The effect of the "registration gap" - a warning to purchasers

For most clients, a deal is done on the day of completion, when the monies are transferred. However, there are post-completion formalities which the buyer needs to comply with; the most important of which is registration of the transaction at Land Registry.

The significance of this cannot be underestimated. In dealings with registered land, legal title to the land does not pass until registration has occurred. There is therefore a gap between completion and the buyer becoming the legal owner.

In most situations this is not a problem, as registration occurs reasonably speedily. However, it can give rise to difficulties where there are notices to be served pending registration.

In Renshaw v Magnet Properties South East LLP, the court held that the correct person on whom any statutory notices should be served, and who was capable of serving such a notice, was the legal owner.

Until a purchase of registered land is completed by registration, this is still the seller. Renshaw v Magnet Properties South East LLP was a case concerning the collective right of tenants of long leasehold flats to enfranchise their building. However, the principle is equally applicable to other kinds of notice as well (in particular, notices under the Landlord and Tenant Act 1954).

Things to consider

Many notices are time critical and it is crucial that they are served by or on the right person. For example, a landlord has only two months to respond to a tenant's request for a new tenancy under section 26 of the 1954 Act, if the landlord wishes to object. Where such a request is made shortly before completion, there may not be sufficient time for the buyer to complete their registration at Land Registry and serve a counter-notice.

Most sale and purchase contracts will therefore provide for the seller to manage the property in accordance with the buyer's instructions during the period between completion and registration.

This analysis was written by Sarah Allen, associate in Wragge & Co's Real Estate group.

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