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What is Meant by the Term ‘Full Title Guarantee’?

Posted on Monday, 21st March 2016 by

contractWhen drafting the contract, the seller’s solicitors must decide whether the seller will promise to dispose of the land with ‘full title guarantee’, ‘limited title guarantee’, or refuse to give any title guarantee at all.

The inclusion of the statement ‘the seller sells with full title guarantee’ on a contract will give the buyer the benefit of a full range of covenants (or promises) implied by the Law of Property (Miscellaneous Provisions) Act 1994.

 

These include:

  1. The disposing party has the right to dispose of the property (section 2(1)(a)).

Firstly, the seller must have the right to sell the property, transfer part of the land or grant a lease

  1. The disposing party will do all it reasonably can to give the title it purports to give, at its own cost (section 2(1)(b) and (2)).

Practically speaking, where the seller is registered at the Land Registry as proprietor of the property with title absolute, it is highly unlikely that there will be any problem in giving the purchaser good title to the property.  If the title is not successfully given, then the seller has promised to give reasonable assistance to perfect the title, at his or her own cost.

  1. If the property being disposed of is registered, there is a presumption that the whole of the property in the registered title is being disposed of (section 2(3)).

This means that the seller is disposing of his whole interest in the property. Clearly this implied covenant may need to be amended on a sale or lease of part of the land.

  1. If the property being disposed of is not registered, there is a presumption that the interest being disposed of is the freehold. If it is clear that the interest is leasehold, it is presumed that the interest is the unexpired residue of the term of the lease (section 2(3)).

This is a highly unlikely situation where the property is registered at the Land Registry. However in view of this implied covenant, the seller should state in the contract that the property is leasehold if it is not a freehold property.

  1. The disposal is free from all charges, encumbrances and adverse rights, except any charges, encumbrances or adverse rights about which the seller does not know and could not reasonably be expected to know, that is, free from all known encumbrances (section 3(1)).

An encumbrance is any burden, interest, right or claims which adversely affects the use of, or the ability to transfer, property. Therefore, this implies that the land is free from encumbrances, other than those the seller does not know about and could not reasonably know about.

  1. Where the full title guarantee covenant is used in respect of the sale of leasehold property, additional covenants are implied: that the lease is subsisting and the seller has complied with its terms.

This means that the Lease that is being transferred will continue to exist with the new owner and that it has not been breached and there is nothing that at that time would render the lease liable to forfeiture.

When a buyer is purchasing a property with the aid of a mortgage, the offer must be checked to see if the Lender requires full guarantee. Usually, full guarantee is required. Therefore it is important that you have an experienced Conveyancer acting on your behalf during you transaction so that the title is checked thoroughly and your Lender is satisfied.

If you would like to talk to a specialist about drafting contracts or any other matter related to residential conveyancing
please do not hesitate to get in touch with our residential conveyancers in Leicester

The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer.  If you are interested in obtaining advice, please contact one of our solicitors who will be happy and able to advise you on your own particular circumstances.

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The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.

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Aimee Pyrah - Residential Conveyancing
Aimee Pyrah - Residential Conveyancing
aimee.pyrah@ehlsolicitors.co.uk 0116 266 5394
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