RE2/3
Deduction of title
Certificate of title
What is this? Seller’s obligation to prove to buyer their ownership of the interest which they are purporting to
sell
Proved by producing documentary evidence of title
When is this done? Title to be deduced BEFORE exchange (Standard Conditions of Sale and Standard Commercial
Property Conditions)
Seller’s obligation Supply sufficient documentary evidence to the buyer to prove that they have the right to sell
the land
Method for Seller should pay for and supply official copies of their title to the buyer that are less than 6
deduction months old
o Official copies: copies prepared directly from the register which show up-to-date
position of the register
Investigation of title
Certificate of title
What is a certificate Certificate of title is a report about a property.
of title? - Includes information from searches and enquiries
- Includes information from official copies, ie register for title (charges, property,
proprietorship register)
Prepared by a solicitor and given to a BUYER and LENDER for a purchase
Contains a summary of all the important information both need to know about the property to
decide whether to buy/lend money for it.
Avoids duplication of investigation
Most firms use the City of London Law Society’s (CLLS) Certificate of Title
Can be used whenever there are dealings with a property
Who prepares it? When prepared by the seller’s solicitor it is usually addressed to buyer and lenders
o Avoids need for every party to carry out their own investigation
o Seller’s solicitor may prepare in cases such as where there is a development being sold
and purchasers bidding
each of the purchasers’ solicitors can examine the draft certificate when advising
client
saves a lot of time and expense
seller’s solicitor will already be familiar with property so can produce certificate
relatively quickly
When prepared by buyer’s solicitor it will be addressed to both the lender and the buyer
o avoids need for the lender’s solicitor to carry out his own investigation of title
o e.g. when the property is smaller
o will create certificate based on the information which he ascertained in pre-contract
searches and investigation of title
Why use it? Alternative to using a certificate of title is for each party’s solicitor to carry out their own
investigations, which can result in a lot of duplication of work
Does it provide Where buyer’s solicitor is preparing certificate, much of the information will have been obtained
sufficient security from the seller’s solicitor so qualifications will be needed with regards to fullness/accuracy of
information supplied
alone?
1
,RE2/3
Key stages of There are certain tasks which need to be completed whenever you prepare a certificate of title:
preparation review title documents
raise searches and enquiries and review results
prepare first draft of the certificate
raise enquiries of your client
review the valuation of the property
submit the draft certificate to the addressee’s solicitors for approval and negotiate their
amendments
revise the draft certificate
agree the form of certificate with the addressee’s solicitors
send the final draft to client for confirmation
agree the addressees
engross and date the agreed form of certificate
Completing the No amendments to the certificate: apart from inserting the addressee’s details, completing
certificate definitions in Schedule 1/2 or including/deleting the wording in square brackets - NO other
amendments can be made to the body of the certificate.
o below the relevant set of statements
• ask ‘is this true?’
• if statement is not true you need to make a disclosure against it in the box, but
NEVER amend the statement itself
Freehold property: where there is no lease, you can insert ‘not used’ in Part 1 of Schedule 4
and delete the table (also in Schedule 5 if there are no letting documents)
Occupational leases:
o if property is subject to numerous occupational leases, report in detail the ‘standard
form’ lease, then summarise the differences between each unit
o e.g shopping centre likely to be a standard form lease for each type of use
o where significant differences between each standard form lease report
separately on each standard form
Annexes to the certificate: avoid annexing copies of documents to the certificate
o instead summarise the terms of any relevant document
o if there is permission from the addressee, it is acceptable to annex copy documents or
extracts where appropriate (e.g. detailed provisions or plan)
Enquiries certificate contains a number of statements given on behalf of your client.
solicitor giving the certificate ask the client to either confirm statement is correct or make a
disclosure as to why it is not correct
Where the property is not owned by the company (client ): certificate generally assumes that
the property owner is the company (client) and that the property owner’s solicitor is giving the
certificate - but this will not always be the case - ie if buyer’s solicitor is giving certificate
o certificate will still contain all of the statements that the ‘company’ has told the
solicitor
o but it is not really the buyer who is telling the solicitor these things, it is the seller
in his replies to enquiries
o in such cases it is ideal to raise enquiries of both the property owner and the
buyer
where the buyer’s solicitor has already investigated the seller’s title to the
property, this is not appropriate
thus, disclosures need to be made in certificate for two reasons
CPSE enquiries are not as wide as the certificate statements
highly likely that the seller has not fully answered all the CPSE
enquiries see diagrams below
Confirmatory letter Client’s confirmation as to statements in the certificate :
o this letter should ask specific questions of the client about each of the confirmations
given in the certificate
o must be sent not more than 5 days before the date of the issue of the certificate
2
, RE2/3
Inspection: company needs to confirm that it has inspected the property not more than 20
working days before the date of the issue of the certificate
o necessary to liaise with the client regarding inspection arrangements
o if the inspection takes place more than 20 working days before the date of issue of the
certificate then an
o appropriate disclosure has to be made in the certificate
Valuers: copy of final draft of certificate must be sent to the valuers as certificate assumes they
have taken the final draft certificate into account when making their report/there is nothing in
the certificate which causes them to alter their report.
o advisable to provide the valuers with the initial draft as well
o to ensure that they have adequate opportunity to re-consider their valuation if the
certificate reveals any matters that they haven't taken into account
Problems with investigation of title
Trustees of land Registered land
- Restriction may be entered on proprietorship register which will indicate to buyer what
must be done to overreach beneficiaries’ interests
- If terms of restriction complied with, buyer will get GOOD title
- Disposition must be made by ALL trustees (at least 2) or a trust corporation
Appointing a further trustee
- If there is ONLY 1 trustee, buyer must insist that second trustee be appointed to
overreach interests of beneficiaries
- Appointment can be made prior to the contract for sale being entered into → new
trustee will be a party to the contract and bound by its terms
- Useful where new trustee is also in occupation of the property
- Appointment can be made by sole trustee who can enter into the contract on their own
and then appoint a SECOND trustee prior to completion in order to overreach and
receive the purchase price
Conveyance by trustees to themselves
- Must make enquiry into circumstances of transaction this disposal may be in breach
of trust, voidable by beneficiaries
But may be justified where:
there is proof of a pre-existing contract in favour of the trustee or
personal representative; OR
the personal representative was a beneficiary under the will or
3
Deduction of title
Certificate of title
What is this? Seller’s obligation to prove to buyer their ownership of the interest which they are purporting to
sell
Proved by producing documentary evidence of title
When is this done? Title to be deduced BEFORE exchange (Standard Conditions of Sale and Standard Commercial
Property Conditions)
Seller’s obligation Supply sufficient documentary evidence to the buyer to prove that they have the right to sell
the land
Method for Seller should pay for and supply official copies of their title to the buyer that are less than 6
deduction months old
o Official copies: copies prepared directly from the register which show up-to-date
position of the register
Investigation of title
Certificate of title
What is a certificate Certificate of title is a report about a property.
of title? - Includes information from searches and enquiries
- Includes information from official copies, ie register for title (charges, property,
proprietorship register)
Prepared by a solicitor and given to a BUYER and LENDER for a purchase
Contains a summary of all the important information both need to know about the property to
decide whether to buy/lend money for it.
Avoids duplication of investigation
Most firms use the City of London Law Society’s (CLLS) Certificate of Title
Can be used whenever there are dealings with a property
Who prepares it? When prepared by the seller’s solicitor it is usually addressed to buyer and lenders
o Avoids need for every party to carry out their own investigation
o Seller’s solicitor may prepare in cases such as where there is a development being sold
and purchasers bidding
each of the purchasers’ solicitors can examine the draft certificate when advising
client
saves a lot of time and expense
seller’s solicitor will already be familiar with property so can produce certificate
relatively quickly
When prepared by buyer’s solicitor it will be addressed to both the lender and the buyer
o avoids need for the lender’s solicitor to carry out his own investigation of title
o e.g. when the property is smaller
o will create certificate based on the information which he ascertained in pre-contract
searches and investigation of title
Why use it? Alternative to using a certificate of title is for each party’s solicitor to carry out their own
investigations, which can result in a lot of duplication of work
Does it provide Where buyer’s solicitor is preparing certificate, much of the information will have been obtained
sufficient security from the seller’s solicitor so qualifications will be needed with regards to fullness/accuracy of
information supplied
alone?
1
,RE2/3
Key stages of There are certain tasks which need to be completed whenever you prepare a certificate of title:
preparation review title documents
raise searches and enquiries and review results
prepare first draft of the certificate
raise enquiries of your client
review the valuation of the property
submit the draft certificate to the addressee’s solicitors for approval and negotiate their
amendments
revise the draft certificate
agree the form of certificate with the addressee’s solicitors
send the final draft to client for confirmation
agree the addressees
engross and date the agreed form of certificate
Completing the No amendments to the certificate: apart from inserting the addressee’s details, completing
certificate definitions in Schedule 1/2 or including/deleting the wording in square brackets - NO other
amendments can be made to the body of the certificate.
o below the relevant set of statements
• ask ‘is this true?’
• if statement is not true you need to make a disclosure against it in the box, but
NEVER amend the statement itself
Freehold property: where there is no lease, you can insert ‘not used’ in Part 1 of Schedule 4
and delete the table (also in Schedule 5 if there are no letting documents)
Occupational leases:
o if property is subject to numerous occupational leases, report in detail the ‘standard
form’ lease, then summarise the differences between each unit
o e.g shopping centre likely to be a standard form lease for each type of use
o where significant differences between each standard form lease report
separately on each standard form
Annexes to the certificate: avoid annexing copies of documents to the certificate
o instead summarise the terms of any relevant document
o if there is permission from the addressee, it is acceptable to annex copy documents or
extracts where appropriate (e.g. detailed provisions or plan)
Enquiries certificate contains a number of statements given on behalf of your client.
solicitor giving the certificate ask the client to either confirm statement is correct or make a
disclosure as to why it is not correct
Where the property is not owned by the company (client ): certificate generally assumes that
the property owner is the company (client) and that the property owner’s solicitor is giving the
certificate - but this will not always be the case - ie if buyer’s solicitor is giving certificate
o certificate will still contain all of the statements that the ‘company’ has told the
solicitor
o but it is not really the buyer who is telling the solicitor these things, it is the seller
in his replies to enquiries
o in such cases it is ideal to raise enquiries of both the property owner and the
buyer
where the buyer’s solicitor has already investigated the seller’s title to the
property, this is not appropriate
thus, disclosures need to be made in certificate for two reasons
CPSE enquiries are not as wide as the certificate statements
highly likely that the seller has not fully answered all the CPSE
enquiries see diagrams below
Confirmatory letter Client’s confirmation as to statements in the certificate :
o this letter should ask specific questions of the client about each of the confirmations
given in the certificate
o must be sent not more than 5 days before the date of the issue of the certificate
2
, RE2/3
Inspection: company needs to confirm that it has inspected the property not more than 20
working days before the date of the issue of the certificate
o necessary to liaise with the client regarding inspection arrangements
o if the inspection takes place more than 20 working days before the date of issue of the
certificate then an
o appropriate disclosure has to be made in the certificate
Valuers: copy of final draft of certificate must be sent to the valuers as certificate assumes they
have taken the final draft certificate into account when making their report/there is nothing in
the certificate which causes them to alter their report.
o advisable to provide the valuers with the initial draft as well
o to ensure that they have adequate opportunity to re-consider their valuation if the
certificate reveals any matters that they haven't taken into account
Problems with investigation of title
Trustees of land Registered land
- Restriction may be entered on proprietorship register which will indicate to buyer what
must be done to overreach beneficiaries’ interests
- If terms of restriction complied with, buyer will get GOOD title
- Disposition must be made by ALL trustees (at least 2) or a trust corporation
Appointing a further trustee
- If there is ONLY 1 trustee, buyer must insist that second trustee be appointed to
overreach interests of beneficiaries
- Appointment can be made prior to the contract for sale being entered into → new
trustee will be a party to the contract and bound by its terms
- Useful where new trustee is also in occupation of the property
- Appointment can be made by sole trustee who can enter into the contract on their own
and then appoint a SECOND trustee prior to completion in order to overreach and
receive the purchase price
Conveyance by trustees to themselves
- Must make enquiry into circumstances of transaction this disposal may be in breach
of trust, voidable by beneficiaries
But may be justified where:
there is proof of a pre-existing contract in favour of the trustee or
personal representative; OR
the personal representative was a beneficiary under the will or
3
