This section is from the book "Real Property, An Introductory Explanation Of The Law Relating To Land", by Alfred F Topham. Also available from Amazon: The New Law Of Property.
Even after the most careful investigation the buyer cannot be perfectly sure that he is acquiring a good title to the land, and, if the title is bad, he may lose the land and has no right of action against the seller: therefore it is usual by way of further precaution to require the seller to covenant that he has a good title, so as to make him liable in damages, if the title turns out to be bad.
The seller, however, is equally uncertain whether the person who sold to him had a good title, and therefore usually declines to guarantee the buyer against defects of title which existed before the land was sold to him or his ancestors.
On a mortgage of land, however, the lender usually refuses to lend his money unless the borrower guarantees his title absolutely.
Before 1881 covenants by the seller were set out in every deed of conveyance, namely that he had a good title to the land free from incumbrances, that the buyer should have quiet possession and that he the seller would do all further acts which might be necessary to convey the whole fee simple in the land to the buyer.
These covenants were very long and were almost always in the same form, so that conveyancers often had lithographed copies which were fastened on to every draft conveyance, and thereby the length and cost of the deed were greatly increased.
Since the Conveyancing Act (a) these covenants need not be set out at length, but they may be, implied, by the use of certain short phrases as follows: -
(A) Where a person conveys and is expressed to convey(b) "as beneficial owner'" the following covenants are implied.
I. On a sale (c) of freeholds or other interests in land.
(i.) That the seller has power to convey the land.
(ii.) That the buyer shall have quiet enjoyment of the land.
(iii.) That the land is free from incumbrances; and
(iv.) That the seller will do all further acts necessary to assure the land to the buyer. This is called the covenant for further assurance.
All these four covenants are qualified, covenants, i.e. in covenant No. (i.) the seller only covenants to be responsible for the acts of
(a) himself, and
(b) persons through whom he claims otherwise than by purchase for value (which does not include a marriage settlement).
In covenants Nos. (ii.),(iii.), and (iv.) the seller covenants in respect of the same persons (a) and (b), and also
Thus, A sold the land to B. B died and left the land by will to C. C agrees to sell it to D.
C will answer for the acts of himself and of B, but will not answer for the acts of A.
(a) See Conveyancing Act, s. 7, which is set out on pp. 312-317.
(b) i.e. expressly uses the words "as beneficial owner."
(c) The words in the Act are "in a conveyance for valuable consideration other than a"mortgage."
(c) persons claiming through him, and
(d) persons claiming in trust for him.
A person claiming through the seller means a person who has acquired his interest in the land directly or indirectly from the seller.
David v. Sabin (1893), 1 Ch. 523.
Sabin granted a lease to B.
B mortgaged the lease by way of sub-lease.
B then surrendered the lease to Sabin without disclosing the mortgages.
Sabin, thinking the land was free from incumbrances sold it to David "as beneficial owner."
This of course implied a covenant against incumbrances.
Held, Sabin was liable in respect of the mortgages made by B, as B was a " person claiming through him."
II. On a Sale of Leaseholds. (i. to iv.) The same covenants as in I. and also (v.) That the lease is valid. (vi.) That the rent has been paid. (vii.) That the covenants in the lease have been performed.
These are qualified covenants as in I. (i.)
III. On a Mortgage of Freeholds.
(i. to iv.) The same covenants as in I., hut absolute, i.e. the mortgagor absolutely guarantees the title in spite of anything that may have been done by anybody.
IV. On a Mortgage of Leaseholds.
(i. to iv.) The same as in III., and also
(v.) That the lease is valid.
(vi.) That the rents have been and will be paid.
(vii.) That the covenants have been and will be performed.
(viii.) An indemnity to the mortgagee.
In the case of a sale of leaseholds the purchaser takes possession and becomes himself responsible for payment of rent and performance of the covenants, and therefore does not need any covenants by the seller as to the future. But in the case of a mortgage, the mortgagor remains in possession and the mortgagee wishes to be protected against forfeiture of the lease by reason of breach of covenants or non-payment of rent by the mortgagor after the mortgage.
(B) When a person conveys "as settlor" in a settlement, a covenant is implied that he and all persons claiming under him will do all further acts necessary to vest the whole estate in the land in the grantee: i.e. a covenant for further assurance only.
A person who makes a voluntary settlement or gift of land naturally does not wish to bind himself to pay damages to the grantee if there turns out to be some defect in his title.
(C) When a person conveys
"as trustee," or "as mortgagee," or "as personal representative," or "as committee" of a lunatic, or "under an order of the court," he implies a covenant that he himself has not incumbered the land.
Each of the expressions above mentioned is therefore used for the purpose of implying long covenants which do not appear on the face of the deed; it is therefore most important that the conveyancer should know exactly what is implied by each of these phrases, and the student should learn almost by heart the effect of these covenants as set out above, and should also read carefully the full wording of section 7 of the Conveyancing Act, which is set out on pp. 312-317.
On a lease of land (apart from the Conveyancing Act), the word "demise" implies a covenant by the lessor that the lessee shall have quiet enjoyment, so long as the lessor or persons claiming through him have any interest in the land. See Budd-Scott v. Daniel , 2 K. B. 351; Jones v. Lavington , 1 K. B. 253.