Buying or selling a piece of land? Beware the registration gap!

Despite many technological advances at HM Land Registry over the past few years, registration of a transfer of a piece of land simply cannot be registered instantly.

So, between the legal process of transferring ownership from the seller to the buyer; and the entry of the transaction on the register of title at HM Land Registry, a period arises known as the ‘registration gap’.

What can and cannot be done in relation to any tenant of the property during this registration gap has been a cause of confusion which has recently been addressed by the courts.

The case concerned Mr Pye, who was the tenant of approximately 18 acres of farmland in Lancashire protected by the Agricultural Holdings Act 1986 (the 1986 Act). On 19 June 2013, Mr Pye’s landlord Stodday Land Limited (Stodday) transferred a slither of the tenanted land to Ripway Properties Limited (Ripway). Ripway was formally registered as the proprietor of the slither on 16 July 2013. Between 19 June 2013 and 16 July 2013 we find our registration gap.During a registration gap, a seller (here, Stodday) remains the registered and, importantly, legal proprietor of the land subject to the transfer, while the buyer (Ripway) only retains what is known as an equitable interest over the land until the date of registration.

In the case at hand, Mr Pye was served with the following notices to quit during the registration gap:

• Case B notice to quit (in reliance on planning permission for non-agricultural use)
• Case D notice to quit (in reliance on rent arrears on the rest of the land).

Mr Pye argued the validity of the notices to quit at Preston County Court on the following basis:

• A valid notice to quit must be served by the registered proprietor (that being the legal owner of the reversionary estate which, during the registration gap, was Stodday)
• A notice to quit should relate to the whole of the land and not part (Stodday’s notice excluded the slither of land).

The judge at Preston County Court found that Mr Pye’s arguments were valid and the notices to quit were therefore not valid. Stodday and Ripway subsequently appealed to the High Court but without success and the court found that Mr Pye’s tenancy should continue.

Stodday and Ripway put it to the judge that Mr Pye’s case was based on an impractical and abstract approach to the service of notices during the registration gap, however the judge was satisfied that practical solutions were available to avoid this situation arising. Such a solution might be the authorisation of the transferee (Ripway) to act as agent to the transferor (Stodday) pending registration of the transferee as the legal proprietor. Indeed, the Law Commission’s 2016 paper acknowledged the problems that could be caused by registration gaps but equally concluded that that there were practical resolutions available and the law did not require revision on this point.If you are buying, selling or renting agricultural land and think you might be affected by registration gap issues please ask us for individual advice.