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.
It has been held (a) that the duty of the vendor with regard to title is limited to furnishing an abstract, and verifying or completing it on any point on which the purchaser may show defects, and does not extend to answering questions for the purpose of negativing the existence of incumbrances; hence such an inquiry is one which neither a vendor nor his solicitor is bound to answer. It is conceived, however, that this decision merely negatives the right of a purchaser to make inquiries from the vendor with regard to matters the suppression of which by the vendor's solicitor would constitute a misdemeanour, but has no application to matters which affect the property but which it is not customary to notice in the abstract; such, for instance, as easements not created by express grant, paving charges, notices to remove dangerous structures, and the like.
Inquiries as to incumbrances from vendor.
Where a married woman is disposing of property it is advisable to inquire as to the terms of her settlement. This may contain a covenant to settle after-acquired property which may bind the property to be acquired. If the purchaser gets the legal estate without notice of the settlement, his title will be good, but having regard to the construction which has been placed on s. 19 of the M. W. P. Act, 1882, there may be a doubt whether the Act would constitute as her separate property that which was in equity bound by the settlement.
Inquiries as to settlement by married woman.
(a) Re Ford and Hill, (1879) 10 Ch. D. 365 ; 48 L. J. Ch. 327.
When there is reason to suspect the existence of any particular incumbrances, an application should be made to the supposed incumbrancers ; the motive for the application should, of course, be stated, and the parties applied to will be bound by their replies (b) ; it seems, however, that a mortgagee need not answer any inquiry as to his security, unless the applicant is entitled and offers to redeem him (c).
And of supposed incumbrancers.
An incumbrancer, it is said, need not voluntarily communicate his claim to an intending purchaser (d) ; this, however, it is conceived, does not apply where there is reason to suppose that the vendor is fraudulently selling the estate as unincumbered; if, with knowledge of such a fraud being in progress, the incumbrancer conceals his claim, he will be prevented from setting up his right against the purchaser; nor will infancy, or coverture, be an excuse (e) ; d fortiori, he will be postponed, if he is a direct party to the fraud, or has facilitated or encouraged its commission (f) ; and, as no prudent person acquires an equity of redemption without informing the mortgagee, it may be conjectured that a mortgagee who is aware of the intended purchase, and, having received no inquiry from the purchaser as to his charge, allows him to complete in ignorance of its existence, will on slight additional grounds be treated as an accomplice of the vendor (g).
Whether incumbrancer need communicate his claim to intended purchaser.
On the purchase of an equitable interest in personalty, inquiry as to incumbrances should be made of the trustees, or other parties in whom the legal interest is vested (h). A trustee is not bound to answer such inquiries. If he does so, he will incur no liability provided he has answered in good faith, and has disclosed all he knows. But he should beware against being too positive, or he may be held to have estopped himself from afterwards denying the truth of his statement (/).
Inquiry of trustees, on purchase of personalty.
(b) Ibbotson v. Rhodes, (1706) 2 Vern. 554 ; Stronge v. Hawkes, (1853) 4 D. M. & G. 186 ; 4 D. & J. 632; see sup. p. 106.
(c) Bugden v. Bignold, (1843) 2 T. & C. C. C. at p. 390.
(d) Osborn v. Lea, (1724) 9 Mod. 96; see p. 97 ; Dolman v. Nokes, (1855) 22 Beav. 402.
(e) Savage v. Foster, (1723) 9 Mod.
36 ; Clare v. Earl of Bedford, (1690) 13 Vin. Abr. 536 ; Re Lush's Trusts, (1869) 4 Ch. 591 ; 38 L. J. Ch. 650. As to fraud by a married woman, see sup. pp. 14, 854.
(f) Berrisford v. Milward, (1740) 2 Atk. 49.
(g) And see Sibson v. Fletcher, (1632) 1 Ch. R. at p. 59.
(h) Ward v. Buncombe, 1893, A. C. 369; 62 L.J. Ch. 881.
On completion, notice of the sale should be given to the trustees, because in the event of there being prior undisclosed incumbrances (j), or of the vendor concealing the sale and subsequently selling the property to a third person, priority as regards personalty, including money to arise under a trust for sale of land (k), will be determined, other things being equal, by the dates on which effectual (/) notice was given to the trustees by the various claimants (m).
Notice of sale of personalty to trustees.
Though priority between rival claimants to an equitable interest in land is determined, not by the dates on which notice was given to the persons in whom the legal estate is vested, but, other things being equal, by the dates on which the interests were created, still it is always prudent both to inquire from the trustees as to incumbrances, and to give notice to them of the transaction («).
Notice of sale of land.
On the purchase of a remainder there is always a danger of the land being sold by the tenant for life under the S. L. Acts (nn), in which case the trustees, if in ignorance of the sale, may pay the capital money arising therefrom to the remainderman. Hence notice of such a transaction should always be given to the trustees for the purposes of the S. L. Acts.
On purchase of a legal remainder.
(i) Burrowes v. Lock, (1805) 10 Ves. at p. 470 ; Derry v. Peek, (1889) 14 A. C. 337; 58 L. J. Ch. 864; Low v. Bouverie, 1891, 3 Ch. 82; 60 L. J. Ch. 594 ; Porter v. Moore, 1904, 2 Ch. 367.
(j) See further on this subject, sup. p. 848.
(k) Lee v. Howlett, (1856) 2 K. & J. 531 ; Re Hughes' Trusts, (1864) 2 H. & M. 89 ; Foster v. Cockerell, (1835) 3 CI. & F. 456.
(I) I.e., to all the trustees in existence at the date of the sale:
Re Wasdale, 1899, 1 Ch. 163; 68 L. J. Ch. 117; Re Phillip's Trusts, 1903, 1 Ch. 183 ; 72 L. J. Ch. 94; and see sup. p. 873.
(m) Re Freshfield, (1879) 11 Ch. D. 198 ; Ward v. Buncombe, 1893, A. C. 369; 62 L. J. Ch. 881, where the earlier cases are examined.
(n) As to priorities generally, see sup. pp. 848 et seq.
(nn) See Wheelwright v. Walker, (1883) 23 Ch. D. 752 ; 52 L. J. Ch. 274.
And, as notice of a tenancy is notice of the tenant's equities (o), it is a proper precaution, where the property is not in hand, to inquire of the occupying tenants as to the extent and nature of their interests (p).
Inquiry of tenants.
No inquiries need he made of a person who has recently held, but relinquished possession of the property (q), if it is clear that there has been an intentional abandonment of possession (r).
Where a tenant has recently given up possession.
It is prudent for a purchaser to inquire whether any undisclosed easement, such as a way of necessity or a right of light or of drainage (s), exists over or through the property; such an easement may pass or be reserved by implication, without express words (f) ; and the existence of such an easement where it is patent, and no inquiry has been made respecting it, is no defence to a vendor's action for specific performance (u). Nor must it be assumed, on a purchase of a house, that windows overlooking the ground of a third party are entitled to the access of light over that land. The non-disclosure of a deed by the vendor expressly disclaiming all such rights has been held to be no ground for refusing-specific performance (x).
Inquiry as to undisclosed easements.
(o) See sup. p. 884 et seq.
(p) 1 Jarm. Conv. 3rd ed. hy Sweet, 119. As to inquiries on a purchase of leaseholds, see sup. p. 188 et seq.
(q) Miles v. Lanrjlcij, (1829) 1 R. & M. 39.
(r) Holmes v. Powell, (1856) 8 D. M. &G. 572, 581.
(a) See Henry v. Smith, (1856) 22 Beav. 299 ; 8. C. on motion, (1855) 1 K. & J. 389 ; case of undisclosed smoke easement, and sup. p. 883.
(t) Pearson v. Spencer, (1863) 1 B. & S. 571 ; 3 B. & S. 761 ; Pyer v. Carter, (1857) 1 II. & N. 916 ; 26 L. J. Ex. 258; Ewart v.
Cochrane, (1861) 4 Macq. 117 ; Watts v. Kelson, (1871) 6 Ch. 166; 40 L. J. Ch. 126, case of underground artificial watercourse; Kay v. Oxley, (1875) L. R. 10 Q. B. 360 ; 44 L. J. Q. B. 210; Barkshire v. Grubb, (1881) 18 Ch. D. 610 ; 50 L. J. Ch. 731 ; Bayley v. G. W. It. Co., (1884) 26 Ch. D. 434 ; Clancy v. Byrne, (1877) 11 I. R. C. L. 355 ; Thomas v. Owen, (1887) 20 Q. B. D. 225; 57 L. J. Q. B. 198; aud see Brown v. Alabaster, (1.887) 37 Ch. D. 490; 57 L. J. Ch. 255.
(u) Bowles v. Round, (1808) 5 Ves. 508 ; cf. Re Puckett and Smith, 1902, 2Ch. 258; 71 L.J. Ch. 666.
It may sometimes he well to inquire whether there are any undisclosed covenants or conditions, restrictive of the enjoyment of the property (y).
As to undisclosed restrictive covenants.
A purchaser must ascertain who has the custody of the title deeds, and demand a satisfactory explanation if any of them are not forthcoming. His omission to make such an inquiry might, for instance, fix him with notice of an equitable mortgage by deposit (z). So, a mere physical fact may, it seems, amount to notice of a charge affecting the property; e.g., upon the purchase of land forming part of a district lying beneath the level of the neighbouring sea, the purchaser was held to be affected with notice of a private deed, under which the owners of the land were liable to contribute to the expense of keeping up a sea-wall (a). But the doctrine of constructive notice from the physical condition of the property will not be extended; thus, it has been held that the mere fact of there being windows in a house overlooking the purchased property is not constructive notice of any agreement for a right to light through them (b).
As to title deeds.
Physical fact may be notice of a charge, etc.