Can't complete due to Priority Search

getmore4less

zarf2007 wrote: »

so with this in mind whats to stop me from instructing a solicitor to place a 'priority search' on a £10m London Property and then telling the genuine purchaser I will remove if it if they pay me £50K?

someone with that kind of money may not want to wait and fight it through the courts and may just pay up, Nice little earner I would have thought. Isnt this the property version of domain name grabbing?

I think someone buying at that level will have plenty money to take you to court.

Then again they may be the kind to get your executors to remove the search.

xylophone

The current Land Registry Rules do not provide for any remedy against someone who wrongfully, and without cause, lodges a priority search application, or refuses to withdraw an official search once an intended transaction has 'gone off'.

Surely a system should be in place whereby the LR only accepts an application for Priority Search if evidence of exchange has been submitted with the application?

movilogo

so with this in mind whats to stop me from instructing a solicitor to place a 'priority search' on a £10m London Property and then telling the genuine purchaser I will remove if it if they pay me £50K?

Based on what I read here, it seems that is indeed possible. I thought only those ones having an interest in the property can order a priority search but now I see that every Tom/!!!!!!/Harry can do so on any property!

I think it was allowed historically for churches register their interest in the property (for Chancel Repair claims).

Also, I don't think priority search lasts for infinite time. It should lapse within a month or so.

zarf2007

movilogo wrote: »

Based on what I read here, it seems that is indeed possible. I thought only those ones having an interest in the property can order a priority search but now I see that every Tom/!!!!!!/Harry can do so on any property!

I think it was allowed historically for churches register their interest in the property (for Chancel Repair claims).

Also, I don't think priority search lasts for infinite time. It should lapse within a month or so.

it would also not stop someone setting up a LTD company to do this to a number of properties, taking the ransom fee from each and then closing down and starting under a new company to avoid being sued....I'm not sure the search is time limited, but even if it is it could be enough disruption to cause the genuine buyer to stump up the money (say they were relocating from abroad and had to complete by a certain date etc).....

the problem with things that relay on trust is that they are ripe to be abused.....I of course would not dream of such a thing, but many people would.

movilogo

By looking at this form

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/352945/OS1.pdf

It is indeed meant for purchaser only.
However, in OPs case, the other party was also a "purchaser" (as it was contract race). This is rare scenario where other party was also deemed a valid candidate for OS1 search.

So, to answer the question whether you can hold anyone ransom via OS1 search, the answer would be "no" - unless you spend some money to employ a solicitor to show an interest in the property.

Contract race is not illegal as long as each party is aware of this. So in this typical scenario, such incident may happen.

Also, OS1 search is made just before exchange and not after! This is to protect the interest of buyer between exchange and completion. I'm surprised that OP's solicitor didn't do the search before exchange!

Every priority search puts a lock on updating of LR record but that is only valid for 3-4 weeks max. After this lock lapses.

pinkteapot

How would you know that a property has exchanged but not yet completed? The only thing that's public information is that it was listed for sale and then got marked as SSTC.

[Deleted User]

Obviously the buyer is in an awkward situation.., but so is the seller. Seller deserves it from the sound of it., the buyer didn't.

I hope the situation can be resolved.

Possibly neither buyer knew there was a race on?

movilogo

Again it is fault of solicitor!

Law society rule says seller's solicitor must disclose it but ONLY IF buyer's solicitor asks this question.

Personally I'd not go ahead under such circumstances!

sk123_3

I am the original poster. Quick update from my end.

The Priority Search problem was discovered late last Friday afternoon. For once seller's solicitor decided to co-operate with my solicitor and tried to get the other buyer's solicitor to withdraw search. Finally this was done this Monday afternoon just at the nick of the time for my bank to allow funds to be drawn before 3:00 pm. Completion was formally effected by Monday afternoon.

Like all things during the purchase process, things went horribly wrong at every stage only to resolve at the very last minute after giving me palpitations. All is well that ends well!

As Land Registry Representative pointed out, the priority search was an unforeseen situation. In hindsight, my solicitor could have pre-empted this problem by ordering it before exchange (but even that exchange was very nerve wracking and uncertain until the very last moment). But there was no way my solicitor could have contacted the other buyer's solicitor (as LRP suggested). Only the seller's solicitor could have done that.

Would I have lost the exchange deposit if the completion couldn't be effected due to priority search block? I don't think so, since I wasn't responsible for completion delay.

Ultimately, it seems that land registry rules have shown a loophole which unscrupulous "other" buyers can exploit to squat the rights of genuine buyers (as zarf2007 pointed out). Why LR should allow anyone to do that before exchange is beyond me.

G_M

zarf2007 wrote: »

so with this in mind whats to stop me from instructing a solicitor to place a 'priority search' on a £10m London Property and then telling the genuine purchaser I will remove if it if they pay me £50K?

Great post since this is a moneysaving forum.

But why involve a solicitor - place the Priority Search yourself.

How would you know that a property has exchanged but not yet completed? The only thing that's public information is that it was listed for sale and then got marked as SSTC.

Fly in the ointment. Would need a bit of deep research on 'SSTC'properties.

Also, I don't think priority search lasts for infinite time. It should lapse within a month or so.

Priority under an official search ends at midnight marking the end of the 30th business day after the day on which the official search application was received (rule 131 of the Land Registration Rules 2003).