Managing the Application Disorder Caused by Increasing Delays at the Land Registry: Possible Solutions.

Expert Advice from Land Registry Specialist Jennie Curtis on Tackling Disruptive Processing Delays

The extended wait for applications to be processed by the Land Registry has become a serious issue within the property market, with many clients contacting us to inquire why their applications remain in limbo despite our prompt and careful submission of all necessary paperwork. Even before the pandemic, the Land Registry was dealing with a significant backlog, but subsequent events have only worsened the situation, with the "registration gap" expanding to swallow up entire properties. Our firm has witnessed a number of problems triggered by this development, including:

• Borrowers forced to pay penalty interest rates on overdue loans due to delayed refinancing of mortgages;
• Landlords unable to grant leases until their purchase has been registered;
• Developers unable to sell houses or new units;
• Landlords unable to serve legal notices as the rightful owners.

The Land Registry has recently launched a Digital Registration Service, which may address some of the common application issues that trigger registration delays, and it is hoped that such processes will continue to streamline the system going forward. In the meantime, we want to respond to some of the most frequently asked questions on this issue.

Can you request expedition?

Where an application is causing financial difficulties due to delays, the conveyancer who lodged the application may request expedition, provided they supply accompanying evidence that clearly demonstrates the hardship being caused. A letter detailing this evidence should ideally accompany the request, along with documents that back up the claim, such as a borrower's mortgage statement that shows default interest rates and penalty charges. Developers may choose to offer marketing documentation along with evidence showing how the delay is adversely impacting sales. There is an option to request an application for expedition when it is causing delays to subsequent applications. However, a request for expedition cannot be made based on any other grounds.

It is important to point out that the granting of an expedition request does not necessarily result in swift registration of the application. The applicant may face additional enquiries and requisitions that must be addressed. Additionally, where the application includes a discharge, special notice must be served on the outgoing lender, making it important to ensure that the relevant party is contacted, with a request for a prompt response. It is also advisable to urge the solicitors involved in the requisitions to respond in a timely manner, with good communication between all parties essential for achieving fast registration.

What's the big deal?

Those who purchase freehold or leasehold titles do not legally own the property until they have been registered as proprietor at the Land Registry. Until then, the seller remains the registered owner, while the purchaser holds an equitable interest in the property. This results in the slightly unusual situation where you may find yourself enjoying your new home while the seller remains the legal owner. The seller technically holds the property in trust for the equitable owner until such time as registration has been achieved.

Registration of legal ownership should be a mere formality in most cases, but there is always a risk of rejection by the Land Registry based on defects in the application. The most common reasons for this are defective signing and execution of the transfer deed or lease, errors in the documentation drafts, or compliance issues with title restrictions (e.g. prior charges, overage payments, or obligations to enter into a deed of covenant).

While many of these errors can be remedied, there is always the danger that they indicate more serious issues, such as identity fraud by the seller, third-party debts, disputes over the land's title, or prior contracts of sale. In such cases, registration may not be possible, leaving the buyer or lender facing legal action.

If there is a risk of non-achievement of legal ownership, buyers and lenders will be hesitant to complete contracts without official copies, which demonstrate correct ownership and provide evidence of title. Official copies also detail all matters that burden and benefit the property, and outline title restrictions, charges, notices, and leases impacting the land. Without official copies of these documents, solicitors will have to assess entries from the underlying title documentation, and not all relevant documents may be disclosed. Thus, there may be reluctance to proceed with contracts where some but not all transfers are pending.

What options are available if the expedition is not an option?

In cases of straightforward refinance or purchase transactions, it may be possible for a solicitor to advise a buyer or lender to proceed with the registration pending completion. Before proceeding, the solicitor will need to perform several checks to ensure that the pending application is in proper order. These checks might include verifying the identity of the seller, examining the original/certified copy transfer or lease, and examining the existing title. The solicitor would also check that the stamp duty land tax has been paid (if necessary) and carry out insolvency/bankruptcy checks. Ensuring the buyer or lender has obtained consent to all existing restrictions on the title is also important, along with checking if there are any loans to be discharged. Additionally, it is essential to ensure that the application is lodged with first priority or obtaining copies of all prior applications, and the relevant solicitors have provided undertakings related to the original documents and any requisitions that may be raised. Ultimately, whether to proceed with completion when an application is pending registration is up to the lender or purchaser, and it will depend on the facts of the case, with advice from their solicitor.

How long does it take for my application to be registered?

This is one of our most frequently asked questions, and unfortunately, it's not easy to predict. Nevertheless, the Land Registry estimates that processing times for updating the register, such as adding a mortgage or changing ownership, take about 4 to 6 weeks, while creating a new register, such as a transfer of part or new lease, take around 6 to 9 months. These are conservative approximations, and more complex applications may take up to a year, while simpler ones may take two months. During the pandemic, ordinance surveyors suspended their services, causing significant backlog for applications requiring surveys. However, they've recently resumed field survey work whenever it can be done safely.

What if I have more questions?

We're happy to help! At Brecher LLP, we assist our clients with various Land Registry applications, especially those that are more complex. Please contact a member of our Real Estate or Real Estate Finance team if you need more assistance or legal advice. If you're dealing with litigation, our Banking Litigation and Real Estate Litigation teams may also be able to help.

Please note that this article is only for general guidance and does not constitute legal advice. Before acting on any of the topics covered, it is essential to seek specific legal advice. The information in this article must not be used, reproduced, stored, or transmitted in any form or by any means without prior permission from Brecher LLP.