The Registration Gap, being the time between submitting a Land Registry application and receipt of the new or updated Register of Title, continues to lengthen year upon year causing increasing frustration amongst those eagerly awaiting legal title and other title documents.
Land Registry applications, as many are aware, have been seriously delayed in recent years with delays worsening due to Covid-19. With the recently issued (16th November 2022) timescales, Land Registry have confirmed the extent of these delays.
In January 2020, Land Registry reported that first registrations averaged 35 working days to complete, this is now averaging 307 days. An almost 808% increase in processing time. New Leases, in 2020, were reported to take on average 34 working days and Transfers of Part 105 working days. These have also increased to 448 days for both types of applications. With Transfers of Part with prior estate plan approval reduced by 60 days to 388 days on average.
Waiting 10 to 15 months on average for Title to be registered can result in significant risks to Land Owners and Lenders. With no registered legal title Owners are simply an Owner in equity according to the Land Registration Act 2002 (“LRA 2002”). Although, at common law, an executed transfer (in the form of a deed) is effective immediately in passing the legal and beneficial title, under the LRA 2002, the legal title does not pass until the new owner is registered, finalising the disposition and new legal title Owner. The LRA 2002 (s 58(1) deems the legal interest vests in the proprietor once registration has taken place and s 27(1) confirms that disposition of the legal interest is only completed once registration of the disposition is complete. The Registration Gap therefore leaves a grey area which has proven problematic, particularly with Landlords who find themselves without registered title to the property but in a position to serve notices on tenants. Without a vested legal interest under the LRA 2002, the serving of the notice by the new Landlord is not valid as seen in Stodday Land Ltd v Pye [2016] EWHC 2454 (Ch). With delays this lengthy, these issues will be encountered more and more.
The consequences of such delays are not limited to the above and can include delays to onward sales or related transactions causing problems within chains, delays to registering a charge, and backlogged ongoing development sites meaning discharging a charge, individual plot registrations and the like are forever queued, some for years at a time, whilst parent titles remain unchanged. Long delays, increased enquiries and abortive transactions, all stemming from the Land Registry delays, understandably is causing frustration amongst the industry and clients alike.
To try to mitigate the delays, Land Registry has introduced the Digital Registration Service, which as of the 30th November 2022 will be the only method for applications save for First Registrations. It is hoped that this alongside the new “View My Applications feature” (which provides an expected completion date for the application) will help reduce delays by minimising errors within applications which in turn will see the number of requisitions decrease. However, many of these applications are exceeding their expected completion dates leaving the industry increasingly frustrated.
As industry professionals we can try to mitigate by ensuring that Official Searches with Priority are in place providing our clients with security as to order of priority for registration and ensuring their applications for registration are submitted promptly.
For those more complex of transactions such as Freehold purchases subject to Lease(s), with careful drafting a clause can be included within the Contract to appoint the buyer as the seller’s agent during the registration gap – this will obviously need to be drafted to account for both parties rights and to indemnify the seller (against all matters arising from any such action taken during the registration gap period). Due to the careful drafting required it is not a favoured option, however, with delays forever growing this may be seen more and more.
With basic applications now taking on average 60 to 80 days to complete and those slightly more complicated taking up to 185 days, it is clear that Land Registry delays are going to continue as will the knock-on effect on transactions.
If you have any concerns or queries please do not hesitate to contact our experts within the Commercial Property team.
