Vesting Certificates

1. Acquisition of the fee simple under a Vesting Certificate

2. Compulsory First Registration

3. Where Investigation of Title is required

4. Where Investigation of Title is not required

5. Common Difficulties

6. Effect of Acquisition on Mortgages

7. Effect of Acquisition on Covenants

Appendix A

Appendix B

1. Acquisition of the fee simple under a Vesting Certificate

Section 22(1) of the Landlord and Tenant (Ground Rents) Act 1978 (hereinafter called the 1978 Act) empowers the Authority to issue a vesting certificate vesting the fee simple and any intermediate interests, free from incumbrances in an applicant. The Act provides two separate circumstances where the Authority may issue such a vesting certificate:

1. where an application is made with the consent of every person who would be a necessary party to the conveyance to him of the fee simple free from incumbrances (section 20 and section 22(1)(a));

2. where an application is made without the consent of such persons (section 21 and section 22(1)(b)).

The two categories of cases are distinguished colloquially as “Consent Cases” and “Arbitration Cases”. This power is limited to cases “where the permanent buildings are constructed for use wholly or principally as a dwelling and are so used” (section 19). ‘Dwelling’ does not include a separate and self-contained flat in premises divided into two or more such flats” (section 3).

For detailed information regarding the operation of the Ground Rents Purchase Scheme see Practice Direction Ground Rents (published 1 December 2009).. Once a Vesting Certificate has issued it may be lodged for registration in the Land Registry or in the Registry of Deeds. This Practice Direction deals with applications for registration of a Vesting Certificate in the Land Registry. Note that some applications for registration in the Land Registry may require full investigation of title.

2. Compulsory First Registration

The issue of a Vesting Certificate may give rise to a situation where the fee simple though unregistered is compulsorily registrable under the provisions of sections 23 and 25 of 1964 Act.

By virtue of section 22(3) of Land and Tenant (Ground Rents) (No 2) Act of 1978 Act, a vesting certificate is deemed to be a “Conveyance on Sale” for the purpose of section 24 of the Registration of Title Act 1964. This relates to the areas in which registration is compulsory consequent on a conveyance on sale.

Counties affected and effective date:

  • Carlow Meath and Laois – 1st January 1970
  • Longford Westmeath and Roscommon – 1st April 2006
  • Clare, Kilkenny, Louth, Sligo, Wexford and Wicklow – 1st October 2008
  • Cavan, Donegal, Galway, Kerry, Kildare, Leitrim, Limerick, Mayo, Monaghan, North Tipperary, Offaly, South Tipperary and Waterford – 1st January 2010
  • Cork and Dublin – 1st June 2011

Cities affected and effective date:

  • Galway, Limerick and Waterford [as defined in Section 10 of the Local Government Act 2001] – 1st January 2010
  • Cork and Dublin – 1st June 2011

3. Where Investigation of Title is required

The cases listed in points 1-5 of Appendix A require investigation of title and are to be dealt with by an Examiner of Titles.

Appendix A provides full details of the documents to be lodged with the various types of applications to register a vesting certificate where an investigation of title is required.

The following matters must be taken into account when the application is being prepared.

3.1 Freehold Title

(i) Arbitration Cases – The fee simple title to be shown in arbitration cases is to commence with the vesting certificate and title is to be traced from there in the normal way subject to what is set out below.

(ii) Consent Cases – The fee simple title in consent cases is to commence with the Vesting Certificate provided the other documents lodged or the folios do not cast any doubt on the title.

3.2 Leasehold Title

The leasehold title should be investigated in all cases to establish the lessee/applicant’s title and to ascertain any burdens or charges to be registered on the new freehold folio.

3.3 Merger

When an application is made for registration of a title on foot of a vesting certificate merger of the leasehold interest is required in all cases. This is so as an intention to merge must be imputed to the lessee who avails of his/her right under the 1978 Act to enlarge his interest into a fee simple. The 1978 Act does not deal expressly with the issue of merger. Section 29 of the 1978 Act which provides that a mortgage or charge affecting the lessee’s interest is deemed to be a mortgage or charge on the fee simple implies that merger has occurred without any express declaration of merger.

When does merger take place?

If the two interests, freehold and leasehold, are unregistered, merger is effected on the issue of the Vesting Certificate. If one only title is registered, merger takes place with effect from the date of settling of the application for registration.

3.4 Original Lease to be produced

On a merger of an unregistered leasehold interest the original lease must be lodged or its absence accounted for e.g. refers to other property held by another, is lost as evidenced in usual affidavit containing undertaking and indemnity. The original lease need not be produced where the leasehold title has been registered on a leasehold folio.

3.5 Rights of Way

In the case of the enlargement of leasehold interests into fee simple rights of way which were granted with a lease as appurtenant to or for the benefit of the lease are not to be cancelled. Sometimes such rights of way were registered as separate entries on registration of the lease and sometimes they were coupled with the lease burden in the one entry. All such rights of way should remain as burdens on the freehold folio which they affect. On merger of a lease which was subject to a right of way register the right of way as a burden on the freehold folio- ” during the period specified in Instrument No……” (being the unexpired term of the lease).

These rights of way are usually over common roads or common driveways in building estates. If the plot being transferred is identified as including half the adjoining roadway over which the other lessees have reciprocal rights, the appurtenant right of way (and the appurtenant rights for the others, which would be burden rights on the plot) may in suitable cases be ignored, especially where the roadways have been taken in charge by the Local Authority. If the plot is not so identified but is simply the plot demised by the Lease consider restricting the registration to the plot demised, without the presumption of half the roadway.

Where a right of way is coupled with the lease burden in one entry then on cancellation of the lease burden on enlargement of the lease into a fee simple the right of way is to be re-entered on the appropriate folio under the lease burden instrument number.

On cancellation of the lease burden enter the following note “See Entry Number_____” which entry will relate to the re-instatement of the right of way.

3.6 Common Driveways

If the plot being transferred included a common driveway which is the subject of:

  • The Lease registered as a burden
  • The appurtenant right over the neighbours portion
  • The subject right in favour of the neighbour

and the Lease is being merged then:

1. cancel the Lease burden

2. ensure that the appurtenant right is registered as a burden (on the parent freehold folio if the neighbour has not bought his/her ground rent, or on the neighbours freehold folio, if s/he has bought out) and

3. register the subject right of way as a burden on the new freehold folio – even though same will not have been registered as a burden on the leasehold folio.

4. Where Investigation of Title is not required

The following cases do not require investigation of title and are to be dealt with by the Dealing Sections.

(a) Freehold folio subject to a perpetual yearly rent (b) Where the fee simple and leasehold titles are registered

Appendix B provides full details of the documents to be lodged with such applications. The following matters must be taken into account when the application is being prepared.

4.1 Effect of Vesting Certificate where freehold is registered

The vesting certificate is by virtue of section 22(3) of 1978 Act deemed to be an instrument in the prescribed form for the purpose of section 51 of 1964 Act which provides inter alia until the transferee is registered as owner of the land transferred that instrument shall not operate to transfer the land. The date of registration will be the date of lodgement of the vesting certificate.

4.2 Merger

When an application is made for registration of a title on foot of a vesting certificate, merger of the leasehold interest is required in all cases.

The dealing is to be passed to mapping for freehold mapping references for the plot and cancellation of the leasehold references.

The leasehold folio is to be cancelled as follows;

1. Date

2. Instrument

3. The title to the property herein having merged in the freehold of folio …….F

4. This folio is closed.

The entry for cancellation of the lease burden should read as follows;

“ The Lease has merged in the freehold of Folio ………F. (new freehold folio).”

5. Common Difficulties

General Approach

Pursuant to Rule 18 of the Land Registration Rules 2012 Examiners of Titles are to take a pragmatic and practical view of vesting certificates when an application for first registration is made. In this regard it is to be noted that that a ‘good holding title’ which the Authority is authorised to accept under Rule 18 connotes a lower standard of technical perfection that an ‘good marketable title’ that the court can impose upon a purchaser in an action for specific performance. See UK case M.E.P.C. Limited –v- Christian Edwards and Others (1978) WLR 230. Adoption of such practical approach will enable resolution of the great majority of the common difficulties set out below through ongoing cooperation between the Registry practitioners and with consent of the parties.

5.1 Outstanding Interests

The documents lodged may disclose an interest that may not have been accounted for by the parties who consented to the issue of the Vesting Certificate. For example an examination of the freehold folio may disclose that the plot is the subject of a head lease and a sub-lease, the lessees interest under the sub-lease being in the applicant, the consenting party in the Vesting Certificate being the fee simple owner and there being no reference to or evidence of the title of the same consenting party to the lessees interest under the head lease. The matter should be clarified with the Ground Rents Section. The Vesting Certificate can be modified or cancelled if necessary and/or any required amendment made to Ground Rent records. Again where the documents now lodged disclose an interest that may not have been accounted for by the parties who consented to the issue of the vesting certificate e.g. where the lessor’s title is traced under a Lease or under a Fee Farm Grant (the fee farm rent of which is being paid by some other person in indemnification of the lessor) – consider enquiring from the Ground Rents section to ascertain what information is available to them. If no information is forthcoming the Examiner may in his/her discretion take whatever action s/he considers appropriate.

5.2 Where that applicant was not owner of the leasehold interest at the time of vesting.

For example, where the applicant died before vesting, the certificate is void on the face of it. However a practical view is to be taken, and registration may be proceeded with in a suitable case e.g. where title is being traced to a successor under a will or intestacy or a purchaser from a personal representative.

5.3 Where the leasehold owned by two or more persons (as joint tenants or tenants in common) and the vesting certificate is in the name of one only.

Where the leasehold interest is held by two or more persons (as joint tenant or tenants in common) and the vesting certificate is in the name of one only – consider having the certificate amended, with the consent of all of the parties or their solicitor(s) and in default of such consent refuse registration on the grounds that the certificate may be defective.

5.4 Where the leasehold interest is held by one and the vesting order issued in the name of two.

Where the leasehold interest was held by one person and the vesting certificate issued in the name of two (as joint tenants) – consider either having the certificate amended with the consent of other party or requiring the leasehold interest be transferred to the joint names.

5.5 Tenants in Common or Joint Tenants.

Where the Vesting Certificate is the names of two or more persons jointly without words of division and the leasehold interest was held by the same parties as tenants in common or vice versa, consider proceeding with consent of the applicant(s) to registration in the same terms as the leasehold title.

5.6 Personal Representative or Trustee

Where the person named in the vesting certificate is found to have been a personal representative or trustee. He should be so described on the vesting certificate. Nevertheless a vesting certificate without such a description will vest the fee simple in the person as he holds the lease or tenancy. The matter should be clarified with the Ground Rents Section. The Vesting Certificate can be modified or cancelled if necessary and/or any required amendment made to Ground Rent records.

5.7 Life Tenant or Tenant in Remainder.

Where the person named in the vesting certificate is found to have been a life tenant or tenant in remainder. Nevertheless a vesting certificate without such a description will vest the fee simple in the person as he holds the lease or tenancy. A life tenant and a remainderman under a settlement have an equitable interest only and the legal estate vests in the trustees [section 11 and Part 4 Land and Conveyancing Law Reform Act 2009].The matter should be clarified with the Ground Rents Section. The vesting certificate can be amended to have the fee simple vested in the trustees or cancelled if necessary and/or any required amendment made to Ground Rent records.

5.8 Leasehold interest acquired by adverse possession

Where the person named in the vesting certificate is claiming to have acquired the leasehold interest by long possession the matter should be considered on its merits. Section 50 of the Registration of Deeds and Title Act 2006, amends the definition of a “leasehold interest” in section 3 of the Registration of Title Act 1964 to read “the right or interest of a person who has barred under the Statute of Limitations 1957, the right of action of a person entitled to such leasehold interest”. This amendment brings adverse possession applications in relation to unregistered leasehold interests into line with adverse possession applications in relation to registered land pursuant to section 49 of the 1964 Act and was brought into operation on the 26th of May 2006.

5.9 Premises outside scope of Part 3 of the 1978 (No 2) Act

Where the premises are now ascertained to have been or may have been outside the scope of Part 3 of the Landlord and Tenant (Ground Rents) (No 2) Act 1978. Examples would be where the documents lodged show that the land is over one acre in extent or that there was more than one dwelling on the land at the date of issue of the Vesting Certificate. The matter should be clarified with the Ground Rents Section. Consider calling for a deed of transfer of the fee simple in lieu of the vesting certificate.

5.10 Property Sold On

Where the property has been sold on prior to lodgement of the application for registration, both interests should be dealt with. In suitable cases it may be accepted that a conveyance or transfer of the fee simple together with the handing over of possession and the leasehold title documents, operates as an assignment of the leasehold interest also e.g. where the applicant was not a party to the first such conveyance and/or transfer but acquired title thereafter (section 76 of the Land and Conveyancing Law Reform Act 2009, “All Estates Clause”). If the applicant was a party to the transaction ask him/her to have the conveyance amended or rectified.

6. Effect of Acquisition on charges on Leasehold Folio

Section 29 of the Landlord and Tenant (Ground Rents) (No 2) Act 1978 preserves the security of a charge on a previous leasehold interest. All charges on the leasehold folio must be registered as burdens on the new freehold folio. The information relating to the issue of the certificate of charge (if any) shall be carried over to the new freehold folio.

7. Effect of Acquisition on Covenants

Section 28 of the Landlord and Tenant (Ground Rents) (No 2) Act 1978 provides that certain amenity covenants which continue in force following the acquisition of the fee simple affect the lands without registration under section 72(1) of the Registration of Title Act 1964. The note “ Ground Rents No (2) Act of 1978” is to be entered in the

Since 1st August 1978 the following covenants are burdens which affect the land without registration under section 72(1) of the Registration of Title Act 1964:

(a) those which protect or enhance the amenities of any land occupied by the immediate lessor of the grantee

(b) those which relate to the performance of a duty imposed by statute

(c) those which relate to a right of way over acquired land or a right of drainage or other right necessary to secure or assist the development of other land.

Under section 77 of the Registration of Deeds and title Act 2006, section 28 of the Landlord and  Tenant (Ground Rents) (No. 2) Act  1978 was amended. This amendment makes clear that only covenants in the lease under which the person held the land (save for those specified in section 28 (2)) are extinguished. It also provides that new covenants may be entered into with the agreement of the person acquiring the fee simple. This Section has effect where the fee simple in land is acquired on or after the 27th of February 2006.

The note “ Ground Rents No (2) Act of 1978” is to be entered in the Official Notes Column of Part 1 of the new freehold folio, to ensure that notice is given of the possible existence of such amenity covenants.

Property Registration Authority.

01 December 2009

 

Appendix A

The documents to be lodged with applications to register a vesting certificate(where investigation of title is required). The documents required will vary depending on the circumstances as set out in 1-5 below.

In ALL CASES set out below lodge:-

  • Form 17 duly completed
  • The original Vesting Certificate
  • The original Lease (except where leasehold title is registered)
  • All Searches and Affidavit to be dated within three weeks of lodgement in Land Registry

1. Where the fee simple is registered on a freehold folio but the leasehold title is not registered on a leasehold folio and the applicant is the Original Lessee lodge the following:

  • All original title deeds including all mortgages and vacates on title
  • Land Registry approved map (unless already mapped on Land Registry Index Map)
  • Affidavit of Discovery in Form 16 sworn by applicant(s)
  • Common or verified hand search in the Registry of Deeds against the lessee from the date of the lease.
  • Judgment search against the lessee
  • Fees

2. Where the fee simple is registered on a freehold folio, the leasehold title is not registered on a leasehold folio and the applicant is not the original Lessee lodge the following:

  • Affidavit in Form 2 with paragraph 9 thereof amended to apply not for the registration of the leasehold title on a leasehold folio but rather for merger and cancellation of it from the freehold register sworn by applicant or in the case of a corporate body by the Secretary or Law Agent.
  • Statement of title
  • All original title deeds relating to the leasehold interest including all assignments, mortgages and vacates on title
  • Application map complying with Land Registry mapping requirements (unless plot is already mapped on Land Registry Map).
  • Common or verified hand search in Registry of Deeds and Judgment searches against all parties that hold or have held an interest in the property.
  • Certificate of no acts by the mortgagee since the date of the mortgage to facilitate registration of the ownership of the mortgage.
  • Fees

3. Where the Leasehold title is registered on a leasehold folio, the applicant is the registered owner of thereon and the fee simple title is not registered on a freehold folio lodge the following:

  • Affidavit in Form 1 sworn by applicant or in the case of a corporate body, by the Secretary or Law Agent
  • Fees

4. Where the Leasehold title is registered on a leasehold folio, the applicant is not the registered owner of thereon and the fee simple title is not registered on a freehold folio lodge the following:

  • Affidavit in Form 1 sworn by applicant or in the case of a corporate body by the Secretary or Law Agent
  • All deeds and other documents of title showing how the applicant acquired title to the property registered on the Leasehold Folio.
  • Fees

5. Where the freehold and leasehold titles are unregistered and the applicant is the party who obtained the vesting certificate lodge the following:

  • Affidavit in Form 1 sworn by applicant or in the case of a corporate body by the Secretary or Law Agent.
  • Application map complying with Land Registry mapping requirements.
  • All deeds and other documents of title relating to the leasehold interest including any mortgages and vacates on title.
  • Statement of title if applicant is not original lessee.
  • Common or verified hand search in the Registry of Deeds and Judgment search against all the parties who held an interest in the leasehold property.
  • Certificate of no acts by the mortgagee since the date of the mortgage to facilitate registration of the ownership of the mortgage.
  • Fees.

Note: If the applicant is the successor in title to the party who obtained the vesting certificate all documents dealing with such interest such as a conveyance or an assent must be lodged.

 

Appendix B

The documents to be lodged with applications to register a vesting certificate (where investigation of title is not required).

Where the fee simple and leasehold titles are registered:

  • Form 17
  • The original Vesting Certificate
  • The original Lease
  • Fees

Where the Freehold Folio subject to a perpetual yearly rent:

  • Application to cancel the relevant burden entry – may be incorporated in Form 17
  • The original Vesting Certificate
  • Fees