Three Co-Owners, One Signature, and a Caveat
A notary in Gampaha is asked to attest a deed of sale of a 20-perch land. The seller owns a one-third share; his two siblings own one-third each and are working in Italy. The seller produces signed 'no objection' letters from the siblings but these are not notarised. The original certificate of title is held by a finance company as security for a loan. A caveat lodged by a judgment creditor was registered against the land last month. The buyer has already paid Rs. 2 million as an advance. The deed, prepared by the seller's lawyer, describes the seller as transferring the 'entire land' and contains a covenant that the property is free from encumbrances. The seller says the siblings will sign later and the caveat is 'a misunderstanding'. The buyer wants completion today.
1. What title and encumbrance checks must the notary make before attestation?
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Before attestation the notary must investigate title and encumbrances. He should obtain the original certificate of title or a current title search at the Gampaha land registry, check the last deed and any subdivisions, and search for mortgages, leases and caveats. The finance company's possession of the title indicates a mortgage; the notary needs the mortgagee's discharge or written consent to the sale, otherwise the buyer takes subject to the charge. The caveat lodged by the judgment creditor must be disclosed; it may prevent or delay registration and signals a competing claim. The two siblings' 'no objection' letters are not notarial conveyances and do not transfer their shares. If they have appointed the seller attorney, the power of attorney must be notarially executed and, where required, registered or authenticated; a letter is insufficient. The notary must also verify the seller's identity and title to the one-third share.
2. Can the notary attest the deed as drafted? Explain your answer.
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He should not attest the deed as drafted. A co-owner may sell his undivided one-third share without the other co-owners' consent, but he cannot convey their two-thirds. The deed's description of the seller as transferring the entire land is false and would mislead the buyer and the Registrar. The notary should require a deed that conveys only the seller's undivided share, with the buyer becoming a co-owner, or fresh deeds or powers from the siblings. He must also deal with the mortgage and caveat. If the caveat remains, registration may be refused or delayed; the notary should advise the parties to resolve it before completion. He should explain that the Rs. 2 million advance is a matter between the parties and does not authorise him to certify a title he cannot verify. If the parties insist on the existing draft, he must decline.
3. What advice should the notary give the buyer about the advance and the remaining risks?
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The notary should advise the buyer to obtain independent legal advice before paying any further sum. The advance was paid before the caveat, mortgage and co-ownership issues were cleared; the buyer's remedy may be only a personal claim against the seller, not a good title. Completion should be conditional on a registrable deed from all owners or a deed limited to the seller's share, a discharge or consent from the finance company, and resolution of the caveat. Funds should be held in escrow or paid against registration, not released on promises. The notary must not guarantee clear title or act as the buyer's adviser while also preparing the deed; if conflict arises, he should recommend separate counsel. The caveat may mature into a claim, and the mortgage may give the finance company priority. The notary should record the advice given and any refusal to proceed.