Property Law and Practice
Part 1 Revision Notes
Registered title
There are five stages in a property transaction:
1) Pre contract stage – taking instructions. Drafting contract. Approving the contract. Deducing title (what
is the title). Investigating title. Due diligence on the property – pre contract searches and inquiries.
Mortgages. Report to client after investigating.
2) Exchange the contracts – this is when the agreement becomes binding.
3) Pre completion – need to have a deed. Draft it. Needs to be approved. Execute the deed (s). Deed can
cover transfer/lease/mortgage. Need to complete pre completion searches – finding out if anything has
changed to the title e.g new covenants/easements/mortgages
4) Completion – sale and purchase legally takes place.
5) Post completion – stamp duty. Have to pay in order to have the stamp on the documents to make it
legally binding. Also, register the new proprietor (new buyer) because of change of ownership. Needs
to be done at land registry. Need to have previous mortgage(s) discharged.
Pre-contract stage:
First, a bit of regulation: ensure you undertake the correct due diligence before starting a business relationship:
1) General CDD= identifying and verifying the customers identity via reliable data, identifying any beneficial
owners, assessing the nature of the business relationship or occasional transaction
2) Simplified CDD= low risk = still comply with General CDD requirements but adjust extent or timing of the
process
3) Enhanced CDD = high risk = terrorist financing/money laundering/political exposed persons = must take
measures to examine the background and purpose of the transaction and increase monitoring of the business
relationship
Deducing title:
This shows that the seller owns the property and can transfer/sell it
SCS 4.1.1 and SCPC 7.1.1- the seller is obliged, at its own expense, to provide proof of title and of its ability to
transfer it.
As per SCS 4.1.2 and SCPC 7.1.2, the buyer’s solicitor will receive official copies of the registered title and title
plan and official copies of any documents referred to in the register and kept by the registrar (unless the document
is to be discharged or overridden at or before completion).
If there are any difficulties with the title, the buyer's solicitor should raise these as requisitions. SCS 4.2.1 and SCPC
7.2.1 prevent the buyer, after contracts have been exchanged, from raising requisitions on the title deduced to the
buyer before exchange of contracts.
Some guidance on looking at documents:
The official copies of registered title- OS1 SEARCH look carefully at the official copies from the land registry.
• Is the title number correct?
Part A (Property Register) describes the estate:
• Is it freehold or leasehold?
• What is the address? Does it match the property wanted by your client? (make sure you also check the plan
provided)
• What covenants/ easements does the property benefit from? Benefit of both positive and restrictive covenants can
pass
Part B (Proprietorship Register) identifies the owner, the class of title and entries which affect the right of disposal:
• What is the class of title? (absolute, leasehold etc)
,• Who is the owner? Does their description match the seller (e.g. company number, spelling)
• Who can transfer the land?
• Any charges on the register? What impact will it have? There may be a restriction . This means that the power of
the proprietor are limited or that a prior condition needs to be met first before a disposition e.g. a mortgage. Fairly
straight forward but of course will have to check that the mortgage will be discharged upon sale.
Part C (Charges Register)_contains any charges which affect the estate (e.g. covenant, easements by which it is
bound)
• What charges are there? Do they pass?
For covenants:
1) Establish: is it positive or restrictive?
2) Is the covenant registered?
If it’s restrictive (not to do something)-if registered, then it passes (basically buyer would need to have
notice of it- he will be deemed to know if it is registered land)
If it’s positive (to spend money or money’s worth)- it won’t generally pass BUT it can if sellers
require buyers to enter a personal covenant with them to undertake liability to perform the original
covenants, and to indemnify the seller is the original covenants are broken (this is called a chain of
indemnity covenants)
• Do any of these clash with the purpose of the buyer? E.g. he wants to open a pub but there is a covenant
prohibiting drinking on the premises
• Does it appear that some of these covenants were already breached?
If that is the case, the seller should be asked to remedy the breach immediately.
If impossible try:
1) indemnity insurance (protect against loss)- involves arranging at the sellers cost an indemnity insurance
policy from a reputable insurance company, where buyer and other successors in title are insured against loss
which results from the breach. Insurer requires copy of conveyance or land registry entry, a statutory
declaration from owner stating that no enforcement action has been taken, and counsel’s opinion. Unlikely to
be offered for recent covenants (10-15 years) due to increased risk of enforcement
2) obtain retrospective consent of the person with the benefit of the covenant (agree to allow the breach to
occur or vary the covenant)
3) apply to the Upper Tribunal and get the covenant removed- unlikely
4) if consent was already given – need a copy of this
Buyer’s solicitor also needs to make RELEVANT SEARCHES:
Because CAVEAT EMPTOR (buyer beware): need to check for encumbrances, occupiers, physical state, amenities
such as gas, water, development-past future, surrounding environment etc.
Always (irrespective of whether the title is registered or unregistered):
• Enquiries of the Seller
• Local Land Charges search
• Enquiries of Local Authority
• Water Company search
• Inspection
If appropriate:
• Coal Authority search
• Commons Registration search
• Environmental survey/search (including flood risk)
• Company Search/Winding Up Petition search
• Chancel Repairs search
• Highways Search
• Other location specific searches – e.g. limestone, brine, tin, clay mining, canals, railways, etc – see
relevant sections of chapter 4 in the course text.
SO:
1) Enquiries of seller:
,This will help you find out the information which the seller is not bound to disclose: boundaries, disputes with
neighbours, planning history
Form: for commercial properties, usually the Commercial Property Standard Enquiries is used
For residential clients, there are many standard form client questionnaires
!!! Of course, never over-rely on standard forms- there may be something important to inquire about which is not
there!!!
Similarly, sometimes you will make additional enquiries about title (Requisitions on title)- e.g. letter raising an
enquiry
If they give false information, they can be liable for misrepresentation
2) Inspection
Purpose
• to check for physical defects (survey);
• to check for accuracy of plans and boundaries;
• to check for rights and easements affecting or benefiting the property;
• to check fixtures and fittings;
• to discover the rights of any occupiers.
3) Local Land Charges Search: LLC1
This is done to identify land charges registered against the property. It will disclose all entries in the 12 categories of
local land charges, such as planning permissions, listed buildings, tree preservation orders etc.
A listed building may not be demolished, extended, or altered without special permission from the local planning
authority, which typically consults the relevant central government agency
4) Enquiries of the Local Authority: (Con 29 and Con 29O) (more general)
Con 29 (the main one) gives more general information on activities etc which may affect the property e.g. information
about planning policies, it abuts a public highway.
Con 29o consists of 22 optional extra questions on things such as public paths or byways, pipelines, common land,
town or village greens (where property is or adjoins common land or a village green). (specific)
5) Water Company Search (Con29DW for residential) and (CommercialDW for commercial properties) :
This will show if property is connected to public water supply and sewage water
Is there a liability to maintain private drainage system?
Are there public water pipes/sewers within the property?
6) Coal Mining Search (Con M)
Necessary if the property is located in an area where mining activities have been/are carried out. If the area is listed in
the Law Society's Coal Mining Directory a search is required. If in any doubt, always do a search.
The result will reveal the proximity of the property to past and present underground or opencast workings, future
proposals, shafts within 20 metres of the property and any compensation for subsidence already claimed and paid.
7) Highways search (simple letter with plan to the Highways Department of relevant authority)
Necessary is property appears to abut a road and there is doubt whether there is a strip of land between the road and
the property that is owned by another party (hence the risk of a ransom strip). Need to check who owns that.
8) Chancel Repairs Search (online search ChancelCheck)
Need to check whether the property could fall in an area where it’s liable to contribute to the cost of repairs to the
chancel if it is in a parish with a vicar of a medieval church.
, 9) Environmental searches surveys (including contaminated land and flood risk) can use various companies
In every property transaction (freehold and leasehold; commercial and residential), a practitioner should consider
whether contamination and/or flooding are relevant issues. In addition, environmental searches and/or surveys should
be made where appropriate, taking into account the property’s location and other features.
In every property transaction (freehold and leasehold; commercial and residential), a practitioner should consider
whether contamination and/or flooding are relevant issues.
In addition, environmental searches and/or surveys should be made where appropriate, taking into account the
property’s location and other features.
10) Company search (no specific form-usually using agents) DO THIS BEFORE EXCHANGE AND AFTER!
Against selling company (when acting for the buyer):
If unregistered title:
To check if company exists:
To check company is not subject to winding up proceedings/ appointment of administration/ liquidation
to check that there are no fixed or floating charges which affect the property (fixed charges should also be
revealed in the epitome of title).
Registered title:
To check if company exists:
To check company is not subject to winding up proceedings/ appointment of administration/ liquidation
To check that there are no floating charges which affect the property (NB post Land Registration Act 2002
this strictly may not be necessary but is good practice).
Against a buying company (when acting for the seller/lender)
to check that the company is not subject to winding up proceedings, appointment of
administrator/liquidator/receiver or has been struck off the register at Companies House; and
to check that the company’s constitution permits it to buy, mortgage, sell and otherwise deal with the
property.
* Most practitioners also undertake a search at the High Court to check for insolvency. This is called a Winding-up
Petition search. The information from this search is up to date and therefore may be more reliable than a standard
company search.
A few points on misrepresentation:
An untrue statement of fact made by one party on which the other relies and which induces it to enter into a
contract. The remedies of rescission of the contract and/or damages for misrepresentation under the
Misrepresentation Act 1967 apply to a contract for the sale of land.
The Standard Conditions purport to limit the general availability of the remedy. Under SCS 7.1.1/SCPC 10.1 (b)
rescission is only possible if:
• there is fraud or recklessness; or
• a party would otherwise be obliged to transfer or accept property “differing substantially (in quantity, quality
or tenure)” from what it had been led to expect.
SCS 7.1.1/SCPC 10.1(b) must be read subject to section 3 of the Misrepresentation Act 1967 (as amended by the
Unfair Contract Terms Act 1977). Section 3 of the 1967 Act provides that any term which purports to exclude/restrict
liability/remedies for misrepresentation is only valid insofar as it satisfies the reasonableness test laid down in section
11 of the 1977 Act. This states that a term must have been a fair and reasonable one to be included having regard to
the circumstances which were, or ought reasonably to have been, known to (or in the contemplation of) the parties
when the contract was made.
Effect of a disclaimer on replies to the preliminary enquiries?
