What is the difference between Full, Limited and No Title Guarantee?

The inclusion of a few words in a property contract can ensure that the buyer receives the benefit of implied covenants under the Law of Property (Miscellaneous Provisions) Act 1994. The phrase, ‘The Seller sells with a full title guarantee’ indicates that the Buyer will be able to rely on all the covenants implied under the Act. But if the Seller only offers “limited title guarantee’, the Buyer would get only a lesser level of assurance. In some cases, the Seller may state that it does not give any guarantee.

FULL TITLE GUARANTEE

When you are selling your property, or someone is selling to you, with Full Title Guarantee the following is implied:

  1. That the person selling has the right to sell the
  2. That the Seller will, at their own cost, do all that they reasonably can do to ensure the buyer will acquire a good title to the
  3. If the property which is being sold is registered, then it is presumed that the whole of that property in the registered title is being disposed
  4. If the property being sold is a leasehold property additional covenants are implied, which are, that the lease is still in existence and the Seller has complied with all the terms of the
  5. If the property being sold is unregistered then it is presumed that the interest being sold is the freehold. If it is clear that the property being sold is leasehold then it is presumed that the interest being sold is the unexpired term of the
  6. The person is selling the property free from all mortgages and all other rights and interests which may be exercisable by a third party other than those which the seller does not and could not reasonably be expected to know

LIMITED TITLE GUARANTEE

This is used where the Seller of the property has no personal knowledge of the property. This is most often used in the case of a sale by an Attorney, the Executor of an Estate, where the property has been repossessed or by a Trustees or a Personal Representative.

The person selling cannot guarantee that the property is not subject to any financial charges, nor can they guarantee whether there are any rights over the property or give information on what rights there could be. They are unable to confirm whether there are any covenants which may affect the property.

NO TITLE GUARANTEE

Receivers or mortgagees selling a property following repossession usually have little or no knowledge of the property being sold and it is normal for them to give no title guarantee. The danger is that there may be something that the Buyer cannot discover on an investigation of title that the Seller has not told him about (for example, an overriding interest). If this happens, the Buyer has no recourse against the Seller.

A thorough investigation of title is essential before an auction or private treaty purchase circumstances where only limited or no title guarantee is offered to decide whether the Buyer should take out defective title insurance or whether there are any incurable title defects.

Note: This guide is for general information purposes only. If you require any further information or have a specific query you can contact our Property Team. Our Partners, Daniel Berger (daniel@bbslaw.co.uk) and Avi Barr (abarr@bbslaw.co.uk) will be happy to assist.