Building Legal Solutions
Transfers of part: key considerations
- AuthorSophie Read
A transfer of part of registered land is when part of a registered title is transferred independently of other land in that title. For example, in a residential context, a transfer of part may take place where a house and garden are registered within one Land Registry title and part of the garden is being sold off independently to the house, or, on the sale of a residential plot by a developer. In a commercial context, a transfer of part may take place where a development site is being carved up and various smaller plots of land sold off as individual units to end buyers.
In either context there are several important matters to consider which may or may not be relevant to the specific circumstances of the transaction. Listed below are some of the key considerations.
Identifying the property being transferred/retained
- The transfer of part should include a detailed description of the property being transferred to the buyer and also of the property being retained by the seller.
- A scaled plan will need to be prepared identifying the property being transferred and, if relevant, the property being retained. The Land Registry have specific requirements for such plans and it is important that those guidelines are complied with, otherwise the Land Registry may not register the transfer of part.
- It may be necessary to mark other items on the plan, such as any shared facilities which are to be referred to in the transfer of part e.g. a shared access road. The plan may also be used to show the allocation of ownership and responsibility for maintenance of the boundaries of the plot being sold; frequently the drafting will refer to ‘T’ marks shown on the plan.
Rights and reservations (easements)
- New rights may need to be reserved over the property being sold for the benefit of the property being retained (burdening the property sold) and/or rights may need to be granted for the benefit of the property being transferred over the property being retained (benefitting the property sold).
- Frequently it will be necessary to grant or reserve a right of way to property which may otherwise be landlocked/inaccessible following a transfer of part. There may also be service media crossing the property being transferred/retained which serves the other property and so appropriate rights should be included regarding the same. Maintenance responsibilities for any such shared facilities should also be considered (see positive covenants below).
- Section 62 of the Law of the Law of Property Act 1925 automatically includes certain rights in a transfer of part, unless the transfer of part provides otherwise so consideration should be given to this Act otherwise the property transferred may acquire rights over the land being retained unintentionally.
- A restrictive covenant is essentially an enforceable promise restricting the use of property in some way for the benefit of other property. If properly drafted and all requirements met, the restrictive covenant will be enforceable between the original parties who entered into the agreement (i.e. the original buyer and seller) and also between the successors in title to those parties. For this reason they can be a very valuable tool on a transfer of part.
- New restrictive covenants could be imposed on the property sold (burdening the property sold) or the property being retained (benefitting the property sold).
- Such restrictions should be negative in nature. Commonly imposed covenants include covenants restricting land use (i.e. agricultural only or residential only) and/or restricting the number of buildings on the land (i.e. limiting the number of houses which can be built on the property).
- In contrast to restrictive covenants, a positive covenant is an agreement requiring positive action to be taken in respect of property or the payment of money. A positive covenant will be contractually enforceable between the original parties to the agreement (i.e. the original buyer and seller) but the obligation to comply with a positive covenant will not generally be enforceable against successors in title to that party.
- New positive covenants could be imposed on a transfer of part so that the buyer agrees to take some positive action in the future, examples include, an agreement to maintain and repair shared facilities or boundaries or to contribute towards such costs incurred by the other party.
- If such covenants are to be included in a transfer of part consideration should be given to whether it is desirable for that obligation to bind successors in title and whether a workaround can be provided for in the transfer of part to achieve this. For example, a right of way could be made subject to an obligation to contribute towards repair of a shared access road. Further, provision could be added to the transfer requiring any future buyer to enter into an identical agreement and this positive covenant supported by a restriction to be registered against the title (see below).
Restrictions on the Land Registry title
- As well as considering any new restrictions to be included in the transfer of part, if there are any restrictions already registered in the proprietorship register of the land registry title then the terms of these restrictions should be reviewed and complied with.
- If the Land Registry title is subject to a mortgage or other charge which is not being repaid in full on the transfer of part, then a request will need to be made for the lender to release the part of the property being transferred from the mortgage/charge. The lender may require a re-valuation of the land being retained before agreeing to release the land. Further, if rights are being granted in the transfer of part over the land being retained and/or covenants are being imposed on that retained land, the lender’s consent to those matters will be required.
This blog provides general information only and does not constitute legal advice. For further advice on the above please contact Sophie Read or another member of the Feldon Dunsmore team on 01926 954 694.