The Sold-Before-Registration Cottage
Priya buys a freehold cottage from Owen for £385,000. Completion took place on 14 March. Owen's title is unregistered; the root of title is a 1987 conveyance, and the deeds show a 1999 charge in favour of a bank that was discharged on a 2016 DS1 form, plus a 2003 deed of gift of a strip of garden to a neighbour. Priya's solicitor lodged an application with HM Land Registry (HRL) on 2 April. On 20 May, before the application is determined, Priya agrees to sell to Rafiq for £410,000 and exchanges contracts, completion to occur in 28 days. Rafiq's lender instructs a search of the index map, which reveals the pending first registration application. Rafiq's solicitor asks whether his client can safely rely on Priya's title and what must happen before completion. The deeds are still in Priya's solicitor's strongroom.
1. Advise Rafiq's solicitor on the state of Priya's title and the protection available pending first registration.
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Priya holds a legal freehold, but until HRL completes first registration her title is unregistered and the estate is not a registered title. Sale to Rafiq is therefore a sale of unregistered land, and the buyer's protection depends on the pre-completion steps for unregistered title rather than on a registered title number.
Key points:
Investigation of title. Rafiq's solicitor must investigate the epitome of title from the 1987 root of title (at least 15 years, so 1987 is adequate). The epitome must include the 1999 charge and its discharge; the 2016 DS1 (or a receipt/acknowledgment acceptable to the lender) must be examined, since a subsisting charge would bind.
The 2003 deed of gift. The strip conveyed to the neighbour is no longer part of Priya's title. Rafiq needs the deed and any registration or land charges entry; if the gift was registered as a Class D(iii) land charge (gift), it is void against a purchaser for money or money's worth unless registered, but the strip is not being sold, so the issue is boundary accuracy and whether the retained land benefits from easements.
Pending first registration. The application is pending, not completed. Rafiq cannot buy "registered title" yet. He should either wait for registration (HRL may issue requisitions, and the 2003 gift may trigger a boundary review) or complete on unregistered title with appropriate undertakings.
Protection. On completion Rafiq should obtain the original deeds and a full epitome, a statutory declaration or statement of truth covering the period since the root, and the seller's solicitor's undertaking to deliver the deeds and to lodge/complete the first registration. Rafiq's own application for first registration should be lodged promptly after completion, with the deeds, and his lender's charge protected by deposit of deeds or, better, by registration once title is registered.
Risk. If Priya's registration application is rejected or delayed, Rafiq may complete into an unregistered title with an unresolved 2003 gift. He should require evidence that HRL has accepted the application and, ideally, a title plan consistent with the retained strip, plus an indemnity covenant and a retention or undertaking to cover the cost of resolving requisitions.
2. Rafiq's lender requires a clear registered title before release of funds. Explain the practical steps and risks in the 28-day window.
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The 28-day window is tight. HRL first registration routinely takes weeks to months, and requisitions can add further delay. The lender's requirement of a clear registered title cannot be guaranteed within 28 days.
Practical steps:
Check the application status. Ask Priya's solicitor for the HRL application reference, date of lodgement and any requisitions received. If HRL has issued requisitions, the application may be at risk.
Consider expedition. HRL may expedite where there is a genuine commercial need (for example, a pending sale). Priya's solicitor should request expedition and provide evidence of the sale and the lender's requirement.
Alternative structure. If registration will not complete in time, the parties can:
- extend the completion date by agreement, with a longstop;
- complete on unregistered title with an undertaking from Priya's solicitor to deliver the deeds and complete registration, and with Rafiq's solicitor lodging the first registration immediately;
- arrange a retention from the purchase price to cover the risk, released on registration.
Lender protection. If the lender will not lend on unregistered title, the sale cannot complete as structured. Rafiq should not exchange without a condition protecting him, or should exchange with a condition making completion conditional on registration or on lender consent.
Risks. Delay may trigger the lender's offer expiry, penalty interest or loss of the property. If completion occurs unregistered, the lender's charge is protected only by deposit of deeds (if the deeds are held by the lender or its agent) or by a caution against first registration; a Class C(i) land charge is not available for a charge over unregistered land, so deposit of deeds is the practical protection.
Advice. Rafiq should be told in writing that the 28-day completion is at risk, that he may need to extend, and that he should not complete without either a registered title or his lender's written consent to an unregistered completion with adequate protection.