Buying Property in UK

Buying a property will probably be your biggest single investment, so it’s important to do it properly so you could enjoy yourself without experiencing any encumbrances, such as people that you have nothing in common knocking on your door and claiming rights to your property. The key is getting all the facts about a property early on so that you can make an informed decision about whether you want to buy.

Good root of title – The first thing you need to know when considering conveyance is: who is the owner of the property. “Good root of title” is a deed to which title to a property is ultimately traced to prove that the owner has good title. It applies only in relation to unregistered land. Under the open contract rules, which govern the deduction of title in the Law of Property Act 1925 (LPA 1925), the seller is required to give evidence of title starting with a “good root of title” at least 15 years old (section 44, LPA 1925). If the land is to be registered at the Land Registry with title absolute, a good root of title and an unbroken chain of ownership are required.

To be a good root of title, a document must satisfy each of the following requirements:

It must deal with or show the ownership of the whole legal and equitable interest in the land in question.

It must contain a recognisable description of the property.

It must not contain anything that casts any doubt on the title.

Land charges register – You may request an official search of the index to obtain details of any entries registered against a particular name or names (s.10, LCA 1972).

A search should always be made in Land Charges by a prospective purchaser of unregistered land or their conveyancer. ‘Purchaser’ means any person (including a mortgagee or lessee) who, for valuable consideration, takes any interest in land or in a charge on land, and ‘purchase’ has a corresponding meaning (s.17, LCA 1972).

The search should be made against all the estate owners whose names appear in the abstract of title (including those, not being parties to the deeds themselves, who are referred to in the deeds or in schedules attached to deeds which form part of the title). Where a search certificate against previous estate owner(s) has been supplied as part of the abstract (covering the correct period(s) and against the correct name(s) and against the correct description of the property), that search need not be repeated assuming that it reveals no adverse entries.

In favour of a purchaser or an intending purchaser, the certificate, according to its tenor, shall be conclusive, affirmatively or negatively, as the case may be (s.10(4), LCA 1972).

However, the search itself must be correct in all respects – See more at: http://www.landregistry.gov.uk

Restrictive covenant – A restrictive covenant is a clause in a deed or lease to real property that limits what the owner of the land or lease can do with the property.

Examples of restrictive covenants are:

• not to keep a caravan on the property
• not to run a business from the property
• not to keep any animals other than domestic pets on the property
• not to display advertisements, bills or placards on the property other than a notice that the land or property is to let or for sale.

Restrictive covenants can be imposed by landowners that are disposing of property and wish to retain future control over what happens to it. Landowners can put whatever restrictive covenants they want on the land they are selling, although the terms have to be reasonable and capable of being adhered to.

The first step is to check if the covenant is registered; since 1925, covenants that are not registered either on the charges register or as a Class D entry on the charges register cannot be enforced.

Overreaching – It allows a purchaser of land on a conveyance of a legal estate to take a title unencumbered by the beneficial interests under a trust or settlement, whether he has notice thereof or not. It applies where there exists a trust of land in both registered and unregistered land.

Overreaching is the process by which the rights of beneficiaries under a trust of land, become detached from land on conveyance and attach to the proceeds of sale.

Thus a person holding only beneficial ownership can be said to have rights in the value of the land rather than the land itself. In most situations those with equitable ownership rights will also hold legal title so overreaching will not be a problem; since a conveyance of the property will require consent.

However, difficulties arise where the beneficial owner does not hold legal title as the trustees may convey the property without their knowledge or consent.

Overreaching ensures the purchaser of land takes the property free from any beneficial interests and applies irrespective of notice.

 

• Payment of capital moneys

 

In order for overreaching to operate, the purchaser must pay any capital moneys (the proceedings of sale) arising under the conveyance to at least two trustees or a trust corporation (s.27 Law of Property Act 1925). Overreaching cannot operate therefore where there is a single trustee.

This provides some degree of protection to beneficial owners in that it is less likely that two trustees would act in breach of trust as oppose to a single trustee. Where there is a single trustee, the rights of the beneficial owner are determined by the rules on priority. In registered land, the equitable interest may be protected as either a minor or overriding interest. In unregistered land, the doctrine of notice applies.

 

If you have bought a property and realise there is a covenant in place, don’t despair as there are ways of overcoming them and they may well have an expiry date. The best advice is to read the legal pack in detail before buying and speak to your legal adviser for advice about overcoming any obstacles to your development plans.