Contracts exchanged, the vendor’s solicitor deduces title. The contract has stipulated the nature of the title on offer, and it is for the vendor now to prove that he can convey a good title to the land. In days gone by, title was deduced by sending an Abstract of Title – a typewritten summary of the essence of the title deeds, set out in a traditional pattern. Today, the vendor probably sends photocopies of the relevant deeds (perhaps listed in an Epitome of Title). The purchaser’s solicitor examines the title and raises
requisitions – he sends a list of any objections he may have to the title
offered, perhaps asking the vendor’s solicitor for evidence of this event, or seeking further information about that. He also draws the draft conveyance and sends it to the vendor’s solicitor for approval.
Meanwhile, if the purchaser is borrowing some of the purchase price, work will be proceeding on drawing up the mortgage deed, formally reporting to the lender that the title is a good and marketable one, and requisitioning the money in time for completion. Many banks and building societies instruct the purchaser’s solicitor to act for them too, so as to save costs, but some lenders insist on instructing their own lawyers.
Shortly before the day fixed for completion, the purchaser’s solicitor will send a search form to the Land Charges Registry designed to check that there are no unexpected land charges registered in respect of the property. The purchaser will take the legal title on completion, and so the issue whether he is a BFP (remembering that notice, in this context, means registration) is to be judged as at the date of completion.
If the purchaser is borrowing some of the purchase price, a search will also be made at the Land Charges Registry against his name to check that no bankruptcy proceedings have been commenced against him.
The reply from the Land Charges Registry is in the form of an official certificate which gives details of any relevant entries. It carries a priority period of up to 15 working days. That means that the purchaser is not affected by anything registered between the date of search and the date of completion, provided he completes within (approximately) three calendar weeks of the date of the search.
If all is in order, completion takes place. The purchaser’s solicitor pays over the purchase moneys (usually ‘down the wire’ by electronic transfer of funds from his bank to the vendor’s solicitor’s bank), collects the deeds (probably by post) and completes the mortgage, if any. The purchaser is now the legal owner of the house, and may move in.
86
(c)
Post-completion
After completion, the vendor’s solicitor has only to tidy up the loose ends. He must redeem the vendor’s mortgage out of the proceeds of sale if he gave an undertaking to that effect. In any event, he reports completion and settles his account with the vendor.
The purchaser’s solicitor, on the other hand, still has much work to do. He must have the conveyance duly stamped and pay any stamp duty levied on it. Then he must convert the title from unregistered to registered by sending in the appropriate application form to the Land Registry. The application should be submitted within two months of completion.
(2)
REGISTERED CONVEYANCING
(a)
Pre-contract
The comparative simplicity of registered conveyancing becomes apparent at the very beginning of the conveyancing process. The vendor’s solicitor finds it much easier to draw the draft contract. He will doubtless requisition the Land or Charge Certificate from the vendor or his mortgagee, as he would requisition the title deeds for unregistered land, but he also applies to the Land Registry for office copy entries of the vendor’s title. These give him a clear and authoritative report on the current state of the title; he does not have to ferret through several deeds to find out. The actual drafting of the contract is easier too. The vendor’s solicitor simply describes the property by reference to the office copies, and sends the office copies out with the contract.
For the purchaser’s solicitor, the pre-contract stage is not very different. He still obtains his local search; he still makes his preliminary inquiries of the vendor, and he still awaits a mortgage offer. And the problem of tying in sale or purchase or both may still arise.
(b)
Post-contract
After contract, the vendor’s solicitor theoretically deduces title to the purchaser’s solicitor, but it is an empty obligation: the title consists of the office copy entries, and they were supplied with the contract. The purchaser’s solicitor raises his requisitions, but they are of a formal nature. There cannot be anything of great moment, for the title is guaranteed by the State. Moreover, the purchaser’s solicitor saw the title before contract, and if there had been anything untoward he would have delayed exchange of contracts until he was satisfied.
Drawing the transfer document is scarcely an onerous task. It is just a question of taking the appropriate Land Registry form and filling in the blanks. Mortgage arrangements (if any) do not differ very much from unregistered to registered conveyancing – save that the examination of title on behalf of the lender is simplified.
The final searches, however, are different. The purchaser’s solicitor sends his search to the Land Registry. The application states the date of issue of the office copies supplied by the vendor’s solicitor and asks whether there has been any entry on the register since that date. Armed with the office copies and an official certificate setting out the result of his search, the purchaser’s solicitor knows exactly what is the current state of the title. The official search carries a priority period of 30 working days. But – and this is the major difference – the purchaser needs not only to complete his purchase within the 30 days, he also needs within those 30 days to lodge at the Land Registry an application to register his purchase. The reason is that, whereas in the case of unregistered conveyancing the purchaser acquires the legal title on completion of the deed of conveyance, nevertheless in registered conveyancing he does not acquire the legal title until his name is entered on the land register. His registration as the new proprietor will be backdated to the date upon which his application was received at the Land Registry, but until he lodges his application, his interest in the registered land ranks only as a minor interest and is, therefore, vulnerable.
If the purchaser is borrowing money, a search will be made against his name at the Land Charges Registry to check for possible bankruptcy, but there is no point in doing a bankruptcy search against the vendor there. The purchaser of registered land takes the title as registered, and if there is no inhibition or other relevant entry at the Land Registry, then that is an end of the matter.
Otherwise, completion will follow the same procedure as in an unregistered transaction.
88
UNDERSTANDINGLANDLAW
(c)
Post-completion
After completion, the vendor’s solicitor tidies up the loose ends, as in the case of an unregistered transaction, and the purchaser’s solicitor also has the same sort of chores to perform. There are, however, two significant differences for him. First, an application to register dealings is more straightforward than an application for first registration. Second, he must be sure to get his application to the Land Registry before the expiry of the priority period of his search.
It is now necessary to say a little more about the estates of freehold. It will be recalled (see Chapter 5) that only one freehold estate can now exist at Law, namely the fee simple absolute in possession. Equity still recognises all three freehold estates, the fee simple, the entail and the life estate. These three are commonly referred to as equitable estates, but it is strictly more accurate to describe them as equitable interests, arising as they do under a trust.
It is proposed first to say something about the absolute or ordinary form of the three estates; then to consider modified or non-absolute estates; then to consider future interests, or estates which are not in possession.
(1)
NATURE OF THE THREE ESTATES
The essential nature of the three estates was explained in Chapter 5: •the legal fee simple absolute in possession is a virtually perpetual estate
and is in practice equivalent to absolute ownership;
•the equitable fee simple is the equivalent interest held under a trust; it is, in the eyes of Equity, the absolute or ultimate interest, but it may be temporarily subject to one or more particular estates;
•the entail is an interest under a trust which is inheritable (in the strict sense) by the lineal heirs of the original grantee;
•a life interest is an interest under a trust which lasts for the lifetime of the grantee or for the lifetime of another (pur autre vie).
90