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Today we’re going to be talking about how you can read your title register, this is a legal document stating information about a property. We’ll also be going through the types of legal charges that exist on properties, how to understand them and in what circumstances they are used.
What Is A Title Register?
A title register is a document that is widely available through land registry. It’s a document that is in itself split into four sections. The header itself details the piece of land’s title number, the date the register was last updated and when the document you’re reading was in itself produced. The property register below subsequently details the county where the land is located as well as a description of the land, whether it is freehold or leasehold and its full address. The proprietorship then details who owns the property, the price that was paid as well as restrictions. These restrictions are most commonly in relation to a mortgage and what consent needs to be obtained to change ownership. The final part of the document will be the charges register. This section details any mortgages, charges and notices that affect the land. These will include which charge has priority over others, so in the event of default in payment of a mortgage, these debts can be covered if the property is repossessed or sold.
What Are Legal Charges On Property?
There are various types of legal charges that exist on property. With priority over the land, a first charge is typically the main mortgage on the property. The lender with a first charge is going to have priority on any funds available from the sale of the property, if money is still owed. This party will have a power of sale in the event of a default in mortgage payments, and is the debt that must be paid off first if the house is sold. This charge is bound to the property itself, so if this repayment does not occur when the land is sold then it’s bound to the future owner of the property – even in the event that they were not involved in the initial mortgage contract. A second charge on the property can only occur with the approval of the lender of the first charge. This is an alternative to remortgaging and is a secured loan against the borrower’s home as security. Commonly, second charge loans are used to raise capital in the event that a remortgage may not be possible – for example if they have recently become self-employed or experiencing credit issues and remortgaging may not be likely to be approved. It’s a risky option as you’re adding more debt secured against your home, but it’s usually based on the amount of equality you currently hold and its worth.
Another type of charge on a property is a restriction or equitable charge. These are the least secure types of charges, meaning it doesn’t hold precedence compared to a first or second charge. This lending doesn’t give the owner power of sale in the event of a default in payment, although it may be possible for the lender to obtain a court order to do so. Equitable charges come about through an attempt to create a legal charge, but it was unable to be obtained or not handled correctly. Equitable charges will also pass onto the new owners, if these are not cleared upon sale of the property.
What Are Restrictions?
Restrictions are another kind of financial implication placed on a property in the event that the property requires protection for a special reason. Some of the most common restrictions are there to protect party members from being neglected in the sales process. For example, in the event a property is purchased by two or more people, should one pass away, the other owner cannot solely own or sell the property. Instead, the representatives of the deceased would join the sale or appoint a trustee to act on their behalf. Charities may also place a restriction on their property to protect the land from being sold for less than its market value, or to a person connected with the charity. In the event the property is owned by multiple people, if one becomes bankrupt then a restriction may be placed to ensure any joint owners that are not bankrupt will be entitled to their share of the equity.
Whether you are a buyer, owner, angel investor or property investor, knowing the ins and outs of these charges will help you better understand the legal implications on your own property or a property of interest. We hope you found today’s article helpful! If you have any questions at all about this topic, please do reach out to a member of the team either on our social channels, through email at info@djfam.co.uk or through one of the context forms on our website. If you or someone you know is interested in bridging finance or investment opportunities, please do get in touch to see what DJF Asset Management can do for you!