Practice Guide 30 – Approval of mortgage documentation

Updated: April 2012

Update

This edition of the guide replaces the April 2011 edition. The guide has been amended as a result of changes to our contact details.

Scope of this guide

This guide deals with the approval of standard forms of legal charge and deeds of variation/priority/ postponement for use by lending institutions. It applies only to deeds that will be registered or noted under the Land Registration Act 2002. This guide is aimed at lending institutions and you should interpret references to ‘you’ accordingly. Land Registry staff will also refer to it.

1 Introduction

Throughout this guide, the word ‘charge’ is used to mean the document creating a legal charge on registered land which is to be registered as a legal charge under s.27, Land Registration Act 2002, and which is executed as a deed by the borrower (or all the borrowers, if there is more than one). For the purposes of this guide, the terms ‘charge’ and ‘mortgage deed’ are interchangeable.

Unless otherwise indicated, what is said below about charges applies also, with all necessary changes, to deeds of variation/priority/postponement.

The questions addressed are those that we expect to be most often asked by lenders and their representatives.

2 What are the advantages of applying for approval of our charges?

Each approved form of charge is given a reference that allows staff at Land Registry Offices to access the lender’s details from a computer database. This speeds up registration and reduces the incidence of clerical errors.

We give the lender a computer code that generates its name and address in the register with guaranteed accuracy. This cuts out typing errors.

Standard restrictions may be applied for in an approved charge. A standard restriction is a restriction in a form set out in Schedule 4, Land Registration Rules 2003. Form P in Schedule 4 is the relevant restriction where the consent of the proprietor of a charge is required. The normal requirement for an application in form RX1 is waived.

An application to register a restriction contained in an unapproved charge not in form CH1 will be ignored unless it is accompanied by an application in form RX1.

You may apply in an approved charge for notice of an obligation to make further advances to be entered in the register. Unapproved charges not in form CH1 must be accompanied by a form CH2.

3 How do I apply for approval?

You simply send two copies of the charge, with a completed application in form ACD, to:

Commercial Arrangements Section
Land Registry
Trafalgar House
1 Bedford Park
Croydon
CR0 2AQ

(DX 8888 Croydon 3)

Telephone: 0300 006 7416 and 0300 006 7571

Fax: 0300 006 7550

(referred to below as ‘Land Registry Head Office’).

You will need a separate form ACD for each charge.

We will give the charge a reference that will have to be printed in the charge itself, so please remember to apply for approval before the charge is printed.

Please remember also that form ACD contains important undertakings that must be complied with.

4 How long does it take to approve forms of charge?

We will approve forms of charge within 10 business days.

5 What if I want to amend a charge after it has been approved?

Generally, the amended document will have to be lodged at Land Registry Head Office for reapproval with a form ACD. But, if the amendments are very minor, we may waive this requirement.

Never assume that reapproval will be unnecessary, no matter how minor the amendments seem. Before you print the document, telephone Land Registry Head Office to find out whether or not a form ACD application will be needed.

6 What happens when the charge is approved?

Land Registry Head Office will give each approved form of charge a unique reference beginning with the letters ‘MD’. This reference allows staff at Land Registry offices to access details of the document on a computer database.

This is why Land Registry Head Office must be notified of any proposed changes to an approved charge. If it isn’t notified, the details on the database may be wrong and incorrect entries may be made in the register as a result.

After the charge has been approved, one copy will be returned to you with any amendments shown in red.

7 Would you ever refuse to approve a charge?

To qualify for approval, a charge must contain or provide for (as the case may be):

• a date

• the names and addresses of the borrower(s)

• the name and address of the lender, including its company registration number, if any

• a description of the property being mortgaged, including its title number

• a valid charging clause

• a valid execution clause with provision for attestation.

We would not approve any charge that failed to satisfy one or more of these criteria. We would also not approve any charge that contained an application to register a restriction not in a standard form.

A deed of variation/priority/postponement must contain or provide for (as the case may be):

• a date and the names and addresses of the parties

• a description of the property, including its title number

• identification of the charge or charges affected by the deed

• a clause setting out the terms of the variation/alteration in priority/postponement

• a clause permitting valid execution in accordance with the following paragraph.

A deed of variation must provide for execution by the borrower(s). A deed of priority or postponement must provide for execution by the proprietor of any charge of equal or inferior priority prejudicially affected by the alteration in priority or postponement.

8 Is there a prescribed form of charge?

At present, charges, unlike transfers, do not have a mandatory form. Lenders may use form CH1 (see Appendix A) if they wish.

9 Do I have to pay a fee?

There is no fee for approval of forms of charge.

For the assessment of fees for the registration of charges, refer to the current Land Registration Fee Order.

10 Would you ever withdraw approval from a form of charge?

Yes. If a lender failed to keep to its undertakings in panel 6 of form ACD, we might withdraw approval from its charges.

11 What is form ACD and where can I get it?

Form ACD is set out in Appendix B. You can get a small supply of the form, free of charge, from Land Registry Head Office.

Alternatively, you may download copies from our website at www.landregistry.gov.uk

12 Enquiries and comments

This guide contains only basic information. If you have a question that is not covered, please contact Land Registry Head Office before applying for approval.

If you have any comments or suggestions about our guides, please send them to:

Central Operations Group
Land Registry
Trafalgar House
1 Bedford Park
Croydon
CR0 2AQ

(DX 8888 Croydon 3)

13 Appendix A

Example of form CH1 – Legal charge of a registered estate

Form CH1

14 Appendix B

Example of form ACD – Application for approval of a standard form of charge deed and allocation of official Land Registry reference

Form ACD

Remember

Before you lodge your application for approval:

• have you completed and signed form ACD?

• have you enclosed two draft copies of each document you are seeking to have approved?

• do the documents you have lodged for approval meet the criteria in section 7 Would you ever refuse to approve a charge?

• have you allowed 10 working days for the approval to be completed before the documents need to be sent to the printers?

Before you send the documents to the printers:

• have you entered the MD references as shown on the approved document?

• have you made the other changes (if any) which we have prescribed?

After the documents are printed:

• have you sent a copy of the printed document to Land Registry Head Office for filing?