What Is the difference between full, limited and no title guarantee?
A property contract may include wording that gives the buyer certain legal protections, if the contract says the seller gives a full title guarantee, the buyer can rely on all the usual legal promises.
If only a limited title guarantee is given, the buyer has less protection. Sometimes, the seller may not give any guarantee at all.
Find out here more about the difference between full, limited and no title guarantee.
What Is Full Title Guarantee?
If a property is sold with full title guarantee, the following promises are made:
The seller has the right to sell the property.
The seller will do what they reasonably can, at their own cost, to make sure the buyer gets a good title.
If the property is registered, it is assumed that the whole of the registered title is being sold.
If the property is leasehold, it is also promised that the lease is still valid and the seller has kept to its terms.
If the property is unregistered, it is assumed to be freehold. If it is clearly leasehold, it is assumed the unexpired lease is being sold.
The property is sold free from mortgages and other third-party rights, except for anything the seller does not know about and could not reasonably be expected to know.
What Is a Limited Title Guarantee?
A limited title guarantee is a type of ownership guarantee given by a seller when transferring property, but it offers less protection to the buyer than a full title guarantee.
Limited title guarantee is normally used in situations wherein the seller does not have personal knowledge of the property or its history.
This commonly arises where the seller is acting in a representative capacity, for instance, as an attorney under a power of attorney, an executor or administrator of an estate, a trustee, or a personal representative. It is also frequently used in cases where a lender is selling a repossessed property.
Under a limited title guarantee, the seller only confirms that:
They have not personally created any charges, encumbrances, or third-party rights over the property during their period of ownership; and
They are not aware of any adverse interests that they have themselves caused.
However, the seller does not guarantee that previous owners have not created financial charges, restrictive covenants, easements, or other rights affecting the property.
In other words, the seller is only giving assurances about their own actions, not about the property’s full legal history.
Because of this reduced level of protection, thorough due diligence by your conveyancing solicitor is especially important. Title investigations, searches, and enquiries become crucial to ensure there are no unexpected legal or financial issues affecting the property.
What Is No Title Guarantee?
If a receiver or mortgage lender sells a property after repossession, they usually give no title guarantee.
There is a risk that the buyer may not discover all issues with the title, and if a problem comes up later, the buyer cannot claim against the seller.
If only limited or no title guarantee is offered, it is important to investigate the title carefully before buying. This helps you decide if you need title insurance or if there are any problems that cannot be fixed.
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Talk to our skilled property team at Orwins today to find out how we can help with your situation. No matter the complexity or scale, we’re here to help.
Note: This guide is for general information purposes only. If you require any further information or have a specific query you can contact our legal Team at Orwins.
