Investigation of Title

General

The process of investigation of title involves the review and examination of the seller’s title with a view to ascertaining that he is in a position to give so-called good title to the buyer.  The process is more complex in the case of the unregistered title.  In the case of a registered title, the process is greatly simplified.

In a wider sense, the investigation of title process includes consideration of many non-title aspects of the property.  Many of these matters are more appropriately investigated prior to contract.  The standard Law Society contract allows investigation of certain matters after contract which is not strictly title or ownership in nature.

If a buyer fails to investigate title, then he is deemed to know the things which he would have discovered had he undertaken the usual investigations.  Therefore certain classes of equitable rights which are not immediately apparent but would have been discovered will affect the buyer even if he is not aware of them.

Failure by a solicitor investigate title properly or at all is likely to be negligent.

A person disposing off land to a buyer or his solicitor is guilty of an offence if, with the intent to defraud, he conceals from the buyer any instrument or encumbrance or falsifies any matter on which the title may depend in order to induce a buyer to accept the title.

He is also liable for damages where losses arise by reason of concealment or an instrument or encumbrance or any claim made by a person whose title was concealed by such falsification.

Condition

The buyer’s ability to investigate title may be limited by the terms of the sale contract.  Where this is the case the buyer solicitor should make the appropriate investigations prior to the buyer committing to the contract.  A condition which severely precludes the right to investigate title must be clearly flagged.

A condition which precludes investigation or purports to foist a bad or non-existent title will be interpreted strongly against the seller’s interest.  If it seeks to sell an illusory thing there may be simply no consideration.  The court will endeavour to ensure the contract cannot have the effect of simply cheating the buyer.

Certification of Title

The buyer’s solicitor may be asked to certify the buyer’s title to a lender for the purpose of financing the purchase.  See separately in relation to certificates of title in the context of banking practice.  See generally on solicitors’ undertakings in the sections relating to solicitors.

There is a standard form of undertaking.  It is relatively short and imports general conveyancing standards.  It requires that the title is of a quality commensurate through the standards of current conveyancing practice in the Republic of Ireland.

Registered Title

The investigation of title is less complex in the case of registered land.  The production of an up-to-date certified copy of the folio and file plan will be furnished.  Where the seller is registered with absolute title then there is effectively a full state guarantee of title/ownership.

In the case of registered title, a land registry search is effectively an up-to-date folio.  This will vouch adverse rights, mortgages, charges, leases etc.  which may apply.  In some cases, warning notices may be lodged in the land registry which will affect a buyer unless cleared or discharged.

The title may be subject to easements and rights which may be onerous.  The buyer’s solicitor will need to obtain documents referred to on the title as burdens and investigate their application.  The buyer’s solicitor will need to vouch that the title as appears actually conforms with the physical property in sale.

Unregistered Title

In the case of unregistered title, ownership is proved by the production of a chain of ownership going back at least 15 years.  Formerly the requisite period through which ownership was required to be traced was at least 40 years, and laterally 20 years by conveyancing practice.

The seller’s solicitor must produce a deed by which the whole property was sold at least 15 years old.  Where the seller purchased a property more than 15 years ago the seller’s purchase deed will suffice.  Where he is the owner for less than 15 years, a chain of ownership through a deed at least 15 years must be established.

A chain of ownership involves showing that the buyer under one deed is a seller under the next deed.  Searches are made against each owner for his duration of ownership to the point where the deed by him to a successor is registered.  All adverse transfers by an owner during the relevant period as mortgages, leases, easements etc.  must be “explained” proved to be inapplicable

Mortgages will generally be required to be proved to have been discharged.  Easements may be compatible with the f title purchased.  Leases may or may not compatible with what is purchased.  Any such adverse acts by the owner or his predecessor must be discharged or explained.

Deeds I

Generally, the original deeds must be produced.  If they are proved to be genuinely lost for good reason, copies may suffice.  It will be necessary to give proof of loss. It may be necessary to supplement the position with a bond to cover any residual risk by an insurance company.

Where the property has been subdivided in the past,  copies only of earlier deeds may be available.  In this case, there must be a so-called statutory acknowledgement or undertaking by which the buyer or seller and his successors, as the case may be, is entitled to require the production of the original deed.  This would be necessary in order to prove and assert title in court as against a third-party claiming an adverse title.

Each deed must be examined.  It must be shown to have been properly signed, executed, stamped and registered.  It must describe the property adequately.  There may be a map on one or more deed. There may be a cross reference to an earlier deed with a map.

Deeds II

Unlike the case with land registry title, there is no requirement for an ordnance survey map.  In many cases, there is a  verbal description only.  In these cases, it may be necessary and desirable to obtain declarations of a surveyor or another expert or with first-hand knowledge of the identity of the property with the physical locus in sale.

It is necessary to show that the deeds are sufficient to prove good title.  Until 2009 technical rules existed in relation to the requirements for transferring titler ownership.  In particular, it was necessary to use certain words in order to transfer a freehold or fee simple estate.

It is necessary to show that the deeds are duly stamped in accordance with stamping laws.  If the deed is not duly stamped it cannot be used as evidence in court, if it proved necessary to prove and assert title.

Registration of the deed must be shown in order to establish priority.  A failure to register leads to the risk that a later deed by the same seller may be made, which procures priority.

The deeds may show that there are restrictions on title, easements and other relevant rights.  These should be compatible with the buyer’s expectations.

Requisitions on Title

In the strict sense of the word requisitions on title involves requisitions, objections or requirements in order to clear the chain of title to prove the seller’s good and marketable title.

There are certain cases where buyers are protected from investigating the circumstances of a particular sale.  This occurs in a sale by a mortgagee, a sale by a personal representative, and sales by trustees of land.  In these cases, it is not necessary to investigate circumstances behind a particular party’s power where the relevant statute gives a clear power of sale.

However, a buyer in relation to such purchases must act in good faith.  This means that he is bound by an adverse matter he in fact discovers or would have discovered on the investigation of title.  He need not investigate behind powers of parties above but must investigate obvious irregularities which are such as would have caused third-party rights which have come to his attention.

In all cases, the buyer is deemed to have notice of the physical state and condition of the property and matters which arise from it.  Where rights are apparent from inspection then requisitions and objections must be made to explain (as inapplicable), discharge or release them as part of the process.

Where the sellers are in fact trustees who hold tile the buyer is not generally obliged to go behind their actions into the workings of the trust.  If he has actual notice that the buyers are trustees we should satisfy himself that the sellers have the power to sell under the terms of the trust without joining in the beneficiary.  Failing that the beneficiaries may need to become a party to the sale.

The inability of a seller to produce an acknowledgement of the right to production of a document is not a fatal defect on the title where there is an equitable right to the production of the document.

Recitals and statements in deeds more than 20years old are presumed true until the contrary is shown.

Period of Title

The contract sets out to the time period in which the seller must prove title.  Generally, the title deeds must be produced within seven days of contract.  Almost invariably, they will have been furnished at the outset with the draft contract.  Once there is a contract, objections and requisitions must be raised within 14 days of delivery of the title documents (or the date of the contract.  These time limits are strict.  Where, however, objections and requisition have not raised the seller may nonetheless be unable to foist a patently bad title on the buyer.

The terms of the contract may restrict and limit the extent to which title may be investigated.  This is almost invariably done.

Where the title comprises a lease, the title must start with the lease and pass to an assignment more than 15 years old.  In this case, the title commences with the lease, passes to the assignment at least 15 years old and is traced or deduced from it. Generally, the buyer is not entitled to object to or make a requirement in relation to matters prior to the root of title or the intermediate period, passed over.

Insisting on Objections or Requisitions

The standard contract provides that where the buyer insists upon objections or requisitions as title and other matters relating to or incidental to the sale which the lender is unable or unwilling to remove or comply with, the seller may rescind the contract by giving notice to the buyer.  Five days notice is required.  The seller must give a warning to the buyer before exercising this right to allow him reconsiders his position.

The seller may only invoke the right in a reasonable manner and with good cause.  It may not be used as a method simply to terminate the contract.  It invocation should be based on objective grounds of delay and expense associated with complying with the buyer’s requirement. If the contract is terminated in this way, the buyer’s deposit is returned.

The right may not be exercised if the seller has been reckless in entering the contract.  Where he has entered the contract without regard to his lack of title, he will not be allowed to use the right to rescind the contract.  He may not use it where he has no title at all or where the defect is due to his default.  In this event, the buyer’s rights against the seller will be preserved.

The seller, through his solicitor, must give accurate replies to the requisitions and objections. The seller and his solicitor run the risk of liability and (in the solicitor’s case negligence or fraud) if they inaccurately respond.  A seller’s solicitor may be liable to a buyer for negligence where the buyer reasonably relies on it. Where the seller’s solicitor responds, he must make reasonable inquiries of his clients and seek to vouch for its accuracy.

The buyer’s solicitor may raise supplemental requisitions or so-called rejoinders where the initial responses are unsatisfactory and do not explain or discharge material matters.

At the conclusion of the investigation, the buyer may accept the title.  This does not involve a formal acceptance as such but rather the conclusion to queries without further rejoinder

Searches

It is possible to obtain a priority search in the Land Registry gives the buyer a period of up to 44 days in which to lodge and obtain the same priority as is shown under the search. New or further searches are generally made contemporaneous with completion.

A key element in the investigation of unregistered title involves searches or the examination of older searches in relation to the property.  With unregistered (Registry of Deeds) title,  it is necessary to search against each owner on title back to the root of title.  There will generally be older searches which are available and do not need to be replicated.  Formerly Negative Searches were made by the registry itself.

Common searches are made by private providers. Negative Searches are an official search of the registry of deeds by the registry itself. They carry a state guarantee.

If the searches contain adverse acts, then they are produced to the buyer’s solicitor for explanation or discharge.  Further investigation may be required.

A search of pending litigation must be searched.  It is possible to register notice of pending litigation which may affect the title to land in the Judgments Office.  The results of litigation may bind the title to the land.

Formerly it was possible for the Sheriff to seize leasehold property.  This was abolished by the 2009 act.  Accordingly, Sheriff’s office searches against this risk are generally not now undertaken.

On bankruptcy, the bankrupt’s assets vest in the Official Assignee or trustee in bankruptcy.  In order to cover off the risk of unknown bankruptcy, a bankruptcy search is generally made against the seller or purchaser / mortgagor.

In the case of company sellers, searches are generally made to vouch for the company’s continued existence and the absence of other adverse matters.