Sale of land
1. The moment when title in land passes from one person to another is called conveyance. The methods used depend on whether the land is registered or not. In the case of conveyance of unregistered land, the parties to the conveyance have to establish and ascertain the vali dity of the title (a time-honoured and tortuous process). In the case of conveyance of registered land, the validity of the title is both officially examined and officially guaranteed.
2. The land registration system
This is governed by the LRA as amended.
a) Once the title to the relevant interest in the land in question has been subjected to official verification it is registered
in HM Land Registry in London or in a district registry.
b) The transferor has to execute a short and simple deed of transfer (in a prescribed form) and to have his own name substituted by the transferee's name on the register. He will have been provided with a land certificate, which is evi- dence of his title, and the certificate will be endorsed to the transferee.
c) Only two (legal) estates can be registered under separate titles: fee simple absolute in possession and term of years absolute.
d) The separate register for each individual title is divided into three parts:
aa) The property register. This describes the land concerned and the interest (freehold or leashold - see above) invol- ved. Other legal interests (easements etc.) may also be entered and the entry will constitute title to them.
bb) The propietorship register. This one states the class of title and the name, address and description of the proprietor. It may also contain any entries of matters which affect his right to dispose of the land (as in the case of a life tenancy under a strict settlement - so that payment will be made to the trustees or into court; also this must prevent the registration of any disposition that is not authorized by the SLA). This preserves the 'curtain' principle - the pur- chaser knows that there is a settlement but he has no notice of the interests of the beneficiaries.
cc) The charges register. It contains entries of incumbrances (e.g. restrictive covenants).
e) As to title, there are four classes (two of them need no mention):
aa) Absolute titel - it can only be registered if the title has been investigated and officially approved by the Registrar. A leashold as well as a freehold title may be so registered.
bb) In the case of a leasehold, where the holder cannot produce the title to the reversion he may be registered as the proprietor of a 'good leasehold title'.
f) A title registered is guaranteed by the State. Anyone who suffers loss by reason of any error or omission on the register, or by reason of any rectification of the register, may claim indemnity.
g) Some third party rights are binding - even if they are not registered - upon the land, the registered proprietor and upon successors in title. These rights are called 'overriding interests'. They include, inter alia, leases for not more than 21 years, profits à pendre, legal easments and local charges (charges of a public nature).
Other third party rights ('minor interests') must be registered (restrictive covenants, equitable easements and estate contracts). As an exception, a minor interest binds a donee even if it is not registered.
h) Before long, under the LRA 1988 the register will be open to public inspection (for the time being, one needs to obtain permission of the registered proprietor).
3. The contract
a) Contracts for the sale of land have to be in writing (since 1989, before: evidence in writing); the doctrine of part per- formance in this context was abolished 1989.
b) A contract for the sale of land may be:
aa) Open: It does not set out the terms of the sale - certain conditions are implied by law, such as that the vendor must show good title.
bb) Formal: It contains specific conditions (particular, describing the property, and general, standardized conditions).
c) The vendor becomes (upon conclusion of the contract) a trustee of the land in favour of the purchaser; if he sells to a third party (bona fide for value), he is accountable to the purchaser for the proceeds. In turn, he acquires an 'equitable lien' over the property sold for the amount of the purchase price for the time being unpaid. The effect of this is that, if the purchaser fails to pay, the vendor may apply to the court to sancion a sale of the land in order to recoup his loss. If the vendor secures his rights by some other means (such as the creation of an express charge), the lien (which is implied by equity) will terminate.
d) The risk of destruction by fire falls upon the purchaser from the time of the contract.
e) Both parties have a right to specific performance.
f) If the vendor finds that he is unable to complete the sale because of a defect in his title the purchaser will only be able to claim the return of his deposit (if any) and damages for expenses incurred, not for the loss of his bargain. This rule was sanctioned in BAIN v. FOTHERGRILL (1874); but it was abolished by the LPA 1989. Ratio: difficulty of proving good title; change in respect of this due to land registration.
4. Between contract and conveyance.
a) The vendor must satisfy the purchaser that he has a good title to convey. That means he has to give the purchaser authority to inspect the register (but after the LRA 1988 will come into effect, this won't be necessary anymore). Nevertheless, overriding interest (third party rights that need not be registered in order to remain effective) must be specifically disclosed.
b) The purchaser will have to make searches in the register or apply for an official search. He must assure himself that there are no undisclosed overriding interests, and, amongst other things, this will mean searching the local land char- ges register. He must, too, ascertain from the local authority that there is no development planned that may affect the land or its value.
5. Completion of the conveyance
a) There must be a simple deed of transfer executed, the vendor's name substituted by the purchaser's name. A land certificate will also be endorsed to the purchaser.
b) The deed of transfer must be signed by the vendor in the presence of a witness. It must (among other things) state:
aa) The consideration for the sale.
bb) An acknowledgement by the vendor of the receipt thereof.
cc) The file number of the title.
dd) That the transfer is made by the vendor 'as beneficial owner' - this has the effect that certain covenants on the part of the vendor are, by operation of the LPA, incorporated in the conveyance:
(1) A covenant that the vendor has a good right to convey the entire interest he has to convey.
(2) A covenant of quiet enjoyment - that the purchaser shall hold his land free from interference.
(3) A covenant that the land is free from incumbrances - all adverse estates, claims and demands.
(4) A covenant for further assurance - that the vendor shall execute assurances and do all that is possible to perform.