Portfolio Case Study
Proposition
The purchase of a portfolio of 100 new houses from a reputable house builder.
Issues
Informed investors are circling looking for a bargain. Seller needs a quick deal and clean exit through limited warranties.
Our client wants to be the first to capitalise on the distressed sale but their funder wants asset certainty.
First Title Solution
Day 1
(1) Buyer provides us with brief details about Seller the portfolio assets.
(2) We conduct preliminary due diligence to understand the Seller (e.g. their standing, processes and their advisers, and funders), and the standard of assets (e.g. how and when acquired).
(3) We determine the due diligence that we require to satisfy our duty of care before we could insure.
Day 2
(1) Our due diligence is completed through appropriate title checks and review of online resources (e.g. Planning Authority websites, online mapping, H M Land Registry). Common title issues are revealed e.g. restrictive covenants, chancel repair liabilities. We form a view based on our due that that identified title issues can be remedied if the need arises. We form a commercial view that matters which were unknown to or unidentified by the seller on its acquisition will have been drawn out by the publicity of a construction project and addressed by the Seller or else redundant.
(2) Our draft proposal document is dispatched to Buyer (This document typically contains the conditions of our insurance offer and any enquiries to be satisfied). In this matter the following conditions are imposed: (i) that appropriate arrangements are in place for registration of individual titles for each asset plot at H M Land Registry and the release of the Seller's mortgagee's existing charges on the portfolio assets; (ii) the Seller has completed construction of all the portfolio units in accordance with planning consents; (iii) all units in the portfolio have access to the public highway;
Day 3
(1) Policy terms finalised in discussions with Buyer's and their funder's solicitors
Day 4
(1) Our buyer's offer is accepted by the Seller and the policy issued. The policy addresses identifiable title risks (e.g. covenants, chancel repair liabilities) and unknown risks (e.g. overriding interests, historic document flaws, fraud and forgery and exposure from matters which would have been revealed by a Local Searches ordinarily obtained when time permits).By refreshing the traditional due diligence process with a commercial approach to the practical and legal risks relevant to a particular transaction, First Title can speed up the transaction process and provide an insurance policy protecting buyers, and their funders, against common title defects, unknown risks, and fraud and forgery.