Full title guarantee
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An expression tossed about casually by financial lawyers, often without much of a backward glance, but which has a specific meaning under the Law of Property (Miscellaneous Provisions) Act 1994.
Under said statute (section (1)) there are two forms of covenant a chap can give when transferring property: by "limited title guarantee", and by "full title guarantee".
- (1): In an instrument effecting or purporting to effect a disposition of property there shall be implied on the part of the person making the disposition, whether or not the disposition is for valuable consideration, such of the covenants specified in sections 2 to 5 as are applicable to the disposition.
(2) Of those sections—
(a)sections 2, 3(1) and (2), 4 and 5 apply where dispositions are expressed to be made with full title guarantee; and
(b)sections 2, 3(3), 4 and 5 apply where dispositions are expressed to be made with limited title guarantee.
Full title guarantee implies that:
- The transferor has the right to dispose of the property (section 2(1)(a)).
- The transferor will do all it reasonably can to pass the title to the transferee, at its own cost (section 2(1)(b) and (2)).
- There is a presumption that the whole of the property if on a registered title, is being transferred (section 2(3)).
- if the property is not registered, there is a presumption that the freehold interest is being transferred.
- Where the interest being transferred is a leasehold only, it is presumed that the the entire unexpired residue of the term of the lease is being transferred (section 2(3)) and that the lease is subsisting and the seller has complied with its terms.
- The transfer is free from all charges, encumbrances and adverse rights, other than those the seller could not reasonably be expected to know about (section 3(1)).