Risk in buying house yet to be registered with Land registry?

Jeepers_Creepers

Hi all.

The house in question is a private build. The seller has only just had the house's title deeds drawn up, but has yet to register the title and his solicitor says we can register it on completion. Our solicitor has warned us that should there be any delay in doing this - ie between completion and the registry - we would be very vulnerable in that gap of time should a third party turn up with a claim on the house - 'worse case scenario' is that the third party could have a valid claim on the whole house or a sizeable value of it!

Anyone know what the risk actually is? And if there is that risk, is the seller being unreasonable in not having it registered before exchange of contracts?

Thanks.

notrouble

Is the plot of land on which the house has been built the same size as what you are buying (house+garden) or does the seller own a larger plot of land of which this forms a small part ie he's selling off part of his land?

Is the larger plot (if it exists) registered? In which case form TP1 (Transfer of Part) would split off your plot which would then be registered separately.

Or if the larger plot (if exists) or this plot is unregistered (ie never been sold/mortgaged within the last 30 odd years) then a 1st registration is required, either before or after the sale.

What historical deeds, in addition to the current proposed sale deed, have been provided (proving the chain of ownership leading up to your seller's ownership)?

The answers to the above (ie the wholebackground to ownership) will determine the level of risk, but the safest option is as your solicitor has suggested: seller does a 1st registration and then sells to you.

But this will introduce a delay.

Jeepers_Creepers

Many thanks for your reply, notrouble. 

Yes, it's part of a larger piece of land, and a TP1 has been drafted for it. (He's already sold off two other surrounding plots from his original land). 

The TP1 has only just been written up over the last month or so, and was done specifically for the sale. However, they seem to expect the new owner to register this rather than do it themselves. When we asked them to do it first, they did indeed suggest it would take time.

Once a TP1 is written up, just how long does it take to register?! And could you speculate on the risk should we take on the responsibility?

Cheers.

(A thought - could he even change the terms of the TP1 once contracts have been exchanged?!)

davidmcn

If the larger plot is already registered then I don't see why this is any different a risk from a normal purchase from a developer? (where you'd register your plot yourself after completion)

notrouble

Jeepers_Creepers said:

Many thanks for your reply, notrouble. 

There's a 'thanks' button beneath every post.

Yes, it's part of a larger piece of land, and a TP1 has been drafted for it. (He's already sold off two other surrounding plots from his original land). 
So the larger plot is registered and ownership is clear. Risk seems small.
The TP1 has only just been written up over the last month or so, and was done specifically for the sale. Standard in this kind of scenario.

However, they seem to expect the new owner to register this rather than do it themselves. When we asked them to do it first, they did indeed suggest it would take time. But were they willing to do this and accept the delay? Are you willing to accept the delay?

Once a TP1 is written up, just how long does it take to register?! And could you speculate on the risk should we take on the responsibility? Land Registry backlogs vary though sellers can request the LR to expedite registrations where a sale is being impacted. Post on the 'Land Registry' thread and they will respond.

Risk seems low.

Cheers.
(A thought - could he even change the terms of the TP1 once contracts have been exchanged?!). Not legally.

Assuming you are going to do the registration, the TP1 you are given at Completion should be the version agreed at Exchange.

Jeepers_Creepers

Thanks David and 'Notroub'. 

We are going by what our own solicitor says - it carries a risk should there be any delay betwixt completion and registering the Deeds. We don't know if he's saying this from a "it's technically possible tho' I've never actually heard of it happening..." or "If there is a delay for any reason, it's a real risk should there be a third party we don't know about and who could have a claim - eg the owner borrowed money from a friend to help with the build".

Land_Registry

notrouble said:

Jeepers_Creepers said:

Many thanks for your reply, notrouble. 

There's a 'thanks' button beneath every post.

Yes, it's part of a larger piece of land, and a TP1 has been drafted for it. (He's already sold off two other surrounding plots from his original land). 
So the larger plot is registered and ownership is clear. Risk seems small.
The TP1 has only just been written up over the last month or so, and was done specifically for the sale. Standard in this kind of scenario.

However, they seem to expect the new owner to register this rather than do it themselves. When we asked them to do it first, they did indeed suggest it would take time. But were they willing to do this and accept the delay? Are you willing to accept the delay?

Once a TP1 is written up, just how long does it take to register?! And could you speculate on the risk should we take on the responsibility? Land Registry backlogs vary though sellers can request the LR to expedite registrations where a sale is being impacted. Post on the 'Land Registry' thread and they will respond.

Risk seems low.

Cheers.
(A thought - could he even change the terms of the TP1 once contracts have been exchanged?!). Not legally.

Assuming you are going to do the registration, the TP1 you are given at Completion should be the version agreed at Exchange.

Buying and selling, conveyancing and registration all deal in some way with trying to minimalise the risks involved. 
If you have a chain of documentation which has been agreed and to which all parties are bound then as suggested by others the risk is quite small, but there is always a risk.
Each party, including the lender (if any), will view the risk in a variety of ways and sometimes their processes and risk management may mean that rather than relying on all the ducks to be aligned correctly that they only have the one duck, your completed and registered title, to deal with. 
The current backlog of work we have re this type of work does mean that registration might be delayed for several months. However to follow through with the single duck analogy then the risk is very small. The purchase has completed, monies changed hands and the application to register has been submitted. As such the purchaser's priority is protected and will eventually be registered to complete matters.
Clearly there will be times, for example here, that the delay creates a problem and puts too many ducks in the firing line. We recognise that and do, where it is clear that there is a linked onward transaction, expedite the earlier application to help those involved.
Expedition is achieved by the lodging conveyancer requesting it and providing documentary evidence to confirm the linked transaction. If we expedite the application then it will normally be considered within 10 working days. Everything then hinges on it being in order and capable of being registered, which may include dealing with other applications which are linked or have priority.
So, the simple answer is that yes there are risks to buying in your scenario but those risks may vary for the parties involved. As such you are unlikely to change your conveyancer or lender view on that and as such far better to try and get the current application expedited and completed as mentioned.

Jeepers_Creepers

Many thanks L_R - that's really helpful.
This would be a cash purchase, so no lender or other third party involvement from the buyer's side at least. Can I ask what other 'ducks' could affect this sort of transaction?!
Cheers. 

Land_Registry

Jeepers_Creepers said:

Many thanks L_R - that's really helpful.
This would be a cash purchase, so no lender or other third party involvement from the buyer's side at least. Can I ask what other 'ducks' could affect this sort of transaction?!
Cheers. 

The main 'duck' would be that the previous transaction did not complete correctly and could not be registered. But it's really a Q for your conveyancer here as to what they see as the risk(s) and their reasons for not progressing the matter.
From a purely registration perspective it can be done but the choice as to whether you complete on the conveyancing/buying is for those involved to decide

Jeepers_Creepers

Thank you.