A title check is frequently referenced during the conveyancing process, but what exactly is it, and what are conveyancers searching for?
Once a transaction has been agreed upon, and both parties have appointed their conveyancers, the seller's conveyancer will provide the buyer's conveyancer with documentation of the seller's title to the property as part of the contract package. A "title check" will then be performed by the buyer's conveyancer.
A buyer's conveyancer will also analyse the results of searches and other papers that are part of the contract package as part of their research, focusing only on the legal title.
What Exactly are Conveyancers Looking For in a Title Check?
They will be looking to see if there are any faults or difficulties disclosed in the title that may jeopardise the buyer's rights and ability to sell or mortgage the property in the future or influence the value. Any issues that are unclear or require additional clarity can be discussed with the seller's conveyancer and hopefully resolved before the buyer commits to the purchase formally through the exchange of contracts.
This includes checking:
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Whether the description of the land agrees with the contract description.
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Whether there are any leases of the land which will affect the easement and other rights of the seller and buyer.
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Whether the seller has a right to withdraw from the sale.
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Whether there are any restrictions on the use of the land.
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Whether there is any prohibition on the use of the property or other matters that might affect the property's development.
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Whether there are any planning problems or matters which may affect the planning permission or alterations.
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Whether there are any covenants that may restrict the use or development of the property.
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Whether there are any personal restrictions which may affect the property, for example, restrictions on the sale of the property.
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Whether there are any overriding interests, e.g. title held by the Duchy of Cornwall.
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Another critical factor that will be addressed as part of the title check is any intermediate leases.
Intermediate leases are those which fall between the freehold and those granted by the freeholder. For example, if a property was initially leased outright by the freeholder, the owner of that leasehold property may have subsequently sold a smaller leasehold to a third party. This would mean that a second lease falls between the freehold and the original lease.
Suppose a title check identifies any intermediate leases. In that case, the buyer's conveyancer will check that these are not of a nature which will prevent the buyer from making the improvements they wish to make to the property. In some cases, they may need to negotiate with the intermediate leaseholder to improve the property.
Common Title Deed Effects You May Encounter
Sometimes, title deeds may be defective: something required may be missing from it, or something not required may be included. We will discuss some common title deed defects, which you may want to watch out for:
1. Absence of easement
An easement is a legal right in relation to the land. An absence of easement occurs mainly when the property must be accessed via a private road or if a private sewer serves it. This defect in the title deed brings about two problems – disputes about the right of way and disagreements about maintenance and repair.
2. Lack of covenants for repair and maintenance
This defect in the title deed means that the seller cannot enforce the seller's covenants. These covenants are set out in the Freehold and Leasehold Reform Act 2002 and include repairing and maintaining the external walls and surface of the property, including drains, gutters, paths and other areas open to the air.
3. Restrictions on development
A restriction on development is contained in the title deed when there are restrictions on the use of land or buildings. This defect in the title deed means that the buyer may not be able to use the land for residential or commercial purposes.
4. A lack of a provision for building leases
This defect in the title deed means there are no provisions for building leases, which the freeholder can grant to third parties. A building lease may have been granted, but the title deed has not been noted.
5. Overriding interests
An overriding interest is an interest that prioritises the seller's interest. This is a defect in the title deed, and it means that the seller's interest in the property can be overridden at any time by a third party.
This defect in the title deed can lead to a problem in improving the property. This is because the third party who holds the overriding interest may have a right to make alterations or improvements, which will affect the property itself and its value.
6. Intermediate leases
This defect in the title deed occurs when there is a second lease falling between the freehold and the original lease or where there is a second lease falling between the original lease and the tenant. This defect in the title deed means that the buyer may not obtain a lease from the original leaseholder to improve the property.
7. Pre-emptive rights
This defect in the title deed means that the title deed does not contain a right of pre-emption. This defect prevents the buyer from acquiring the freehold.
These are just some of the defects you may encounter on your search for a home. As you can see, it is essential to be aware of any defects or issues with the title. Many are now quickly resolved and can be reinstated if the vendor has not signed up to the 'Consent Order' scheme, which can be used to resolve disputes and correct defects.
Conclusion
In the event that there are any problems or issues with the property you are looking to purchase, a title check will expose these and enable you to decide whether you would like to proceed with the purchase. This part of the conveyancing process is vital, so don't forget to ask your conveyancer to carry out a title check and make sure that this is addressed and that you have the opportunity to rectify any issues before you proceed further with the purchase.
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