Bound by the Law of Property (Miscellaneous Provisions) Act 1994, the inclusion of phrases and a few words can ensure that the buyer benefits from a few implied covenants. As implied in the Act, the phrase, ‘the seller,’ who sells with a full title guarantee, means that the buyer gets all the covenants.
If it’s a limited title guarantee, the phrase would include,’ the buyer would get only a limited title guarantee, or in some cases, the seller may also indicate that no guarantee is given.
What Are The The Types Of Title Guarantees?
As indicated, there are two main types of title guarantees that include full and limited. A full title guarantee ensures that a seller has the legal right to sell a property. It also guarantees that the property has no third-party charges or encumbrances.
These guarantees are critical to the buyer since someone may come along and claim that they have rights to the property, causing a dispute. By contrast, a limited title guarantee is used when the seller does not have personal knowledge of the property, which means there is no guarantee that the title is clear.
Normally, buying a limited title guarantees affluence. Buying a house that is less valuable than a property with a full title guarantee. The solicitor should pick this up for the buyer, but if unsure, check with them before buying. However, the seller usually goes to normal practice, which provides covenants for title, in standard form, by selling with a “full” or “limited” title guarantee, following the Law of Property (Miscellaneous Provisions) Act 1994.
Moreover, this wording effect means the buyer can take legal action against the seller due to a breach of the title guarantee following completion. Typically, a property with a full title guarantee is being sold. On the other hand, for those sellers who are trustees, personal representatives, or mortgagees, only property with a limited title guarantee is what they usually sell.
On the other hand, a liquidator who sells a house, or a seller who can’t prove good title to a property, may sell with no title guarantee at all. In this case, no title covenants are given, meaning there is nothing the buyer can sue. Where a seller transfers the property with a full title guarantee, the following covenants for the title are implicated:
a. A covenant that indicates the seller has the right to transfer the land as they wish. Also, this indicates a promise that the seller should do anything as what was promised in the disposition.
b. A covenant that the seller will reasonably accomplish everything with the expectation to transfer the land title intended to be transferred. If a clear title can’t be provided, the seller shall do all forms of assistance to perfect the title at his own expense. This includes helping a buyer apply for title registration under the LRA 1925.
c. If the land is given away as the holding of property by lease, the seller indicates guarantees that the lease’s time of disposition should exist and that no breach of the covenant has taken place, which makes the lease liable to forfeiture.
On the other hand, a major difference implies between giving a full and limited title guarantee:
a. With respect to the full title guarantee, it implies that the land is disposed of incumbrances other than those the seller doesn’t know about or could reasonably not have known about.
b. With respect to limited title guarantee, it implies that the seller has not himself encumbered the land, nor is he aware of anyone who has done so since the last time the land was transferred for value. Thus, if a donee further disposes of a land with limited title guarantee, the donee covenants that he has not encumbered the land, nor is he aware if the donor had done it.
a. The seller shall not be in breach of implied covenants with respect to matters:
1. Where the transfer is itself made a subject. For instance, when land is expressly transferred subject to a restrictive covenant contained in a deed dated 1st January 1950, the seller cannot be held liable with respect to that incumbrance.
2. Also, when the buyer knows about the covenant at the transfer time. Thus, when a buyer knew at the time of transfer that an overriding interest existed, he could not sue the seller for the overriding interest.
b. By inserting a clause in the transfer, the seller can always modify the effect of any covenants.
What Are The Possible Risks Of Not Having A Title Insurance?
The benefit of purchasing a property with a limited title guarantee means it is cheaper than properties with a full title guarantee. The limited title guarantee lot makes the property less valuable. Despite the available security the title insurance can offer, one may still opt not to get one.
When it happens, there may be a risk in case title defects go unnoticed. For example, an individual finally decides to purchase a property, and the person gets ecstatic, especially during the signing and the turnover of keys. Now that an individual has finally stepped into their new home, letters come into the mailbox, only to find out that the property bought has loans and unpaid property taxes to pay.
Without title insurance, the individual will be legally responsible for settling the dues and all the lot’s problems. With title insurance, these things can be prevented. Apart from unpaid taxes, a few issues can still arise regarding the title.
In fact, the insurance will take full responsibility and save money and time. Indeed, buying a home is a meticulous decision since one should take careful and thoughtful action to avoid falling into any trap. Additionally, it has many bits and pieces of information one must deal with unless all documentations are spot-on clean.
Title guarantee refers to a person’s or business’s legitimate claim to ownership of a particular asset. If you’re looking to purchase a house shortly, Utah Title Guarantee, a title insurance agency, can help you understand the complicated process of owning a property. Learn more about why Title Guarantee is your best option.