Learning Outcomes
After reading this article, you will be able to explain the process of investigating title for both registered and unregistered land, identify and assess common title issues such as easements, covenants, mortgages, and overriding interests, and outline practical steps and remedies for resolving defects. You will also be able to apply these principles to SQE1-style scenarios and advise clients on ensuring good and marketable title.
SQE1 Syllabus
For SQE1, you are required to understand the investigation of title in property transactions, including identifying and resolving title issues. As you work through this article, focus your revision on:
- The distinction between registered and unregistered land and the procedures for investigating title in each.
- The process of examining official copies, title deeds, and supporting documents.
- How to identify and assess encumbrances such as easements, covenants, mortgages, and overriding interests.
- Practical steps and legal remedies for resolving defects in title and ensuring good and marketable title for the buyer.
- Advising clients on the implications of title issues and the use of indemnity insurance or statutory remedies.
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What is a "good root of title" in the context of unregistered land, and why is it important?
- Which register in the official copies will reveal restrictive covenants affecting a registered property?
- What is an overriding interest, and give one example that could affect a buyer?
- If a restrictive covenant is discovered that would prevent a buyer’s intended use, what are two possible ways to resolve this issue?
Introduction
When acting for a buyer in a property transaction, you must ensure that the seller has the right to sell and that the buyer will acquire good and marketable title. This involves a systematic investigation of title, which differs depending on whether the land is registered or unregistered. Identifying and resolving title issues is essential to protect your client from hidden risks, unexpected liabilities, or defects that could affect the value or use of the property.
Investigating Title: Registered and Unregistered Land
Registered Land
Most land in England and Wales is now registered. The seller’s solicitor will provide official copies of the register and the title plan. You must check:
- The Property Register for the property’s description, tenure, and any rights benefiting the land.
- The Proprietorship Register for the class of title, current owners, and any restrictions on disposition.
- The Charges Register for encumbrances such as mortgages, restrictive covenants, easements, and notices.
Key Term: official copies
Official copies are certified extracts of the Land Registry register and title plan, used as conclusive evidence of title in registered land.
Unregistered Land
For unregistered land, the seller’s solicitor will provide an epitome of title—a chronological bundle of deeds and documents. You must:
- Identify a good root of title (usually a conveyance at least 15 years old).
- Trace an unbroken chain of ownership from the root to the current seller.
- Check all deeds for property description, execution, stamp duty, and encumbrances.
- Conduct Land Charges searches against all estate owners since 1926.
Key Term: good root of title
A document at least 15 years old that deals with the whole legal and equitable interest in the property, contains an adequate description, and does not cast doubt on the title.
Identifying Title Issues
Encumbrances and Adverse Rights
You must identify any rights or burdens that could affect the buyer, including:
- Easements (e.g., rights of way, drainage rights)
- Restrictive covenants (e.g., limits on use or development)
- Positive covenants (e.g., obligations to maintain a wall)
- Mortgages and charges
- Leases or tenancies
- Notices and restrictions
Key Term: encumbrance
A right or interest in land held by a third party that restricts the owner's ability to use or dispose of the property.
Overriding Interests
Some interests bind a buyer even if not registered. These include:
- Legal leases not exceeding seven years.
- Rights of persons in actual occupation.
- Certain legal easements and profits.
Key Term: overriding interest
An interest that binds a purchaser of registered land even if not entered on the register, such as the rights of a person in actual occupation.
Defects in Title
Defects may include:
- Breaks in the chain of ownership.
- Missing documents or unstamped deeds.
- Unresolved mortgages or charges.
- Unregistered or unknown covenants or easements.
- Discrepancies in property description or boundaries.
Resolving Title Issues
Practical Steps
- Raise requisitions or enquiries with the seller’s solicitor to clarify or resolve issues.
- Request missing documents or evidence (e.g., death certificates, powers of attorney).
- Seek undertakings for the discharge of mortgages or removal of notices.
- Advise on the need for indemnity insurance where a defect cannot be remedied.
Key Term: requisition on title
A formal question raised by the buyer’s solicitor to clarify or resolve an issue identified during the investigation of title.
Remedies for Defects
- Negotiation: Seek a release or variation of restrictive covenants or easements from the person with the benefit.
- Indemnity insurance: Obtain a policy to protect against loss from specific defects (e.g., missing deeds, breach of covenant).
- Statutory remedies: Apply to the Upper Tribunal (Lands Chamber) under s.84 Law of Property Act 1925 to modify or discharge restrictive covenants.
- Rectification: Apply to the Land Registry to correct mistakes in the register.
Key Term: indemnity insurance
An insurance policy that protects against financial loss arising from a specific defect in title, such as a missing deed or breach of covenant.
Worked Example 1.1
A buyer’s solicitor discovers a restrictive covenant in the charges register prohibiting business use, but the buyer intends to run a home office. What should the solicitor do?
Answer: The solicitor should first check if the covenant is enforceable and who has the benefit. If the covenant is recent and the beneficiary can be identified, the solicitor can approach them for consent or a release. If the beneficiary cannot be found, or consent is unlikely, the solicitor should consider restrictive covenant indemnity insurance to protect the buyer.
Worked Example 1.2
During investigation of unregistered title, a deed is missing from the chain. The seller cannot produce it. What are the options?
Answer: The solicitor should ask the seller to obtain a certified copy or statutory declaration explaining the loss. If this is not possible, indemnity insurance may be appropriate to protect the buyer and lender against any risk arising from the missing deed.
Worked Example 1.3
The official copies reveal a mortgage in the charges register. What must the buyer’s solicitor do before completion?
Answer: The solicitor must obtain an undertaking from the seller’s solicitor to redeem the mortgage out of the sale proceeds and provide evidence of discharge (e.g., DS1 form or electronic discharge) after completion.
Exam Warning
If a restrictive covenant is recent and the person with the benefit is approached, this may alert them to a potential breach and make indemnity insurance unavailable. Always check the insurer’s requirements before contacting the beneficiary.
Revision Tip
For SQE1, be able to distinguish between encumbrances that must be registered, overriding interests, and defects that can be remedied by insurance or statutory application.
Summary
| Issue Type | Registered Land (Action) | Unregistered Land (Action) |
|---|---|---|
| Restrictive covenant | Check charges register; seek consent or insurance | Check deeds; check registration as land charge; seek consent or insurance |
| Easement | Check property/charges register; clarify terms | Check deeds; check registration; clarify terms |
| Mortgage/charge | Obtain undertaking for discharge | Obtain undertaking for discharge |
| Missing deed | Seek certified copy/statutory declaration; insurance | Seek certified copy/statutory declaration; insurance |
| Overriding interest | Check for occupiers; raise enquiries | Check for occupiers; raise enquiries |
Key Point Checklist
This article has covered the following key knowledge points:
- Investigation of title is essential to ensure the buyer acquires good and marketable title.
- The process differs for registered and unregistered land.
- Official copies and the title plan are used for registered land; an epitome of title is used for unregistered land.
- Encumbrances such as easements, covenants, and mortgages must be identified and resolved.
- Overriding interests may bind a buyer even if not registered.
- Defects in title can often be remedied by requisitions, undertakings, insurance, or statutory application.
- Always advise the client and lender of any unresolved issues or risks.
Key Terms and Concepts
- official copies
- good root of title
- encumbrance
- overriding interest
- requisition on title
- indemnity insurance
