Section 6 of the Land Registration Act 2002 (LRA 2002) imposes a duty on the responsible estate owner to apply for registration of all land, which is required to be registered under the LRA 2002, within two-months, beginning with the date on which the relevant event occurs.

This article will look at the importance of this requirement, especially for unregistered land, the risks involved with delaying registration and the registrar’s ability to refuse registration after the two-month timeframe if a valid reason for a late application is not provided.

For HM Land Registry, timely registration of land transactions serves several broader purposes. It helps prevent fraud, enables HM Land Registry to maintain effective communication with relevant parties, as over time contact details change and particularly with first registrations ensures documents, such as plans are up to date. Therefore, adhering to the two-month timeframe is crucial.

Failure to comply with the two-month timeframe
Failure to comply with this critical requirement can lead to a range of adverse outcomes, from the simple inconvenience of delayed transactions to the more severe consequences of legal disputes and financial losses.

The LRA 2002 emphasises that the onus is on the responsible estate owner to ensure that all necessary documentation is submitted within the prescribed time limit, thereby safeguarding their interests and those of future stakeholders.

Delayed registration also poses many risks for an estate owner, such as:

Loss of legal title: A buyer of registered land does not become the legal owner of land until the disposition has been registered at HM Land Registry. During the period between completion and registration taking place (often referred to as the registration gap), the legal estate remains vested in the seller, who holds the property on trust for the buyer as an equitable owner. As some rights can only be exercised by the legal owner of the property this can cause practical difficulties for a buyer who intends to exercise such powers shortly after completion such as serving notice on a tenant. In Stodday v Pye [2016] it was held that a notice to quit served by the landlord on the tenant during the registration gap was invalid.

Difficulties selling or re-mortgaging: Until completion of registration has taken place the official copy of the register will show the legal owner to be the seller. A lender is unlikely to issue a mortgage offer to a prospective buyer or client wishing to re-mortgage the property until the register has been updated, although HM Land Registry will expedite an application for registration in these circumstances this could still delay a transaction and put financial hardship on the applicant.

Potential for fraud: Priority searches should prevent fraudulent entries, or any entries being made on the registered title but the longer the registration gap the greater the risk of these events. The potential for fraud is greatly increased when the property is unregistered. A registered proprietor of land would be automatically notified of any claim against their title but if the land remains unregistered, you could be blissfully unaware of an entry, until it is too late. Priority searches also only last 15 days for unregistered land compared to 30 working days for registered land and therefore the risk of failing to refresh a search is reduced in time. Furthermore, unregistered farms and open land are more at risk because neighbours can encroach and incorporate land into their boundaries.

Registrar’s Authority
Section 6 of the LRA 2002 grants the registrar the authority to refuse applications for registration if they are not submitted within the two-month timeframe and no valid reason is provided for the delay.

Subsection 5 of section 6 of the LRA 2002 enables the registrar, on application by an interested person, to specify a longer period of registration if there is a good reason for doing so. These reasons include:

• complexity of the transaction: some land transactions may involve complicated legal or factual issues that require additional time to resolve

• unforeseen circumstances: events such as natural disasters, pandemics, or other emergencies can impact the ability to submit an application on time

• administrative errors: mistakes or omissions in the application process may necessitate additional time to correct and resubmit the documents.

In such cases, the applicant must provide a detailed explanation to the registrar, who will assess the validity of the reason before deciding whether to accept the late application.

Effects of a Void Transaction
If the registrar decides not to accept the late application section 7 of the LRA 2002 states that the effects of not complying with the requirement of registration makes the transaction void. Furthermore, section 8 of the LRA 2002 further provides that if it is necessary to repeat a transaction because it has become void, the person who is responsible for the registration (an estate owner or mortgagor in the case of the creation of a legal mortgage) is liable to the disponor or mortgagee for all the proper costs of, and, incidental to the repeated disposition. He or she is also liable to indemnify the disponor or mortgagee in respect of any other liability reasonably incurred because of the failure to register.

As well as the risks of a delayed registration for the applicant there are risks for any conveyancer who fails to meet the two-month deadline. These include:

• complaint from clients: dissatisfaction from clients due to void transactions can lead to formal complaints, further complicating the conveyancer’s professional standing

• financial implications: the costs associated with repeating transactions, indemnifying clients, and handling legal claims can be substantial, impacting the firm’s financial health

• lenders: if a transaction subject to a mortgage becomes void due to the acting conveyancer’s failure to register the transaction on time, then the lender may look to remove the acting firm from their panel, resulting in loss of future clients and business

• legal complications: claims as a result of an increased registration gap or not being able to register the property at all can arise. The buyer would also look to recoup their costs incurred in indemnifying the disponee for the void transactions and their costs involved

• reputational damage: failure to comply with registration requirements can tarnish the firm’s reputation, making it difficult to attract new clients

• loss of clients: unsatisfied clients will not recommend or return to the law firm, causing a loss of revenue for the firm in the future.

Therefore, failure to apply for registration of a property within the two-month timeframe imposed by the LRA 2002 can cause catastrophic consequences for both buyers and their acting conveyancers.

A void transaction will certainly increase the registration gap thereby exacerbating the risks of delayed registration as discussed above, more prevalent as well as increasing the costs involved. This is assuming the parties can complete the void transaction a second time; otherwise, more significant claims and financial losses may ensue.

Conclusion
The failure to comply with the two-month timeframe for registration imposed by section 6 of the LRA 2002 can lead to severe consequences, especially if the application is for a first registration.

Acting conveyancers must be especially vigilant, as the repercussions of a void transaction extend beyond legal and financial burdens to include potential reputational damage and loss of future business. Aside from the requirement to register in the two-month timeframe, best practice suggests that risks are greatly reduced for buyers, lenders and conveyancers if the application for registration is submitted as soon as possible following completion of the transaction.

Content supplied by: Sarah Mason – Consultant of PCC