Investigation of title and contract

The seller’s solicitor needs to examine the title to be able to draft a contract for the sale of the property. The draft contract should clearly explain the terms and conditions of the sale, the land agreed to be sold by the seller, and so on. 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. Once the seller provides all documents related to the title to the land, it is the job of the buyer’s solicitor to ensure that the seller is capable of transferring what he has contracted to sell, and that there 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’s solicitor.

Modern day conveyancing makes it mandatory for the title to be investigated before the formal exchange of contracts (see below, when contracts are ‘exchanged’ a legally-binding contract is created). This is to allow the buyer an opportunity to raise questions regarding the title. By the time they enter into a contract, they would have full knowledge of all issues relating to the land. In fact, most contracts contain a provision that prevents a buyer from raising title issues once contracts are exchanged.

What are the types of ownership of title?

Freehold – When purchasing a freehold property, you are buying the outright ownership of the property and the land on which it stands, and the entitlement to permanent residency for as long you wish. As the freeholder you are entitled to make alterations to the property within restrictions of the law and planning restrictions. You may need permission to make structural changes, particularly with listed buildings (old buildings). Most houses in England and Wales are sold freehold.

Leasehold – If you buy a leasehold, you are actually buying the property for a period of time, hence the “lease”. Unlike a freehold, you aren’t buying ownership of the property or the land the property stands on. Most flats in England and Wales are leasehold. They are subject to ground rent and often a service charge, which are payable to the freeholder. The lease should stipulate how the service charge is worked out, and how it is divided between the other leaseholders. It’s important to calculate all these costs before committing to a leasehold property, as you may not have budgeted for the additional costs.

Commonhold – This is a relatively ‘new’ idea which was introduced at the end of 2004. Like leasehold properties, commonholds are typically found with flats and units. Commonhold is when a group of people mutually own, for example, a block of flats. There is no overall landlord. However, there is a freehold owner, and that is a company called a ‘commonhold association’. The owner of each flat is a member of the association (i.e. if you buy a commonhold flat, you will be part of the association). The ‘commonhold association’ is responsible for maintaining the communal areas of the building. We do not often come across this type of ownership.

Matthew Winder Solicitor Director 09.11.2023