Investigation of a property title is one of the most important aspects of a conveyancing transaction. This article aims to help a conveyancing solicitor in investigating the title. It also discusses about the reasons for doing so.
Basically, the form in which it is investigated largely depends on whether the land is registered or unregistered; each of these is explained clearly. It also discusses some of the typical challenges faced by a property solicitor, and the ways to resolve them. Issues related to verifying a title, raising queries during an investigation are also discussed.
In order to make a successful investigation, the property solicitor should make regular and periodic notes during the process and take prompt steps to either rectify them or investigate further. There is no precise format for investigation and varies from solicitor to solicitor, but the underlying principle, i.e. the practice of maintaining a systematic record does not change.
Reasons for investigating a property title
There are two main reasons why a property lawyer should investigate a title. The following article explains them carefully:
Property seller’s investigation of a title
As explained earlier, there are two reasons why a seller’s solicitor conveyancing the transaction should investigate a title. First and foremost, they help the conveyancing solicitor to draft a contract for the sale of the property. The draft contract should clearly explain the terms and conditions of the sale, the part of land agreed to sale by the seller, etc. Without a thorough investigation, it is impossible to include all of these details accurately. Investigation also allows the conveyancing lawyer to anticipate problems that may arise in the future and how to deal with them. This can help in ensuring that the transaction proceeds without a hiccup.
The reasons for investigating a title may vary from a buyer and seller, but the method remains more or less the same.
Property buyer’s investigation of a title
Once the seller provides all documents related to the title of the land, it is the job of the buyer to ensure that the seller is capable of transferring what he has contracted to sell, and that are no defects that are likely to affect the interest of the buyer. Issues that are not to the satisfaction of the buyer should be raised as queries to the seller.
Modern day conveyancing makes it mandatory for the title to be investigated before the exchange of contract. This is to allow the buyer with an opportunity to raise questions regarding the title. By the time he enters into a contract, he would have full knowledge of all issues relating to the land. In fact, most contracts contain a provision that prevents a buyer from putting forth any demand on some or all aspects relating to the title, once the contract is exchanged. But if the title is to be deduced after the exchange (which is a rarity), a timetable is included in the contract that provides a schedule for the raising of queries and the time before which they should be responded.
Mortgage lender’s Investigation of title
It is natural for a lender to make sure that his investment is safe, and the property for which the money is advanced, is worth it. This is because, when the buyer defaults in payment, the lender can recover his investment by selling off the property. Such a power shall be of limited value if the title is defective. It also undermines the market value of the property, making it very difficult for the lender to sell the property and recover the loan. He will have to investigate the title thoroughly and take all steps to protect his investment.
If a conveyancing solicitor was instructed to act on behalf of the lender and the buyer, the investigation is carried out only once, but for both of them taking into account the particular interest of each. When the lender chooses to hire an independent solicitor, he carries out an independent investigation.
Photo courtesy: dynamosquito