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Most people who purchase property depend on their lawyer to perfect the transaction for them. Perfection of the transaction will include that necessary searches are made on the subject property before purchase and exchange of contract and eventual conveyance. It will also mean that the contract and conveyance are properly executed and stamped and registered.
Although failure to register the conveyance does not invalidate the conveyance/transaction, but it is one of the most dangerous consequences of sloppy conveyancing practice especially in unregistered conveyancing. Apart from the fact that such a document embodying the transaction/conveyance will not be admissible in evidence, the seller may sell the property to another innocent buyer or as I am presently confronted with in my practice, a person may claim adverse possession/occupation of the property and possibly obtain certificate of title from the court by Quieting Title proceeding – since a search of the land register will not reveal or disclose the interest of the buyer. Thus we strongly advise conveyancing lawyers to proceed to register a conveyance expeditiously or timeously immediately, the documents are signed and sealed and stamped. Clients have come to me with unregistered deed three years after they reasonably believed that they had purchased property. However I did not hesitate to advise them that they are holding a waste paper instead of a "land paper."
Lawyers in this jurisdiction should adopt the Law Society guideline on conveyancing to protect their clients. Remember that the maxim is caveat emptor – let the buyer beware. Thus if buyer, an unregistered title, (note that in reality nobody buys property, but title or interest) it will have to be registered within two months of completion. Note that if there are two owners, i.e. co-owners, there may be the need to include a section for declaration of trust – declaring if they are to hold for themselves as joint tenants, tenants in common, or on other trust. Instruction must be taken as to how they are to hold the property and advice given as to when a joint tenancy may or may not be appropriate.
Remember to include indemnity covenant. A covenant is a promise contained in a deed. Covenants are relevant to land law where they affect the use and occupation of land – i.e. one landowner may give to another a covenant to keep in repair the fence forming a common boundary line land or a covenant restricting the use of the land for building purposes.
Necessary Searches
Just before completion, a search should be made in the Registry of Land charges against the names of all the estate owners provided. Remember that registration of a land charge constitutes actual notice to all persons and for all purposes connected with the land. One should therefore search against not just the names of estate owners from the root of the title, but also against any pre-root names, which may for some reason appear on the abstract. This must in all case be investigated for the minimum statutory period of 15 years. If anything turns up in your searches, you must now raise a last minute requisition requiring the encumbrance to be cleared off. A promise that it would be cleared off is not good except that it is embodied in deed since it will be an agreement affecting an interest in land. See section 4, Statute of Frauds 1677; Section 40, Law of Property Act 1925.
The exception is where the entry relates to restrictive covenants subject to which the buyer has already agreed to buy the property. Exercise enhanced discretion when dealing with a second legal mortgage. Generally if you are dealing with a second legal mortgage, you will need to do the following:
Request a copy – All legal mortgages must be abstracted. Require it to be handed over on completion with the vacating receipt already signed unless you are happy to take an undertaking to provide the receipted mortgage after completion. This in turn depends on the financial status of the second mortgagee.
Also request a completed application to the land charges registry to cancel the second mortgage entry. If not, the second mortgage will continue to show up every time a search is made, even though it has been paid off.
Note that Section 198 Law of Property Act 1925 says that registration is notice to a purchaser. Proceeded with diligent speed with post completion searches and even up to the time of conveyance. Once you receive the abstract of title, you must proceed with speed. Remember the equitable maxim – Qui Prior est tempore, portior est jure (he who is first in time is stronger in law). For example, if there is undue delay between contract and completion or from receipt of abstract of title and completion, anything could happen in the interim, e.g. a search was made against Tom Sawyer on 1st December, and completion of the sale by Tom Sawyer to Agatha Johnson to place on 1st February. There is no guarantee that nothing happened in the register between 1st December and 1st February. Therefore, add the name of Tom Sawyer to your own pre-completion searches. Remember further that a land charge cannot be registered until it is actually created.
Bankruptcy Only Search – Full Land Charge Search Against The Buyer
Remember this is made against the buyer on behalf of a proposed mortgage. If a bankruptcy entry is shown up, the mortgage must grind to a halt. If the buyer completes the mortgage, it will not bind a trustee in bankruptcy if one is appointed.
Company Search
The main object of this search is to look for floating charges created by the company owe its assets. These will not appear in the land charges register. If a floating charge does appear, obtain a letter or certificate of non-crystallization of the charge. Note the distinction between fixed charge and floating charge which, unlike a fixed charge hovers over all the company’s undertakings and attaches upon all on crystallization – it is common to obtain this from the company although it is safer to obtain it from the lender.
Remember that the search in any real property transaction is not just against the title, to determine whether it is good and marketable title, but also against the individual owner of the land (e.g. cause list search) as to whether there is lis pendes or pending action relating to the subject property, etc. Any proposed buyer, lessee or mortgagee ought to ensure that this aspect of his life or business is handled by an experienced seasoned and competent property lawyer knows how to navigate through the uncharted waters or real property conveyancing.
In all, the lawyer must ensure that the deed is properly executed, any stamp duty paid and the transfer (the conveyance) sent to the Registry for registration. Note further that deductions or addition may also be made where one of the parties has been guilty of delay and the other is claiming the right to interest at the contract rate.
If the property is leasehold there will be an apportionment of rent and any service charges or insurance premiums paid to the landlord. If paid in advance, the apportioned amount will be added, and if outstanding or payable in arrears, an allowance will be made against the total. Appointment is on a daily basis if the property is sold, subject to an existing lease, rent paid in advance (and any other advance payments) will be apportioned in the buyer’s favour. Any payments accruing but not yet paid (e.g. where rent is payable in arrears) will be added to the purchase price. If the parties agree to send the deed by post, safest means should be used and documents sent through the post are at the risk of the buyer’s lawyer.
Note finally that on completion the contract obligations merge in the transfer of the legal title and the contract becomes spent as it has now been performed. It follows that after completion the buyer cannot bring an action on the contract. Note however that the doctrine of merger will not apply if the contract contains a collateral term not yet fulfilled, or something, when common sense dictates.
Hence, a contractual condition for a vacant possession on completion will continue to apply if the seller refuses to move. Do not fall into the trap using the other party’s seller. Please get your own lawyer. Using the other party’s lawyer on the authority of Smith v. Mansi is not wrong, but it may have unwanted implications in the event that something goes wrong. The attorney may claim that you did not retain him or ask him to advise on title and as such may deny owing you a duty. Besides it may be difficult for you to show that a sufficient relationship of propinquity exists between you and the other party’s layer for liability to arise against him an in your favour and thus satisfy that core ingredient of negligence liability. |
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