Issues Arising from Title Investigation and Required Actions
Investigating the title of a property is a crucial step in any real estate transaction, whether for registered or unregistered land. The process helps ensure that the seller has the legal right to transfer ownership and that the buyer will receive a clear and marketable title. However, various issues can arise during a title investigation that may complicate the transaction. Identifying these issues early allows for appropriate action to be taken, ensuring the transaction proceeds smoothly and protecting all parties involved.
Common Issues in Title Investigation
Several issues may be discovered during a title investigation, including:
- ★ Missing or Defective Documents: Key documents such as conveyances, transfers, or deeds may be missing or incomplete. Defects can also include missing signatures, improper execution, or unclear descriptions of the property.
- ★ Unregistered Interests: Interests that have not been registered, such as rights of way, easements, or restrictive covenants, may still affect the property. These interests may bind future owners even if they are not recorded in the Land Registry.
- ★ Encumbrances and Charges: Existing mortgages, charges, or liens against the property can complicate the sale. These financial obligations must typically be discharged before or at the time of sale.
- ★ Adverse Possession: Claims of adverse possession can arise if another party has occupied the property for an extended period without the owner's permission. This can challenge the owner's title and the buyer's ability to acquire clear ownership.
- ★ Boundary Disputes: Unclear or disputed property boundaries can lead to conflicts with neighboring properties. Issues may include encroachments, unclear demarcations, or disagreements over property lines.
- ★ Restrictive Covenants: These are binding obligations that restrict the use of the property. They can impact the buyer's plans, such as development or changes in property use, and must be carefully reviewed and understood.
- ★ Third-Party Rights: Rights of third parties, such as tenants, leaseholders, or beneficiaries of an easement, can affect the property's use and transferability. These rights must be identified and addressed appropriately.
- ★ Planning and Zoning Issues: Existing planning permissions, zoning regulations, or land use restrictions can limit the buyer's intended use of the property. Violations or unapproved alterations can lead to legal and financial liabilities.
Further Action Required
Once issues are identified, several actions may be necessary to resolve them and ensure a clear title:
- ★ Rectifying Defective Documents: Missing or defective documents may require rectification. This could involve obtaining missing signatures, executing new documents, or obtaining statutory declarations to clarify the property's history.
- ★ Registration of Interests: Any unregistered interests affecting the property should be registered to ensure they are legally recognized and binding on future owners. This includes registering easements, covenants, and other rights.
- ★ Discharging Encumbrances: Existing mortgages or charges must be paid off and formally discharged. The seller's solicitor typically handles this process, ensuring that all financial obligations are cleared before the sale is completed.
- ★ Resolving Adverse Possession Claims: If adverse possession claims exist, the rightful owner may need to take legal action to reclaim the property or negotiate a settlement with the claimant.
- ★ Addressing Boundary Issues: Boundary disputes may require a surveyor's report, negotiation with neighbors, or legal action to resolve. Accurate boundary plans should be agreed upon and documented.
- ★ Modifying or Removing Covenants: If restrictive covenants are problematic, the buyer may seek to modify or remove them. This can be done through negotiation with the party benefiting from the covenant or by applying to the court for a modification or discharge.
- ★ Confirming Third-Party Rights: Clarifying the rights of third parties, such as tenants or leaseholders, ensures that the buyer understands these rights and their implications. Proper notice and documentation are crucial.
- ★ Compliance with Planning and Zoning Laws: Ensuring compliance with all relevant planning and zoning regulations is essential. This may involve obtaining necessary permits, rectifying unauthorized alterations, or negotiating with planning authorities.
Case Law
Case Example - Midland Bank Trust Co Ltd v Green (1981)
In this case, the court examined the impact of unregistered equitable interests. The ruling emphasized the importance of registering interests to protect them against subsequent purchasers, highlighting the risks associated with unregistered rights.
Examples
Example 1 - Missing Easement Registration
Scenario:
During a title investigation, it is discovered that a right of way benefiting the property has not been registered. To ensure that this right is legally recognized and enforceable, the buyer's solicitor arranges for the registration of the easement with the Land Registry.
Example 2 - Boundary Dispute Resolution
Scenario:
A potential boundary dispute is identified between the property being sold and a neighboring property. A surveyor is hired to accurately define the boundary lines, and an agreement is reached with the neighbor, resolving the issue before the sale proceeds.
Conclusion
Thoroughly investigating the title of a property is essential to uncovering and addressing potential issues that could affect ownership and the transaction process. By identifying problems such as missing documents, unregistered interests, encumbrances, and boundary disputes, parties can take the necessary steps to resolve these issues. Ensuring a clear and marketable title protects the buyer's investment and provides peace of mind for all parties involved in the transaction.