The period of time between the completion of a property transaction and the registration of the disposition at the Land Registry is known as the ‘registration gap’.
The registration gap has become an increasing problem in recent times and poses particular difficulties in respect of more complex matters, where registration can take a number of months to complete.
A buyer of registered land does not become the legal owner of land until the disposition has been registered at the Land Registry. During the registration gap, the legal estates remains vested in the seller, who holds the property on trust for the buyer as an equitable owner.
The Land Registration Act 2002 does afford the buyer powers to deal with the property during the registration gap. However, some rights can only be exercised by the legal owner of the estate. This can cause practical difficulties for a buyer who intends to exercise such powers shortly after completion.
Problems may arise where, for example, the buyer serves notice on an occupational tenant during the registration gap. In Stodday v Pye [2016], the buyer sought to serve a notice to quit on the tenant prior to the registration of the transfer. It was held that the notice was invalid as the buyer was not the legal owner of the land when it served the notice.
Similarly, in Henshaw and others v Magnet Properties South East LLP [2008], the court found a landlord’s counter notice, served during the registration gap in respect of collective enfranchisement proceedings under the Leasehold Reform Housing and Urban Development Act 1993, to be invalid.
Buyers should identify potential problems at an early stage in the transaction and draft documentation accordingly to safeguard against delayed registration.
For more information, please contact our property teams:
https://www.foskettmarr.co.uk/index.php/our-team/commercial-property-solicitor-essex/
https://www.foskettmarr.co.uk/index.php/our-team/residential-conveyancing-essex/