What is a Contract Report on Title when Buying a Property? – Part 1
During the course of a property transaction, the two most important documents that the purchasers’ solicitors produce are the contract, and the report on title. You might have heard us talk about these documents in earlier blogs, but what do they really mean?
Well, here is a layman’s guide to a Report on Title – we hope you find it useful.
The report on title is the document that the purchasers’ solicitors produce after they have done all the searches and checks against the property.
- If you are the purchaser, then when you receive the report, you should read it carefully and discuss any aspect of it that you do not understand with your conveyancer. Here is a summary of the information that a report on title will give you, and why it’s so important.
- Obviously, the report will give the name and address of the property. Check it carefully. Mistakes happen so make sure you are reading the right report! The report will also usually have a plan attached, showing the land you are proposing to buy, marked in red. Look at it carefully and make sure it’s the right area.
- The report will also confirm if the property is registered or unregistered land. As the purchaser it won’t matter to you which it is, but if you are buying unregistered land, your solicitors will have to have gone through a lot more paperwork to check the providence of the property, so the report is likely to be longer.
Although the purchasers’ solicitor will do their best to check the authenticity of all the papers they review, they will have to assume that all original and copy documents relating to the Property have been validly executed and delivered by the parties to them and that all documents are within the capacity and powers of, and have been validly authorised by, each party. If there is anything on the face of the documents to indicate otherwise, your solicitor will let you know.
The Report is addressed to the purchaser only and is for the purchaser’s use only although it will also be shared with anyone the purchaser is using for finance, such as their bank. The purchaser’s Solicitor might also show it to relevant parties, such as the surveyor. It cannot be used for anyone else. So, if you pay for a report, and then decide not to proceed with the purchase for whatever reason, you will not be able to sell the report to the next person interesting in buying the property.
The report will confirm that the purchasers’ solicitors have examined and considered the documents and papers relating to the property, and the results of the searches and replies to the enquiries made by them will be set out in a schedule to the report.
If you see the phrase “not made” against any of the enquiries in the Schedule, that just means that your solicitors didn’t consider it appropriate or necessary to make those enquiries, in the circumstances of the purchase and having regard to the nature of the Property.
The Report will be based only on the buyer’s solicitors’ examination and consideration and the results of such searches and enquiries and from material provided to them by the Seller. These are the searches that are usually done-
- Local search certificate and replies to CON 29R Enquiries of local authority (2007) and any other relevant enquiries in CON 29O Optional enquiries of local authority (2007).
- Commercial drainage and water enquiries (Con 29 DW)
- Enquiries of The Coal Authority as to past, present and future mining operations in proximity to the Property. This is one of the ones likely to be marked “not made” if the property is not in a mining area.
- Land Charges Act searches against every estate owner who was a party to any transaction, or concerned in any event, comprised in the relevant title (see Section 25 of the Law of Property Act 1969) where there is no clear search with the title deeds.
- Land Charges Act searches against the Seller and the date of expiry of priority.
- Land Registry search (whether of whole or part), date of expiry of priority and name of party having benefit of priority period.
- Where the title to the Property is not registered, the date of the search at the Companies Registry of the file of all companies disclosed by the documents of title as estate owners of the Property since the root of title.
- Search at the Companies Registry against the Seller and the Company if any company has been involved in the ownership of the property.
- Replies to enquiries of the Seller.
- Any other searches or enquiries the purchasers’ solicitors considered to be appropriate.
If you are buying a property that has a tenant in situ, then one of the schedules to the report will set out any details regarding the tenancy and any licence or lease over the property.
This might include-
- Personal details the names of all parties to any lease or licence, and the details of any superior landlord and/or sub tenant if applicable.
- Occupation and possession details of who has the right to be in the property when the sale takes place.
- Lease terms details of the lease or licence over the property, how long it lasts for and what the renewal terms (if any) are and how much rent they are paying including any rent review provision and service charge obligations
- Termination provisions How long the lease or licence will run for, and whether the tenant has the right to remain in occupation of the property thereafter.
- Guarantors If there is a guarantor and if so, what the terms of the guarantee are.
- Premises a brief description of the rights being granted, such as any rights of way that the tenants have, whether they have use of utilities and if so, who will be paying for them.
The report will confirm what the property is currently being used for. Simply because you are buying a house, doesn’t mean that it’s being used as a house at the moment, and you’ll need to consider whether any change of use advice is necessary.
Unless the report says otherwise, it will include each and every part of the land and all buildings and structures on it.
Although the report is very extensive, there are a number of things that they will not (cannot) deal with. For example, the buyers’ solicitors will not have inspected the Property themselves, and the information will be from the buyer’s solicitors, not from the buyers personally. Although the buyers’ solicitors will give a wide range of information on the property in the report, they won’t give any opinion on the financial side of things, such as the capital or rental value of the property.
The Report also won’t consider any environmental issues, so if you have any concerns assessments audits surveys or other reports on the environmental condition of the Property and the recipient of this Report should consider what investigations it wishes to make in relation to such matters. Also, the report will not deal with things like insurance such as what insurance policies are already in place or what insurance you should have in force.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.