The term "conveyancing" describes the legal process whereby a person becomes the registered and lawful owner of fixed property or land. When seeking a definition of "land", a good starting point is the one found in section 205(1) (ix) Law of Property Act 1925 which provides that:

"Land" includes land of any tenure, mines and minerals, whether or not held apart from the surface, buildings or parts of buildings (whether the division is horizontal, vertical or made in any other way) and other corporeal hereditaments; also ... a rent and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or derived from land. "Hereditament" means any real property which on an intestacy occurring before the commencement of this Act might have devolved upon an heir.

There are two systems of conveyancing in operation in England and Wales. Registered land conveyancing and unregistered land conveyancing.

Dealing with registered land first. The system of registration of title operating today was originally introduced by the Land Registry Act 1862 and was consolidated in the Land Registration Act 1925, although there have been many statutes amending and consolidating the original Act. The system was designed to ease the mechanics of transferring title to land and it is fast replacing the traditional unregistered system. Nowadays, most dealings with property are on the registered system.

How the system works

When a person first applies for registration of his title to land which was so far unregistered, he will have to produce all the deeds and documents establishing his title (for example conveyances) and other supporting documentation (for example searches, probates of wills, death certificates etcetera), going back over the previous 15 years or more. If the registrar is satisfied with the title, he will register it at HM Land Registry. That registration carries with it a State guarantee that the title shown can be relied upon by anyone dealing with the landowner (called the 'registered proprietor').

The Register provides a person dealing with the registered proprietor with all the information he needs about the title, in a concise and condensed form.

If another person acquires the land from the registered proprietor then he must apply to HM Land Registry to have the name of the former registered proprietor deleted and his own name and details inserted. Only then does the legal estate vest in the new owner, and this can only be accomplished by the signing of a deed of transfer.

The headquarters of HM Land Registry are in London, but there are District Land Registries elsewhere in England and Wales. Each District Land Registry has responsibility for a particular geographical area.

'Registration of Title' or 'Registered Land'

It does not matter how in practice you refer to the registration system as long as it is appreciated that the system is, in fact, one of registration of the title to land (and a record of third party rights over the land, for example mortgages) and not one of registration of the land itself. There may be several titles relating to one piece of land, as the following example will illustrate.

A owns the fee simple of a house, say, in Surrey. His freehold title is registered under say, No. SY 00001. A grants B a 99 year lease of that house (A does not want to live there, but wants to keep the freehold as an investment). B is registered with leasehold title under say, No. SY 00023. B decides to live elsewhere for a time, so grants C a 30 year sub-lease of the house. C is registered also with leasehold title under say, No. SY 200001. One house. Three titles.

As a result of the Registration of Title Order 1989, the whole of England and Wales became an area of compulsory registration as from December 1990. This means that, following a disposition, the title must be registered, if not already registered. It is also possible to apply voluntarily for registration at any other time.

The legislation is designed to speed up the registration process with the aim that, eventually, the titles to all the property in England and Wales will be registered. (See below for a comment on the system of unregistered conveyancing).

The Form of the Register

Originally, the Register was in the form of cards in a card index system; However, the system has now been largely (and, by now, possibly totally) computerised.

The Register is divided into three main sections, namely the Property Register, Proprietorship Register and Charges Register.

Property Register

This describes the land by reference to a plan which is attached to the Register ('the filed plan') and the estate for which it is held (in other words freehold or leasehold). If leasehold, the register will contain brief details of the lease.

The register also describes any rights which benefit the property, for example a right of way enjoyed over an adjoining property by virtue of an easement.

The Proprietorship Register

This states the class of title, the name and address of the registered proprietor and details of anything that may affect his powers of disposition, in other words a caution, restriction or inhibition. An example would be a restriction where trustee regulations dictate that no disposition by one only of several owners, may take place.

The Charges Register

This contains registered charges (in other words mortgages) and notices of other encumbrances adversely affecting the title, for example restrictive covenants, or outstanding claims for Inheritance Tax or Legal Aid.

Land and Charge Certificates

Although the original Register is kept at HM Land Registry, a copy of the information is given to the registered proprietor in the form of a land certificate.

In a sense, a land certificate replaces title deeds but, unlike title deeds, the original register is kept at HM Land Registry so no one can tamper with it without proper application. The chances of fraud are greatly reduced.

If the registered proprietor purchased the property with the aid of a mortgage, then HM Land Registry will retain the land certificate and issue a charge certificate to the lender. Apart from the inclusion of a mortgage, the contents of a charge certificate are virtually identical to those of a land certificate.

Generally, the appropriate certificate must be produced to the Registry whenever a person wishes an entry to be made, or changed, on the register.

Mortgages

Most people are familiar with mortgages. A person wishing to purchase a house will not always have sufficient funds of his own to finance the purchase. He will, normally, approach a building society or bank and ask to borrow the necessary funds. As security for the loan the lender will take a charge over the property. If the loan is not repaid, the lender will take physical possession of the property and sell it, in order to recover the amount outstanding on the debt.

Mortgages of Unregistered Title

Since the implementation of Section 85 Law of Property Act 1925, there are only two methods of creating a legal mortgage over an unregistered title:

(a) A lease for a term of years absolute, usually 3000 years, subject to a provision for cesser on redemption; or
(b) A charge by deed expressed to be by way of legal mortgage.

Mortgages of Registered Title

Section 25 Land Registry Act 1925 states that a legal mortgage of a registered title should be created by charge (although there is some flexibility as to the form of charge that may be adopted). Completion of the deed itself does not create a legal mortgage; it must be completed by registration (as notice in the Charges Register of the mortgagee's title). If the mortgagee, in other words the lender, fails to register the charge, his mortgage will be a minor interest against the registered title and will not bind a purchaser for value.

Freehold

All freehold titles are capable of registration with separate title.

Leasehold

Some leasehold titles may be registered with separate title but some are excluded. For example, a lease which has 21 years or less to run is incapable of registration with separate title.

Leases

Basic land law dictates that there can only be two legal estates in land, the fee simple absolute in possession (or freehold) and the term of years absolute in possession, (or leasehold). The grantor of the lease is the landlord or lessor. The person to whom the lease is granted is the tenant or lessee.

The Lease

The creation of a new lease is often referred to as a grant. When granted a lease, the tenant holds a term of years absolute. A lease may also be referred to as a demise, a term of years or a tenancy.

The Reversion

Although a new lease might be granted, the landlord nevertheless retains his interest in the land and this interest is called the reversion. The reversion covers all the rights that the landlord still has in the property, for instance to collect any rent payable by the tenant, and he will receive the property back, free of the lease, at the end of the term. The landlord may, of course, be the freeholder, or a tenant of the freeholder who has given a lesser term to his own tenant.

A lease can best be described as a grant of exclusive possession for a period that is certain or is capable of being made certain.

Creation of a Legal Lease

A Legal Lease for a period exceeding three years can be created only by a Deed and if it is granted for more than 21 years it must be registered at HM Land Registry. The types of lease created range from the weekly periodic tenancy to the fixed term lease of 999 years or even more. Whatever the length of the lease, the landlord retains the reversion and on termination of the Lease, he or his successors will recover possession of the property.

If a leasehold title is incapable of registration with separate title, it can still be protected as a third party right over the landlord's title.

Who appoints a Solicitor?

Each party actually appoints his own legal representative.

Solicitors and Licensed Conveyancers represent clients in property transactions. Solicitors are regulated by the Law Society and Licensed Conveyancers by the Council for Licensed Conveyancers.

It is only under certain circumstances that one set of representatives will be able to act for both parties. For instance when both parties are existing clients of the firm. It is considered a serious conflict of interest to act otherwise.

What are the basic steps in a property transaction?

The first requirement is an offer and acceptance of the offer. Both will be subject to contract. See below for details of what happens then.

Basic Steps in the Sale of a Property

The solicitor acting for the seller (note that the seller of property is also sometimes known as the vendor) will deal with the following:

Office copy entries

These are official copies of the documents representing the seller's title to the property. The seller's solicitor will base the draft contract for the sale of the property on the office copy entries, which he will obtain from the Land Registry and produce, with the Contract, to the buyer's solicitors.

Prepare draft contract for sale

The seller's solicitor prepares a draft contract, which is then sent to the buyer's solicitor, who will consider it and may suggest amendments. When the solicitors have agreed the terms of the contract, the buyer will sign one copy and the seller will sign the other.

Exchange of contracts The copies of the contract signed by the buyer as to one, and the seller as to the other, are exchanged, and both parties are then contractually bound to go ahead and complete the transaction. The date for completion will be stated in the contract.

Send completion statement

This tells the Buyer's solicitor exactly how much will be payable on completion. It takes into account the deposit, which the buyer has already paid, and in the case of leasehold property there will be groundrent, service charges and building insurance premiums to apportion between buyer and seller.

Check mortgage redemption figure

The property may be subject to a mortgage, if so, the seller must repay the outstanding amount to the mortgage lender (known as 'redeeming the mortgage') out of the proceeds of sale after completion.

Get estate agent's invoice

The estate agent acts for the seller and will charge commission for services provided. The agent's commission will usually be paid out of the proceeds of sale after completion, if so authorised by the Seller.

On Completion

The solicitor receives the balance of the completion statement due from the buyer, and the deed transferring ownership of the property to the buyer is dated and handed over. Finally, the Seller's solicitors will redeem the mortgage, pay the estate agent, and transfer costs from his client account to office account, sending the remaining balance of money to the client.

Steps in the Purchase of Property

The solicitor acting for the buyer (a buyer of property is sometimes also known as the 'purchaser') will deal with the following:

Receive draft contract

The seller's solicitor prepares this. The buyer's solicitor can require further information and suggest amendments before agreeing the terms of the contract.

Make local authority search and drainage search

This is to check whether anyone has any rights over the property, which could affect the buyer's enjoyment of it, what the planning register shows, whether there are any road building or compulsory purchase proposals, whether the property is in a conservation area or green belt, and like matters.

A most important step prior to exchange of Contracts, is that the Buyer's solicitor needs to make a full report to his client in which he will explain everything that he has found out about the property and that the Buyer should be told, and about the transaction generally. Many solicitors interview the clients at that stage and discuss matters face to face. This is convenient for dealing with questions arising at the time, but at Breytenbach & Co we like to report in writing to our clients, sending all necessary original or copy documents and providing our comments and advice for the client's careful consideration at leisure. This enables the Buyer to raise any queries he may have after studying our report, and forms a permanent record which he can keep both for information and future reference. It can also be most useful in any subsequent sale of the property by the client concerned.

Obtain deposit money from buyer

On exchange of contracts, the buyer will have to pay a deposit. The solicitor will want to get his money from the client in time to clear the cheque before exchange, or have it transferred directly into his client account. This deposit could be forfeited if the Buyer failed to complete his purchase.

Exchange of contracts

The Buyer's solicitor and Seller's solicitor agree exchange of contracts and the completion date by phone, in most cases, when the parties become legally bound.

Between Exchange of Contracts and Completion

After exchange the Buyer's solicitor has various tasks to carry out, often in a short period of time, since completion nowadays usually follows quickly upon exchange.

He will raise any outstanding requisitions, in other words final questions about the property handover, keys, documents that need to be produced (for example death certificates or licences) and will at the same time submit a draft of the proposed purchase deed or transfer. The Seller's solicitor will approve or amend as necessary and pass to the Seller for signature.

The Buyer's solicitor will also make final searches, at the Land Registry to protect the forthcoming transaction (and prevent for example an intervening mortgage being registered) and in Bankruptcy to ensure that his client is free to accept the proposed mortgage advance. He will prepare a Completion Statement for his client, which will include all necessary fees and costs, Stamp Duty (charged by the Government on transfers or leases on a sliding scale based on value) and Land Registry fees (again based on the value of the land transferred). It will take account of rent and maintenance charges where the property is leasehold. The Buyer will need to transfer the required balance to his solicitor in good time for completion.

A further task is, in most cases, to submit his report to the Lender, confirm compliance with the Lender's requirements and request issue of the mortgage advance, giving adequate notice for the Lender's needs. If not dealt with at an earlier stage, he will prepare the mortgage deed and arrange for the Buyer to sign it.

Completion and After

On completion the Buyer's solicitor will transfer the balance required to the Seller's solicitor's bank, and complete by phone confirmation, when the Seller's solicitor will forward the title documents and authorise the agents to release the keys to the Buyer. Take note, the release of keys, unless special arrangements have been made between the parties, will not take place nor will the Buyer be allowed to take possession until all monies have been paid on the completion day. If the property happens to be empty, then in rare cases the Seller might agree to the Buyer taking possession as a licensee only, after exchange of contracts and pending completion. In return the Buyer would normally be required to pay a rent based on the contractual interest rate.

A good deal of work still remains, for then the Buyer's solicitor will complete the Inland Revenue form of the transaction details for the District Valuer's records, send the Transfer with the relevant duty for stamping, and on its return complete the Land Registry forms to submit everything to the Registry for his client, and the Lender's mortgage, to be registered. He must deal with and resolve any requisitions or queries that the Land Registry may have, and in due course forward the Charge Certificate and other papers to the Lender for safekeeping. The deeds will of course be available for the Buyer if there happens to be no mortgage.

Note on the Unregistered system of Conveyancing

Where a title to land has not yet been registered, the Buyer's solicitor will carry out the same investigation that the Land Registry would do on a voluntary registration. That is, he will check all the title deeds covering sales and purchases, mortgages, leases (if any) and perhaps, deaths and Probates of Wills, over the preceding 15 years or more, to trace the ownership through to the present proposed Seller. He may well find one or more defects in the title, which will have to be cured or resolved in some way before he can accept it on behalf of his client. He will make searches back over the same period in the Land Charges Registry, to ensure that the land is not burdened by any awkward and outstanding registrations, for example old contracts protected by registration but never completed, or options for purchase or lease.

When all is in order, and following Contract exchange, he would formerly have prepared a new deed of transfer - in unregistered conveyancing, a "Conveyance", for signature by the Seller. Now with compulsory registration, he will prepare a Transfer in the Land Registry's obligatory form and following the purchase will apply for first registration of the title, forwarding the title deeds and Transfer to the Registry for this purpose.

There are numerous technical differences between registered and unregistered conveyancing, but these will become of less concern as time goes by.

The above is a brief summary of the work that your legal representative will be doing for you when you buy, sell or lease property in England and Wales.

It is not exhaustive of course, and many individual problems and queries tend to arise in particular cases. However, you are always free, and indeed are encouraged, to contact Breytenbachs at any time in the course of a transaction, in order to quieten doubts or obtain additional information. You may rest assured that our determined resolve will be to protect your best interests, and to guide you through the sometimes rather daunting procedures that have to be followed, with the minimum fuss and as painlessly for you as possible.