Investigation of title - Notices and their implications

Learning Outcomes

This article explains the investigation of title in registered and unregistered land, focusing on notices, restrictions, and third-party interests. It covers the main types of notices affecting title, the distinction between registered and unregistered land in title investigation, methods of protecting and discovering third-party interests, implications of notices, restrictive covenants, and entries on the register for buyers and lenders, differences between notices and restrictions, the impact of overriding interests, Family Law Act home rights, and strategies for cancelling or removing notices and managing continuing liability under covenants and positive obligations.

SQE1 Syllabus

For SQE1, you are required to understand the investigation of title and the legal implications of notices in both registered and unregistered land, with a focus on the following syllabus points:

• the process of investigating title in registered and unregistered land
• the function and effect of notices, cautions, and restrictions on the register
• how third-party interests are protected and discovered
• the implications of restrictive covenants and indemnity covenants
• the consequences of failing to identify or address notices during conveyancing
• overriding interests under the Land Registration Act 2002 (Schedules 1 and 3), especially legal easements, short legal leases, and interests of persons in actual occupation
• protection of home rights under the Family Law Act 1996 and their removal
• Land Charges registration in unregistered land (e.g. Class D(ii) restrictive covenants; estate contracts; bankruptcy entries)
• lender requirements relevant to title (certificate of title, searches with priority, and discharge undertakings)

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. What is the purpose of a unilateral notice on the register of title?
2. How does a restrictive covenant bind a buyer in registered land?
3. What is the effect of a caution against first registration in unregistered land?
4. Why is it important to identify indemnity covenants during title investigation?

Introduction

When acting in a property transaction, you must ensure that your client receives a good and marketable title. This requires a thorough investigation of title, which includes identifying any notices, restrictions, or entries that may affect the property. Notices are a key mechanism for protecting third-party interests and can have significant legal and practical consequences for buyers, sellers, and lenders. In parallel, some interests bind despite non-registration (overriding interests), and in unregistered land certain interests must be protected at the Land Charges Department against the correct names. Appreciating these systems—and the steps to deal with problematic entries before exchange—is essential.

Investigating Title: Registered and Unregistered Land

The approach to investigating title depends on whether the land is registered or unregistered.

Registered Land

For registered land, the Land Registry maintains a central register divided into three main parts:

• Property Register: Describes the property and any rights benefiting it.
• Proprietorship Register: Identifies the registered owner and any restrictions on their power to deal with the land.
• Charges Register: Lists burdens affecting the land, such as mortgages, restrictive covenants, and notices of third-party interests.

You must review all three registers to identify any entries that could affect your client’s intended use or enjoyment of the property. Check for filed documents referred to on the register (e.g. historic transfers, deeds granting rights) and obtain official copies where necessary, as operative terms often lie within those instruments.

Key Term: notice (registered land)
An entry on the register protecting the priority of a third-party interest affecting the land, such as a lease, option, or restrictive covenant. A notice does not validate the right itself; it preserves its priority against later registrable dispositions for value.

Key Term: overriding interest
An interest that binds a buyer despite not appearing on the register, including short legal leases, certain legal easements, and interests of persons in actual occupation, subject to statutory conditions (LRA 2002 Schedules 1 and 3).

A common restriction is the Form A restriction, automatically entered when co-owners hold the beneficial interest as tenants in common, preventing registration of dispositions under which capital money arises by a sole proprietor unless a trust corporation acts or a court order authorises registration. Lenders commonly add restrictions requiring consent to dispositions; these must be complied with to complete registration.

Unregistered Land

For unregistered land, title is proved by a chain of deeds (the epitome of title) going back at least 15 years to a good root of title. You must check for:

• an unbroken chain of ownership
• proper execution and stamping of deeds
• registration of any land charges (such as restrictive covenants or estate contracts) against the correct names at the Land Charges Department
• any cautions against first registration

Key Term: caution against first registration
An entry made by someone claiming an interest in unregistered land, requiring the Land Registry to notify them if an application for first registration is made, giving the cautioner a short window to object or establish their claim.

Key Term: Class D(ii) land charge
The Land Charges Act 1972 class used to register restrictive covenants (post‑1925) affecting unregistered land. If not registered against the correct names, the burden will not bind a purchaser for money or money’s worth.

Failure to register a registrable land charge renders it void against a purchaser for value (e.g. a restrictive covenant not registered as Class D(ii) or an option not registered as a Class C(iv) estate contract). Always search against all relevant variations of names and historic counties, and across the full period of ownership.

Types of Notices and Their Implications

Notices are used to protect a wide range of interests in land. Understanding their function and effect is essential for SQE1.

Agreed and Unilateral Notices

There are two main types of notice in registered land:

Key Term: agreed notice
A notice entered on the register with the consent of the registered proprietor or where the Land Registry is satisfied as to the validity of the interest. Typically applied for on form AN1 with evidence of the interest.

Key Term: unilateral notice
A notice entered on the register without the proprietor’s consent, usually by a third party claiming an interest. Applied for on form UN1 without proof at the outset. The registered proprietor can apply to cancel it, requiring the claimant to prove their interest.

Agreed notices are preferable when the interest is undisputed; unilateral notices offer a swift route to protect priority where consent is unavailable. On a cancellation application, the registrar notifies the beneficiary, who has a short period (15 business days) to object and provide evidence. If they do not, the unilateral notice will be cancelled. The Land Registration Act 2002 permits damages if a person enters a notice without reasonable cause resulting in loss to another (s77). In some cases, parties choose to seek court resolution (the court has jurisdiction to determine entitlement and order cancellation).

Cautions

Cautions are relevant in unregistered land and in the context of first registration.

• A caution against first registration protects a third party’s claimed interest in unregistered land.
• The cautioner is notified if an application for first registration is made, giving them an opportunity to object.
• Entering cautions without reasonable cause may incur liability; their use is limited and they are not a substitute for applying for first registration or Land Charges registration where appropriate.

Restrictions

Key Term: restriction
An entry in the proprietorship register limiting the registered proprietor’s ability to deal with the land, often to protect the interests of beneficiaries, lenders, or co-owners. A restriction must be complied with, or the registrar will not complete registration of a disposition.

Restrictions do not of themselves prove an interest; they control the registration process to protect those interests (e.g. co-ownership, trust arrangements, charity constraints, lender consent requirements). Standard forms exist (e.g. Form A for tenants in common). Bespoke restrictions can be drafted and, if their wording departs from standard forms, require HMLR approval.

Restrictive Covenants

Key Term: restrictive covenant
A promise restricting the use of land, enforceable against successors in title if properly protected (e.g., by notice in registered land or as a land charge in unregistered land).

In registered land, restrictive covenants typically appear in the Charges Register and are protected by notices. In unregistered land, post‑1925 covenants must be registered as a Class D(ii) land charge; otherwise, they will not bind purchasers for value. Consider compliance history, any consents required for alterations, and whether covenants are onerous for your client’s proposed use. Where covenants are unknown due to missing deeds, indemnity insurance may be appropriate.

Indemnity Covenants

Key Term: indemnity covenant
A promise by the buyer to indemnify the seller against liability for breaches of covenants affecting the property, especially positive covenants that do not automatically bind successors.

Positive covenants generally do not run with freehold land. Liability often continues in practice via a chain of indemnity covenants. Identifying and advising on these covenants is important, especially where the seller remains liable to an upstream covenantee after completion.

Key Term: home rights
Rights of occupation under the Family Law Act 1996 in favour of a non‑owning spouse or civil partner. In registered land they may be protected by a notice; in unregistered land they are registrable as a Class F land charge.

Home rights can prevent vacant possession or completion without waiver. Where present, obtain appropriate undertakings, waivers, and arrange removal before completion.

Practical Steps in Title Investigation

When investigating title, you must:

• obtain and review official copies of the register (registered land) or the epitome of title (unregistered land), including any filed documents referred to
• identify all notices, restrictions, and entries affecting the property, and understand whether they protect burdens or benefits
• check for any restrictive covenants, easements, rights to services, short leases, or occupants whose rights may override
• ensure that any positive covenants are backed by an indemnity covenant if required, and consider indemnity insurance for missing or unknown covenants or rights
• raise focused pre-contract enquiries to clarify compliance, consents, disputes, and occupation, and advise your client on the implications of any entries found

In registered land, plan pre-completion priority protection by OS1/OS2 searches and prepare to comply with restrictions at registration. In unregistered land, plan Land Charges searches (K15) against sellers (and bankruptcy-only searches K16 for individual buyers funding with a mortgage), appreciate the 15 working day priority, and assess whether first registration ought to have been triggered by prior dealings.

Worked Example 1.1

A buyer’s solicitor reviews the charges register and finds a unilateral notice protecting an option to purchase in favour of a third party. What should the solicitor do?

Answer:
The solicitor should ask the seller’s solicitor for details of the interest protected by the notice. If the interest is still valid, the buyer will take subject to it. If not, the seller should arrange for the notice to be cancelled before exchange.

Worked Example 1.2

You are acting for a buyer of unregistered land. The epitome of title refers to a restrictive covenant imposed in 1980 but there is no evidence of registration as a land charge. Will the buyer be bound?

Answer:
No. In unregistered land, a post-1925 restrictive covenant must be registered as a Class D(ii) land charge against the correct name. If it is not registered, it will not bind a purchaser for value.

Worked Example 1.3

A unilateral notice appears on the title without the seller’s consent. Your client requires a clear title. How is cancellation achieved?

Answer:
The registered proprietor applies to cancel the unilateral notice. The registrar then notifies the beneficiary and allows 15 business days to object and prove the claimed interest. If the beneficiary does not respond or cannot prove the claim, the registrar cancels the notice. If the beneficiary objects with evidence, the registrar or the court will determine entitlement. Damages may be payable under LRA 2002 s77 for notices entered without reasonable cause.

Worked Example 1.4

The proprietorship register contains a Form A restriction and the seller is a sole surviving proprietor. What is required for sale to proceed with capital money?

Answer:
A second trustee must be appointed so that overreaching can occur on receipt of capital money, enabling the buyer to take free of equitable interests. Alternatively, a trust corporation could act. The restriction ensures HMLR will not register the transfer unless the overreaching requirement is met or a court order authorises registration.

Worked Example 1.5

A non-owning spouse is in actual occupation and the title reveals a notice of home rights. What steps should be taken?

Answer:
Require the spouse to waive home rights in the contract and arrange removal of the notice before completion. Obtain an undertaking from the seller’s solicitor that home rights will be withdrawn and ensure vacant possession on completion. If home rights are not addressed, the buyer may be bound or completion may be delayed.

Worked Example 1.6

On an inspection of registered land, a well‑used pathway suggests a prescriptive right of way, but no easement is noted on the register. Will it bind the buyer?

Answer:
Possibly. Certain unregistered legal easements can override a registered disposition if the easement is apparent on a reasonably careful inspection or known to the buyer, or has been exercised in the year preceding completion. If conditions are met, the easement will bind even without registration. Proper enquiries and inspection are essential.

Worked Example 1.7

In unregistered land, the seller granted an option to a developer five years ago but never registered it. The buyer is purchasing for value. Is the buyer bound?

Answer:
An option is an estate contract and should be registered as a Class C(iv) land charge against the grantor’s name. If it was not registered, it will be void against a purchaser for money or money’s worth and will not bind the buyer.

Consequences of Overlooking Notices

Failing to identify or address notices can result in:

• the buyer being bound by third-party rights (e.g., leases, options, covenants), drastically restricting use or development
• overriding interests biting despite non-registration (e.g., an occupier’s equitable interest in actual occupation)
• title defects affecting marketability and value, complicating future sales and remortgages
• lender refusing to advance funds or imposing conditions, such as retention or additional insurance
• completion delays where restrictions are not complied with, or interests (e.g. home rights) are not removed
• potential litigation or enforcement action from beneficiaries of protected interests or covenants

Exam Warning

Failing to check the details of a unilateral notice or restrictive covenant can leave your client exposed to enforcement or loss of value. Always raise enquiries and ensure problematic entries are dealt with before exchange.

Pre-Contract Enquiries and Searches

In addition to reviewing the register or deeds, you must raise pre-contract enquiries and conduct relevant searches to discover:

• undisclosed occupiers or rights, and whether anyone other than the seller is in occupation
• planning permissions or enforcement notices, and any restrictions such as Article 4 Directions or conservation area constraints
• environmental risks, contamination designation, or flood history
• local land charges (LLC1) and CON29 enquiries of the local authority
• water and drainage (CON29DW/CommercialDW) to confirm adoption and connections
• mining or other location‑specific searches where indicated
• index map searches (SIM) for land that appears unregistered
• bankruptcy-only searches (K16) for individual buyers funding with a mortgage, and company searches for corporate buyers or sellers
• pre-completion searches with priority (OS1/OS2) in registered land and Land Charges K15 searches in unregistered land

Accurate replies to enquiries are essential. Misleading answers can result in claims for misrepresentation. If restrictive or positive covenants exist, raise enquiries about compliance, consents, notices served, and any disputes. For known breaches that cannot be remedied pre-exchange, consider indemnity insurance (ensuring wording and circumstances preserve coverage—for instance, avoid contacting the covenantee if insurance depends on absence of approach).

Key Term: caution against first registration
An alert lodged to secure notification of an application for first registration, enabling the cautioner to object or establish a claimed interest. It is not a substitute for Land Charges registration or first registration when those are required.

Revision Tip

Always check that all notices and restrictions have been properly dealt with before advising your client to exchange contracts. In registered land, use OS1/OS2 priority searches strategically; in unregistered land, make comprehensive Land Charges searches against all relevant names and historic counties for the full period of ownership.

Key Point Checklist

This article has covered the following key knowledge points:

• the process of investigating title in registered and unregistered land
• the function and effect of notices, cautions, and restrictions on the register
• how restrictive covenants and indemnity covenants affect buyers
• the consequences of failing to address notices during conveyancing
• the importance of raising pre-contract enquiries and conducting searches
• overriding interests and how inspection and enquiries help uncover them
• home rights under the Family Law Act 1996 and steps to remove or waive them
• how Land Charges registration protects interests in unregistered land and the effect of non-registration

Key Terms and Concepts

• notice (registered land)
• caution against first registration
• agreed notice
• unilateral notice
• restriction
• restrictive covenant
• indemnity covenant
• overriding interest
• home rights
• Class D(ii) land charge