Many people before selling their freehold or leasehold property never check their registered title. This can be an issue when the buyer’s solicitor notices a restrictive covenant or an easement and raises this as an enquiry. Unfortunately for the seller’s solicitor, the seller usually does not have any knowledge of the covenants or easements. Thus, the seller’s solicitor will have to investigate to find out the details. Not only is this time consuming, but the seller may need to provide an indemnity policy at an extra cost.
This article will provide a brief outline on what is a covenant and an easement. Furthermore, it will suggest some helpful steps to make the selling process smoother.
What is a covenant
A covenant is a promise/rule that states what you must or must not do on a land that is affected by the promise/rule (the affected property). Most covenants are usually restrictive covenants. They are usually registered with the Land Registry in the Official Copies of the registered title or in another document.
The main issue that the seller has is that they are unaware that a restrictive covenant exists, as it was probably agreed by a previous owner more than a 100 years ago. However, although the seller has not been asked to comply with the restrictive covenant, they are still bound by it and upon purchasing the property, the buyer will have to comply with it if the enforcer requests it. Consequently, prior to selling the property the seller should do the following:
- Find out what is required by the restrictive covenant.
- Find out who has the power to enforce the restrictive covenant.
- Find out if there is an indemnity policy in place.
- Find out if the indemnity policy has been breached (the enforcer of the restrictive covenant may know).
- If there is no indemnity policy in place, find out the costs of one and arrange for an indemnity policy to be put in place.
What is an easement
An easement grants a right for an individual or a group of individuals to use/enter a property without being granted a right of possession over the affected property. References to antiquated easements on the Official Copies of the registered title tend to be an issue, as the property’s boundaries have been altered over time. However, the legal formalities have not been complied with to bring the easement to an end. Furthermore, as most easements were created by the original owner of the property, it is sometimes difficult for the seller to obtain the relevant details to provide evidence that the easement has been abandoned. Consequently, the seller will have to provide an indemnity policy for the buyer.
In order to find out more information about the easement mentioned in the Official Copies of the registered title, you can contact the Land Registry to obtain the relevant document. There should be reference to the current enforcer of the easement. If this is a neighbour, you may be able to settle this amicably without having to obtain an indemnity policy (by express termination of the easement).
As one can see, restrictive covenants and easements add some slight complications to selling a property. This is why a seller should have a look at the Official Copies of the registered title before starting the sale process and seek guidance from a solicitor.
Feel free to contact our Property Department if you have any questions about reviewing your registered title prior to selling your property.