The December 2013 edition of the Commercial Property Information Update – Issue 118 – is published today on this website.
Land Registry is current running a survey on its website to find out customer views in relation to the collection of personal data for fraud prevention purposes: see Land Registry's Fraud Survey. There is scope within the survey to provide suggestions to the Land Registry on how to minimise fraud (e.g. consider providing pin number identification systems for registered proprietors?). It is perhaps better not to suggest the re-introduction of paper land certificates.
Fraud is also the topic of Monday’s webinar: “Applying best conveyancing practice to avoid inadvertent liability for fraud”. This webinar considers how to stay alert to the possibility of property fraud; considers what its implications are at law, and for conveyancers (including the risks of rectification and objections to registration); analyses how to apply Law Society practice guides; deals with the Land Registry’s identification procedures; explains why we should be adhering to the letter the best practice procedures applicable at exchange and completion; deals with incentives in property sales; and examines the lessons learned from recent cases.
Friday 8 November at 12.30pm.
Ensuring binding contracts and effective completions.
The webinar will cover the following issues:.
- Who signs a contract for the sale of land, and how? What is a “signature”? What is a “contract”? - - Are agents sufficiently authorised to sign?
- Can faxes and PDF pages short-cut the route to effective exchange? What if the contract is altered after signature, or after exchange?
- How do you ensure the exchange is fully effective?
- What is execution, and who should execute? Can a deed be altered after execution, or after delivery? What is the current thinking on valid execution in the light of the Mercury Tax case and subsequently offered opinions?
- Who checks the validity of execution at completion, and does the Code for Completion assist? How do you ensure the completion is fully effective?
Relevant case law covered in the session includes: Ikbal v Sterling Law  EWHC 3291 (Ch); Davisons Solicitors (a firm) v Nationwide Building Society  EWCA Civ 1626; First Post Homes Ltd v Johnson  13 EG 125; Green (Liquidator of Stealth Construction Ltd) v Ireland  EWHC 1305 (Ch); J.Pereira Fernandes SA v Mehta  1 WLR 1543; R (on the application of Mercury Tax Group Limited) v HMRC  EWHC 2721 (Admin); Frazer v Brown  EWHC 2692 (Ch).
As is widely known, at midnight on 12 October 2013, certain classes of property rights, such as chancel repair liability (CRL) lose their status as overriding interests under provisions of the Land Registration Act 2002. Once the status of the right as an overriding interest is lost, a purchaser of the land for valuable consideration will be able to take free from it. However, the loss of overriding interest status for a property right does not mean that the right ceases to be an interest. Where no disposition for value occurs after 12 October 2013, the land remains subject to the right, and the right remains enforceable against the owner, and registrable against the title.
Where the disposition for value after 12 October is a mortgage (or re-mortgage) the mortgagee will enjoy priority protection against a CRL that is not noted on the register by virtue of section 29 LRA 2002. Registration of a registered charge made for valuable consideration gives the charge priority over third party interests unless, at registration, the third party interest is either noted on the register, or overriding. CRL cannot be overriding after 12 October 2013, so if it has not been noted on the register by the time the charge is registered, CRL is postponed “to the interest under the disposition” – that is, postponed to the charge. Hence, the chargee has priority, and so too would the chargee’s buyer and all who claim through that line of transmission.
However, in such a case, the chargor (the current registered proprietor) will still remain subject to the liability unless and until there is a disposition for value by the registered proprietor. The mortgagee may therefore be persuaded by the borrower that the cost of insuring against a potential chancel repair liability no longer needs to be incurred, since the mortgagee’s interest will be free from the liability. Whilst it is true that mortgagees may well be able to acquire free from CRL after 12 October, it is worth considering how such a mortgagee will realise its security. If it exercises its power of sale (TR2 transfer), it can sell free from the right. But if it appoints a receiver to sell, and notice of CRL has been noted on the register after the date of the charge, but before the sale, as the receiver is the agent of the borrower, the transfer (TR1) would be subject to it. Given some mortgagees’ preference for selling through receivers, this is a point that may need to be taken into account when considering whether insurance requirements can be dropped.
The October 2013 edition of the Commercial Property Information Update – Issue 116 – is published today on this website.
The September 2013 edition of the Commercial Property Information Update – Issue 115 – is published today on this website.
Wednesday, 14 August 2013, starting time: 12:30pm.
Issues covered by this webinar will include:
- The property law devices used to protect overage clauses.
- Examples of overage errors arising from recent cases (including Cosmichome Ltd v Southampton City Council  EWHC 1378 (Ch); Hildron Finance Ltd v Sunley Holdings Ltd  EWHC 1681 (Ch); Renewal Leeds Limited v Lowry Properties Limited  EWHC 2902; Berkeley Group plc v Pullen  EWHC 1330 (Ch); Micro Design Group Ltd v BDW Trading Ltd  EWCA Civ 448; Johnson v Secretary of State for Communities and Local Government  EWHC 1839 (Admin); Re Withinlee (2003) Lands Tribunal 11 Feb; Groveholt Ltd v Hughes  EWCA Civ 897).
- Drafting for the common overage triggering events, and avoiding circumvention.
- Reducing the risk of negligence when drafting overage clauses – what lessons can be learned from reported cases?
- SDLT implications – deferring payment of tax.
In the law of unintended consequences, one door closes and another opens.
The Companies Act 2006 (Amendment of Part 25) Regulations 2013, which introduced a new Part 25 to the Companies Act 2006, have removed the requirement for registration at Companies House of charges created in rent deposit deeds. Under new rules applicable from 6 April 2013, all charges created by companies and LLPs are registrable unless expressly excluded by section 859A(6) of the Companies Act 2006. Section 859A(6)(a) excludes from the registration requirement “a charge in favour of a landlord on a cash deposit given as a security in connection with the lease of land.”
However, as one door is closed, another opens. Under the previous legislation (section 860(7)(a) of the Companies Act 2006 as originally enacted), there was included in the requirement for registration “a charge on land or any interest in land, other than a charge for any rent or other periodical sum issuing out of land.” The wording of the exception excluded from registration requirements the charge on land that is created by a rentcharge, such as an estate rentcharge. This exception no longer exists. Therefore, where a company or LLP creates a rentcharge, registration at Companies House is required.
Land Registry has published a note to this effect. See: Registration of estate rentcharges with Companies House.
What areas of law does the Law Commission consider may benefit from reform, and could therefore be part of its 12th programme of law reform?
In landlord and tenant, they include:
- Concerns about the scope of Authorised Guarantee Agreements under the Landlord and Tenant (Covenants) Act 1995, following the Court of Appeal’s decision in K/S Victoria Street v House of Fraser  EWCA Civ 904, in which the court confirmed that a “direct guarantee” was not permitted under the Act.
- Residual problems with the rule that a lease must have a certain term, in light of the Supreme Court’s decision in Berrisford v Mexfield Housing Co-operative  UKSC 52.
- Amendment to the security of tenure provisions in Part 2 of the Landlord and Tenant Act 1954 in order to make the procedures more straightforward.
In land registration, nearly ten years after the Land Registration Act 2002 came into force, the Law Commission feels that some issues are ripe for reconsideration, including:
- The effect of the guarantee of title that the register provides, and the impact upon that guarantee of the growth of fraud in recent years. A number of cases have demonstrated that the effect of the Act’s provisions is not clear, and that clarification is required.
- The need to revise the provisions relating to electronic conveyancing in the light of technological advances in recent years and of our understanding of how electronic conveyancing has progressed in other jurisdictions.
Following the commencement of The Finance Act 2013, and the new SDLT rules affecting pre-completion transactions (i.e. assignments and sub-sales) HMRC has issued guidance, for land registration purposes, on what evidence of SDLT compliance needs to be submitted to the Land Registry where a sub-buyer has two transfers to register (A to B, and B to C).
According to paragraph 2.21 of HMRC’s guidance on the SDLT pre-completion transactions rules, the sub-buyer (C) only needs to produce its own SDLT 5 with its application for registration of the transfers from A to B and B to C. The sub-buyer should also either:
(i) confirm in writing that B acquired the land from A and transferred it to C in pursuance of a free-standing transfer for the purposes of Schedule 2A to the Finance Act 2003, or
(ii) produce written confirmation from B (or B’s agent) that B acquired the land from A and transferred it to C in pursuance of a free-standing transfer for the purposes of Schedule 2A to the Finance Act 2003.
This approach is now confirmed by the Land Registry on its website.