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In unregistered title like we have in the Bahamas, the obligation of the seller is to show a good title starting with a good root, at least 30 years old and free from irremovable encumbrances or defects of which the buyer was not aware at the time of making the contract. Where this obligation is breached, the buyer is entitled to immediately reject the property. Note however that a removable defect, although it must be cleared off before completion, is known as a mere "matter of conveyance" and does not entitle the buyer to treat the title as bad. Examples are existing mortgages (at least where there is enough from the proceeds of sale to pay them off) and a missing trustee, as there the seller can easily appoint a new trustee so as to give a valid receipt and overreach any beneficial interest that might be floating around. See William and Glyn Banking Ltd. v. Boland.
A constructive trust will arise where someone is induced by a promise of sharing the property to commit some act to his or her detriment, such as giving up a protected tenancy or even making improvements to the property at his or her expense. And express trust can arise where the other occupier has made a financial contribution to the purchase price with the intention of having an interest in the property, but whose name does not appear in the deeds or the register of title. Classic examples are where a spouse or cohabitee helps with the initial deposit. Note tactfully that the same can apply to a spouse, in which case the spouse has separate property rights quite independently of, and in addition to, the rights of occupation given by the Matrimonial Causes Act. Thus if there is good evidence of trust, it should be overreached by ensuring that the purchase price is paid to at least two trustees.
The contract must be meticulously perused and the obligation of the seller noted. Check that the root shown in the abstract matches up with the root specified in the contract. Check also for encumbrances set out in the contract, subject to which the buyer has agreed to purchase. If per adventure, you stumble across restrictive covenants in the abstract which are not referred to in the contract, there is prima facie a clear breach, and you are entitled to raise a requisition calling for evidence that these covenants are no longer enforceable. Enforceable covenants will entitle your client to rescind the contract i.e. treat the contract as repudiated by the seller’s breach. While looking or trying to abstract root of title, ensure that enhanced care and diligence is exercised if you encounter a conveyance which does not contain a full description of the property. It must be 30 years and the basic rule is that a buyer must contain his curiosity as to the pre-root title. See Conveyancing and Law of Property Act Statute Laws of The Bahamas Section 3, subsection 4. See also Section 45, Law of Property Act 1925.
However, the classic root of title is a conveyance on sale. A legal mortgage can also be used, after all a legal mortgage is regarded as a purchaser. He, she or it examines the title thoroughly before risking money on it since the property may have to be sold to get the money back and it is therefore conventional practice to accept it as a root. Generally speaking, the above two instruments are commonly known as "best roots". Other documents that can be used as a good root include a voluntary conveyance, (I will have difficulty advising my client to accept this without more) or a specific assent.
Note however, that the trouble with these two documents – voluntary conveyance and/or a specific assent is that no money has changed hands, and no reliance can therefore be placed upon the donee’s or assentee’s solicitor having checked out the title. Besides equity does not aid a volunteer but a purchaser for value. What this means is that in the event of any legal dispute over or involving the property, subject to other consideration, equity will prefer a party who has furnished valuable consideration for the property to a volunteer. A volunteer is a person who has not furnished valuable consideration for the property. Thus a voluntary conveyance and a specific assent are not as good as a conveyance on sale or legal mortgage, although the older they are the less risk there will be of any body else being able to prove a better title to the property to which they relate.
Ensure that the abstract shows all documents dealing with the legal estate and peruse them and raise requisition where any uncertainty arises.
The following are a list of the documents to be included, all of which pass or confirm ownership of the legal estate.
Conveyance on sale.
Voluntary conveyance.
A voluntary disposition although this may be overturned by the court if bankruptcy of the donor occurs within five years of the gift.
Legal mortgages.
Receipt of legal mortgages.
Grant of Probate and Letters of administration.
It should be emphasized here that although juristically speaking the will gives an executor title to the property, in reality no legal sale can be completed without showing probate, which is confirmation of the executor’s right to deal with the property. As for Letters of Administration, note that - Letters of administration vest the legal estate in the administrators. Both grants, therefore, becomes documents or instruments of title.
Assents
On completion of administration, a personal representative (PR) should vest the property in the person beneficially entitled by means of an assent, even if this is the same person as the (PR). This is not however, necessary, if the property is to be sold immediately. The sale can be made in the capacity of PR.
Deeds of appointment and retirement of trustees
If a deed of appointment is by deed, it doubles up, as a conveyance of trust of property to the new trustee where title is unregistered. Similarly, with a deed of retirement, there is no need for a separate conveyance by the outgoing trustee to transfer his interest in the legal estate to the continuing trustees.
Court Orders
A classic example of a court order affecting ownership of the property is the appointment of a trustee in bankruptcy, the trustee immediately and automatically acquires title to the legal estate in unregistered land (and retrospectively to the act of bankruptcy)
Note that documents must also be shown which create encumbrances independently of any of the above, e.g.
Deeds of Covenant, restrictive or positive
Deeds of easement
Leases or tenancy agreements still affecting the property i.e., which have not expired by effluxion of time
Power of attorney
These must be shown if any abstracted document has been executed under a power of attorney, as it is vital to be satisfied that the power had been validly granted and had not been revoked.
Note that the abstract should also record death or marriage where this affects the title.
Do not abstract
Deed of Trust
The beneficial interests created under a deed of trust are of no immediate concern to a buyer. All the buyer needs to know is whether or not they exist. If they do, the procedure is to clear them off the land by overreaching i.e. paying the purchase money to at least two trustees.
The Will
Similarly, the beneficial interest under the interest is of no concern to the buyer. He can safely take a conveyance directly from a PR without querying whether there is any good reason for the sale. Any argument is to entitlement to the proceeds of sale is strictly between the PR and the beneficiary. A sole executor can give a valid receipt, so as to enable overreaching of the beneficiary interest. If the beneficiary wishes to show ownership of the property he or she must produce an assent from the PR.
Once you have decided what documents you have to put into the abstract if you are the seller’s solicito, the next thing is what form will it take. The modern practice is simply to photocopy the relevant documents in their entirety and append them to an "epitome" of title, which is no more than a glorified index and ensure that you read the documents through before putting pen to paper. |
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