Since registration of the majority of land transactions became compulsory by the end of 1990, there has always been a “registration gap”. This refers to the time between the completion of a transaction when an application is made to the Land Registry to amend the register and the time at which the Land Registry actually process the application and makes the change.
This has been exacerbated significantly following the COVID-19 lockdowns and continues to affect many transactions to date.
Recent estimations from the Land Registry indicate that timescales for completion of some applications now extend into 2026 and have prompted many property practitioners to be aware to “mind the gap” when drafting and advising in certain transactions.
“But we've completed the transaction – what's the problem?”
Section 27 of the Land Registration Act 2002 means that certain transactions involving land do not take effect in law until the registration requirements have been met.
An example of how this works in practice is that after the property has been transferred, the “old owner” remains the legal owner (as the registered owner) after completion of the sale. The “new owner” becomes the equitable owner. Essentially, the “old owner” holds the property on trust for the “new owner” until completion of registration.
This affects not only sales but also any registrable event. This includes registerable leases, charges and easements, to name a few.
Examples of issues which may arise as a result include:
Can the old owner still deal with their land during the “registration gap?”
The 2018 case of Baker v Craggs suggests that the new owner's equitable interest in the land will prevail over the old owner's dealings after sale. This meant that a right of way granted by the old owners after the sale to the new owner did not take effect in law. However, this would not be the case for other transactions, such as mortgages.
Sections 23 and 24 of the Land Registration Act 2002 allow the “new owner” awaiting registration to deal with the property as though they were the registered owner. Despite this, case law has shown that there are certain dealings that remain reserved only to the registered owner, such as the ability to terminate its lease by exercising a contractual break right.
Contractual Consequences
If a notice or consent is required in respect of leasehold dealings, but the leasehold title is currently sitting in the “registration gap”, who should the notice be served upon to be valid? This could affect the validity of surrenders and break notices as well as a myriad of other circumstances.
Additional Due Diligence for onward sale
Should the “new owner” wish to sell or grant an interest in the property (such as a lease) during the “registration gap”, the other party will require additional and time-consuming due diligence to be satisfied the “new owner” is in fact entitled to the legal title.
Unintended consequences of the old owner remaining the legal owner
Certain proceedings could be brought against the legal (i.e. registered) owner, such as planning enforcement. A 2001 case of Thomson v East Lindsey District Council held that such proceedings are righty brought against the “old owner” even if the “new owner” has bought and occupied the property but is just not yet registered as the owner.
What can be done?
1. Protect your Priority
Solicitors acting in registrable matters will need to ensure that your priority is protected. A search is carried out prior to completion, which gives you a “priority period”. Provided your application to Land Registry is made within that period, your priority will be protected i.e. your place in the queue of registrations for that property is held. No one can “pip you to the post” and register their interest first and prevent yours from being registered.
2. Include Agency Clauses
Include clauses within contracts to account for issues which may arise due to the “registration gap” for example, determining upon who notices should be served on during this time and the seller appointing the buyer as attorney for all purposes connected with the property during the registration gap.
3. Application to Expedite
In limited circumstances, an application can be made to the Land Registry to expedite the registration. Such an application is only accepted where the delay would cause hardship, such as a delay in an ongoing sale.
Registration process time
It is, therefore, important to be realistic about the length of the registration process and make your solicitor aware of your plans for after acquisition or disposal to ensure this can be accounted for during the drafting and registration stages of the matter.
That being said, should your application be delayed, be assured this is commonplace and, provided your priority is protected, does not affect the validity of the transaction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.