The lease should contain in precise words as what is transferred and what is not. This is particularly important in the case of lease of offices and flats that are a part of a larger block. It should be clearly mentioned about what is being let and what is not.

It is also necessary to define the boundaries of the place that is let; i.e. where one unit ends and the other begins. For instance, in the case of a lease of an office premise, a wall is likely to separate one office from the other. The lease should define where in that wall is the boundary between the two offices. Similarly, if the floor and ceiling are to divide a premise, then where shall be the boundary between the floor and the ceiling? Repairing obligations are co-extensive with the ownership, i.e. if the tenant owns the wall, it is his duty to repair it.

Sometimes, it is not possible or practical to claim that one particular tenant owns the entire wall; the boundary shall have to be within the wall. The exact place where this exists shall depend on the construction of the wall.

Top floor and ground floor units

Care should be taken when leasing top floor and ground floor or basements. Does the top floor leasing include the roof and the air space above that, thereby enabling him to extent upwards? This could also include an obligation to maintain the roof and undertake timely repairs. In the case of ground level unit, the challenge is in determining downward extension.

Garage/car parking

If car parking is allotted to a tenant, it should be clearly mentioned in the lease. This is because leasing of flats (or units such as these) includes a garage. When a specific car parking or garage is allocated, it should be included in the property that is let. But if the lease merely gives the tenant, a right to park somewhere in the car park, it is an easement. The client should be informed of the precise rights regarding this, as this is often a cause of major friction between parties.

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When the whole property is let, insurance costs are covered by the tenant. And in some instances, the landlord may take out the insurance and charge the tenant by way of a service charge.  This arrangement is comfortable for the landlord who need not pay for the premium, but can be assured that his property is protected against possible damages.

But when the property is let in parts, there are two options before the seller and the buyer;

a)      The tenant should insure the area that is leased to him, while the landlord is responsible for insuring the common parts. While this seems a convenient proposal, carrying it out would lead to several practical problems. For one, the landlord would have to keep a tab on every tenant to check if he has complied with the covenant. Secondly each tenant would have to rely on the other tenant complying with the covenant. If a tenant has not insured his property, it would be difficult to rebuild (in the event of damage) as the proceeds would not be sufficient. It is also possible that the proceeds of the insurance claim may be used for self-use rather than using it for making good any damage caused. Although, the lease may require tenants to insure from a single company, there could be multiplicity of claims, should one need to be made.

b)      To avoid the above mentioned complications, the landlord insures the entire block and passes on the costs to the tenants through a service charge. Usually, it is the decision of the landlord to choose the insurance company, but a conveyancing solicitor acting for the landlord should make sure that the premium can be recovered by inserting the specified provisions for payment of a separate insurance rent when drafting the lease.

Irrespective of the fact that the lease is of the whole or in part, the following issues should be kept in mind;

a)      Risks insured against

b)      Amount of cover

c)      Application of policy monies

Risks covered

Needless to say, a property is to be insured against risks. But what are these risks? The conveyancing solicitor should mention these expressly. Some common risk factors include fire, storm, flood, etc.  But what if the landlord takes insurance to the extreme and insures the property against unlikely and expensive risks like terrorist attacks? A conveyancing solicitor acting for the tenant should check for these.

He should also read the policy and not just rely on the covenant to ascertain the risks that are covered. If an important risk is not covered, the tenant can arrange for this to be done or renegotiate the terms of the clause. But truth be told, this does not happen in practice.

Some suggested clauses to cover most foreseeable risks include;

subject to the reasonable availability of cover, fire, explosion, lightning, tempest, storm, flood, burst pipes, landslip, subsidence, riot, civil commotion, industrial unrest, impact by vehicles, aircraft and other aerial devices and articles dropped there from, acts of malicious persons and vandals and such other risks as the landlord may reasonably require or the tenant may reasonably request.

Amount of cover

The property should be insured to its full value or else, it would be impossible for the landlord to make good any damage. Full reinstatement value would include;

a)      Costs of demolition and site clearance;

b)      Professional fees (for ex. architects, surveyors, etc.)

c)      An allowance for inflation

It is also advisable to opt for a professional valuation or index linking.

Application of policy monies

There should be a covenant to allow the landlord use the proceeds of the sale towards reinstating the premises. But a tenant would want this provision to be extended so as to make the landlord make good any shortfall in the proceeds out of his own pocket.

The solicitor should check if there is a provision to deal with the possibility of reinstatement being impossible. Should the money be retained by the landlord, or passed over to the tenants who have paid premium for the property? It is best advised that the proceeds are shared between both parties to the values of their respective interests.

Rent suspension

Even in the event of any incident where the property is rendered unusable, the tenant is required to pay his rent. Thus, he should make sure to include provisions that allow the suspension of rent during the period when such mishap happens and the property cannot be occupied. The landlord would be more than happy to include such provision because he can insure the property against loss of rent during such time. But this insurance is usually valid only until three years, thus landlord too would limit such a suspension accordingly.

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In the case of a grant of commercial assignment, the landlord’s consent is a must. In the case of long-term residential lease, it is uncommon to seek the landlord’s permission, unless it is a high value property. Consent would involve the seller’s and the buyer’s involvement.

Covenants that bar the tenant’s freedom to assign also imposes other controls like sub-letting or charging etc. In case, the landlord’s permission is required it should be in the form of a proper licence.

References

When the seller’s permission is required to assign, he takes up references on the buyer to make sure that he is solvent and maintains a good record. He should be asked to supply the names of a few references who can vouch for the buyer. References from the following sources are generally valued higher;

a)      A current landlord

b)      The Buyer’s Bank

c)      The Buyer’s employer

d)     A professional person such as an accountant or solicitor

e)      A company or person with whom the buyer regularly trades, and

f)       Audited accounts for the past three years if the buyer is a company or a self-employed person.

Surety

Sometimes a surety is required to be provided by the guarantor before consenting. In the case of a commercial lease, the landlord may require that the seller enters into an AGA to ensure performance of the covenants. The AGA is sometimes added in the lease itself as a pre-condition for the consent. In such a case, the landlord can insist on the seller entering into the AGA irrespective of the fact that it is reasonable or not. When it is not inserted in the lease, the landlord can demand an AGA only when it seems reasonable. If the tenant has provided a surety, this cannot be required in an AGA to guarantee the obligations of the incoming assignee.

Types of covenants-Absolute covenant

When the terms of the lease clearly mentions that the tenant shall not assign or part with the possession of the property, it is said to be an absolute covenant and any assignment can be considered as a breach causing forfeiture of the lease. Absolute covenants are not subject to any restrictions on its operation except those imposed by the Equality Act 2010.

When an absolute covenant exists, the tenant can ask for the permission of his landlord before undertaking the assignment. But the landlord is not obligated to agree; he can refuse permission even without giving reasons for the same. Such absolute covenants are never accepted in the case of long term leases as these would never be accepted by a prospective lender. Of course, the landlord can waive the covenant and grant permission for assignment, but there is no guarantee that he may consent to a further disposition. Buyers would therefore find the property to be unsaleable.

Types of covenants – Qualified covenants

A qualified covenant allows the tenant to assign if prior permission is obtained from the landlord. This is covered under Section 19 of the Landlord and Tenants Act of 1927 where it is also provided that no landlord may withhold his consent unreasonably. When the landlord refuses consent, the prospective buyer may not usually proceed with the assignment as he runs the risk of his lease being forfeited.

The Landlord and Tenant Act of 1988  provides that after receiving a written request from the tenant, the landlord must give his consent within a reasonable time unless there is sufficient reason to withhold it. This consent should be in the written form stating the conditions (if any) that are attached to the consent, or when the consent is refused the reasons for the same. Breach of the landlord’s duty under the 1998 act is considered as a breach of statutory duty.

With respect to leases of commercial property that were granted on or after 1^st of January 1996, the lease itself provides the circumstances in which the landlord is allowed to withhold his consent, along with the conditions that are required for the consent. A landlord cannot withhold his consent unreasonably, if his insists upon compliance of the conditions. Therefore it helps when the buyer and the seller both take effort to understand the conditions and ensure that they can be complied with.

With respect to commercial leases prior to 1^st January 1996, buyers are required to enter into a direct covenant with the landlord to comply with the covenants of the lease. This should be explained to the buyer by his solicitor, as he shall remain liable for the covenants even after his subsequent disposition.

Demanding a premium for consent

Unless, the lease specifically mentions that the tenant is required to pay a premium for the grant of consent, the landlord cannot ask for one as a condition.

Undertaking for landlord’s consent

It is within the landlord’s rights to ask the tenant to pay his solicitor any reasonable charges accrued in the process of preparing the consent deed (also called the licence to assign). In fact, upon assignment of a commercial lease the landlord’s solicitors need an undertaking from the seller’s solicitors that the seller shall compensate for the costs involved in preparing the consent licence. The seller’s solicitor should first consult his client and seek his permission before giving the undertaking. And when an undertaking is provided, this should be limited to reasonable costs incurred and a cap for these costs should also be sought.

Standard conditions of sale

As per Standard Conditions 8.3, the seller should apply for the landlord’s permission at his own expenses and use reasonable efforts to obtain such consent. Among the efforts that are required include carrying out conditions set out by the landlord, providing references etc. Unless a breach of obligations has occurred, either party to the contract is allowed to rescind the contract if consent is not provided within 3 days prior to the completion date, or if consent is provided, but the seller does not agree to the conditions set by the landlord. Although parties are allowed to rescind the contract, the uncertainly whether the transaction can proceed or not depends on the consent.

In transactions where timing is very important, it is best not to carry out exchange of contract unless permission is provided. Or else, the transaction may fall through, but the depending transaction would be binding.

Standard commercial property Conditions

The SCPC contains detailed provisions to help tenants and landlords understand situations where permission is required from a landlord or superior landlord to an assignment or sub-letting. The SCPC also requires the seller into an AGA if the same is required under the law. Standard Commercial Property Conditions further provides that when the landlord’s consent was not obtained by the completion date, the completion should be postponed until five working days after the seller informs the buyer that consent has been given, or until four months after the original completion date whichever is the earlier. Also, when the timing of the completion is important, it is better to postpone until consent has been obtained.

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But the contract must mention that the property in question is leasehold and should also mention details of the terms vested in the tenant. The incumbrances affecting the freehold title should be discussed along with providing an indemnity by the tenant with respect to future breach of covenants that affect the title. In all other respects, the contract shall be the same as that prepared on a freehold transaction.

When the lease is for a term less than three years, taking effect in possession & with no premium paid for its grant, it should satisfy S2 of the Law of Property (Miscellaneous Provisions) Act of 1989.

As per Standard Conditions 8.2 (SCPC 10.2) the lease should be in the form annexed to the draft contract. The landlord should then sign the lease and give it to the tenant within five working days before the completion date.

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Leases granted on or after 1st January 1996

Leases that are granted on or after 1^st of January 1996 come under the Landlord and Tenant (Covenants) Act of 1995. Under the provisions of the Act, the original landlord or the person who originally granted the lease shall be bound by all the covenants in the lease when the tenant remains as a tenant. When he lawfully assigns the lease or sub-lets the property, he is released from future liabilities occurring in the lease covenants unless he has agreed to enter into an ‘authorised guarantee agreement’ or AGA. This is an agreement that is entered by the outgoing tenant with his landlord. He guarantees that the immediate successor in title shall perform all of the lease covenants.  A tenant is obliged to enter into an AGA only when;

a)      The lease is for a commercial property, where both parties have agreed in the contract that an AGA shall be provided in the case of an assignment. However, this condition cannot be agreed in advance in the case of a residential property lease.

b)      When the landlord requires under the law that the provisions of the AGA are a condition of giving consent to an assignment. It is the decision of the court as to whether a condition has been lawfully imposed in a particular case.

The guarantee provided by the AGA only extends to performance of covenants by the immediate tenant and not to those who come subsequently. However, they shall remain liable for any breach that was done before the date of assignment.

Subsequent assignees are bound by all covenants mentioned in the lease, except those that are mentioned as ‘personal’ and said to be applicable to the original tenant. Although, subsequent assignees shall remain liable for any breach that was committed before the date of assignment, they shall not be liable for breaches that are committed after the tenancy ends. But if he has given an AGA, he shall be held accountable for the performance of a covenant by his immediate successor.

It should be noted that the provisions for automatic release do not apply if the assignment itself was made in breach of a covenant in the lease, nor is it applicable when it occurs by an operation of law, i.e. on the death of the tenant where the lease passes on to the immediate family. Also, when an assignee remains liable through an AGA, he should seek an indemnity covenant from the successor of the title. This should be given expressly.

As for performance of covenants by the original landlord, he is not automatically released from his covenants when he sells the reversion. Automatic release however, applies to the person who is the tenant for the time being and seeking to be released from future liability before or within four weeks of the date of the assignment of the reversion.

Leases granted before 1^st January 1996

Liability of tenants

The Landlord and Tenants (Covenants) Act of 1995, does not apply to leases that were granted before 1^st January 1996. The underlying principle guiding this thought is that the original tenant shall remain bound by the covenants for the whole of the contractual term. Unless the landlord expressly releases the original tenant from the covenant, he remains liable even after assigning it to a successor.

Thus, it can be clearly seen that the original tenant shall be held liable for any breach of covenant during the term of his tenancy, irrespective of the fact that the breach was conducted by a subsequent successor.

All succeeding assignees shall also be liable for any breach that was committed when the ownership of lease vests with them, in respect of covenants that ‘touch and concern’ the land. To the uninitiated, touch and concern refers to covenants that are entered between parties as landowners, instead of being mere individuals. This provision adheres to the doctrine of privity of estate.

This gives the landlord an opportunity to seek redress from the original tenant or the particular assignee who has committed a breach. He cannot sue both of them, but can choose whom to sue. This is of utmost importance when the tenant in question is facing untold financial difficulties and is not worth suing. But, if the original landlord passes the reversion, the right to sue passes to the person who transfers that reversion; because all rights attached to the reversion pass to the transferee including the right to sue for an existing breach of covenant.

Thus, it can be deduced that an assignee will have to indemnify his assignor with respect to the breach of a covenant committed after the date of assignment. This is done irrespective of the fact that the assignor has parted with the lease or not. When a registered lease is transferred, the indemnity is covered under Sc12 para 20 to the LRA 2002, even if no value was given to the assignment. In the case of unregistered land, there shall be no valuable consideration for the assignment, but an express indemnity shall be required by the assignor. As per Standard Conditions 4.6.4 and SCPC 6.6.4 the transfer deed should contain an express provision of indemnity covenant unless it is implied by law.

If the terms of the lease provide that any further assignment of lease requires the permission of the original landlord, he can under some circumstances, insist that the assignee enter into a direct contractual relationship with him. This is usually contained in the same document where the landlord provides his consent to the assignment; also called licence to assign. This is one way of ensuring that the subsequent assignee has the same liability as the original tenant.

Liability of landlords

The doctrine of privity of contract dictates that the original landlord shall remain bound to the original tenant throughout the term of the lease. And when he is unable to do so (either through his own act or by default), he shall be liable for damages to the tenant. This was the gist of the decision in the case of Eagon v Dent [1965] 2All ER 335. The facts of the case are that the landlord sold a reversion to a third party. The original tenant who could not exercise an unregistered option against the buyer of the reversion recovered damages from the landlord for a breach of covenant.

Besides the original landlord, subsequent transferee of reversions shall also be liable in respect of breach of covenants that touch and concern the land which are committed while the reversion is vested in them. This is again under the doctrine of privity of estate.

Default notices – Liability of former tenants

Thus, former tenants can remain liable for breach of covenants made by assignees in the case of assignments that take place before the 1^st of January 1996. With respect to leases that are given on or after that date, the assignee can be made liable if the outgoing tenant has given an AGA. To protect former tenants from arrears of rent, s 17 of the Landlord and Tenants(Covenants) Act provides that the landlord can claim rent arrears only when he has served a ‘default notice’ on the former tenant. This notice should be served within six months of the amount falling due. The landlord cannot pursue when notice is not served. This also applies to leases that are created before and after the Landlord and Tenant (Covenants) Act came into force.

Liability between Head-landlord and Sub-tenant

The doctrine of privity of estate does not apply in the case of relationship between the head-landlord and the sub-tenant. But a contractual relationship shall exist between them if the head-landlord has entered into a direct covenant with the sub-tenant.  The sub-tenant shall also be liable for any restrictive covenant mentioned in the head-lease of which the sub-tenant has notice when he took on the sublease. When a sub-tenant breaches a covenant in the head-lease, the head-landlord has the right to forfeit the head-lease, thereby bringing to an end, the sub-lease as well. This applies irrespective of any direct liability arising from a contract.

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The first major reason could be that there is a readily available market for leasehold properties as there are many people looking for premises on a short term basis. Secondly, when a property is a part of the bigger property or building, each unit within this building is held under lease rather than freehold. This concept applies to both residential as well as commercial properties such as office suites etc. Also, in some areas of Wales and England, especially those that have a long history behind them, it is common for the residential property to be sold as leasehold rather than as a freehold.

Advantages

The first advantage of leasing property is that it provides home for people having short-term residential needs. Although the terms of the lease are fixed, the length of the lease can vary, and can be of any duration. This is sometimes mutually convenient for both parties; lesser and the lessee.  As for the landlord, he not only has access to steady income from the property, but also retains an interest in it. He can sell-off his freehold interest in the property which is separate from the leasehold interest.

Another major advantage of choosing to lease properties is that it is easy to enforce covenants in the case of leasehold than in the case of freehold. In the case of freehold property, positive covenants cannot be directly enforced against the future owners of the property. However, in the case of leasehold property, all covenants, irrespective of the fact that they are positive or negative, are enforceable against all future successors of title.

In instances, where the enforcement of positive and negative covenants is particularly important, leases are used. This is especially true in the case of household units within a single building. Here landlords find it easy to let rather than to sell, thereby ensuring that all tenants should undertake repairs of their respective units. This also works in favour of the tenants where they can be assured that common parts that are retained by the landlord shall be maintained by him. Usually in practice, the landlord undertakes maintenance of the common parts, but recovers the cost incurred for the same by way of a ‘service charge’. Payment of this service charge is an implied positive covenant. The enforcement of such covenants would present huge problems in the case of freehold property.

Disadvantages

Leases are usually disadvantageous for the tenant rather than the landlord. Since the lease is for a fixed period of time, it will eventually expire, after which the tenant will have to again approach the landlord for a renewal of lease. The landlord may either agree or refuse to renew. If the lease has a capital value, it becomes a wasting asset in the tenant’s hand. Some tenants have a statutory right to renew or extend the length of the lease under certain circumstances. But when such a right is not guaranteed, it becomes a big problem for the tenant.

Another problem faced by tenants is that of covenants. Leases impose considerable burden on tenants by way of covenants imposed to repair, contribute towards maintenance of common parts of the building, restrictions on dealing with the property, etc. The landlord is given considerable remedies to ensure compliance of these covenants. He can also forfeit the lease and bring it to an end. This can be difficult for tenants, especially when the lease has a capital value, as the value would be lost with the lease.

When considering the landlord’s point of view, leases can sometimes become a disadvantage because he is liable for continuous obligations such as repairs, insurance, etc. These obligations could have been disposed, had he chosen to sell the property. The burden of these obligations is however, subject to the income received as rent from the property along with the covenants agreed to be performed by the tenants.

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In the case of an unregistered land, the prescribed time limit is two months, failing which the transfer becomes void. However, in the case of registered land, it is suggested that the transfer is registered within the priority period of 30 days given by the pre-completion Land Registry search. Failing to do so, could result in the buyer losing his priority in favour of another application.

Registration of dealings

In the case of registered land, it is important that the deal is registered within the priority period of 30 days and must be made in the right application form. This form should be accompanied by documentation fee and must be made to the right Land Registry Office. This application should be received by the Land Registry Office by 9.30 am of the day, protection provided by the applicant’s search expires.  This is done so as to protect the applicant’s search interest over registration of other interests. The priority cannot be extended and a failure to register his interest may result in the buyer ceding his interest in favour of another applicant.

The Land Registry has been following a new policy of early completion since August 2009. Thus, applicants while make application for other registrations should also apply for the discharge of the whole of a registered charge. This is to be made even when the evidence of satisfaction of the charge is not supplied. The Land Registry may reject the discharge application but will complete the other applications.  And when this happens, a buyer who purchases the property with a new mortgage becomes the new proprietor, even as the seller’s mortgage is still registered due to the fact that evidence of his discharge is not produced before the Registry.  The buyer’s mortgage ranks well before the seller’s. When a restriction is placed by the lender on registering a new charge without the permission of the previous lender (until the mortgage is disposed), a proof must be produced that the charge is valid within 20 days (this can be extended up to 40 days on application). When this is not done, the applicant’s request for discharge, transfer and charge is cancelled by the Land Registry.

The Law Society’s Practice Note on ‘Land Registry Early Completion’ are referred to for further guidance on how to proceed if there is a likely delay in providing evidence. This note contains advice to conveyancing solicitors on this issue including additional undertakings and assurances.

Transfer of whole

Irrespective of the fact that the property is question is a freehold or leasehold, the following are the aspects that apply when the whole of the seller’s registered title is transferred. Ideally, an application for the transfer of the whole property should be made within 30 days of the date of issue of the pre-completion search certificate;

a)      The transfer( a copy of this document is a must)

b)      The required fees unless it is paid by credit account

Besides the above, the following documents (as applicable to the circumstances of the situation) should be submitted with the application;

c)      DS1 form to prove that the seller’s mortgage is discharged. If the discharge is done through e-DS1 or other electronic form of discharge this form need not be submitted.

d)     The mortgage deed to show that the buyer has the mortgage on the property and a certified copy of the same;

e)      A certified copy of the grant of representation that shows that the seller was the personal representative of the deceased proprietor.

f)       A power of attorney (the original) if the transfer was executed under a special power limited to the disposal of the property.

g)      A certified copy of the power of attorney if the transfer was effected under a power of attorney that is not limited to the disposal of the property

h)      SDLT certificate

i)        Form DI

First registration of title

First registration of title should be applied for within sixty days of completion of transaction. The application form along with supporting documents and fees applicable should be paid at the Office of Land Registry.  Photocopies of these documents must be listed on the DL Form and a copy of this form is returned to the applicant’s solicitor as an acknowledgement of the application. Along with this copy is provided an estimated time frame within which the application shall be dealt with.  This time should be kept in mind by the conveyancing solicitor so as to send a reminder if the document is not received within that time period.

Documents that are to be submitted on application for first registration of title

The following discusses the documents that are required to be submitted to the Registrar so as to allow him to investigate the title on an application for first registration. These documents are to be arranged in a chronological order and must be listed in the same sequence as in DL Form. The list of documents is as follows;

a)      All documents that form as evidence of title supplied by the seller’s conveyancing solicitor

b)      The buyer’s pre-contract search results and evidence gathered by the buyer’s conveyancing solicitor relating to the title. This should also include further information and other correspondence related to the enquiry.

c)      The contract

d)     Requisition on title and their replies

e)      All pre-completion search certificates

f)       The transfer deed along with a certified copy

g)      The seller’s mortgage that contains discharge receipt

h)      The buyer’s mortgage documents with a certified copy

i)        When the document is a leasehold, the original lease along with a certified copy

j)        SDLT certificate

k)      Cheque for fee

l)        DI Form

Disclosing overriding interests

The application for registration should also be inclusive of completed DI Form to as to override any interests that may affect the title. These are then entered into the Register thereby ceasing to be overriding.

Identity requirements

Forms such as AP1, DS2, FR1 and other forms related to properties that are worth more than £5,000 in value must give details of the conveyancer involved in the transaction. And when it is not represented, evidence must be provided about the party’s identity.

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When a person is appointed as an agent for the buyer to undertake the completion, the buyer should make sure that this agent has a copy of the checklist so that the agent is aware of the issues that are dealt with and those that need further attention.

Some of these items are required to be completed on the date of actual completion. It should contain an itemized list of documents that are to be inspected, marked, and handed over on completion.

Documents that are to be made available at completion include;

a)      Contract papers

b)      Evidence of title

c)      Copy transfer deed

d)     Answers to requisitions

e)      Completion statement etc.

Documents to be inspected by the buyer

a)      The title deeds. In an unregistered land, these are not handed over to the buyer after completion.

b)      Power of attorney

c)      Grant of administration

d)     Demands of apportionment if it is not previously supplied

Documents that are to be handed to the buyer on completion

a)      Title deeds

b)      Original lease

c)      The transfer deed duly executed

d)     Schedule of deeds

e)      Form DS1 or discharged mortgaged or an undertaking in respect of this discharge.

f)       Receipt of money paid for the chattels

g)      Keys of the property

h)      Certified copy of a memorandum endorsed on retained deeds

Documents and things to be handed over to the seller after completion:

a)      The executed duplicate transfer deed/counterpart lease whenever considered appropriate

b)      The schedule of deeds received from the seller

c)      The release of deposits if it is held by a third party (on behalf of the seller)

Endorsements on documents

a)      In the case of a part of an unregistered land, an endorsement of sale in the most recent document of title.

An abstract or epitome that is marked up as compared with the original deed in the case of unregistered land and with respect to those documents that shall not be handed over on completion.

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On 8^th October 2007, the Phew! conveyancing team was requested by a client to assist in the purchase of a property situated on  Firs Avenue, Friern Barnet, London. The property was bought for £ 298000 by the client. The London Borough of Barnet was local authority associated with this conveyancing deal.

The office copy entries related to the freehold property was inspected by the conveyancing team. The property held an absolute title which eliminated all worries about its ownership as it was guaranteed by the registry. The team also ensured that the seller and his family members were the sole occupants of the property before the sale.

According to a conveyance dated 20^th February 1985, there were some additional rights passing with the property:

• The client had the access to light, air and the boundary structures in the property.
• The client had access to the passage way, water, electricity, gas and soil in the property. The access to adjoining parts of the property was for the purpose of maintenance or repair of the same.
• The client had access to the roadways connecting the estate with or without vehicles.
• The client had the right of access to the garage as well as parking lot.
• The owner also enjoys the right to roam over and carry out activities in the footpath areas marked in the plan. Access to various other structures adjoining the property may also be provided if proper maintenance cost is paid.

The above mentioned rights are not applicable if the property comes under the Electricity board. The reciprocal rights were reserved in favour of Smardene Properties Limited.

The client should abide by the restrictive covenants during ownership of the property:

• You must maintain and repair the fence on the sides of the property that are marked  “T” in the plan.
• No building in addition to the existing house and garage shall be erected in the land  transferred other than a greenhouse, conservatory, garden or tool shed without the permission of seller.

The Charges Register reveals that there were also some additional restrictive covenants registered against the property according to a transfer dated 6^th March 1981,

A Tree Preservation Order was registered against the property by the local planning authority to protect specific trees from deliberate damage and destruction. This order also prevented the felling, lopping, topping, uprooting or wilful damaging of trees without the permission of the local planning authority.

The conveyancing team also exposed that the property stood in an area which came under the purview of Smoke Control Order and Clean air Act. According to the Smoke Control Order, excess smoke from chimney was not allowed to be disposed into the environment and according to the Clean Air Act smoke of any kind from other premises was not allowed, as well. Firs Avenue is adopted & hence is maintained by London Borough of Barnet. Our conveyancing solicitors’ inspection did not reveal any future plans regarding the arrival of new roads or maintenance of existing roads within 200 metres of the property.

The conveyancing solicitor who appeared for the seller was Nahlis Christou Solicitors and the Estate agent was Spicerhaart.

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a)      The event on which the contract shall be made conditional should be included.

b)      The time before which the condition should be fulfilled. (This time cannot be extended)

c)      The terms on which the party with benefit of the condition can withdraw from the contract.

d)     The conveyancer should also make sure that there are no loopholes that allow the other party to escape from fulfillment of the condition or from consequences, when the condition is not met.

e)      The conveyancer should also include a precedent that makes it clear for all as to the requirements of the client’s circumstances.

Subject to Planning permissions

A contract that includes the phrase ‘subject to planning permissions’ should include the following matters:

a)      The form of the application should be agreed by both parties.

b)      In situations where conditions are attached to consents, the draft should make a mention on the types of conditions that allow the buyer to rescind the contract.

c)      Who should pay the application fee.

d)     When the Local Planning Authority does not grant permission within a stated period, can the buyer be allowed to rescind the contract.

e)      The buyer should be able to make applications without opposition from the seller.

f)       Details of the application- whether they are to be detailed or just an outline.

g)      Can the buyer be allowed to withdraw from the contract if the planning applications were never submitted.

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There are several risks involved in the use of conditional contracts. However, they are advisable when:

a)      The buyer did not get the opportunity (before the contract was exchanged) to make searches and enquiries or even conduct a survey, or when mortgage arrangements have not been finalised.

b)      The contract depends on the planning permission that is being obtained for the property.

c)      The sale depends on permissions that are to be sought from a third party; for instance, a landlord.

Chain transactions

If one or both parties to the conveyancing transaction has an unconditional sale, or enter into a purchase contract that depends on the conditional sale, a conditional contract should never be used. When such conditional contract is rescinded, there would be great difficulty in fulfillment of linked unconditional contract and may eventually lead to breach of the contract.

Alternative solutions

It is the duty of the seller’s conveyancing solicitor to look into viable alternative options that could be used instead of conditional contracts.  For instance, the contract can be delayed if the matter that is subject to the condition is not resolved.

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The features of the property and its location may sometimes indicate the need for unusual searches. It is the duty of the buyer’s conveyancing solicitor to take note of these factors and advise such searches. This is because a buyer is liable for all incumbrances on the property irrespective of the fact that a search was conducted or not. A conveyancing solicitor who fails to conduct a less than usual survey in instances where they are required can be held liable for negligence.

Examples of some less than usual searches include:

Coal mining search

This search reveals if the property is situated in an area where coal mining operations were conducted. The Law Society’s Coal Mining Directory will reveal if the property is in an area where a coal mining search is to be conducted. You can also find this at the Coal Authority’s website, www.coal.gov.uk. This search can be included in the CON29M form along with a fee and a plan of the property to the Coal Authority.

The results of the search reveal if mining operations were carried out in the area where the property is situated, or if such a plan is likely in the future. It also reveals the existence of underground workings that may affect the house, compensations payable/already paid for subsidence damage, and claims for compensation that is pending. But it does not provide any protection to the buyer during the search result.

Such searches are not only conducted for coal mining activities, but also for a wide variety of mining activities including tin and china clay mining at Cornwall, salt at Chesire, etc. While the Coal Authority is responsible for Chesire brine searches, it is not responsible for any other searches besides coal.

Common registration search

This conveyancing search should be made when the property intended to be purchased is adjoining a village green or common land, or when the property was build on a previously undeveloped land, or when a strip not included in the property separates the property from the public highway. Such a search should be conducted by choosing enquiring number 22 of the CON29O form.

The search shows if the property is registered under the Common Registration Act 1965 as a common land or village green. If an entry is under the Common Registration Act, it is difficult to remove the land from the register and hence not possible to obtain permission for development of the land. In fact, even third parties may have registered their interest in the land.

Flooding searches

Thousands of people are affected by floods every year and millions more are at the risk of flooding. To avoid such a situation, it is advised that the property should be checked on the Flood Map at the Environment Agency’s website. The search result shows the extent of a possible flood and also provides a detailed assessment of the area.

You can also seek a Flood Risk Indicator online from the Land Registry website. Such a search is available to private individuals to help them assess the risk of registering titles in areas where coastal and river flooding is possible. But information about surface water flooding can be sought only from a commercial provider.

Land adjoining rivers, streams, and canals

When property is situated adjoining rivers, streams and canals, a search should be made with the Environmental Agency to assess responsibility for maintenance of river banks. As for canals, an enquiry about their maintenance should be sought from the British Waterways.

Railways searches

With respect to properties that are next to a railway line, it was earlier possible to enquire if the owner was obligated to maintain the boundary walls and fences that separate the property from the railway line. But private railway undertakings no longer answer such queries and the buyer will have to rely on the seller during pre-contract enquiries.

The buyer’s conveyancing solicitor should advise his client that such properties are usually under an obligation to provide a right of access on the adjoining land in order to undertake repairs to the railway property.

Highways search

Although replies to questions 2, 3.4, and 3.6 in the CON29R form would give details about roads that are adjoining the property, or if there is a proposal for a roadway project, or some traffic scheme under consideration, this is not always sufficient. In such instances, the conveyancer may have to make specific enquiries with the relevant highway authority and ascertain the exact boundaries of the publicly maintainable highways adjoining or crossing the property. This is particularly important when the property is being redeveloped in a different configuration or there exists a strip of land between the property and the public road. Such a land may belong to a third party who might demand a huge sum to allow access over it.

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It is the duty of the buyer’s conveyancing solicitor to advise his client on all matters related to the purchase of property. He should investigate as much as possible about the property, before the buyer enters into a contract. He should insist on a full structural survey to assess the physical strength of the building, check for authorised use of the property, etc.

Failing to make such inquiries may cause the buyer to suffer losses; he can even sue the solicitor for negligence. And finally, just a search of these issues is not enough; the solicitor should ensure that the buyer is aware of all information and implications of the proposed purchase. The buyer would then be able to make a decision on proceeding with the purchase, or if the terms of the contract are to be amended.

Who make the searches and enquiries?

The maxim Caveat Emptor is applicable to the buyer and it is his duty to check if necessary searches have been made and the results of such a search are satisfactory. The CML Lender’s Handbook insists that all searches on a property should not be more than six months old on the date of completion, but conveyancers often regard this check to be too out-dated for a buyer. While all the necessary searches mentioned in the Handbook need not be carried out, it is up to the buyer’s conveyancing solicitor to decide regarding the searches to be done and those that need not be made.

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