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Explainer - investigating title to a property

on Monday, 12 September 2016.

When buying an interest in land, the general (and somewhat clichéd) starting position is 'caveat emptor' - let the buyer beware.

In other words, once the property is purchased, the buyer takes it in the condition that it is in, warts and all.

An important part of the solicitor's role when acting for a buyer and/or their lender is to investigate title to the property to reduce the chance of a nasty surprise once the purchase is completed. If the investigation turns up issues that were not previously apparent, it allows the buyer to make a decision at this stage whether to (a) walk away from the transaction; (b) seek to renegotiate the price in light of the new information, or (c) take account of the new information and seek to mitigate against any negative impact it may have in the future (such as insuring against a risk or seeking contractual protections from the seller).

What is involved in the investigation?

Checking the seller's title - this should tell the buyer whether the seller has the legal right to sell the property. It should also inform the buyer of any other interests that affect the property and may have a detrimental effect on the buyer's ability to use the property.

Searches - there is a large amount of information about property in England and Wales that is held by local authorities and other third party organisations and which is available for a fee. The results of these searches should inform the buyer whether any one of a number of potential legal risks affect or are likely to affect the property. Examples of these risks include whether the land is potentially contaminated, or whether there are planning restrictions affecting any development on the land or the manner in which the land may be used.

Enquiries - an important part of the investigation is enquiries raised with the seller's solicitor. These will hopefully disclose detailed practical information about the property of which the seller is aware. There is a suite of standard enquiries that elicit information on a wide range of topics including responsibility for boundaries, mains services available and VAT issues. Non-standard specific enquiries should also be raised where issues arise out of the seller's title or the search results.

Conclusion

Investigating title is often the most time consuming and, as a result, costly part of the process of buying property. The extent of the investigation can be tailored so that it takes account of, for example, the timeframe within which the buyer wishes to conclude a transaction. However, we recommend that a solicitor should always be instructed to carry out a full investigation of title (and a lender will always require this to be done to protect its financial interest) to ensure that any issues are picked up (and resolved) prior to exchange of contracts for the purchase.

If you require any property advice please contact Jess Booz in our Commercial Property Law Team on 0117 314 5483.

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