Practice Guide 41 – Developing estates – registration services
Supplement 3 – Approval of draft transfers and leases

Updated: March 2013

Update

This edition of the supplement replaces the September 2012 edition. Section 3 has been updated to confirm that Land Registry can accept draft deeds for approval via email as well as by post.

Scope of this guide

This supplement provides an overview of Land Registry’s approval of draft transfers and leases service to those involved in the registration of developing estates. It contains general guidance on the preparation of standard forms of draft transfers and leases. We have aimed the supplement at developers, their legal advisers and surveyors and you should interpret references to 'you' accordingly.

1 Abbreviations and terms used

In this guide:

‘conveyancer’ means an authorised person within the meaning of s.18, Legal Services Act 2007 who is entitled to provide the conveyancing services referred to in paragraphs 5(1)(a) and (b) of Schedule 2 to that Act, or a person carrying out those activities in the course of their duties as a public officer. It also includes an individual or body who employs or has among their managers such an authorised person who will undertake or supervise those conveyancing activities (r.217A, LRR 2003)

‘LRA 2002’ means the Land Registration Act 2002

‘LRR 2003’ means the Land Registration Rules 2003

‘PDF’ means Portable Document Format

‘prescribed clauses lease’ means any lease granted on or after 19 June 2006 which is required by r.58A, LRR 2003 to contain the prescribed clauses set out in Schedule 1A, LRR 2003

references to numbered forms are to the forms in Schedule 1, LRR 2003.

2 Introduction

This free service is designed to identify and resolve the difficulties that can arise when plot transfers and leases are prepared. These difficulties often relate to proof of title to grant easements or generally to the conveyancing element of the estate. The service offers the following advantages.

• Approved transfers and leases provide a standard format for use throughout the development.

• Applications based on approved deeds will give rise to fewer requisitions or other problems and ensure a consistent approach to registration.

3 How to apply

We have designed this service to work in conjunction with the estate boundary approval and estate plan approval services. Simply send two copies of the draft transfer or lease to the Land Registry office serving the area in which the development is situated before issuing them to purchasers. Once any problems are resolved we will approve the draft for use as the basis of all future sales on the development. A draft transfer or lease can be sent for approval via email as a PDF attachment or by post.

We may decline to approve a draft transfer or lease if we consider that granting approval may mislead members of the public into believing that future development is likely, such as when approval is sought in respect of a scheme that appears to be a land banking investment scheme (where a landowner divides their land into many small plots to sell and they claim that the plots have good investment value, usually in the expectation of future development).

4 Form of transfer

A transfer of part of the land in a registered title must be in form TP1, unless the transfer is by the registered chargee under its power of sale, in which case it must be in form TP2. Transfer forms will usually be prepared electronically. If you have created the form on your own computer system rather than using a commercial forms package you will need to submit this to the Forms Unit at Land Registry Head Office for approval of the blank form before you present the draft for approval. See Practice Guide 46 – Land Registry forms for further information. The LRR 2003 require the transfer forms to be printed on durable A4 size paper, and to be reproduced as printed as regards wording, layout, font and point size. But when preparing the forms electronically you can:

• change the depth of the panels

• divide a panel at a page break

• omit instructions in side notes, inapplicable certificates and statements and the corresponding ‘X’ boxes, panels which would contain only the panel number and heading if any (but do not renumber subsequent panels), and sub-headings in the additional provisions panel

• change singular into plural and vice versa

• add to, amend and reposition sub-headings in the additional provisions panel

• change ‘Transferor’ to ‘Seller’ and ‘Transferee’ to ‘Buyer’ in a transfer on sale. (Be sure to use ‘Seller’ and ‘Buyer’ throughout, that is, in the headings of the panels, the text form itself (including the transfer panel) and your own text).

5 Form of lease

For the reasons explained in section 2 Introduction you should submit draft leases as well as draft transfers for approval.

All leases out of a registered estate in land granted on or after 19 June 2006 must (with certain exceptions) be in the form of a prescribed clauses lease and contain the prescribed clauses set out in Schedule 1A, LRR 2003. For further information see Practice Guide 64 – Prescribed clauses leases.

6 Preparing a draft transfer

6.1 Title numbers

In panel 1 of form TP1 or TP2 you must give the title numbers of all the registered titles under which the developer holds the part of the estate that the approved draft covers. In panel 2 give the title numbers of any other titles against which matters contained in the transfers (such as easements or covenants) are to be registered. If developer’s covenants are to be entered into, these titles must of course be in the developer’s ownership. Where you are granting an easement in certain cases and not others, you should enclose any title affected only by the easement in square brackets.

You must provide all the title numbers of all the registered titles under which the developer holds the estate. If the easements granted by the transfers, or any of them, affect other land owned by the developer, you must quote the title numbers of that land. If any easements granted are over land, which is not registered, or registered with only a possessory title, then you should deduce title. If easements granted are over land that is not in the developer’s ownership you must prove title to grant the easements.

6.2 Property transferred

Whenever necessary, enclose copies of the plans to be used in the transfers with the draft transfer for approval. This will provide us with a clear picture of what you intend. However, where there is an approved estate plan, individual plans are only required to clarify matters (such as easements) not included in the approved estate plan.

In the property transferred panel insert an outline description of the properties. You may insert the plot numbers here or in a covering letter. Include any garage or parking space included in the property. Do not include easements granted and reserved; you should place these in the additional provisions panel. The plans to be attached to draft transfers should be copies of (or extracts from) the latest approved estate plan showing the true scale, north point and any colours referred to in the deed. Where boundaries are of an intricate or detailed nature, eg where they pass through a building, a larger scale plan or inset plan may be necessary, see Supplement 5 to this practice guide.

‘Corporeal exclusions’, ie land within the red edging on the transfer plan that is excluded from the transfer, should be specified in the property transferred panel. You should draft these with care, to clearly identify the location and precise extent of the exclusion. A plan reference is generally necessary. You may specify exclusions positively or negatively, eg ‘excluding the first floor of the land coloured blue on the plan’ or ‘including only the ground floor of the land coloured blue on the plan’. The former will transfer the subsoil and the airspace above whereas the latter will not.

In the case of a covered passageway it may be possible to avoid a corporeal exclusion by transferring parts of the passageway with the rooms over.

6.3 Transferee panel and address for service panel

Leave these blank at draft for approval stage.

6.4 Transfer panel

Assuming the developer is a company and the purchasers in most cases will be joint proprietors, the transfer panel may be in one of the following forms:

‘The Transferor transfers the Property to the Transferees’.

‘The Seller transfers the Property to the Buyers’.

‘Transferee’ or ‘Buyer’ could equally well be in the singular.

Whichever you choose, it may be the simplest to stick to it when preparing transfers regardless of the number of purchasers.

6.5 Consideration

If the price to be paid is wholly in money, choose the first option. You will probably wish to omit the others using the freedom available when preparing forms electronically. If the developer will be taking purchasers’ former properties in part payment you can retain two options at draft for approval stage, inserting the following as the second:

‘In satisfaction of the purchase price of… the Transferor has received from the Transferee for the Property a transfer of (brief description of the property taken) and the sum of (the balance of the price)’.

6.6 Declaration of trust

Leave this blank at draft for approval stage.

6.7 Additional provisions

This panel is for grants and reservations of easements, estate rentcharges, restrictive covenants, personal covenants, agreements and declarations and any other agreed provisions, and for any required or permitted statements, applications, etc. You should arrange them under appropriate sub-headings. The subheadings in the prescribed forms are:

• Definitions

• Rights granted for the benefit of the Property

• Rights reserved for the benefit of other land

• Restrictive covenants by the Transferee

• Restrictive covenants by the Transferor.

You can add to, amend, reposition or delete those sub-headings as desired. For example, the sub-heading ‘Rights reserved for the benefit of other land’ could be divided into ‘Rights reserved for the benefit of the adjoining property’ and ‘Rights reserved for the benefit of the remainder of the Estate’.

6.8 Definitions

You should provide definitions in the additional provisions panel where they are necessary to give certainty to the meaning of the transfer. Terms such as ‘the development’, ‘the perpetuity period’, ‘the estate’, ‘the estate roads’ and ‘the estate plans’ in particular should be carefully defined. Do not however redefine ‘the Property’, ‘the Transferor’ or ‘the Transferee’ as this could affect the meaning of the transfer panel.

6.9 Easements

The draft transfer submitted for approval should set out, under appropriate sub-headings in the additional provisions panel, all the easements granted and reserved in the transfers, even though they may not be required in every case. If you cannot adequately describe the extent of the land that either benefits or is subject to the easements, you should clearly define it by a reference on a plan.

Easements to be included in certain cases and not others should be enclosed in square brackets in the draft, and a note should be provided giving the numbers of the plots which will, or alternatively will not, have the benefit of, or be affected by, the easement. When preparing transfers of individual units based on the approved draft, you should omit easements that do not relate to or affect that unit.

When approving the draft transfer, Land Registry will confirm, provided the developer’s title to grant them has been properly shown, that the easements granted will be registered as appurtenant to purchasers’ titles.

You do not need to include words of grant or reservation if you list the rights under the appropriate sub-headings.

6.10 Rentcharges

The creation of most rentcharges was prohibited by the Rentcharges Act 1977, but it is still possible to create estate rentcharges.

A principal purpose of estate rentcharges is to meet the cost of the performance by the rentowner of covenants for the provision of services, maintenance or repairs, insurance or other payments for the benefit of the land affected by the rentcharge. These rentcharges and covenants will form part of a scheme for the management of the estate. You may find precedent transfers reserving rentcharges of this kind.

Where estate rentcharges are to be reserved the appropriate wording should be included under a suitable sub-heading in the additional provisions panel. To be effective at law the rentcharge must be registered and notice must be entered in the register of the title affected. However, we will only substantively register the rentcharges if a specific application for registration is made and the prescribed fee paid.

6.11 Restrictive covenants

You should include words of covenant, which will annex the benefit of the covenants to the land they are intended to benefit. We will note the burden of restrictive covenants in the register, but there is no provision in the LRA 2002 or the LRR 2003 to enter the benefit of the covenants.

6.12 Personal covenants

We will usually make a note in the proprietorship register of both positive and indemnity covenants given by the proprietor which relate to the registered estate or matters affecting it.

6.13 Restrictions

An application for a standard form of restriction can be applied for in the additional provisions panel of form TP1 or TP2 or in form RX1. A non-standard restriction must be applied for in form RX1.

Standard forms of restriction are set out in Schedule 4, LRR 2003. These reflect common situations and forms of restriction frequently applied for. Where there is no standard form of restriction to meet your requirements a restriction may be applied for in a different form but will need to meet the requirements set out in Practice Guide 19 – Notices, restrictions and the protection of third party interests. If you lodge a draft of form RX1 along with the draft transfer or lease we will advise you of its acceptability for registration purposes at the same time as the deed.

6.14 Declarations

Declarations may be used, for example, to exclude the implication of easements or the acquisition of certain easements by prescription. We will accept declarations about boundaries but you should not use them for corporeal exclusions, nor to create or reserve legal rights.

6.15 Exchanges

Where the transfer is wholly or partly in consideration of a transfer of another estate the following provision must be included in the additional provisions panel.

‘This transfer is in consideration of a transfer (or conveyance, or as appropriate) of (brief description of property exchanged) dated today, [if applicable and of the sum stated above paid for equality of exchange]’.

6.16 Execution

The transfer should show details of the proposed execution by the developer. It should follow one of the forms of execution set out in Schedule 9, LRR 2003.

If it is intended that the transfers will be executed by the developer's attorney, a certified copy of the power of attorney can be submitted at the same time as the draft deed is lodged for approval. Land Registry will hold the copy power on file and will not require a certified copy to be lodged with each application to register the individual transfers.

6.17 Evidence of identity

The requirements of Practice Guide 67 Evidence of identity – conveyancers will apply when the transfer is lodged for registration. However if the transfers are to be executed by an attorney acting for the developer, Land Registry will accept and retain on file appropriate evidence of the identity of the attorney provided by the developer's conveyancer at the same time as the draft transfer is approved. This will remove the requirement for the purchaser's conveyancer to provide confirmation of the identity of the attorney when they lodge the transfers for registration (although the requirements set out in Practice Guide 67 relating to the identity of the transferor will continue to apply).

The evidence required is either a completed form ID1 or ID2 (as appropriate) for each attorney, or a letter in which a conveyancer confirms they are satisfied that sufficient steps have been taken to verify the identity of [...] the attorney of [...].

6.18 Rights relating to the apparatus of statutory undertakers, etc

Some developers make a practice of granting to their purchasers’ rights of user of supply services such as telecommunications, gas, electricity and water. Since the statutory undertakers and telecommunications code system operators who provide these services will ensure that the services are made available to their customers, irrespective of any rights the customers may have as owners of the land, there would seem to be no real need to do this.

Similarly, when selling houses developers often reserve rights of laying and maintaining services for the benefit of statutory undertakers, etc, but this would appear to be generally unnecessary as the undertakers almost always have statutory rights which they can use.

The omission of such rights should simplify the preparation of draft transfers. These remarks do not, of course, apply to rights of drainage, to which different considerations apply.

6.19 Exception of mines and minerals

Where a registered title contains a note that expressly includes mines and minerals or is silent as to the inclusion or exclusion of mines and minerals, any transfer out of that title that excepts the mines and minerals will have the effect of severing the mines and minerals from the surface land.

In these circumstances it is mutually beneficial to register the mines and minerals retained by the transferor under a new title number before applications for the removals of the surface land are received.

To proceed with this form AP1 should be lodged together with the consent of the chargees of any registered charge.

7 Preparing a draft lease

7.1 Prescribed clauses leases

The Land Registration (Amendment) (No 2) Rules 2005 introduce some important changes affecting leases that are:

• dispositions of a registered estate, and

• required to be completed by registration.

Any such lease granted on or after 19 June 2006 must be in the form of a prescribed clauses lease unless it is an excepted lease. (See Practice Guide 64 – Prescribed clauses leases – 3.2 Exceptions to the general requirement). The amendment rules introduce a set of prescribed clauses that must appear at the beginning (or immediately after the front sheet) of any such lease. These clauses contain information necessary to complete the registration of the lease.

Detailed information relating to the use of prescribed clauses is contained in Practice Guide 64 – Prescribed clauses leases.

Since 12 October 2005 we have recommended that draft leases be lodged for approval to include the prescribed clauses. These should be completed in accordance with the guidance contained in Practice Guide 64 – Prescribed clauses leases.

You will be unable to complete the sections relating to the date of the lease (clause LR1), identity of the tenant (part of clause LR3) or the declaration of trust (clause LR14). These should be left blank.

In addition to the prescribed clauses you should also consider the general advice referred to in paragraphs 6.8 Definitions, 6.16 Execution and 6.18 Rights relating to the apparatus of statutory undertakers etc as the general principles also apply to draft leases.

8 Requests for official copies

When developers require official copies of the register or certificates of inspection of the title plan, it is recommended that they are applied for in batches as development proceeds and not as one bulk order at the outset. In this way, the later batches will include entries made in the register and additional references made on the title plan as a result of the registration of earlier sales off. Official copies or certificates in form CI that are out of date often cause trouble and confusion to purchasers and to Land Registry.

9 Enquiries and comments

Please direct any queries that relate to the approval of draft transfers and leases service to the relevant Land Registry office.

Practice Guide 51 – Areas served by Land Registry offices is available free of charge from any Land Registry office and gives a full list of areas served by each Land Registry office. You can also find this information on our website at www.landregistry.gov.uk

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)

You can obtain further copies of this and of all our guides free of charge from Customer Support (see Contact details) or you can download them from our website.