Investigation of Freehold Title — SQE1 FLK2 Property Law and Practice

A trainee is asked to read the official copies of a registered freehold title, and to report anything affecting the buyer's plans. The buyer wants to run a dog-grooming business from the garage. She reads the property register. She reads the proprietorship register. Seller named as sole proprietor, title absolute, nothing adverse in either. She reports that the title is clear. Is she right? No.

She never opened the third register. It carries a bank's legal charge, a covenant against any trade or business, and notice of a neighbour's right to pass over the driveway. The covenant alone destroys the reason her client is buying. Investigation of Freehold Title. Keep the trainee in mind.

Here is the route. What investigating title is for, and what it answers that a survey never does. Then registered title: the three registers, the classes, and the plan. Then unregistered title, and the root you are entitled to insist on. Then the issues that turn up, from squatters to chancel repair. Then what to do about them, and how to report.

Start with what the exercise is for. Investigating title answers two questions that nothing else in the transaction answers. Does the seller own the estate he has contracted to sell, and can he transfer it? And what comes with the house? The easements it enjoys, the covenants and charges that bind it, the restrictions that will block registration.

Notice what that leaves out. A structural survey tells you about the building. A valuation tells the lender about the price. Neither tells you who owns the land or what is against it. And thirty years of quiet occupation proves nothing either: a long-standing occupier may hold only a possessory title. Failing to investigate properly is professional negligence.

Two systems, and the split is lopsided. About 87% of land in England and Wales is registered, and about 13% is not. Registered land is governed by the Land Registration Act 2002, and it rests on three principles. The mirror principle: the register reflects what affects the title. The curtain principle: trusts are kept off it. The insurance principle: the state guarantees it.

Two sections give those principles teeth. Section 58 makes registration conclusive: on registration the legal estate vests in the registered proprietor, even where it otherwise would not have. And section 66 gives a general right of inspection, so the register is a public document. Anybody can buy a copy of anybody's title.

Now the three registers, and they answer three different questions. The property register is the what. The proprietorship register is the who. The charges register is what is against it. Download the official copies and you get all three. Read all three.

The property register describes what is being sold. Address and description, the title number, the extent by reference to the title plan, and the easements that benefit the property. Rights of way, rights to park, drainage. If your client is buying a right, this is usually where you find it.

The proprietorship register names the owner. Current proprietor, class of title, and often the price paid on the last registration. Three classes for freehold. Absolute, which is the best the registrar can grant. Possessory, granted where the claim rests on possession rather than the documents. And qualified, which is rare, where a specific defect is excepted from the guarantee.

Possessory title is the one to watch. It is typically granted where the deeds were lost or destroyed, and the register records that the title is subject to any adverse interest subsisting when it was first registered. The state guarantee does not reach those. Somebody with an older paper title could in principle assert it. The answers are indemnity insurance, and an application to upgrade after a period of ownership.

And the charges register, which is where our trainee came unstuck. It carries everything that burdens the title. Legal charges, usually mortgages. Restrictions, limiting how the proprietor may deal with the land. Restrictive covenants. Notices protecting third-party rights: easements granted over the land, leases, options.

So read every entry, and work out which ones die at completion and which ones survive it. The bank's charge will be discharged out of the price. The neighbour's right of way will not. And the covenant against trade or business is the one that matters, because it defeats the whole purpose of the purchase. That is a conversation to have before exchange, not after.

Then the title plan, and one rule about it earns marks every time. The plan is prepared from Ordnance Survey mapping and shows the property edged in red. Section 60 of the 2002 Act provides that this is a general boundary. It identifies the land. It does not determine the exact legal line unless that line has been determined under the statutory procedure.

Which means a buyer who measures a neighbour's new fence at half a metre inside the red edging has proved nothing at all. Where the line actually falls is a question of fact, answered from the conveyance that first divided the land. Coloured lines on the plan, blue, yellow, brown, mark rights benefiting or burdening the property, so check those too.

Unregistered title next, and it is now the minority case. There is no register and no state guarantee. Ownership is proved by deeds, and the seller's solicitor sends an epitome of title. The root document. The chain of conveyances and transfers after it. Anything creating rights over the land. And evidence filling any gaps.

The root of title is the starting point, and it has four requirements. It must contain an adequate description of the property. It must deal with the whole of the legal and equitable interest. It must cast no doubt on the title. And it must be at least fifteen years old.

That fifteen has a history worth knowing. Section 44 of the Law of Property Act 1925 originally fixed the period at thirty years. Section 23 of the Law of Property Act 1969 cut it to fifteen. So a seller who offers you a conveyance from 2016 for an exchange in 2026 is ten years short, and you are entitled to have title deduced from further back.

Now the issues that actually turn up, and there are five worth your time. Adverse possession first. For registered land, Schedule 6 lets a squatter apply to be registered after ten years of adverse possession ending with the application. The registrar notifies the proprietor, who has 65 business days to object, and if he objects the squatter succeeds only in limited circumstances.

Two points follow for a buyer. Eight years of a neighbour keeping his greenhouse on your strip is not enough for him to apply, but it is a problem worth solving before completion. And section 96 disapplies the limitation period for registered land, so time alone never extinguishes the proprietor's title. Walk the boundaries. Look for gardens that have crept.

Second, easements. A right benefiting one piece of land over another: rights of way, light, drainage, support, and wayleaves for utilities. Easements benefiting the property are usually in the property register. Easements burdening it may be noted in the charges register, or shown on the plan, or nowhere at all, which brings us to the third issue.

Covenants. A restrictive covenant is a promise not to do something on your own land for the benefit of other land. Its burden runs in equity, so it binds successors who were never party to it. That is Tulk v Moxhay, from 1848, and on registered land the covenant is protected by notice on the charges register. A man who parks a motorhome in breach of a 1995 estate covenant cannot answer that he never agreed to it.

But the burden of a positive covenant does not run with freehold land, at law or in equity. That is Rhone v Stephens, from 1994. And whether a covenant is positive is a question of substance, not wording. The test is whether the covenantor has to put his hand in his pocket. A covenant not to permit a boundary wall to fall into disrepair compels expenditure, so it is positive in negative clothing, and it does not bind the buyer.

Fourth, and this is the limit of the mirror principle: overriding interests. A handful of rights bind a buyer of registered land although nothing appears on the register. They are set out in Schedules 1 and 3 to the 2002 Act. Legal leases of seven years or less. Public rights, such as a footpath on the definitive map. Certain legal easements. And the rights of people in actual occupation.

Actual occupation is the one that costs money. An elderly aunt who contributed to the purchase price and has lived there ever since may have a beneficial interest under a trust, and her occupation makes it override. That is Williams and Glyn's Bank v Boland, from 1981, and the register will say nothing about her.

The answer is overreaching, and it is a practical step rather than an argument. Require a second trustee to be appointed and pay the purchase money to both of them. The beneficial interest is then swept off the land and attaches to the proceeds instead. That is City of London Building Society v Flegg, from 1988. It is why a sale by a sole proprietor with an occupier in the house needs a second signature.

A prescriptive easement can override too. Twenty years of open use of a defined track, without permission and without objection, can create a legal easement. It binds a buyer where it is obvious on a reasonably careful inspection. A worn gravel track with its own gate is obvious. This is the reason you inspect the property and do not simply read the file.

Fifth, chancel repair liability. An ancient obligation attaching to the owner of former rectorial land to contribute to repairs to the chancel of the parish church, and it was never abolished. What changed was its conveyancing reach. At the end of 12 October 2013 the transitional period in section 117 of the 2002 Act expired, and the liability ceased to be capable of overriding.

So a buyer of a registered estate for valuable consideration now takes free of it, unless it is protected by a notice on the register. Which is not quite the end of the story. A notice could still be entered before your buyer's own disposition is registered. That residual risk is why a chancel check search comes back positive and the answer is still a cheap indemnity policy.

Which brings us to solutions generally. Indemnity insurance is the workhorse. One premium, cover that runs on to successors, and lenders usually accept it. But know its limits. Insurers will not cover a known claim or a live dispute, and insurance does not remove the burden. It pays out if the burden is enforced.

The alternatives are more work. A statutory declaration to explain a gap or regularise a long-standing position, worth only as much as the declarant's honesty. An application under section 84 of the Law of Property Act 1925, to the Upper Tribunal, to discharge or modify a restrictive covenant. Grounds such as obsolescence. Expensive and uncertain. A boundary agreement. Rectification of a register error. Or advising the client to walk away.

Last, the report on title. You have found what you have found, and now you have to tell a client who is not a lawyer. Confirm you have a good root. Describe what is being sold. Set out the rights that benefit it and the burdens that bind it. Explain every defect and what you recommend doing about it.

Write it in plain English, because a confused client cannot give instructions. Then get those instructions. Accept as it stands, require insurance, renegotiate the price, or withdraw. And write the decision down. If the problem surfaces in three years, the email in which your client told you to proceed is what protects you.

A word on how SQE1 tests this. You will not be asked to name a case or quote a section number. You get a scenario, five answers, and one instruction: pick the best one. So learn the rules, and how they decide facts. The names in this episode are memory pegs, nothing more.

If you keep only three. Tulk v Moxhay, for why a covenant your client never made still binds him. Rhone v Stephens, for the positive covenant that does not. And the pairing of Boland and Flegg: an occupier with a beneficial interest overrides, and paying two trustees sweeps it off the land.

Four traps the examiners set. One: the register is not the whole story. Overriding interests bind although nothing appears on it, so an answer that says the register is conclusive as to everything affecting the estate is wrong. Inspect the property, and ask who is living there.

Two: the red edging is not a boundary survey. It is a general boundary for identification. A discrepancy on the ground proves nothing, and the exact line comes from the conveyance that first divided the land, not from the plan.

Three: read a covenant for substance, not for wording. Not to permit a wall to fall into disrepair sounds negative and is positive, because complying costs money. The burden of a positive covenant does not run with freehold land, however carefully it was drafted.

Four: indemnity insurance is not a cure. It does not remove the burden, and it is unavailable for a known claim or a live dispute. And approaching the person who benefits from a covenant, to ask about it, can destroy the insurability of the risk. Insure first, ask questions second.

Quick check. A man is buying a registered house whose garden runs down to a lane. The register discloses nothing but the seller's charge. On inspection there is a well-trodden path across the bottom of the garden, between two gaps in the hedge. The local search records it on the definitive map as a public footpath. He wants to fence it off, and says anything not on the register cannot concern him.

Will the footpath bind him although the register does not mention it? Three candidate answers. One: no, the register is conclusive as to the estate and all that affects it. Two: no, a right of way must be protected by notice to bind a buyer for value. Three: yes, a public right of way binds a buyer without any entry on the register. Pause here if you want a moment.

The answer is three. A handful of interests bind a buyer of registered land although nothing appears on the register: the overriding interests, now confined to the short lists in Schedules 1 and 3. Public rights are among them. So the footpath binds him whether or not he knows of it, and fencing it off would obstruct a highway.

Why the others fail. One states the mirror principle as though it had no exceptions, and the exceptions are the whole point. Two applies the rule for interests that do need protecting to a public right, which does not. And notice how he found it. Inspection and the local search, not the register.

Five things to take away. One: three registers, and all three matter. What is being sold, who owns it, and what is against it. Two: the red edging is a general boundary, and possessory title means the state guarantees nothing about what came before registration.

Three: for unregistered land, a good root describes the property, passes the whole interest, casts no doubt, and is at least fifteen years old. Four: restrictive covenant burdens run with the land, positive ones do not, and substance beats wording. Five: overriding interests bind without any entry, so inspect the property and ask who lives there.

And our trainee? Two registers out of three, and the one she skipped was the one carrying the covenant that ends her client's business before it starts. Open the charges register first, not last. Next time, Pre-Contract Searches and Enquiries.

Practise this topic with exam-style questions at sqe1prep.co.uk. This episode is for education and exam revision only, not legal advice, and we are not affiliated with or endorsed by the SRA or Kaplan.