Understanding Conveyancing Law
Most of us at some point in our lives will come into contact with conveyancing law (or land law as it is properly known) but most people know little or nothing about it. Many volumes have been written on the subject over the centuries and I certainly don’t intend this article to be a comprehensive lesson on conveyancing but it is intended to provide a background to the law governing conveyancing and some of the ways it affects day to day transactions.
Land law is the branch of the law that governs the transfer of ownership of land (including houses and flats). Land can be transferred in several ways, by sale/purchase, by inheritance, by gift or by an order of the court. All of these types of transfers are governed by land law.
What is so special About Land?
If you want to buy a loaf of bread, a car, or even a multi million pound work of art you don’t need to employ a solicitor. There is very little paperwork and it does not weeks or even months to complete your purchase. So what is so special about land?
The answer is its importance and the ability for one person’s land ownership to affect others. We rely on land for somewhere to live, to grow food, to build our factories and house our businesses. Basically we rely on it for just about every aspect of our lives so it’s vital that ownership is properly recorded and rights of non owners are properly protected. Also, if you own a car or a painting or any other object you will generally by the only person who has any rights over it. Land is different, although you own it; others may have rights over it. These might be rights of way, rights of tenants to occupy it or rights to have services such as water, sewage and electricity to pass under or over it. This is why complex rules have been developed and why solicitors are required to interpret them.
Why Do I Need a Solicitor For Conveyancing?
The short answer is, you don’t. You are entitled to do your own conveyancing, though if you are buying with a mortgage the lender will insist on having a conveyancer instructed to represent its interests and it will insist that you foot the bill. It is likely to cost you just about the same to have solicitor acting for you and the lender as it would if he acted just for the lender, so it doesn’t make sense to do your own conveyancing where you are getting a mortgage.
The reason the lender will insist on being represented is that it is vital, in order to enforce its security, that its charge is properly registered and that it has priority over any third party rights such as occupiers and that you have had the necessary advice before entering into the mortgage. A solicitor is obliged to carry insurance which the lender can claim on if he makes a mistake.
The Law behind Conveyancing
Law can be made in several ways, by statute, i.e. by acts of parliament, by judicial precedent, meaning that if a court looks at a particular case and makes a particular decision then a future case with substantially the same facts should produce the same outcome or though common law, that is it has always been that way.
Land law is based mostly on statutes, and two important statutes in particular, the Law of Property Act 1925 (LPA 1925) and the Land Registration Act 2002 (LRA 2002). The LPA 1925 defines the different types of interest that can exist in land (freehold ownership, leasehold, mortgages, rights etc) and the LRA 2002, which replaced the Land Registration Act 1925, tells us when and how land must be registered.
The LRA 1925 was introduced because it was felt that it was necessary to have a central registry of ownership of all land in England and Wales. This is known as the Land Registry. The LRA 2002 states that in order for legal ownership of land to change a transaction must be registered.
Another important piece of legislation is the Law of Property (Miscellaneous Provisions) Act 1989. This legislation created a requirement that a contract for the sale of land must be in writing, signed by all the parties to it and contain all of the terms in one document.
How Does Conveyancing Law Affect Day to Day Transactions?
Although it is the LPA 1925 which defines the majority of the land law rules, it is probably the LRA 2002 which has the biggest impact on day to day transactions. The requirement to ensure not just that the transfer of ownership, but any mortgages and rights are properly registered in order for them to have proper legal effect means that a conveyancer must follow very strict rules.
It is not an option to proceed quickly to completion overlooking any points which will or might affect the conveyancer’s ability to register the transfer. Issues must be resolved prior to exchange of contracts to ensure that they are resolved prior to completion. A person does become the legal owner of a property on completion; he only becomes the legal owner on registration at land registry. Similarly a mortgage does not become a legal mortgage until it is registered. Without the need for registration conveyancers would have the option (albeit they risk claims for negligence in doing so) of “taking a view” on a great number more issues than they can at present.
The LPA (MP) A 1989 also has a major impact. The need for a contract to be in writing and signed means that neither buyer nor seller can be in any way bound to proceed with a transaction until contracts are exchanged. Verbal agreements are not binding. As time is not of the essence before exchange the pre contract searches and enquiries can be conducted at the buyer’s own pace. Transactions would proceed more quickly, though at greater risk to the buyer, if a contract was formed as soon as the seller accepted the buyer’s offer, since the buyer would be obliged to complete his investigations by a certain pre-agreed date.
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