When registered freehold or leasehold land is transferred, the requirements for registration at the Land Registry must be satisfied in order to vest the legal estate in the transferee.
In general terms registration requirements apply to all transfers of land by operation of law (there are certain exceptions including dissolution of a corporate owner, or, on death or bankruptcy of an individual). Once registration is completed by the Land Registry the legal estate vests in the entity with the benefit of the transfer.
However the effective date for registration is the date of the application to the Land Registry for registration. The gap between the date of the deed or instrument effecting the transfer and the date that the legal estate vests in the transferee is known as the registration gap.
We have seen a number of recent instances where a landlord has served notice (for example under the Landlord and Tenant Act 1954 to end a business tenancy) having had the property transferred, but before registration.
It is established law (Smith v Express Dairy Company Ltd 1954; confirmed in Brown & Root Technology v Sun Alliance and London Assurance Co 1997) that if such a notice is served before the legal estate has vested, it will be invalid.
Equally, care needs to be taken in respect of residential property, where a seller of a leasehold flat agrees to serve notice to ‘extend the lease’ under the Leaseold Reform Housing and Urban Development Act 1993 as part of a sale, and then transfers the benefit of the notice upon completion of the sale. A landlord, if serving a counter-notice, needs to be sure who the actual tenant is pending registration.
More generally, where any agreement relating to registered land has a reference to ‘completion’ care needs to be taken as to whether it is the date of the deed or instrument completing the transaction or whether it is really meant to be when the legal estate vests in the transferee/assignee.
If you require further information regarding the registration gap, please speak to Julian Johnstone, Head of Druces LLP’s Property Litigation team, or Benjamin Lomer, Senior Associate.
