PLP LG3 and LG4- Deducing and Investigating Title PDF

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PLP LG3 and LG4: Deducing and Investigating Title What does deducing and investigating title mean? - Is the seller establishing that they own the land and can therefore sell it. - Investigating – is the buyers solicitor checking that title is ideally risk free? When is title deduced? - It is done at the very beginning of the transaction. - Standard Conditions of Sale (Fifth Edition) 4.1 and 4.2.1 - Evidence of title is included as part of the seller’s pre-contractual documentation. - 4.1 – It is a term of the contract that the seller must deduce title prior to exchange. - 4.2 – If the seller does that, the buyer cannot later question that title. Obtaining information and documentation from the lender - In order to deduce title, the seller’s solicitor would need to obtain information about the title. - Most sellers in residential transactions have a mortgage. Therefore, you can contract the lender to see if they can provide you with title information. - If contracting the lender the information you need to provide is contained in Lenders’ Handbook paragraphs 2.1, 2.2; 17.1.1  States what you need to provide to the lender.  The Lender might tell you whether it is registered, if not check at Land Registry anyway. - If title unregistered and the property is mortgaged, the lender will have the paper title deeds, you will need to give lender an undertaking to hold the title deeds to the order of the lender pending redemption of the mortgage or to return the deeds unaltered on demand.  Retention of the title deeds gives priority and security as first mortgagee so they would not simply hand them over. You would need to provide an undertaking that you will look after them.  Para 17 LH – Should also ask for a redemption figure if you are contacting the lender proving the info in para 17.. - If no mortgage, ask seller for information on title. Overall principle - Lenders’ Handbook paragraph 5.6.1 – Seller must disclose a good and marketable title together with third party interests which benefit or burden the land.  They must prove that they are the outright owner. - The buyer’s solicitor needs to examine title to check ownership and third party interests. From the buyer’s perspective it is about risk. General Principles – Particular Situations - Note: For the application of general principles to particular situations see Manual sections 16.1 – 16.8 and Lenders’ Handbook. - This course covers:  Sale by surviving joint tenant.  Sale by surviving tenant in common.  Sale by a personal representative.  Sale by a mortgagee. Registered Freehold – the law - The register is paramount.  Title is guaranteed by the state.  It is the register today which the buyer is concerned – this is the seller’s title. - Registered proprietor has statutory power to dispose of registered land - Purchaser acquires good title subject to entries on the register and to any interests which override (ss23-26; 29(1) – (3); Schedule 3 LRA 2002).  These stipulate that the seller has statutory power to sell the land and the buyer’s title is unimpeachable.  Note that the register is not all conclusive as there are overriding interests. Registered Freehold – the practice

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No statutory requirement/obligation (schedule 10 (2) LRA 2002)  Land Registry could introduce rules about deduction of title – it has never been brought into play. However, there is a provision in the contract (SC 4.1.2): Seller must provide:  Official copies of the register and title plan; copies of documents referred to on the register as to which the register is not conclusive; and information about any interests which override.  Plus, subsequently, buyer undertakes pre-completion search (to see if there have been any changes to the register). This documentation would be provided as part of the pre-exchange documentation. Property information form will provide details about any overriding interests. Effect of S.67 LRA 2002  Official copies are as good as the register - they guarantee title. Anyone can make a copy of the register (S.66). Official copies can be obtained electronically or use OC1 if paper application. Send to Land Registry For sample register, see section 16.13.1 of the Manual For a worked example of checking a registered title, see Section 16.13 of the Manual. Essentially you need to:  Check each of the registers: A, B and if there is C register.  Check the person selling the land is registered owner.  Check that the land is the land the seller is supposed to be selling both legally (freehold/leasehold) and physically (description).  Make sure plan accurately sets out the extent of the land.  Check third party burdening interests are not too onerous and would not interfere with the buyer’s proposed use of the property. – the seller needs to disclose them.  Check the property has all the necessary benefiting third party interests. The contract  When drafting the contract, refer to the estate, title number and class of title.

Unregistered Freehold – The Law - Title is deduced by reference to the paper title deeds. - To establish the seller’s ownership, the seller must provide a paper title which begins with a good root of title and traces the ownership of the property from the root document to the current seller.  Chain of ownership is checked through the paper title deeds. - Very often you would need to obtain the paper title deeds from the lender. - The paper title will disclose third party interests which burden and benefit the land. - A good root of title is a document which: (a) is at least 15 years old at the date of the contract (S 44(1)LPA 1925 (as amended by S 23 LPA 1969)); (b) deals with the whole legal and equitable interests in the land; (c) identifies the land sufficiently; and (d) does nothing to cast doubt on the title - Best example is a conveyance on sale.  If there is a conveyance on sale you should always use it as the root of title in preference to a legal mortgage.  A legal mortgage cannot be used as good root of title as all it does is demonstrate that the borrower mortgaged the property, it doesn’t establish ownership. - Prior to SDLT every document needed to be stamped and if document hasn’t been stamped it cannot be used as evidence, so paper title could not be defended in court – Stamp Act 1891 - Note:  Ordinarily you start with a good root of title, if there is a description in the root document to a plan in pre-root document o Always include the pre-root document and plan.  Nothing to cast doubt on the title (check all the links) also check – o check stamping and proper execution  Prior to SDLT every document had to contain a stamp on the face of it, produced to the revenue, seen by the revenue and stamped. If a document wasn’t stamped it cannot be adduced in evidence. Therefore, the paper title cannot be defended (Stamp Act 1891).

S 52 LPA 1925 – to convey a legal estate you need a deed. What makes a document a deed is valid execution. S 73 LPA 1925 (effective from 1st January 1926 – 30th July 1990) – Valid execution = Signed, sealed and delivered. o S 1 LP(MP)A 1989 (in force from 31st July 1990) – valid execution now requires signing and witnessing. Third party interests created in pre-root document(s) – S 45(1) LPA 1925 o Where third party interests pre-date the good root, you need to include it. o o o

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Unregistered Freehold – The Practice - Provision of the Contract (SC 4.1.3) – As part of the pre-contract documentation, the seller must provide an epitome of title together with copies of necessary documents. - Epitome begins with the good root of title (subject as noted on previous slide [description by reference to plan in pre-root document; third party interests created in pre-root document(s) – S 45(1)LPA 1925] and via the paper deeds and documents traces/demonstrates the devolution of ownership from the root to the current seller - Documents to include and not to include in epitome:  see Sections 14.5.2.3 and 14.5.2.4 of the Manual - Checking the devolution of an unregistered title - see Section 15.4.2 of the Manual - Third Party Interests which Burden and Benefit the Land  Third party interests (for example, legal easements; restrictive covenants) should be revealed by the paper title.  By providing paper title the seller is disclosing information about third party interests which affect the land.  As buyer’s solicitor check: o (i) burdening interests are not too onerous and will not affect buyer’s proposed use of the land; and o (ii) that the land has all necessary benefitting interests o Should also check that such third party interests do continue to affect the land  Land Charges o Seller should disclose and buyer should check land charges affecting the land. o Seller should include in epitome results of Land Charges Searches undertaken against estate owners (including seller) mentioned in the epitome for the estate owners’ years of ownership. o S 3(1) LCA 1972 – land charges are registered in the name of the estate owner whose estate is affected o S 198(1) LPA 1925 – registration at the LCR constitutes actual notice (bind the world)  As the seller you should: o Undertake a land charges search against estate owners revealed by the epitome for their years of ownership (although no need to repeat previous search results) o Search can be undertaken electronically. Use K15 application if paper search application. Send to Land Charges Registry, Plymouth o Include any relevant previous search results and current search result in epitome. o Check –  title is unregistered - undertake search of the Index Map – SIM – at the Land Registry and include result in epitome – demonstrates title is not registered; and  whether or not title should have been registered - check date of compulsory registration for the area in which the land is situate (Land Registry Practice Guide 1 Section 8) – are there any later triggers?  Whether title should have been registered in which case it will need to be done now.  Plus, subsequently, buyer undertakes pre-completion search at LCR on K15

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For a worked example of an unregistered title, see 16.14 of the Manual. This includes sample epitome of title and documents. The contract – identify the root document...