Investigation of title - Analyzing Land Registry official copy entries

Learning Outcomes

This article explains how to conduct an investigation of title for registered land by analysing the official copies of the register obtained from HM Land Registry. It focuses on the structure and content of the Property Register, Proprietorship Register, and Charges Register, highlighting common entries and their implications. After reading this article, you should understand the key information contained within each register, recognise potential title issues such as restrictive covenants, easements, charges, and restrictions, and know the initial steps required to address these issues in a conveyancing transaction, enabling you to apply this knowledge to SQE1 assessment questions.

SQE1 Syllabus

For SQE1, you are required to understand the practical steps involved in investigating title for registered land, specifically through the analysis of official copies. A thorough understanding of the registers and common entries is essential for advising clients effectively. Key areas for revision include:

• The structure and purpose of the Property Register, Proprietorship Register, and Charges Register.
• Identifying and interpreting entries relating to easements, covenants, charges, restrictions, and co-ownership.
• Recognising potential title defects or issues revealed by the official copies.
• Understanding the implications of different classes of title.
• Knowing the initial steps to take when adverse entries or potential problems are discovered.

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.

1. In which part of the official copies would you typically find details of restrictive covenants burdening the property?
   1. Property Register
   2. Proprietorship Register
   3. Charges Register
   4. Title Plan
2. Which class of title offers the highest level of state guarantee?
   1. Possessory Title
   2. Qualified Title
   3. Good Leasehold Title
   4. Absolute Title
3. What does a Form A restriction on the Proprietorship Register usually indicate?
   1. The property is subject to a mortgage.
   2. The registered proprietors hold the property as beneficial tenants in common.
   3. There are restrictive covenants affecting the property.
   4. The property benefits from an easement.

Introduction

Investigating title is a fundamental part of any property transaction. For registered land in England and Wales, the primary evidence of title is the register held at HM Land Registry (HMLR). Solicitors acting for buyers and lenders must meticulously examine the official copies of the register entries and the title plan to ascertain the nature of the seller's ownership, identify any rights benefiting the property, and, critically, uncover any defects or incumbrances that might adversely affect the property's value, use, or marketability. This article focuses on the practical analysis of these official copies.

Key Term: Investigation of title
The process of examining the legal title to a property to ensure the seller has the right to sell it, and to identify any matters that might adversely affect the property or its value.

Key Term: Official Copies
Copies of the register entries and title plan for a registered title, issued by HM Land Registry. They serve as the primary evidence of title for registered land.

STRUCTURE OF THE OFFICIAL COPIES

Official copies obtained from HMLR are divided into distinct sections, each providing specific information about the property. Understanding this structure is the first step in a systematic investigation.

The Header Section

The header provides administrative details essential for referencing the title:

• Title Number: A unique identifier for the registered title (e.g., LM12037). This must be quoted accurately in transactional documents.
• Edition Date: The date the register was last updated by HMLR, perhaps following a sale or new mortgage.
• Search From Date: The date and time the official copy was produced. This is critical for subsequent pre-completion searches.
• Land Registry Office: The specific HMLR office dealing with the title.

The Property Register

This register describes the property itself and the nature of the registered estate.

Key Term: Property Register
The part of the official copies that describes the property, states whether the title is freehold or leasehold, and details rights that benefit the property (e.g., easements).

Key elements to examine include:

• Property Description: Usually the postal address and a reference to the title plan (e.g., "edged with red"). You must check this corresponds with the contract description and the client's understanding.
• Tenure: Clearly states whether the title is Freehold or Leasehold. If leasehold, brief details of the lease (date, parties, term) will be included.
• Rights Benefiting the Property: Details any easements (e.g., rights of way over adjoining land) or restrictive covenants that benefit this property. The precise wording must be checked to ensure the rights are adequate for the client's needs.
• Exclusions: May note rights excluded from the title, such as rights to mines and minerals below the surface, or exclusions of rights to light or air over adjoining land.

The Proprietorship Register

This register identifies the legal owner(s) and specifies the quality of their title.

Key Term: Proprietorship Register
The part of the official copies that states the class of title, identifies the current registered owner(s) (proprietors), and lists any entries affecting their right to dispose of the property (e.g., restrictions).

Key elements to examine include:

• Class of Title: Indicates the quality of the title guaranteed by HMLR. The main classes are Absolute, Qualified, Possessory (for freeholds and leaseholds), and Good Leasehold (leaseholds only). Absolute Title provides the highest level of guarantee. Lesser titles may indicate potential issues or missing evidence and require further investigation or indemnity insurance.
• Registered Proprietor(s): Lists the name(s) and address(es) of the current legal owner(s). You must verify these match the seller(s) named in the contract. If there's a discrepancy (e.g., due to death, marriage, name change), evidence explaining the difference is required.
• Price Paid: For dispositions registered after 1 April 2000, the price paid by the current owner is usually stated. This can be useful commercial information but should be treated with caution as it may not reflect current market value.
• Restrictions: These limit the proprietor's ability to deal with the property, often requiring consent from a third party (like a lender) or compliance with certain procedures (like overreaching in co-ownership) before a disposition can be registered. The effect of any restriction must be carefully considered.
• Indemnity Covenant: May note if the current proprietor gave an indemnity covenant when they purchased, indicating potential ongoing liability for breaches of covenants (often positive covenants).

Key Term: Class of Title
A classification given by HM Land Registry indicating the quality of the registered title (e.g., Absolute, Possessory, Qualified, Good Leasehold), reflecting the level of state guarantee.

Key Term: Restriction
An entry in the Proprietorship Register limiting the registered proprietor's ability to make a disposition (e.g., transfer, mortgage) of the registered estate or charge.

The Charges Register

This register details burdens affecting the property.

Key Term: Charges Register
The part of the official copies that lists third-party rights burdening the property, such as mortgages (charges), restrictive covenants, easements, and notices.

Key elements to examine include:

• Mortgages/Charges: Details of any registered mortgages (charges) secured against the property, including the lender's name and address and the date of the charge. These must usually be discharged on or before completion.
• Restrictive Covenants: Details of covenants restricting the use of the property (e.g., limiting use to residential only, prohibiting alterations without consent). The exact wording is essential to assess the impact on the buyer's intended use.
• Positive Covenants: Although the burden of positive covenants doesn't typically run with the land, they are often listed in the Charges Register, especially if contained in the same deed as restrictive covenants. The presence of an indemnity covenant noted in the Proprietorship Register makes these practically relevant.
• Easements: Details of easements burdening the property (e.g., rights of way granted to neighbours over this property).
• Notices: Entries protecting third-party interests (e.g., estate contracts, home rights under the Family Law Act 1996, equitable charges). Notices can be 'agreed' or 'unilateral'. Unilateral notices can be entered without the proprietor's consent and may require investigation and removal.

Key Term: Notice (Land Registry)
An entry made in the register to protect a third-party interest affecting a registered estate or charge (e.g., a restrictive covenant, an option, or an equitable charge). It ensures the priority of the interest against subsequent dispositions.

Worked Example 1.1

The official copies for a freehold property being purchased by your client contain the following entry in the Charges Register: "A Conveyance of the land in this title dated 10 May 1975 made between (1) John Smith (Vendor) and (2) Mary Jones (Purchaser) contains the following covenant:- 'Not to use the premises hereby conveyed for any purpose other than as a single private dwellinghouse.'" Your client intends to run a small accountancy practice from a room in the house.

What advice should you give your client?

Answer: The covenant restricts the use of the property solely to that of a private dwelling house. Running an accountancy practice, even from a single room, would likely constitute a business use and therefore breach this restrictive covenant. You should advise the client that proceeding with their plan would risk enforcement action by whoever has the benefit of the covenant. Options include seeking a release or modification of the covenant, or obtaining indemnity insurance (though the latter may not be acceptable if the breach is deliberate and ongoing). The client may need to reconsider their purchase if the covenant cannot be dealt with satisfactorily.

ANALYSING THE ENTRIES: KEY CONSIDERATIONS

A systematic approach is essential when reviewing the official copies.

Tenure, Description and Plan

• Confirm the tenure (freehold/leasehold) matches the contract.
• Verify the property description and address.
• Examine the title plan carefully. Check the property edged red corresponds to the client's expectations and the contract plan. Note any other colourings/hatchings indicating rights of way, shared areas, or land removed from the title. Remember, Land Registry plans generally show indicative boundaries only ('general boundaries rule').

Benefiting Rights (Property Register)

• Identify any easements or covenants benefiting the property.
• Assess their adequacy: Is the right of way wide enough for vehicles? Does it operate at all times? Are the necessary rights for services (water, gas, electricity, drainage) present and adequate?
• Note any obligations attached to these rights, such as contributing to maintenance costs. Raise enquiries with the seller about past contributions and disputes.

Ownership and Restrictions (Proprietorship Register)

• Confirm the seller(s) match the registered proprietor(s). Investigate discrepancies (evidence of death, marriage, name change, grant of representation for personal representatives, power of attorney).
• Note the class of title. If not Absolute, investigate the reason and implications. Advise the client and lender. Consider indemnity insurance or seeking to upgrade the title.
• Analyse any Restrictions carefully. What action is needed to comply?
  • Lender Restriction: Requires consent from the lender to a disposition. The seller's solicitor must obtain this.
  • Form A Restriction: Indicates a tenancy in common. If a sole proprietor is selling, a second trustee must be appointed to receive the purchase money to overreach beneficial interests (unless the sole proprietor can prove sole beneficial entitlement, e.g., following the death of a joint tenant where the joint tenancy wasn't severed).

Worked Example 1.2

The Proprietorship Register for a property being sold by Alan states: "PROPRIETOR: ALAN JONES and BRENDA JONES of [address]". Brenda Jones died two years ago. A Form A restriction is also registered.

Can Alan sell the property on his own?

Answer: No. Although Alan is the sole surviving legal owner (as legal title is always held as joint tenants), the Form A restriction indicates that the beneficial interest was held as tenants in common. Brenda's beneficial share passed under her will or intestacy, not automatically to Alan. To sell the property free from Brenda's beneficial interest, Alan must appoint a second trustee to join him in the transfer and receive the purchase money. This overreaches the beneficial interest. The buyer should ensure the contract requires this appointment.

Burdens (Charges Register)

• Mortgages: Identify all registered charges. The seller's solicitor must provide an undertaking to discharge these on or before completion using the sale proceeds.
• Covenants (Restrictive): Note the exact wording. Assess the impact on the buyer's intended use/development plans. Investigate any past breaches by the seller. Consider options: release/modification, indemnity insurance.
• Covenants (Positive): Note the obligations. Check the Proprietorship Register for an indemnity covenant given by the current seller. If present, the buyer will need to give a similar indemnity in the transfer, making them indirectly liable. Enquire about past compliance and costs.
• Easements: Identify rights burdening the property (e.g., neighbour's right of way). Assess the impact on the buyer's use and enjoyment.
• Notices: Investigate the interest protected by any notice (agreed or unilateral). If it is adverse and not acceptable to the buyer, require the seller to arrange for its removal before completion. Home rights notices require the spouse/civil partner to consent and release their rights.

Exam Warning

Do not confuse the different types of entries. Restrictions (Proprietorship Register) limit the owner's power to deal with the land. Notices (Charges Register) protect third-party interests or burdens. Covenants (Charges Register) impose obligations regarding the use of the land. Ensure you know where to look for each type of entry and understand its specific effect.

ADDRESSING TITLE ISSUES

When investigation reveals potential problems (defects, adverse entries, missing information), the buyer's solicitor must:

1. Raise Requisitions: Ask specific questions of the seller's solicitor to clarify the issue or request action (e.g., provide missing consent, evidence of compliance, confirmation of mortgage discharge).
2. Inform Client and Lender: Explain the issue and its implications clearly. Obtain instructions on how to proceed. The lender's requirements may dictate the necessary course of action (e.g., insisting on indemnity insurance).
3. Negotiate Solutions: Seek remedies from the seller, such as rectifying a breach, obtaining third-party consent, providing indemnity insurance at their expense, or agreeing a price reduction.
4. Assess Risk: Evaluate the practical risk posed by the issue. Is enforcement likely? What are the potential consequences?
5. Consider Insurance: Where a risk cannot be eliminated (e.g., old restrictive covenants, minor access issues), defective title indemnity insurance may be a practical solution acceptable to both buyer and lender.

Revision Tip

Remember the principle of caveat emptor (buyer beware). While the seller has a limited duty to disclose certain title matters, the primary responsibility for discovering issues rests with the buyer's solicitor through thorough investigation of the official copies and appropriate searches and enquiries.

Key Point Checklist

This article has covered the following key knowledge points:

• Investigation of registered title involves analysing the official copies (Property, Proprietorship, and Charges Registers) and title plan from HMLR.
• The Property Register describes the land, tenure, and benefiting rights (easements, covenants).
• The Proprietorship Register identifies the owner(s), class of title, and any restrictions affecting their power to deal with the land.
• The Charges Register details burdens affecting the property, such as mortgages, restrictive covenants, easements, and notices.
• Common issues include restrictive covenants impacting use, positive covenant liabilities (via indemnity), undischarged mortgages, co-ownership complexities (requiring overreaching if tenants in common), and lesser classes of title.
• Restrictions (e.g., Form A for tenancy in common, lender restrictions) must be complied with for a disposition to be registered.
• Potential title issues must be identified, investigated via requisitions, reported to the client and lender, and resolved (e.g., through seller action, indemnity insurance) before exchange of contracts.

Key Terms and Concepts

• Investigation of title
• Official Copies
• Property Register
• Proprietorship Register
• Class of Title
• Restriction
• Charges Register
• Notice (Land Registry)