In the Pendle area, we are increasingly coming upon the issue of Title Defects, specifically in new build properties. Strangely enough, many of these properties are still also unregistered.
What is the "title" of a property, and what is its purpose?
A title deed is a legal document showing who the owner, or title holder, is of a property. When a property is registered with HM Land Registry, it is allocated a unique title number. This title number, which can be seen at the top of the title documents of a property, has a corresponding "title register" and "title plan". The property register includes a description of the property, who has legal ownership, the price paid for it, its boundaries and rights of access. These title documents (or deeds) will be examined by the buyer's solicitor, who will want to be assured that the seller has the right to transfer valid title to the buyer and that there are no defects in the title which may cause problems for the buyer. Lenders will also need this information as title defects will affect the value of the property and their ability to sell it in the event of repossession.
What if a property has not yet been registered with HM Land Registry?
In this case, the seller of the property must provide physical evidence, in the form of the title documents or deeds, that they have full ownership and therefore the rights to sell it. This is known as a “good root of title” evidenced in an “epitome”. A good root of title must date back 15 years, deal with all the legal and beneficial ownership, include all the land which is the subject of the sale and be stamped as taxed for PD or ad valorem. It proves that the seller owns the land. This is known in conveyancing as "deducing title". Once registered the seller's conveyancer or solicitor will simply download a copy of the register as proof of title to the property, for the buyer. The Register is actually in the public domain and anyone can access it for a small fee. Pendle was one of the last areas to introduce compulsory first registration in the early 1980’s – therefore there are a lot of unregistered titles still in this area. Any property can legally be sold with an unregistered title providing you can show you have a “good root of title”. The Land Registration Act 2002 made more kinds of transfers of land registrable. It also made registration of rights of way compulsory. Finally it introduced ‘overriding interests’ i.e. things which affect the property even though they are not registered – in many ways we have now have a hybrid system with titles mainly registered but with unusual or historic rights issues being thrown in whether you like it or not. (E.g. possessory titles – where trespassers claim land after 10 – 12 years, or deeds are lost or boundaries have moved without being recorded).
What is a Title Defect?
Title defects are hard to define, but they are generally something which you did not bargain for that stops you buying or selling your land. This could include things like…
A lack of planning permission for construction,
A covenant not to build or extend,
A covenant to pay a charge, like a freehold estate rent charge or freehold service charge (which can potentially be a rent charge even it is not called one)
An area of land which is part of the property but is not included in the title deeds, or
A right of way over the land in the wrong place or missing altogether
What can be done about it?
Buyers always should, with the help of their solicitor, try to find out everything there is to know about a property before committing to purchase it. It is the duty of the seller to disclose only latent (hidden) defects in the title which the buyer can’t discover for themselves by carrying out searches, surveys and enquiries.
When it comes to title defects, you will want these to be dealt with before buying a property. Contrary to popular opinion, you can buy land or a house with a title defect if you know what it is you are buying. If won’t matter that you cannot extend your house or change unless you want to alter it or change its use. However, a lender will not let you mortgage the land or use it as security if there are major defects with the title. Not many problems are totally insurmountable. For example, if a deed does not make it very clear about the right of way, making access uncertain, a Statutory Declaration from the sellers as to long use can be effective. Alternatively a deed of variation with the servient land owners will need to be obtained (and these can be registered at HMLR to protect you in the future). We also deal with things like –
Leasehold covenants and conditions for both residential and commercial property,
Missing titles and possessory titles if you have lost your deeds or if the boundaries have moved,
Possession claims if you have a trespasser and
Freehold properties with service charge or rent charge issues. These can trap their owners with punitive fees which stop you selling the property. Rent charge remedies could potentially be used to recover unpaid new build estate service charges. This makes a house unsaleable and unmortgageable – we can help with this issue.