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6. V's obligation to give good title and UBW (V has twin duties to…
6. V's obligation to give good title and UBW
V has twin duties to show and give title
Active Keen
: V had good title but did not reply properly to a requisition reasonably raised by P. V breached the contract even though he had good title.
V
shows title
by
Producing title deeds; and
Answering Requisitions on title
V
gives title
by
Removing any defects; and
Providing conveyancing evidence to prove title is not defective or defeasible
Depends on SPA
If
agreement is silent
(most PAs are), it is implied V will give good title
De Monsa Investments Ltd
Parties are free to make whatever agreement they want regarding title.
V may include appropriate
limiting clause
limiting V's duty to give and show title
Jumbo King Ltd v Faithful Property Ltd
If parties signed a binding agreement, they cannot vary the terms unless both parties agree. An insistence on a new term might amount to repudiation:
Spark Rich v Valrose
Whether limiting clause limit's V's obligation to give good title is a matter of construction.
Must be drafted sufficiently widely and clearly to limit V's obligation
V must not, regardless of words used, mislead P
Overall, P must understand the risk he is required to take
e.g. Jumbo King Ltd v Faithful Property Ltd
Identify height restriction in Gov lease (defect in title), state how it had been breached and bar requisitions or objections
But here,
widely drafted limiting clause that the V gave no warranty
Every structure complied w/ BO
V would not be liable for any contravention discovered before/after completion
V would not pay for any remedial work and P would not raise any requisition/objection in respect of UBW
Sufficiently widely drafted
. No evidence that V knew cocklofts were unauthorised - P had not been mislead. Both parties must have been aware of the possibility that cocklofts were unauthorised.
"Existing physical state, conditions and finished"
Jumbo King
applied. But
Limiting clause was not drafted widely enough to cover an unauthorised structure on the premises and
V had not disclosed defects he must have known about.
Limiting clause referring to
"unauthorised structures"
included structures unauthorised under the
BO
, Gov Lease or DMC and
"unauthorised additions or alterations"
could include those in breach of the Gov lease/DMC irrespective of their status under BO
Channel Green Ltd
A limiting clause will not absolve V from disclosing defects he is aware or ought to be aware of unless the defect is disclosed in the
clearest language
Becker v Partridge
-
General words; P not bound by limiting clause
Clause precluding requisitions about existence of notices/orders from Gov ineffective because V had notice of a BA order to carry out remedial work
Wah Ying Properties Ltd
1 more item...
V's solicitor's knowledge is imputed to V
V must not mislead P
V cannot impose on P a serious defect in title of which he knew unless the limiting clause contains the most explicit wording.
Different if V didn't know of the defect but had the means of knowledge or if the matter was technically a defect in title but one which P might reasonably be prepared to accept
Jumbo King
A limiting clause must be considered in light of the factual matrix to discover what a reasonable person would understand the parties to mean
Jumbo King Ltd v Faithful Property Ltd
A term that property is sold
as is
extends to conditions of the premises and not to title
All Ports Holdings Ltd
As regards condition, the buyers should beware
V has duty to disclose defects in title
Almost all defects are latent (not visible on inspection)
UBW were patent when property was compared w/ plan of property which was in title deeds given to P before he signed SPA.
Kensel v Charmfast
But in general, UBW are not patent
Waiver by P of objections to defective title
Waiver: party debarred from asserting a substantive right or from raising a defence. Waiver can be express, deemed or implied.
Test for waiver in
Large Land Investments Ltd
Waiver by election
occurs when:
A state of affairs comes into existence in which one party becomes entitled to exercise a right and he must elect whether to do so
Party making election must know the facts which give rise to the right
Party making the election might have to be aware that he has the legal right to affirm/rescind the agreement when there has been repudiation by the party
Party electing to abandon the right would be held to have done so only if he had communicated the election to the other party in clear terms
P may expressly or impliedly by conduct waive right to object to title.
Expressly*
e.g.*:
Limiting clause
P accepts title after receiving replies to requisitions
Waiver by conduct
V answered P's requisitions then P sent draft assignment and asked for completion statement
Tread East Ltd v Hillier Devpt Ltd
UBW -
P must understand the consequence
s of the facts that give rise to a requisition. Knowledge of the facts alone is insufficient:
Giant River Ltd v Asie Marketing Ltd
-
Contract said V would give good title
Regent Summit (HK) Ltd
: PA and silent on title
P's knowledge cannot affect V's obligation to give title
Giant River Ltd v Asie Marketing Ltd
P held to have waived the right to raise requisitions about UBW when it failed to raise them within the time prescribed by the agreement - works patent when compared to plan on deeds. Requisitions were out of time.
Kensel v Charmfast
Late requisitions does not amount to a waiver of right to good title:
Strong v Flywin
V might not need to answer requisitions raised out of time but V must still be able to give good title if contract provides.
What is good title
A good title is one which the course can at all times and in all circumstances be forced upon an unwilling P in an action for SP.
The courts will not force a doubtful title on P.
Kan Wing-Yau
Courts will not compel P to buy a lawsuit
Re Heaysman's and Tweedy's contract
But
title may not be perfect
MEPC Ltd v Christian Edwards
If the facts and circumstances are so compelling to the mind of the court that the court concludes BRD that P will not be at any risk of a successful assertion against him of the encumbrance, the court sohuld declare in favour of good title
Good title doesn't mean perfect title -
must be seen from standpoint of a willing P and willing V, both possessed of reasonably robust common sense, both intending to see the transaction through to completion in terms of their bargain
Mexon Holdings Ltd
If in a particular case the facts and circumstances are so compelling that BRD the risk is for all practical purposes illusory, the court can and should be prepared to ignore it and accordingly dismiss any objections founded upon it
Kan Wing Yau
V has
burden of proving title
BRD
Re Stirrups' Contract
V must give good title on completion. Time is of the essence.
Chu Wing Nin v Ngan Hing Cheung
Unauthorised Building Works