Land registration: don’t fall at the final hurdle

Most applications to the Land Registry are relatively painless, but Bill Chandler highlights several practical points that can cause unwelcome discomfort. With the purchase monies paid and the deal completed, nobody wants to encounter problems with their application to register a transaction. Dealing with Land Registry requisitions (those pesky e-mails requiring additional information or asking for things to be changed before an application for registration can be completed) is at best a waste of time. At worst, requisitions can reveal fundamental defects in an application that can be difficult to correct. Fortunately, the Land Registry publishes a lot of guidance, including more than 80 practice guides and specific advice on how to avoid requisitions. There is even a pre-submission enquiry service allowing conveyancers to clarify the Land Registry’s position on complicated points before it’s too late. However, regular changes to guidance and practice create a number of traps that can trip up even experienced conveyancers and their clients. Confidential The Land Registry has a direction in place that entitles it to reject documents bearing the words “confidential” or “private”. As the custodian of a public register and being subject to the Freedom of Information Act 2000, the Land Registry simply cannot agree to respect someone else’s confidentiality. We recently received a flurry of requisitions objecting to a standard-form legal charge used by a high street bank that included the printed word “confidential” on each page. Even though the standard form of charge and the Land Registry direction have both been around for several years, the Land Registry has become stricter in raising requisitions where those words appear. It is therefore advisable to ensure that these words are omitted from all documents that will ultimately need to be sent to the Land Registry. It can also be a good idea to check that the lender has sent you its current Land Registry-approved standard-form mortgage on any particular transaction, since a superseded version can occasionally slip through the net. This can be particularly problematic if the old version requests a restriction that no longer reflects the relevant standard-form restriction. Witnesses The Land Registry has also become much stricter on witnesses in recent years. Practice Guide 8 reminds practitioners: “It is important that names and addresses are complete (including any postcode) and legible as this can help in locating and contacting witnesses by any party should any issue arise concerning the execution.” This raises several practical issues: What is legible can sometimes be subjective. How bad does someone’s handwriting have to be before it can be said to be illegible? The Land Registry’s prescribed execution clause for individuals (and the equivalent clauses for companies executing by a single director, attorneys and others) simply says “address”. To avoid the common mistake of the witness failing to include their full address (or at least omitting their postcode), it is prudent to issue specific instructions to the witness. Perhaps in time the Land Registry will amend its standard clauses to refer to “Full address (including postcode)” in the same way that it now specifiesy “Name (IN BLOCK CAPITALS)”. Typically, the documents to be registered will at completion be in the hands of the conveyancer acting for the seller or landlord. Even though the conveyancer acting for the buyer or tenant will be submitting the application, they will only receive the documents after completion. It is obviously not ideal to realise at that point that the documents may have been sufficiently well executed to constitute a valid deed, but may not be registrable owing to doubts over legibility or a missing postcode. At the risk of being considered pedantic, best practice must surely be to request a copy of the executed document prior to completion. This would also flush out the undisclosed involvement of an attorney (see below). Restrictions Restrictions on title, limiting an owner’s ability to deal with their property, are one of the largest causes of requisitions. Restrictions frequently require consent from a third party, such as a mortgagee, to the registration of a disposition. Or they may require a certificate that particular provisions of a document have been complied with – perhaps an obligation to obtain a deed of covenant from a purchaser to comply with positive covenants that do not run with the land. Obviously, nobody should be completing a transaction that is affected by such a restriction without having the requisite consent or certificate available on completion, or at least knowing how they are going to obtain it. But that is not necessarily the end of the matter. Since July 2020, the Land Registry has been accepting dispositionary documents that have been signed electronically. However, consents and certificates must still be signed in wet ink, unless given by (or received via) a conveyancer acting for the beneficiary of the restriction. During lockdown, some lenders have been issuing electronically signed consents to leases, but these consents are not usually given by, or routed through, a conveyancer acting for the bank. Although the lease itself can be electronically signed, the tenant’s conveyancer must insist that the bank’s consent is signed in wet ink if the lease is registrable. I would also encourage anyone agreeing a new restriction to spare a thought for the unfortunate people who will have to deal with that restriction on a future dealing with the property. In particular, where a restriction requires a certificate confirming that a buyer has given a deed of covenant but the underlying document provides for classes of “permitted disposals” that do not require a deed of covenant, it is incredibly helpful if the restriction includes the optional words “or that they do not apply”. Without those words, the Land Registry will not accept a certificate confirming that the requirements do not apply to the particular disposition, but the beneficiary of the restriction may be reluctant to issue a certificate confirming that a deed of covenant has been given when that has not in fact happened. And there’s more There is a whole host of other areas where risks have arisen or increased in recent years: Corporate execution: hopefully we have all adapted to the Land Registry’s insistence since September 2019 on using “executed as a deed” for companies and limited liability partnerships, but the occasional “signed as a deed” still slips through the net and invariably results in a requisition. Plans: as traditional engrossment documents have become less common and we have become more reliant on clients printing out documents for signature, there is a risk that plans cease to be acceptable to the Land Registry. The rise in remote working means that plans are often printed on home printers, with a corresponding risk to their clarity, colouring and scaling. And without being able to add stickers showing the signatories where to sign, it is easier for the signature of plans to be overlooked. Overseas companies: the Land Registry has helpfully consolidated its guidance on overseas companies into Practice Guide 78, but traps remain. Where a foreign legal opinion letter will need to be sent to the Land Registry to confirm corporate status or due execution, the Land Registry requirement that opinion letters must not be conditional or qualified in any way can conflict with the natural tendency of offshore lawyers to caveat such letters and limit reliance on them. Attorneys: the use of an attorney raises issues of authority, due execution and evidence of identity. While none of these is usually particularly troublesome, they can become so if the involvement of an attorney is only revealed at the last minute. In a worst-case scenario, the conveyancer submitting the application may become aware only when they receive the completed documents from the other side. Company charges: since Companies House stopped imprinting the Crown stamp when registering charges eight years ago, it has been necessary to include confirmation with the Land Registry application that the charge included with the application is the same charge to which the Companies House certificate relates. When this change occurred, I did suggest to the Land Registry that needless requisitions could be avoided by including the confirmation as a tick box on the standard AP1 application form, but this has not (yet) come to fruition. Final words Land registration law and practice is necessarily complicated. It is also constantly evolving, often in response to advances in technology. For example, the growing use of electronic signatures removes issues around the printing and scanning of plans and the legibility of witness details, but has provoked new conversations about certification requirements and making minor corrections to documents. The above selection is not exhaustive, and others will no doubt have encountered further practical issues. The challenge for practitioners is to ensure that transactions are structured and documents are drafted to comply with the latest Land Registry requirements, so as to minimise the scope for difficulties and delays after completion. Bill Chandler is a professional support lawyer at Hill Dickinson LLP Image by ArtTower/Pixabay