When do you become the legal owner of a property?
The recent case of Baker v Craggs is an important reminder of the fact that a buyer does not become the legal owner of a property until its purchase is registered at the Land Registry.
The case concerned a right of way over a farmyard to a barn conversion following the successful sale of two pieces of farmland. The sellers first sold part of their farm to Mr Craggs, but did not reserve a right of way over it to a barn elsewhere on its land. They then sold the barn to Mr Baker and granted a right of way at the same time over the land sold to Mr Craggs.
Ordinarily, a buyer would be protected against subsequent interests such as a new right of way being registered against land between completion and registration by virtue of its Land Registry official search. This grants a priority period within which a buyer can register its property free from any new adverse interests. However, there was an issue with Mr Craggs’ transfer plan that caused the Land Registry to query the application. When Mr Craggs’ solicitor did not respond to the query within the required amount of time (because the sellers delayed in correcting the plan), the Land Registry rejected the whole application and they had to re-apply to register his purchase.
During this interval, Mr Baker successfully registered his purchase, including the right of way over Craggs’ land, at the Land Registry. Mr Baker argued that the right of way had taken priority over Mr Craggs’ application and should be binding on his land. For a variety of complex legal reasons (in particular, the fact that Mr Craggs was in occupation of the property) the Court of Appeal held that the right of way was not binding on Mr Craggs and should be removed from his title, overturning the initial decision.
Mr Craggs had a lucky escape in avoiding a right of way across his land that would have been at best inconvenient and at worst detrimental to the value of his property. Nonetheless, a buyer will want its purchase to be registered at the Land Registry as soon as possible to ensure that it becomes the legal owner. Things that can result in a longer interval between completion and registration include delayed approval of a Stamp Duty Land Tax return and problems with the plan on sales of part or other documentary errors that may cause the Land Registry to reject the application. We would always recommend that a buyer carefully checks the plan showing the exact extent of the land that they believe they are buying, and this is another reason why this is so important.
It is noteworthy that the Law Commission is currently preparing a response to a consultation on the reform of the law relating to land registration, due to be published later in the year. It will be interesting to see whether this will address issues such as these arising from the registration gap.
Fenella Eddell is a solicitor in the property department at Barker Gotelee, Suffolk solicitors.