Preparing your land for sale or development Part 2: Property considerations
This article is one in a series looking at issues to consider when preparing your land for sale and/or development. Further and more detailed information about other elements of strategic land can be found here.
Preparing land for sale from a legal and practical perspective is not always a top priority for landowners when they are ready to sell. However, investigating potential issues which may arise as part of the sale process in advance and, where relevant, taking steps to mitigate such issues will save time and money in the long run. This article looks at three key questions that landowners should ask themselves (and their advisers) about their land and provides some tips on what can be done about any potential issues identified.
Is my land registered at the Land Registry?
The vast majority of land in England and Wales is registered at the Land Registry. Each parcel of registered land has its own allocated number, known as a "title number". However there are still areas of land which remain unregistered (which means that the Land Registry does not hold information about the extent of the land and who owns it). Dealing with unregistered land can be more costly and time consuming from a legal perspective.
Action point: Check on the status of your land and if it is not registered, then we would recommend that you go through the process of registering the land before you sell (known as "first registration" at the Land Registry). You would need a solicitor to help you with this.
It is possible that some or all of the title deeds and documents needed for first registration have been lost or are not available. If this is the case for your land, then you will need to make or obtain from another appropriate person statutory declarations about the land and its ownership in order to secure a registration of the relevant land. The more evidence that can be supplied to support any such declarations the better. Note that the Land Registry will not always accept an application for registration or they may accept the application but only give a qualified title.
Do I own the land I am looking to sell?
This sounds like an obvious question but this is not always the case! We have looked separately at legal and beneficial ownership and the importance of estate planning in our article. However, also consider whether there are any land encroachment or other boundary issues, e.g. where the legal boundary of your property as identified by the plans at the Land Registry (assuming your land is registered) does not align with the corresponding boundary on the ground. These discrepancies may be immaterial or they may be very significant depending on various factors. By way of example, land encroachments can be particularly problematic when they affect access or proposed access onto potential development land.
Action point: obtain a copy of the Land Registry plan for your land and walk the boundaries. Identify any discrepancies and take advice from your agent and solicitor as to next steps. Being upfront with potential purchasers at heads of terms stage will help any significant issues being tackled upfront.
For larger and more complex land holdings, it is possible that land may be registered under more than one title number. It is not uncommon for there to be small areas of land (perhaps falling between two titles) that may be unregistered. This is often due to historical mapping discrepancies. Identifying these early and "tidying up" land registrations at the Land Registry will prevent delays during the sale process. Again, you would need a solicitor to advise you and assist with this process.
Is there anything which prevents me from selling my land for development?
Your land may be subject to rights, restrictive covenants or other restrictions which could impact on any sale and potential development. The Land Registry holds a record of most matters which affect your land (assuming it is registered) and you can find out what these are from the registers for your specific title number(s). There may also be matters that are not recorded at the Land Registry but affect your land, such as rights which may have been exercised by third parties over your land for some time. We have considered some of these in our related article. This also looks at the occupiers and regularising the legal framework around any current occupiers.
"Title defects" (matters relating to your title to the land which could impact on a sale or future development) can cause frustrating delays and increased costs for both parties on a sale transaction. Many title defects can be dealt with by an insurance indemnity policy (which is often required by developers to be put in place at the cost of the landowner) – these can vary greatly in complexity and cost depending on the nature of the title defect. However, some title defects cannot be dealt with via the insurance route and may, for example, require the co-operation of a third party to resolve.
Action point: investigate what potential legal barriers there may be to sale or development of your land and consider these with your agent and solicitor initially. If insurance is appropriate, it may be advisable to get some initial quotes in advance of any sale. If you think third party co-operation is required, you will most likely need to agree a strategy with your prospective purchaser before making any approaches to the relevant third party. Always remember that you can scupper your ability to get insurance if you speak to third parties about a title defect without an insurers consent!
The more you know about your land and the matters which could impact on a sale or future development the better. Be clued up and raise issues early with your agent and solicitor to determine the best course of action. Being upfront with potential purchasers at heads of terms stage will save time and costs in the long run. It is in the mutual benefit of parties on both side of a transaction to work through any issues and agree solutions.