pre-contract searches, CLC searches, index map searches, replies to enquiries from the seller, etc.; and 4. the sale contract, certificate of payment of SDLT (SDLT 5) and the correctly executed TR1 transferring the property from the seller to the current buyer along with any new mortgage....