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Leasehold conveyancing: Deducting different types of titles

Leasehold conveyancing - Deducting different types of titlesThis article discusses about deducing the title in the case of properties that are registered with absolute title and those that are registered with a good leasehold title.

Lease registered with absolute title

Both SC and SCPC stipulate that the seller should provide official copies of the register along with the plan and a copy of the lease to the buyer. Once this is done, the buyer shall be treated as if he is fully aware and accepting the terms of the lease. The Open Registry concept always helps the buyer to inspect the seller’s title.  Since the title is guaranteed by the Land Registry, the buyer need not investigate the title to the freehold or superior leases.

Lease registered with good leasehold title

According to both SC and the SCPC, the seller should provide the buyer with the official copies of the register and the title plan along with a copy of the lease. Once this is done, the buyer is then said to have entered into the contract knowing and fully accepting terms of the lease. Just because the property is registered with a good leasehold title, it does not guarantee that the freehold reversion title is good as well. Thus, the buyer should insist that the superior title is also deduced, although he is not entitled to do so under the general law.  This should be dealt with through separate provisions in the contract because neither set of standard conditions deal with this.

The Lender’s Handbook also provides that unless the title to the freehold reversion is deduced, the lease shall not be acceptable. This is deduced by the methods that are applicable to unregistered land. The registers are open to the public thus making it easy for the buyer to make a search on the reversionary title, even when the seller is unable or unwilling to deduce it.

Unregistered lease

S44 of the LPA 1925 states that a buyer is within his rights to inspect titles related to all leases, sub-leases and assignments for the past 15 years. However, he is not entitled to examining a superior title. This may enable him from deducing only a good leasehold title (unless the reversionary is already registered with an absolute title) and may not be acceptable to the buyer’s lender. In such cases, it is common to include a clause in the contract that the seller should deduce the reversionary title, as well. Where title is deduced, the buyer will also want to ascertain if the property has a good freehold title by examining the title at least 15 years from the date of grant of lease.

Photo courtesy: Jens Mayer

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