Learning Outcomes
After studying this article, you will be able to explain the purpose and main steps of investigating title in property transactions, distinguish between registered and unregistered title investigation, identify common title defects and encumbrances, and describe the process and objectives of reporting findings to the client. You will also be able to apply these principles to SQE1-style scenarios and answer related MCQs.
SQE1 Syllabus
For SQE1, you are required to understand the investigation of title and the process of reporting to the client in property transactions. Focus your revision on:
- the purpose and main steps of investigating title in both registered and unregistered land
- how to identify and assess encumbrances, defects, and third-party interests
- the process of raising requisitions and resolving issues before exchange
- the structure and objectives of a client report following title investigation
- how to communicate risks and recommendations clearly to the client
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 is the main objective of investigating title in a property transaction?
- Name two key differences between investigating registered and unregistered title.
- What is an encumbrance, and why must it be reported to the client?
- What are the essential elements that should be included in a report to the client after investigating title?
Introduction
Investigating title is a core step in any property transaction. The solicitor must check that the seller can transfer what they have agreed to sell and that the buyer will not inherit unexpected risks or liabilities. This process is essential for protecting the client’s interests and ensuring compliance with the principle of caveat emptor.
Purpose of Title Investigation
The main purpose of investigating title is to confirm that the seller has the right to sell the property and to identify any issues that could affect the buyer’s use, enjoyment, or value of the property. This includes checking for defects, encumbrances, and third-party interests.
Key Term: caveat emptor The legal principle meaning "let the buyer beware." The buyer is responsible for investigating the property’s title and condition before committing to purchase.
Registered vs Unregistered Title
The approach to investigating title depends on whether the property is registered or unregistered.
Key Term: registered title Title to land recorded at HM Land Registry, with ownership and most interests shown on the register.
Key Term: unregistered title Title to land not recorded at HM Land Registry, proved by a chain of title deeds and documents.
Registered Title
For registered land, the seller’s solicitor provides official copies of the register and title plan. The buyer’s solicitor checks these documents for:
- the identity of the registered proprietor
- the class of title (e.g., absolute, possessory, qualified)
- entries in the property, proprietorship, and charges registers (including mortgages, covenants, easements, restrictions, and notices)
- any discrepancies or defects
Unregistered Title
For unregistered land, the seller’s solicitor provides an epitome of title—a chronological bundle of deeds and documents starting with a good root of title (usually at least 15 years old). The buyer’s solicitor checks for:
- a clear and unbroken chain of ownership from the root to the seller
- proper execution and stamping of all deeds
- consistent property descriptions
- evidence of discharge of any mortgages
- registration and enforceability of covenants and easements
- Land Charges searches against all relevant estate owners
Key Term: good root of title A document at least 15 years old that deals with the whole legal and equitable interest in the property, contains a clear description, and does not cast doubt on the seller’s title.
Identifying Encumbrances and Defects
A key part of the investigation is to identify any encumbrances—rights or interests that burden the property. These may include:
- restrictive covenants
- easements (e.g., rights of way)
- mortgages or charges
- leases or tenancies
- notices and restrictions
- home rights or statutory rights
Key Term: encumbrance A right or interest that burdens land, such as a covenant, easement, mortgage, or lease.
If any encumbrances or defects are found, the solicitor must assess their impact on the buyer’s intended use and value of the property.
Raising Requisitions and Resolving Issues
If the investigation reveals unclear, missing, or problematic information, the buyer’s solicitor raises requisitions (formal questions) with the seller’s solicitor. These may relate to:
- unexplained breaks in the chain of title
- missing documents or plans
- compliance with covenants or planning permissions
- discharge of mortgages
- third-party rights or occupiers
The aim is to resolve all issues before exchange of contracts. If a defect cannot be remedied, the buyer may seek indemnity insurance or negotiate a price reduction.
Key Term: requisition A formal question or request for clarification raised by the buyer’s solicitor during the investigation of title.
Searches and Final Checks
In addition to reviewing title documents, the solicitor conducts searches and due diligence, such as:
- local authority search (planning, building regulations, road adoption)
- water and drainage search
- environmental and flood risk searches
- chancel repair liability search
- Land Charges search (for unregistered land)
- bankruptcy and company searches (for buyer and seller as appropriate)
Before exchange, final checks are made to ensure all documents are properly executed and that no new adverse entries have been made since the initial investigation.
Reporting to the Client: Purpose and Process
After completing the investigation, the solicitor must report clearly and comprehensively to the client. The report should:
- explain the seller’s right to sell and any title defects
- summarise all encumbrances and their practical impact
- highlight any risks or unresolved issues
- summarise the results of searches and enquiries
- advise on any further action required (e.g., indemnity insurance, negotiation, or withdrawal)
- provide clear recommendations and warnings
The report enables the client to make an informed decision about proceeding with the transaction.
Key Term: client report A written summary provided by the solicitor to the client, outlining the results of the title investigation, key risks, and recommendations.
Worked Example 1.1
Scenario: You are acting for a buyer of a registered freehold property. The charges register reveals a restrictive covenant prohibiting business use. The client intends to run a business from home.
Question: How should you report this to the client?
Answer: The report should explain the existence and effect of the restrictive covenant, warn that business use would breach the covenant, and advise on the risks (including possible enforcement). The client should be advised to reconsider their plans or seek a release or indemnity insurance if appropriate.
Worked Example 1.2
Scenario: During investigation of unregistered title, you find a missing link in the chain of ownership between the root of title and the seller.
Question: What is your next step?
Answer: Raise a requisition with the seller’s solicitor asking for evidence to explain the missing link (e.g., a copy of a missing conveyance or a statutory declaration). If the defect cannot be remedied, advise the client on the risks and possible solutions (such as indemnity insurance).
Revision Tip
When preparing a client report, use clear headings and bullet points. Focus on practical implications and highlight any risks or actions needed before exchange.
Key Point Checklist
This article has covered the following key knowledge points:
- The purpose of investigating title is to confirm the seller’s right to sell and identify any issues affecting the property.
- The process differs for registered and unregistered land.
- Encumbrances such as covenants, easements, and mortgages must be identified and assessed.
- Requisitions are raised to clarify or resolve defects or unclear matters.
- Searches and final checks are essential to uncover hidden risks.
- The client report must summarise findings, highlight risks, and provide clear recommendations.
Key Terms and Concepts
- caveat emptor
- registered title
- unregistered title
- good root of title
- encumbrance
- requisition
- client report
