Law of Property (Miscellaneous Provisions) Act 1994
|
A word about credit risk mitigation
|
One of those innocuous-sounding, understated, quintessentially British statutes that actually does some fairly important work.
It is this little fellow whom we can thank for vouchsafing to us the expression “full title guarantee”, bringing with it covenants implied at law (and as to which see below) and its less fashionable, seldom-uttered brother “limited title guarantee” which, as you might expect, comes with less fulsome covenants. In it, “property” includes intangible rights and similar things in action.
Full title guarantee: Section 3(1) explains what full title guarantee means. It means you provide the property with an implied covenant, as follows:
- 3(1) If the disposition is expressed to be made with full title guarantee there shall be implied a covenant that the person making the disposition is disposing of the property free—
- (a) from all charges and incumbrances (whether monetary or not), and
- (b) from all other rights exercisable by third parties,
other than any charges, incumbrances or rights which that person does not and could not reasonably be expected to know about.
It is not unknown for chargees to try to widen this implied covenant to delete the caveat about no actual or constructive knowledge. Which seems a bit harsh.