Guidelines on Landlord's title
The Conveyancing Committee issued a practice note in the Law Society Gazette in January/ February 1980 in relation to the enquiries which ought to be made in relation to title by a solicitor for a tenant on the granting of a rack-rent lease. The view of the committee at that time was that enquiries need only be made in relation to a landlord’s title when acting for a client taking a lease of commercial property for a period in excess of three years. This view was taken on the basis that while a tenant was not, under the provisions of the Conveyancing or the Vendor and Purchaser Acts, entitled to enquire into the landlord’s title, both the practice of the profession and certain judicial pronouncements (in particular, the decision in Hill v Harris [1965] 2 AER referred to in that practice note) had made inroads into the statutory position.
More than 20 years have passed since the issuing of the practice note. The committee is now of the view that in relation to shorter-term commercial leases the practice of the profession since then and the decision in ICC Bank Plc v Richard Verling, Niamh Landy and Wine Dimensions Limited ([1995] 1ILRM 1.23) have resulted in an alteration of this position. In that case, a two-year, nine-month lease of an off-licence premises was granted by the first-named defendant to the third-named defendant. The licence was transferred into the name of the second-named defendant as a nominee of the third-named defendant. The plaintiff as mortgagee issued proceedings in April 1994 in which, among other things, it sought possession of the premises. Lynch J in his judgment indicated that the second- and third-named defendants had to be regarded as having notice of the mortgage created by the first-named defendant in favour of the plaintiff as it was registered in the Registry of Deeds and they could have discovered its existence by means of a simple search.
In view of the above, the committee is of the view that prudent solicitors acting for tenants of short-term leases of commercial property should make the same enquiries and investigations as those acting for tenants of longer leases. The committee is of the view that the Law Society’s recommended ‘pre-lease enquiries or checklist’ as published in the Gazette in May 1990 (and reproduced in the current edition of the Conveyancing handbook) should be raised in relation to all such leases. Practitioners should, however, note that this checklist is at present the subject matter of a review by the committee to take account of recent legislation.