Part of a solicitor’s role is to establish who owns a property and whether there are any interests residing in that property. This is done through the process of investigating the title. All the records regarding the title and any interests that are registered against it are held at the Land Registry.
Since 1 December 1990 it has been compulsory in every part of England and Wales to register an unregistered title on the change of ownership and about 85% of land and property is now registered. However much of the land owned by the Crown the Aristocracy and the Church has not been registered because it has never been sold and historically a few landowners have voluntarily registered their land.
In order to investigate a registered title the seller’s solicitor needs to obtain copies of the register of the title from the property which are called official copies. An example of official copy is here. The term deduction of title is the expression used for the seller’s obligation to prove to the buyer their ownership of the property they are trying to sell. This ownership is proved by producing documentary evidence of the title to a buyer. Modern practice is for title to be deduced before exchange of contracts and for the buyer to be prevented from raising any objections to that title after exchange.
Official copies obtained from the Land Registry show the title number to the property and the addition date which is the date on which the Land Registry last updated the title. The official copies show entries on three registers the property register, the proprietary register and the charges register. The property register will contain a description of the land by reference to the postal address. It will indicate whether there are easements or rights benefiting the land and if so what the easements or rights are subject to obligations and also certain things that one might usually expect to come with the land e.g. the rights of light and air over adjacent land that have been excluded from the title.
The Land Registry have a useful primer on the contents of these searches, which can be found here: A guide to Understanding the Official Copy of Register of Title (land-registry-documents.co.uk)
The proprietorship register will always identify the current owners and their addresses. It will also identify the class of title i.e. whether it is a leasehold or a freehold.
There are three important types of title.
- Absolute title is the common best class the registered proprietor has vested in them a legal estate subject only to the entries on the register overriding interests and where the proprietor is a trustee minor interests of which they have notice.
- Possessory title which is granted where the proprietor is in possession of the property but has lost the title deeds or is claiming through adverse possession. This means that the proprietor is also subject to all adverse interest existing at the date of first registration.
- Qualified title granted where there is a specific identified defect where the Registrar feels cannot be overlooked or cured by the absolute title. The proprietorship register could also indicate the price paid for the land by the current owners but only if the land has been sold since 1 April 2000. The proprietorship register will also contain any restrictions on the owner’s ability to sell. This will be important to note as a solicitor. Since 2003 the Land Registry has provided only two types of entry for the protection of third parties being notices and restrictions The presence of a restriction in the proprietorship register is an indication that ability to deal with the property is limited or that a prior condition must be satisfied in order for the disposition to be registered.
- Finally, the charges register will identify the incumbrances over the property. The solicitor should be looking out for covenants, easements, charges over the land, leases granted over part or whole of the property and notices registered by third parties claiming an interest on the property.
You may also have to investigate title in unregistered land. The first step is to check whether the land is already registered or subject to a pending application for first registration. It is also possible that a third party has lodged a caution against first registration warning any person attempting to deal with the land that they have an interest.
If the title has not been registered then title is proved by title deeds. The seller will have to provide the buyer with copies of the title deeds and if the sale is a sale of the property hand over the originals to buyer on completion. If the sale is a sale of the part the seller will keep the original title deeds and hand over certified copies to the buyer on completion.
Deducing title in unregistered land involves examining the paper deed which had been used to transfer ownership of the property in the past. These could include conveyances mortgages assents deeds of gift and land charge searches. The seller’s solicitor will usually be able to obtain the title deeds from the client if the property is mortgage free or from their mortgage lender if subject to a mortgage. Having obtained the deeds the next task is to look through them and find the document that will be the root of title of the document from which to begin the title investigation. When a number of documents set in a title deed might be capable of being a good root for a title the seller’s solicitor must pick the single document that will be the route of title for that particular sale.
Under section 44 of the Law of Property Act 1925 a root of title must:
- Deal with or show who owns the entire interest legal and equitable that is being sold by the current owner.
- Contain a recognisable description of the relevant land.
- Do nothing to cast out on the seller’s title.
- Be at least 15 years old.
A Conveyance on sale or legal mortgage which satisfies the above requirements is generally acknowledged to be the most acceptable root of title because it effectively offers a double guarantee. If neither a Conveyance nor mortgage are available, then a deed of gift or an assent can be used but as these transactions were gifts and not for value title investigations are unlikely to have taken place and therefore do not provide a double guarantee which is given by the Conveyance on sale or legal mortgage.
Once the root of title has been identified that root and all subsequent title deeds must be checked in a systematic and thorough manner. Many solicitors start by reading through all the title deeds a number of times focusing on the chain of ownership, description of the land, stamp duties, incumbrances, execution and the land charges. There should be an unbroken chain of ownership from the owner indicated in the root of title up to the present seller. Since legal estates can only be transferred by a deed there should be documentary evidence of every change of ownership. So the person who acquired the property in the route of title should be the same person who is transferring title in the next document.
Stamp duty was payable on conveyancing documents prior to December 2003 and this was evidenced by embossed stamps being placed on the document usually in the top margin. A conveyance on sale was liable to add valour and duty i.e. due to the varied according to the amount of a purchase price. Some low value transactions were exempt or liable to a reduced rate but only if the conveyance included the certificate of value stating that the transaction did not form part of a larger transaction.
Each title deed should be checked for incumbrances such as easements and covenants. Easements will often appear in a conveyance beginning with the words accepting and reserving. These words indicate that on an earlier sale the seller was reserving an easement of some kind over the land being sold such as a right of way.
The words subject to are also used to introduce an incumbrance such as an obligation to pay towards the maintenance of a road. Each document should be checked to ensure it was properly executed. Most documents in a conveyancing transaction will need to be executed as a deed so the formalities for execution as a deed must be complied with.
A deed is defined in section 1.2 of the Law of Property Miscellaneous Provisions Act and must be in writing and make it clear on the face of it that it is a deed and be signed by the person granting the interest in the presence of a witness who attests the signature and be delivered as a deed. Before July 1990 a deed had to be signed and sealed by its maker and delivered as a deed. The seal had to be on the document before the maker signed if the seal was never there the document was not a deed and could not convey a legal estate.
Some incumbrances notably restrictive covenants will only bind unregistered land if they are correctly registered as a charge at the Land Charges Department in Plymouth.
There are a number of issues which might be revealed in the investigation of title and require further action on behalf of a solicitor. Here are some common ones.
The most common easements are right of way, rights of drainage and rights of support. In registered land easements that burden the property should appear in the charges register but may also appear in the property register if the Land Registry has extracted text from a Conveyance and easements that burden the property are mixing with easements that benefit it.
Mines and minerals reservations
In the past the seller may have sold a piece of land that reserved out of the sale of the mines and minerals beneath the surface together with a right to come onto the land to extract the valuable coal and other substances. In registered land this will be noted on the property register.
Declaration as to rights of land and air
Sometimes a landowner will sell off part of their land and retain another part for their own purposes. In order to preserve the right to develop in the future they may have declared a transfer of part A so that part A does not enjoy the benefit of any rights of light or air over part B. So there will be nothing to stop the owner of part B building on that land and for example blocking off light to the windows in the building of part A.
Restrictive covenants prevent land from being used in particular ways and are usually binding on successors in title to the original party. In registered lands they appear in the charges register. In unregistered land they appear in the Conveyance often in or immediately after the first operative paragraph conveying the property to the purchaser.
A positive covenant is one that obliges the covenantee to carry out works or incur expenditure. In registered land they appear in the charges register. In unregistered land they appear in the Conveyance often in or immediately after the first operative paragraph conveying the property to the buyer.
A positive covenant always binds the original covenantor but the burden of a positive covenant does not run to a successor in title in the original covenanter so at first sight a positive covenant is not binding on a new buyer. However when the original covenantor sold the property it is likely that they require their buyer to give them an indemnity covenant so that if their buyer breached the covenant then the original covenantee will sue directly for the breach they could recover their losses from the buyer.
A mortgage is rarely a problem because the seller usually intends to discharge it using the proceeds of sale immediately after completion. Indeed the buyer will not commit to buying the property unless they are satisfied that the seller’s mortgage will be discharged on completion of the sale. It is possible to tell if a registered property is subject to a mortgage as there will be two entries on the title register one giving the time the date and purpose of the charge and the other stating the identity of the lender.
Notices can be agreed or unilateral. Agreed notices are put on the register with the agreement that the registered proprietor unilateral notices are used when the registered proprietor has refused to consent to the entry or has not been asked about it. The entry of a notice does not guarantee that the interest is valid or even that it exists. The notice itself does not give the person who registers any right over the property is such. It merely serves to ensure that the priority of the interest referred to in the notice is protected against any subsequent interest.