What are the different types of Property title guarantees?

In property transactions it is normal practice for the seller to agree to sell their property with “full” or “limited” title guarantee. This would provide assurance that the buyer will receive full title to the assets and nobody else has any rights relating to the land. There are three types of title guarantees a seller can give and these are:

• A Full Title Guarantee;
• A Limited Title Guarantee; and
• No Title Guarantee

A Full Title Guarantee assures the buyer that the seller has the right to sell the property. It also means the seller is disposing his whole interest in the property to the prospective buyer and if the interest is leasehold, then it would mean the seller has the right to sell the lease whole part.

A Limited Title Guarantee is when a seller cannot guarantee there are no financial charges from third parties such as a bank on the property, nor can they guarantee whether there are any rights over the property or give information on what rights and covenants there could be. This can arise in cases where the Executor of an Estate is selling the property on behalf of someone.

No Title Guarantee is when mortgagees or receivers are selling a property following a repossession usually having little or no knowledge of the property being sold, and it is normal for them to give no title guarantee. The buyer must be aware that a property might have an overriding interest and if this is the case then the buyer has no remedy against the seller. Therefore, a thorough investigation of title is crucial before purchase and where a buyer might feel unsure then they should take out defective title insurance to protect themselves.

Conclusion

It is much more beneficial to have a full title guarantee in place as it will assure the buyer that nobody else can claim a right to the property. Purchasing a home is a vital decision to make and both parties need to be aware of the implications that can arise in the future. It is important you  prevent these issues from taking place rather than suffering consequences later. That is why It is one of the many reasons a seller and buyer should always instruct a professional and trusted firm of solicitors to act on their behalf.