October 10, 2011

The Certificate of Title



The certificate of title is the document which must be signed by a solicitor and forwarded to a mortgage lender in order for the lender to release the mortgage monies for a purchase or remortgage. In order for a solicitor to act for both lender and borrower/purchaser in a transaction involving a residential property which is the borrower’s only or main home the certificate of title must be in a standard Law Society approved form which is set out in the appendix to rule 3 of the Solicitor Code of Conduct 2007.

The approved certificate of title is a lengthy document and in practice, all of the high street lenders issue a single page memorandum which contains a statement confirming that it complies with Code of Conduct rule 3.12 (so that it incorporates the approved form of certificate of title).


What Is The Certificate of Title?

The certificate of title is a report by the solicitor acting for the lender that he has checked the legal title and he is happy that the property represents good security for the loan. The scope of the approved form of certificate of title is limited to matters of title. The certificate of title itself is in two parts. First, there is the memorandum into which administrative details must be entered such as the mortgage advance amount, the purchase price/property value, the address and title number of the property to be mortgaged, the borrowers’ names, the solicitor’s client account details and the space where the solicitor signs.

The second part of the certificate of title is a pre-written report detailing all of the things that the lender expects the solicitor to check on its behalf. By signing the certificate of title the solicitor is confirming that all of these matters are satisfactory. A qualified certificate of title, whereby a solicitor states that certain items referred to in the certificate of title have not been checked or are not satisfactory, will not usually be acceptable to a lender.

In practice, rather than setting out the certificate of title in full, a lender will usually produce just the memorandum which will contain a statement confirming that it incorporates the approved form of certificate of title.

When Should the Certificate of Title Be Submitted?

The certificate of title is normally submitted as soon as exchange of contracts has taken place. It must not be done until the solicitor is entirely satisfied that the legal title represents good security for the loan therefore the certificate of title should not be submitted while there are enquiries outstanding, unless they are in respect of issues which will only be of concern to the purchaser and not to the lender.

The lender’s instructions will usually state that the certificate of title must be submitted X days prior to the date on which funds are required. The notice period ranges from 3 to sometimes 10 working days. If the requisite notice is not given the certificate of title may not be processed in time to release the funds for completion.

Some lenders insist that the certificate of title is signed by a partner of the firm. In any event it should at least be signed by a solicitor, licensed conveyancer or legal executive.

What if the Certificate of Title Does not Comply With Rule 3?

If a lender attempts to produce a certificate of title that does not comply with the standard form and a solicitor is also acting for the borrower and the property being mortgaged is the borrower’s only or main home, the solicitor must advise the lender that he is unable to accept the instructions as they fall outside of the scope of Rule 3 of the Code of Conduct for Solicitors. If the lender is not prepared to revise its certificate of title the solicitor must cease to act for both lender and borrower.

The lender and borrower will subsequently need to seek independent representation. If the property is not the borrower’s sole or main residence, for example if the mortgage is a buy to let mortgage, the approved form of certificate of title need not be used.

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Filed under Mortgages, Uncategorized

October 7, 2011

Restrictions in Favour of Dissolved Companies



One of the lesser publicised effects of the housing market collapse has been the dissolution of many management companies as a result of tenants of flats failing to maintain service charge payments. Very often a property tycoon will own many of the flats in a block as a investment. Should he become insolvent therefore this presents a major problem to the management company as a large chunk of the service charge goes unpaid and this has led to many companies having no option but to fold.

Apart from the obvious difficulties that the lack of a management company presents to conveyancers, there is often the problem of a restriction on the leasehold title preventing dispositions without a certificate of consent by the company. Once the company is dissolved then clearly the restriction cannot be complied with, so what can a conveyancer do to enable him to register a disposition?


Can An Application Be Made to Remove the Restriction?

When a company is dissolved it ceases to exist as a legal entity. Even if therefore the directors were prepared to sign an RX4 (application to withdraw a restriction) the application would fail because they no longer have the power to sign in the name of the company. To do so would be something like an attorney signing a document on behalf of the donor after the donor has died.

Most conveyancers’ first thought therefore is to apply in form RX3 (application to remove a restriction) on the basis that it is superfluous. The problem is that, unlike a deceased donor under a power of attorney, a dissolved company can be reinstated. If this happens then they will require the restriction therefore the Land Registry will have no choice but to reject the application to remove it. It is not superfluous because the interest protected has not come to an end. The proper procedure is to make an application in form RX2 (application to disapply a restriction).

Making an Application to Disapply a Restriction on Dissolution of a Management Company

An application to disapply a restriction is made using form RX2. If successful, the restriction will remain on the register but the Registrar will make an order that the restriction be “overlooked” in respect of a specific transaction (details of which must be provided on the application) thus allowing registration to be completed.

On making the application, evidence must be supplied of the applicant’s right to have the restriction disapplied. Where the application is made as a result of the dissolution of the company whose certificate is required, the conveyancer must supply two pieces of evidence. First, a company search showing that the company is dissolved. The free search available via the Companies House website is sufficient for these purposes. Second, a letter from the Treasury Solicitor consenting to the application and confirming it has no interest in the restriction.

When a company is dissolved, all of its assets vest in the Treasury Solicitor who holds them on behalf of the Crown. This includes any rights under any restrictions in the company’s favour. Technically therefore the Treasury Solicitor may be entitled to object to the application. In reality this is very unlikely and if the Bona Vacantia section is contacted they will issue a standard letter for Land Registry purposes.

When to Make the Application to Disapply a Restriction

The decision as to what point in the transaction to make the application is one for the individual conveyancer. Any order issued by the Land Registry is valid for a specific transaction, so if a sale falls through the application will have to be repeated once a new buyer is found. In an ideal world it would be made between exchange and completion with completion on notice and conditional on the application being successful, however of course this may not be convenient for buyer or seller.

Conveyancers should avoid making the application after completion as, although it is likely to be successful, success can never be guaranteed and delays are possible.

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Filed under Conveyancing Practice Points, Notices and Restrictions

October 5, 2011

How to Find Conveyancing Solicitors



When you are buying, selling or mortgaging a property in England or Wales, you’ll usually need to instruct conveyancing solicitors. Conveyancing solicitors specialise in the legal process of buying, selling or mortgaging land (conveyancing) and although any solicitor is legally allowed to do the work, specialist conveyancing solicitors have the necessary knowledge and experience to ensure that you get the advice you need, as well as being the best value for money.

There are thousands of conveyancing solicitors up and down the country so finding them is easy. First, you need to decide whether you want local conveyancing solicitors, whose offices you can visit to sign documents and discuss your case, or national conveyancing solicitors who will deal with everything via telephone, post and email.


Local Conveyancing Solicitors

Local conveyancing solicitors tend to see clients face to face in the traditional way. This means you have to take time out to attend appointments (which will most likely be during your normal working day) but face to face meetings can help where a transaction is particularly complex as you can examine documents and plans with your conveyancing solicitors.

The best way to find local conveyancing solicitors is to use the Law Society’s “Find a Solicitor” tool. Just enter your postcode and use the “area of law” filter to choose “residential conveyancing”. The search will list conveyancing solicitors in your area, nearest first. Just choose 3 or 4, give them all a call for a quote and choose the one you like best.

National Conveyancing Solicitors

Some of the larger firms of conveyancing solicitors operate on a national scale and are prepared to take on conveyancing cases all over the country. These conveyancing solicitors tend to deal with all of the paperwork by post or email and communicate with clients this and also by phone. Many people find this convenient because they don’t need to take time off work to visit their conveyancing solicitors and go through the paperwork at their leisure. They will probably find it much easier to get hold of their conveyancing solicitors when it’s convenient for them (the clients).

To find national conveyancing solicitors it is usually easiest to search on the internet (take a look around this page for example). A search for the term “conveyancing solicitors” should bring up a number of intermediary websites. These websites have a relationship with a number of conveyancing solicitors and are able to provide you with a quote which meets your needs depending on the information you supply. When using these sites it is important to provide as much information as possible and in particular your contact details so that the conveyancing solicitors are able to contact you.

A word of warning though, should you obtain a quote from such a site, check with your conveyancing solicitors directly that the quote you have been given is all you will pay and there are no hidden costs or charges.

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Filed under Conveyancing Solicitors, Public Guides

July 3, 2011

Automatic Adoption of Public Sewers



 
There is good news for conveyancers and many home owners alike today (01.07.2011) The Water Industry (Schemes for Adoption of Private Sewers) Regulations 2011 come into force. Why is this good news? The Water Industry (Schemes for Adoption of Private Sewers) Regulations 2011 are made using powers granted by the Water Act 2003 and transfer ownership of all private sewers and lateral drains in England and Wales which serve more than one property to the water authorities responsible for the properties they serve.

With effect from the 1st of October 2011 all of these stretches of private sewer and drain will be deemed automatically adopted. Pumping stations will also be adopted eventually, though not until 2016.


Lack of Drainage Easements and Maintenance Obligations

The move was made following concerns by the previous Government regarding the problems which arise from missing easements to use private sewers and drains and in particular the potentially huge costs facing home owners where their properties are served by an extended network of private sewer, perhaps where a developer after constructing an estate has failed to make an application for adoption.

These situations can of course be a real nightmare for home owners in terms of both the cost and the administrative task of negotiating with the other home owners to make payment of their share. This move will also mean one less headache for conveyancers and one less indemnity insurance policy that might be needed!

Which Sewers and Drains Will be Affected?

Any private sewer or lateral drain which serves more than one property and which eventually connects to a public sewer or drain will be adopted. Any section 104 agreements currently being negotiated will be cancelled and for agreements in force, the date for adoption will be brought forward to 01 October 2011. Private pumping stations will be adopted in 2016.

Cost of Automatic Sewer Adoption

Of course, will all of these new sewers and drains to look after, the water authorities are going to need more money to pay for repairs etc, which will surely mean a rise in water bills. Not such good news for those who are not connected to a private sewer.

Building over a Sewer

Of course, it is illegal to build any structure over a public sewer without the consent of the water authority. This raises the question of what might be done where a structure has been built over a private sewer which as a result of this action has become public. Will the water authorities have the same rights as if the structure was built without permission after the sewer had been adopted? This is not clear, but what is clear is that conveyancers will need to clearly note, where a structure has been built over a sewer that was previously private, whether it was pre or post 01 October 2011.

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Filed under Conveyancing Practice Points, Easements and Rights, Services, Pipes and Cables