Particular types of seller

Particular requirements and restrictions apply to the sale of property by particular types of seller. Some of the more common of these are:

Charities

Except in the case of an exempt charity, no transfer of the charity’s property can be made without an order of the court or of the Charity Commissioners unless the requirements of the Charities Act 1993, in particular those set out in Sections 37-40, are satisfied. Basically, these require a surveyor’s report, the advertising of the property, a decision by the trustees that the terms of the sale are the best that can be obtained, and the incorporation of prescribed words in both the contract and the transfer .

Where the charity is exempt, wording to this effect should be inserted in the contract and the transfer. So long as the requisite wording is included in the transfer, the buyer may rely on the accuracy of the prescribed wording and on a certificate in the transfer that the trustees have the power to enter into the transfer and have complied with Section 36 of the Charities Act 1993 .

Companies

Regulated by the Companies Acts – The powers of a company incorporated under the Companies Acts are governed by its memorandum and articles of association (the power to own and deal with land will normally be included in the objects clause of the memorandum of association). Normally these will require that a director and the secretary, or two directors, execute any document which takes effect as a deed. Section 44 of the Companies Act 2006 also permits a company to execute a transfer or other deed by means of a single director's signature made in the presence of a witness who attests the signature.

Other UK companies – A company incorporated by Royal Charter effectively has the same powers as an individual. Where property is owned by a company incorporated by a UK statute, its powers will depend on the provisions of the statute.

Foreign – A buyer of property from a foreign company will need to check the powers of that company, and a foreign lawyer’s opinion will also be required, confirming that the company has the power to hold and deal in land (although the Land Registry will have checked that the company has the power to own land before registering it as proprietor of the property), that the company is not insolvent, and that the documentation has been properly executed on behalf of the company.

Bankrupts

When a person becomes bankrupt, his property passes to his trustee in bankruptcy, with whom the buyer will deal. If the seller becomes bankrupt between exchange of contracts and completion, the trustee in bankruptcy will take over the seller’s obligations and rights under the contract, unless he disclaims the contract (which he cannot do without also disclaiming the property itself).

Mortgagees

A mortgagee will have the power to sell the mortgaged property provided that he has a power of sale (which is implied in every mortgage made by deed unless specifically excluded) and that power has arisen and become exercisable. The buyer should therefore check that the mortgagee has a power of sale (which will be the case in respect of any registered chargee in relation to registered land, unless there is an entry on the register to the contrary), that the power of sale has arisen (this occurs on the legal date for redemption of the mortgage, normally specifically stated in the mortgage as a date shortly after the date of the mortgage) and that it is exercisable (this will occur when notice requiring repayment of the loan has been served and the repayment has not been made for three months, or when interest under the mortgage is due but unpaid for two months, or when some other provision in the mortgage has been breached). However, so long as the mortgagee has a power of sale and this has arisen, the buyer will acquire good title from the mortgagee even if the power of sale has not become exercisable.

Trustees

Where the property is held on a trust of land, any transfer of the land must be made by at least two trustees or a trust corporation, in order that the rights of the beneficiaries under the trust (i.e. the owners of the beneficial interest in the property) can be overreached. Where only one trustee (not being a trust corporation) remains, following the death or resignation of the other(s), a second trustee must be appointed in order to receive the proceeds of sale before a sale can proceed. The trustees have a duty to consult with adult beneficiaries – however, the buyer does not need to check that this duty has been complied with.

Co-owners

Co-owners hold the property for themselves on a trust of land. Where the property was expressly held on a trust for sale before 1997, this will have been converted into a trust of land. It is still possible to create an express trust for sale, but this must be done expressly.

Personal representatives

Personal representatives have the same powers as those of trustees of land, but can only exercise those powers during the administration. The buyer should ensure that the contract is entered into by all the personal representatives to whom probate of the deceased’s will was granted, as their powers are joint – a sole personal representative can, however, act alone (unlike in the case of trustees).

However, it should be noted that the Land Registration Act 2002 provides that the registered proprietor of land has power to make any disposition of any kind permitted by the general law in relation to the registered estate. Any fetter on these powers must be noted on the register as a restriction, in which case the buyer would need to ensure compliance with any such restriction. Accordingly, if no restriction is noted on the register, a buyer can deal with any of the above persons on the assumption that their powers are unrestricted.

Properties falling within Part I of the Landlord and Tenant Act 1987

Part I of the Landlord and Tenant Act 1987, as amended by the Housing Act 1996, grants rights of first refusal to the tenants of certain property where their landlord wishes to dispose of his reversionary interest in the property. The Act applies where:

• The property consists of the whole or part of a building;
• The building contains two or more flats which are let to qualifying tenants (a qualifying tenant is, basically, any residential tenant other than an assured or assured shorthold tenant, except where that tenant has leases of 3 or more flats in the building), and those flats exceed 50% of the total flats in the building;
• (Where the building contains both residential and commercial use) 50% or more of the internal floor area of the building is used for residential purposes;
• The landlord is the immediate landlord of the qualifying tenants (or the superior landlord, if the intermediate landlord is himself a tenant under a tenancy for less than 7 years or a tenancy terminable by his landlord within the first 7 years of the term) and is not a resident landlord (except in certain circumstances) nor a public body which is exempt from the Act.

The Act requires the landlord to serve notice on the qualifying tenants before disposing (or entering into a contract to dispose) of the property. If the requisite majority of the qualifying tenants respond positively to the notices, and satisfy the other requirements of the Act, then the landlord will be unable to sell the property for a specified period except to the tenants’ nominated purchaser.

It is a criminal offence for the landlord to fail to comply with his obligations under the 1987 Act. Further, any buyer from the landlord may be required to transfer the property to the tenants, if the landlord did not comply with his obligations under the 1987 Act.