This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
The purchaser's solicitor may compare the abstract with the deeds before investigating the title, and the vendor (assuming that there is a binding contract) must pay the costs if the title prove bad (d); but where the abstract is apparently complete, the purchaser's solicitor acts reasonably if he defers comparing the abstract with the deeds until counsel's opinion is obtained (e).
Whether to be compared with deeds before investigation of title.
A purchaser's solicitor is prima facie justified in incurring the expense of counsel's opinion upon the abstract. It appears, however, that a solicitor ought himself to peruse an abstract before submitting it to counsel; and that he will be allowed a fee for such perusal, and also the stationer's charge for making a copy of the abstract (f). Titles are constantly accepted, almost without investigation, upon the faith of their having, on some previous occasion, been advised upon and accepted by counsel of eminence. It should, however, be remembered that judicial decisions have a retrospective effect upon titles; hence, in estimating the value of a favourable opinion taken a few years previously, allowance must 'be made for the possibility of the title having been since rendered unmarketable, possibly unsafe, by some intermediate and unexpected exposition of the law (g). It is also important to know whether the counsel who accepted the title did so upon an open contract, or under special conditions; and whether any special reasons may have existed, which would probably render him astute in endeavouring to take a favourable view of the title.
Opinion of counsel on abstract.
Value of old opinions in favour of a title.
(d) Hodges v. Earl of Lichfield, (1835) 1 Bing. N. C. p. 499; 1 Sc. 449. (e) Sug. 14th ed. p. 411.
(f) Drax v. Scroupe, (1831) 1 Dowl. 69; 2 B. & Ad. 581.
(g) The decision in He Harkness and Allsopp, 1896, 2 Ch. 358; 65 L. J. Ch. 726, is an illustration.
It may also be material to know whether the investigation was on behalf of a purchaser or a mortgagee. For in some respects the requirements of counsel are more, and in others they may properly be less, strict when advising on behalf of a mortgagee than when advising on behalf of a purchaser. A mortgagee who looks merely to a return of his money, requires an absolutely safe title to a sufficient amount of property to leave him perfectly secure in all events; and if satisfied as to this, he may be comparatively indifferent to defects in title to that which he can afford to regard as a mere margin to his security. He might, therefore, on the one hand, in the case of a residential property, be indifferent as to a probable want of title to some particular part of it, the loss of which would be all-important to a purchaser, yet would leave an amount of acreage amply sufficient to cover the amount of the mortgage debt. While, on the other hand, a shade of doubt respecting the soundness of the general title, which might very possibly be disregarded by a purchaser eager to acquire an attractive property, would be a sufficient reason for a mortgagee at once declining to advance his money. Land adjoining, or near residential property, which might be so used as to depreciate the principal estate, will often be purchased by the owner of such estate in disregard of great uncertainty respecting the title.
The abstract, when submitted to counsel, should be accompanied by a copy of the agreement and conditions of sale (if any).
Copy of agreement should accompany abstract.
The acceptance of a title is no waiver of objections which are not disclosed by the abstract (h); nor, of course, is a client bound by his counsel's acceptance of a defective title, even though the defect appear upon the abstract (i). If, however, counsel waive a requisition or accept a title, and the purchaser adopt his opinion and deal with the vendor on that footing, he cannot afterwards repudiate it (k).
Acceptance of title shown by - to what it extends.
(h) Const v. Barr, (1816) 2 Mer. 57; A.-g. v. Sitwell, (1835) 1 Y. & C. at p. 570; 5 L. J. N. S. Ex. Eq. 86; Ward v. Trathen, (1844) 14 Si. 82; 8 Jur. 303; Mcculloch v. Gregory, (1855) 1 K. & J. 286; 24 L. J. Ch. 246; and see Bourn v. Stenson, (1857) 24 Beav. 631; Turquand v. Rhodes, (1868) 37 L. J. Ch. 830; 16 W. R. 1074, where the purchaser had taken possession, and yet was allowed to rescind, on the ground of serious misdescription discovered aliunde.
If a solicitor is concerned for both parties, though bound to see that the purchaser does not buy with a defective title, or buy that which is in fact his own, he is not at liberty to disclose defects in the vendor's title of which the purchaser might himself take advantage; and a solicitor acting in contravention of the rule has been held liable in an action for damages (I). If there is any serious defect in the title, the solicitor should pot act for both parties; or if he has commenced so to do and then discovers the defect, he should "deliver back the deeds to the vendor, and should consider his lips sealed with a sacred silence as to their contents" (m).
Solicitor acting for both parties, how far at liberty to disclose defects.