RESOURCES | Registration gaps: What’s the problem?

Natasha Jordan of Hills Dickinson writes:

The “registration gap” is the period of time between completion of a property transfer and the subsequent registration of the transaction at the Land Registry.

Registration gaps are becoming increasingly problematic as registrations are taking longer to complete.

The registration gap is one of the issues which the Law Commission has been asked to consider as part of its proposed review of land registration.

Legal position

In relation to both freehold and leasehold registered land, legal title does not pass to the transferee until they are registered as proprietor at the Land Registry. The transferee is merely the owner in equity until registration.

On completion of a transaction regarding unregistered land, legal title passes on completion. Although the transaction must be registered at the Land Registry within two months, failing which the legal title will revert to the transferor.

What’s the problem?

In the recent case of Stodday Land Limited and Ripway Properties Limited v Pye, the registration gap problem was an issue in regard to the service of notice.

Part of the freehold land subject to an agricultural tenancy was transferred to Ripway Properties on 19 June 2013 but not registered until 16 July 2013. A notice to quit was served by Ripway Properties on 1 July 2013.

It was held that Ripway Properties’ notice was invalid as they were only the equitable owner and not the legal owner.

That case was swiftly followed by Baker v Craggs, which was decided just before Christmas.

Mr Craggs bought part of Mr and Mrs Charlton’s registered land on 17 January 2012, but the transfer was not registered until May 2012. In the meantime, the Charltons had sold another part of their land to Mr and Mrs Baker on 20 February.  That transfer mistakenly included a right of way over the land already sold to Mr Craggs.

It was held that the Land Registry was right to register Mr Craggs’ title subject to the right of way in favour of the Bakers.

Practical steps

• The growing registration gap is causing problems; careful consideration is required to identify the correct parties to serve and receive notices and appropriate drafting is required to mitigate the difficulties arising from delayed registration.

• Applications to register should be submitted as soon as possible after completion and the progress of the application monitored.

• Contract clauses could be used to enable a buyer to compel a seller to serve any required notices in the period between completion of a transfer and its registration.

• As suggested by the Judge in the case of Stodday Land Limited and Ripway Properties Limited v Pye, the transferee could serve notice as agent prior to registration.

• Buyers and their solicitors must ensure that the buyer has priority over any subsequent transactions by the seller.  In the case of Baker v Craggs, the buyer’s pre-completion search should have protected Mr Craggs, but priority was lost when his initial application to the Land Registry was cancelled.

This article was originally published on Place Resources.