Practice Guide 41 – Developing estates – registration services Supplement 4 – Plot sales – transfers and leases

Updated: November 2009

Update

This edition of the supplement replaces the October 2005 edition. Sections 8 and 9 have been amended to provide more information as to our requirements on registering transfers and leases.

Scope of this guide

This supplement contains information and guidance aimed at purchasers of plots on new developments and their legal advisers. You should interpret references to 'you' accordingly.

1 Introduction

This supplement explains how purchasers of plots on new developments will be able to satisfy themselves that their plot, and the rights that go with it, is within the developer's title. It also contains guidance about official searches, discharges from the developer's charge, restrictions and the additional points that arise where the development is disposed of by the grant of leases.

2 Information needed by the purchaser

You will always need to see an official copy of the register of the developer's title so that you can see the class of title on offer and the burdens that affect the land. We will supply an official copy on application but the developer may send you one with the draft contract.

You should ensure that any fences erected along the plot boundaries are, or will be, positioned in accordance with the plan attached to the transfer or lease. If in any doubt you should check with the developer and, if necessary, ask a competent land surveyor to advise. You will also need to:

• confirm that your plot is in the developer's title

• check what references (if any) on the title plan affect the plot so that you can see which of the register entries relate to the plot

• just before completion, confirm that the plot remains in the title, that it is not subject to any prior pending application and that no affecting adverse entry has been made in the register since the date the official copy of the developer's register was issued.

3 Proof that the plot being purchased is in the developer's title

Form CI, certificate of inspection of the title plan, certifies that the plot which it describes falls within the developer's registered title and states whether or not the plot is affected by any colour or other reference appearing on the title plan. This certificate does not confer any priority for the registration of the transfer or lease but we guarantee its accuracy and an applicant can claim indemnity if the certificate contains any error which causes loss (see paragraph 1(1)(c) of Schedule 8, Land Registration Act 2002). Form CI gives exactly the same information that the purchaser could obtain from inspecting an official copy of the title plan of the developer's title. A purchaser who holds a form CI does not need a copy of that title plan.

If the developer does not supply a form CI with the draft contract, the purchaser can obtain one by applying to the appropriate Land Registry office in form OC1. In cases where we have officially approved an estate layout plan (see Supplement 2 to this practice guide), form OC1 should describe the land being purchased by reference to the plot number(s) shown on that plan. Otherwise the purchaser should attach a plan in duplicate to the application. In either case, the applicant must supply an adequate verbal description of the property. You must give the name or provisional description of the roadway serving the property as well as the plot number(s) on any approved estate plan. The distinguishing plan numbers of any other parcels (for example, a garage or parking space) included in the purchase should also be provided.

Using form CI procedure can save developers the delay that may arise in obtaining official copies of large and complex title plans in order to supply them to purchasers.

4 Proof of easements

Purchasers and their legal advisers will wish to satisfy themselves that the developer has power to grant any easements provided for in the contract, for example, rights of way over roads and passageways and rights of drainage.

A developer who intends to adopt a standard form of disposition for the estate should ask us to approve the draft transfer or lease before development begins. In our letter to the developer's legal advisers approving the draft we will give an assurance whenever we are able to do so, that if the easements are granted in the standard form we will register them as appurtenant to the purchasers' titles. If the developer supplies each purchaser with a copy of this letter the purchaser can rely on our assurance and will not need to investigate the developer's power to grant those easements. The approval process also allows us to draw attention to any unusual features, either in the estate layout plan or in the text of the proposed transfer or lease, before any sales have taken place.

There will be cases where developers, for one reason or another, do not have their plans and draft documents approved so that we will not be able to give purchasers assurance about easements. Before ordering an official copy of the developer's title plan, you should bear in mind that easements granted on sales of building plots are often of an indefinite nature, for example, a right to drain under the developer's adjoining land without any indication of where the drains run. In such a case an inspection of the title plan will carry the matter no further. If the grant is more specific, for example, a right of way over a defined road, it is always possible, when applying for form CI, to ask us to confirm that the land affected is within the developer's title. In some such cases we are able to arrange with the developer's legal advisers to include this information on all form CI certificates issued in respect of their client's title. On other occasions, there may be entries in the register that, when read in conjunction with the form CI and a copy or extract of the approved estate plan, may provide an adequate assurance.

However, the form CI procedure is optional and you can apply for an official copy of the title plan of the developer's title.

5 Searching for adverse register entries affecting the plot

5.1 Method of application

At least five days before the date fixed for completion you should apply in form OS2 for an official search of the register. We will aim to issue the official certificate of result no later than the next working day after we receive the application. The search certificate gives you a priority period, beginning at the time when that application is entered on the day list and ending at midnight, marking the end of the 30th business day thereafter. The search certificate states the dates on which the priority period begins and ends.

Form OS2 must accurately describe the extent of the land which is the subject of the search. If we have approved the estate layout plan form OS2 should describe the land by its plot number(s) on that plan. Where there is no approved estate layout plan, you must define the land in question on a plan (in duplicate) attached to the form. Our requirements in respect of this plan are the same as those for the transfer or lease plan (see Supplement 5 to this practice guide). Purchasers who wish to avoid confusion should ensure that the plan submitted with form OS2 is an exact copy of the transfer or lease plan.

Where, as is often the case, the purchaser intends to charge the property immediately upon taking the transfer or lease, an official search certificate obtained on behalf of the chargee protects both the registration of the charge and that of the transfer or lease on which it depends.

If there is a delay in completion, you may make a further form OS2 application and we will issue a further official search certificate conferring a fresh priority period. This period will run from the date of the further certificate.

For more information see Practice Guide 12 – Official searches and outline applications.

5.2 Land in more than one title

Sometimes a house plot is included in more than one title, with the developer the proprietor of both titles. In such a case, purchasers who wish to apply for an official search against both titles may enter the two title numbers on one form OS2. You must modify the printed wording on the form to make your requirements clear. If you have different 'subsisting entries' dates for each title, taken from either official copies of the registers or from a register view, you must quote both dates as the 'search from' date, identifying which date relates to which title.

5.3 Easements granted over adjoining land

The priority granted under an official certificate of search extends to the easements and other rights granted over the title searched. Where the easements granted fall within another title, you should also lodge a search against that title.

6 Discharge of part from an existing charge

The discharge of the part transferred from an existing registered charge on the developer's title should be made using form DS3. The form must be accompanied by a plan that identifies the land discharged. The plan must satisfy our requirement (see Supplement 5 to this practice guide) and, ideally, will be an exact copy of the transfer plan.

An application to cancel notice of a charge (other than a unilateral notice) in respect of the plot being registered must be made in form CN1. You must also lodge sufficient evidence that the charge has been discharged, by way of either:

• form DS3

• an endorsed receipt on the instrument of charge

• a letter addressed to the registrar, signed by the noted chargee (or an authorised signatory of the noted chargee if it is a body corporate), and including confirmation that there has been no assignment of the benefit of the charge (if an assignment has been made, the normal conveyancing evidence of devolution of title must be lodged), or

• in the case of a floating charge, a letter of non-crystallisation.

The charge itself need not be produced but (if available) it may be useful as evidence that the applicant is still entitled to the benefit of it.

Where a unilateral notice has been entered in respect of a charge, an application to cancel the notice in respect of the plot being registered must be made in form UN2 where the application is for removal by the registered beneficiary. If it is not possible to lodge such an application it is possible for the registered proprietor (or the person entitled to be registered as proprietor) to apply in form UN4. In this case notice of the application will be served on the beneficiary.

7 Developing leasehold estates: official copies of the register

Before issuing an official copy of a register we must have regard to any pending application that will give rise to a further entry in the register. For this reason we backdate any official copy to before the receipt of the pending application. Unfortunately, official copies of the registers of titles that are being developed by the grant of leases suffer a greater degree of backdating than official copies of the registers of freehold building estates. This is because we must make a separate entry on the register of the lessor's title for each lease. These entries must follow one another in strictly chronological order, according to the date of the registration of each lease. Any delay in the registration of a particular lease (for example, because of a boundary difficulty) creates a bar to the entry of notice of all leases received later. This is so, even though in all other respects, registration of the later leases may be ready for completion. This difficulty does not arise in the case of estates sold by transfers of part. In that case separate entries are not usually needed because all the removals are covered on the developer's register by one general entry to the effect that the parts of the land edged in green on the title plan have been removed from the developer's title.

An intending lessee or chargee of an individual property need not be concerned that the official copy of the lessor's title does not set out particulars of all the leases of the other properties granted by the lessor. It only needs to assure the lessee or chargee that the property in question remains in the lessor's title. Even if we substantially backdate an official copy, an official search in form OS2 will bring the position up to date so far as the lessee's property is concerned. The official search certificate itself confirms that the property is still in the lessor's title. The certificate will also disclose whether any adverse entries affecting the property which is the subject of the search have been made in the register since the date of the official copy or register view. The search result will also reveal details of any pending application for registration or for an official search affecting the part searched.

8 Registration with absolute leasehold title

Any consents to the grant and/or the registration of the lease required as a consequence of entries in the register of the lessor's title should be lodged with the application to register the lease.

In certain situations however we will complete registration with absolute title if a consent is not produced. We will normally approve absolute title where there is a legal, equitable or floating charge entered in the register of the lessor's title but the chargee's consent to the grant of the lease has not been lodged and no explanation has been provided of why the consent is not required. There must also be no restriction requiring consent to the registration of the lease. In this situation we will make the following entry in the property register of the new leasehold title:

"The title to the lease is, during the subsistence of the charge dated... in favour of... affecting the lessor's title (and, to the extent permitted by law, any charge replacing or varying this charge or any further charge in respect of all or part of the sum secured by this charge), subject to any rights that may have arisen by reason of the absence of chargee's consent, unless the lease is authorised by section 99 of the Law of Property Act 1925."

The purpose of this entry is to alert potential purchasers to the possible vulnerability of the registered lease. It should also reduce the possibility of the chargee's right effectively to determine the lease being lost as a result of section 29 of the Land Registration Act 2002.

We will always require the consent of the chargee if there is a restriction in the lessor's title requiring the chargee's consent to the registration of a lease. This is because a restriction in the register of a title must be complied with whenever a disposition is caught by the terms of a restriction. A restriction against the registration of dispositions will catch leases.

In the case of a sub-lease, we will approve absolute title if there is a note on the lessor's title showing that the head lease contains a prohibition against alienation without licence, but the licence or consent of the superior lessor does not accompany the application. This is because while a sub-lease in breach of a prohibition or restriction in a head lease or superior lease is a valid lease that may be registered with absolute title, this does not prevent the forfeiture of that lease and determination of the sub-lease, with consequent closure of the sublease title. In this situation we will make the following entry in the property register of the new leasehold title.

"The registrar has not seen any consent to the grant of this sub-lease that the superior lease, out of which it was granted, may have required."

9 Restrictions

Restrictions regulate the registration of dispositions. If a transfer of part or lease is caught by the terms of a restriction on the developer's title, the restriction must be complied with, unless the restriction is in standard form P and the application includes a discharge of the charge referred to in the restriction, either in whole or so far as it affects the land transferred or leased (this is because the restriction will be cancelled either in whole or in part as part of the discharge application). Once entered, a restriction will remain in the register until it is cancelled or withdrawn. This means that when registering a transfer of part any restriction appearing in the parent title will normally be carried forward to the transferee's title unless the application to register the transfer is accompanied by an application to cancel or withdraw the restriction so far as it affects the land transferred in form RX3 or RX4. Because registration of a lease creates a new estate, a restriction will not be carried forward from the lessor's title when a lease is registered.

If an application to register a transfer of part or a lease includes an application, either in the transfer, clause LR13 of a prescribed clauses lease or form RX1, to enter a new restriction and to register a charge, the application form AP1 should show in panel 4 the order of priority of the applications to register the restriction and the charge. If the restriction takes effect with priority over the charge and the terms of the restriction catch that charge any necessary consent or certificate required by the restriction must be supplied.

Further information relating to the entry, effect and removal of restrictions is contained in Practice Guide 19 – Notices, restrictions and the protection of third party interests.

10 Application

Application to register a transfer or lease of part of a registered title should be made using form AP1. The applicant must disclose any unregistered interests which override registered dispositions that are within the actual knowledge of the applicant and affect the estate to which the application relates.

11 Enquiries and comments

If you have a particular query that this guide has not covered please contact the relevant Land Registry office.

Practice Guide 51 – Areas served by Land Registry offices is available free of charge from Customer Support, see Contact details 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

(DX1098 London/Chancery Lane)

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