Learning Outcomes
After studying this article, you will be able to explain the landlord’s obligations when deducing title on the grant of a lease or underlease, distinguish the requirements for registered and unregistered land, identify the difference between legal and equitable leases, and understand the significance of absolute and good leasehold title. You will also be able to apply these principles to SQE1-style scenarios and avoid common pitfalls in exam questions.
SQE1 Syllabus
For SQE1, you are required to understand the process and requirements for deduction of title by a landlord when granting a lease or underlease. Focus your revision on:
- The landlord’s duty to deduce title when granting a lease or underlease
- The difference between deduction of title for registered and unregistered land
- The statutory requirements for deducing title (including LPA 1925 s44 and LRA 2002)
- The distinction between legal and equitable leases and its impact on title deduction
- The meaning and implications of absolute leasehold title and good leasehold title
- Practical issues that may arise, such as missing documents or third-party consents
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 documents must a landlord provide to deduce title when granting a lease of registered land?
- How does the deduction of title differ for unregistered land?
- What is the difference between absolute leasehold title and good leasehold title?
- When might a lease be equitable rather than legal, and how does this affect title deduction?
Introduction
When a landlord grants a lease or underlease, they must prove their authority to do so by deducing title. This process ensures the tenant receives a valid leasehold interest and that the landlord is entitled to grant the lease. The requirements for deduction of title depend on whether the land is registered or unregistered, and whether the lease is legal or equitable. Understanding these rules is essential for SQE1 and for advising clients in practice.
Deduction of Title: Purpose and Overview
Deduction of title is the process by which a landlord demonstrates their legal right to grant a lease or underlease. The tenant (and any lender) needs to be satisfied that the landlord owns the estate out of which the lease is granted and that there are no defects or undisclosed burdens that could undermine the leasehold interest.
Key Term: deduction of title
The process by which a landlord proves their legal right to grant a lease or underlease, typically by providing documentary evidence of ownership and authority.
Registered Land: Deduction of Title
For registered land, the landlord must provide official copies of the register of title and the title plan from HM Land Registry. These documents confirm the landlord’s ownership, the class of title, and any restrictions or encumbrances affecting the property.
Key Term: official copies
Certified copies of the register and title plan issued by HM Land Registry, providing conclusive evidence of the registered proprietor’s title.
The register will also reveal any mortgages or restrictions that may require third-party consent before a lease can be granted. The landlord must ensure that all such consents are obtained and that the lease does not breach any registered burdens.
Worked Example 1.1
A landlord wishes to grant a 15-year lease of a shop. The title is registered with absolute title. What must the landlord provide to deduce title?
Answer: The landlord must provide official copies of the register and title plan, showing they are the registered proprietor with absolute title. If there is a registered charge, the landlord must obtain the lender’s consent to the lease.
Unregistered Land: Deduction of Title
For unregistered land, the landlord must provide an epitome or abstract of title, tracing ownership back at least 15 years from the date of the lease. The chain of title must be clear and unbroken, with all relevant deeds, conveyances, and supporting documents included.
Key Term: epitome of title
A chronological list of title deeds and documents, with copies attached, evidencing ownership of unregistered land.
The landlord must also provide evidence that any mortgages have been discharged or that the lender consents to the lease. If any documents are missing, the landlord may need to obtain indemnity insurance to protect the tenant.
Worked Example 1.2
A landlord owns unregistered land and wants to grant a 10-year lease. The last conveyance is dated 20 years ago. What must the landlord provide?
Answer: The landlord must provide an epitome of title starting with a good root of title at least 15 years old, showing an unbroken chain of ownership to the present. All relevant deeds and supporting documents must be included.
Legal and Equitable Leases
A lease will be legal if it is granted by deed for a term exceeding three years and takes effect in possession. If the lease is not granted by deed, or if other formalities are not met, it may only take effect as an equitable lease.
Key Term: legal lease
A lease that satisfies all statutory requirements, including being granted by deed, for a term exceeding three years, and taking effect in possession.Key Term: equitable lease
A lease that does not meet all legal formalities but is enforceable in equity, usually arising from a valid contract to grant a lease.
Legal leases can be registered or noted on the title, providing security for the tenant. Equitable leases may be harder to discover from the title documents and may not provide the same level of protection.
Worked Example 1.3
A landlord agrees in writing (not by deed) to grant a 7-year lease, and the tenant takes possession and pays rent. What is the status of the lease?
Answer: The lease is equitable, as it was not granted by deed. The tenant has an equitable lease, which may be enforceable in equity but is not a legal estate.
Title Classes: Absolute and Good Leasehold Title
When a lease is registered, the class of title may be absolute leasehold or good leasehold. The distinction is important for both landlord and tenant.
Key Term: absolute leasehold title
The best class of leasehold title, guaranteeing both the lease and the landlord’s title to the superior estate.Key Term: good leasehold title
A class of title confirming the validity of the lease, but not guaranteeing the landlord’s title to the superior estate.
Absolute leasehold title gives the tenant maximum security. Good leasehold title may be granted if the landlord cannot produce evidence of the superior title, exposing the tenant to some risk if the landlord’s title is later challenged.
Exam Warning
If a lease is registered with good leasehold title only, the tenant’s interest is not guaranteed against defects in the landlord’s superior title. This may affect the lease’s value and marketability.
Practical Issues in Deduction of Title
Solicitors must review all documents provided by the landlord, check for missing links, and ensure that all necessary consents are obtained. Common problems include:
- Missing deeds or incomplete chains of title (especially for unregistered land)
- Undischarged mortgages or restrictions requiring consent
- Restrictive covenants or other burdens affecting the property
If issues cannot be resolved, indemnity insurance may be required to protect the tenant and any lender.
Worked Example 1.4
A landlord’s title to unregistered land is missing a deed from 18 years ago. What should the landlord’s solicitor do?
Answer: The solicitor should try to locate the missing deed. If it cannot be found, they may recommend indemnity insurance to protect the tenant against possible claims.
Key Point Checklist
This article has covered the following key knowledge points:
- The landlord must deduce title when granting a lease or underlease, proving their authority to grant the interest.
- For registered land, deduction of title is by official copies of the register and title plan.
- For unregistered land, deduction of title is by an epitome or abstract of title tracing ownership back at least 15 years.
- Legal leases require a deed and compliance with statutory formalities; otherwise, only an equitable lease arises.
- Absolute leasehold title guarantees both the lease and the superior title; good leasehold title does not guarantee the superior title.
- Solicitors must check for missing documents, third-party consents, and burdens affecting the property, and may need to arrange indemnity insurance if issues arise.
Key Terms and Concepts
- deduction of title
- official copies
- epitome of title
- legal lease
- equitable lease
- absolute leasehold title
- good leasehold title
