Coronavirus Blog Series: Land Registry Closure
Published 28 April 2020. By Emma Smyth
Land Registry is a record of land and properties registered in Northern Ireland. Land & Property Services (LPS), the body who collect and maintain this record, closed their offices and operations in line with lockdown measures announced on 23 March 2020.
This closure has had an impact on all current and new property transactions in both residential sales and construction work. There are five areas of service which Land Registry have notified to solicitors are affected.
From this, there are three main issues:
Post is not being received or dealt with after the date of LPS closure. Therefore, no assurance can be placed on Land Registry, Statutory Charges of Registry of Deeds searches after 24 March 2020. This means that acts affecting property could have occurred affecting interested parties but there is no way to search for this. Acts may be as far ranging as transfers, leases, mortgages, easements (rights of way etc.). Registration controls the priority of the interests of people dealing with land and is designed, in its simplest form, to protect against fraud. This creates a possibility that something fraudulent could happen without normal checks and balances.
Priority searches are not being processed but electronically submitted priority searches are being marked on the folio as “pending”. A priority search does two things. It lets a buyer (or lender) know what applications are already in the Registry ahead of his dealing and it gives a 40-day grace period to file his application. At present the Registry is accepting the electronic application for the priority search and marking on the folio that there is “pending dealing”. This means that someone coming along behind that dealing is aware that something is happening on the folio but doesn’t know what it is. In some circumstances this will allow solicitors to take an informed view about the risks of proceeding with transactions but it cannot be absolutely safe to do so. Lenders tend to have a more precautionary approach and their practice varies. At present most lenders are willing to proceed where the priority search has been filed electronically as a pending dealing. For example, on 31 March Nationwide said “…we are happy for cases to proceed where the Priority Notice has been lodged online and is showing as ‘pending’…”
Other dealings to Land Registry may be submitted using the electronic system but they won’t be processed. Interestingly, the e-registration system does not confer priority and that is not created until the paper applications are filed; which brings us back to the problem at 1 above. This is not creating an immediate issue but as time goes on it will create more and more of a problem. Priority searches are the most immediate problem but we already have examples of resales of properties bought where the buyer/seller’s title cannot be registered. It is inevitable that there will be confusion, documents registered out of order, priorities lost and transaction delayed. All of this will create a burden and cost on transactions for years to come.
The source of the problem is that Land Registry remains, at heart, a paper-based system. It has some electronic elements which are assisting but are far from a perfect solution. For example an application can be filed electronically but this is really only a “heads up” for the Registry. The application cannot be processed or given priority until the paper version is filed.
The current crisis may result in the Registry moving to a truly electronic system going forward and also address the fact that a “wet” signature is still required for deeds in the UK. As a small jurisdiction this is something Northern Ireland could address easily and make it easier to do business in NI than in other places. Should you require any further information please contact a member of our Property Team.