The recent case of Baker v Craggs reiterates the importance of dealing with registration formalities following completion of all property purchases – and the consequences of failing to do so. The case also highlights the importance of employing a legal expert to ensure all transactions are dealt with correctly from initial instruction through to completion and finally, but just as important, registration.
Case Summary: the Landowners (A) sold part of their farm, which included a yard, to a Purchaser (B). The transfer granted a right of way in favour of B over a driveway leading from the yard however it did not reserve any right of way over the yard in favour of A. The transaction completed on 17 January 2012, at which point B’s solicitors dealt with registration formalities. The Land Registry raised a requisition stating that the plan attached to the transfer was incomplete and requested that a new plan be submitted. B’s solicitor failed to submit a new plan and the application for registration was cancelled. B’s solicitor was required to make a fresh application for registration and B was eventually registered as proprietor on 16 May 2012. In the meantime, A transferred another part of the farm to a third party (C). There were two transfers: one of the transfers granted a right of way over the driveway over which B had been granted a similar right; and the other transfer purported to grant a right of way over the yard that had been transferred to B. Both A and C’s solicitors had sight of the transfer dated 17 January 2012 to B, but neither noticed that the purported right of way had been granted over land which had already been transferred to B. The transfers to C completed on 20 February 2012 and registration formalities were duly completed, with C being registered as proprietor on 14 March 2012. There was an entry noted on the title register to the effect that C’s property had the benefit of the rights granted by the transfer dated 20 February 2012 (including the right of way over the yard). When subsequently registering B as registered proprietor in May 2012, the Land Registry also made an entry on the title register to the effect that B’s property was subject to the rights granted in the transfer to C. Court proceedings were issued on 26 March 2015 to determine whether the right of way granted to C during the “registration gap” was effective.
Decision: the High Court held that the yard which had been transferred by A to B, and subsequently A purported to grant a right of way over to C, was bound by the right of way. The Court awarded damages to C assessed in the sum of £250 for interference with their right of way. The Court granted declaratory relief only and did not consider an injunction to be warranted.
Commentary: this case highlights the importance of dealing promptly with registration post-completion. Clients should be aware that the buyer does not become the legal owner of a property until registration is completed – creating the so called “registration gap”. All delays should be avoided as the longer the delay, the longer the legal estate remains vested in the seller. If the application is cancelled, there will be no priority and there is a risk that a third party may make an application to register an interest against your property.
If you are buying or selling a property, our Residential Conveyancing and Commercial Property departments are here to guide you through the process and ensure all formalities are dealt with efficiently and expertly.
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