Land Registry Question - Charges On Titles

Mickey666

I'm trying to establish whether a property has a charge on it, or not.

I've pulled down the title from LR and the 'register extract' box on page one gives the usual info - Title Number, address, price, registered owner(s) - and under 'Lender(s)' it clearly states 'None', which seems clear enough that there is no lender, so no charge on the property.  Fine.

Section B confirms Title absolute and is dated dd/mm/1987.

However, under section 'C: Charges register' it states the following:

(dd/mm/1987)  Notice of deposit of Land Certificate with Barclays Bank Plc of ... [branch address]

I'd never heard of 'land certificates' but a quick Google revealed that they were a certificate of ownership issued by LR before a change in the law around 2002 and that they are no longer legally relevant.  I also discovered that if there was a charge on the property then a 'Charge Certificate' would be issued by LR and held by the lender.  Again, since around 2002 these certificates have no legal significance, presumably because everything is now contained within the LR title documents.

Thus, I'm pretty sure this all means that there is no charge on the property in question but I'm still slightly confused by the Land Certificate being listed under the Charges Register if it is no longer relevant.

So, I guess I'm just seeking a bit of reassurance that I've interpreted things correctly and haven't missed anything.

Any thoughts?

greatcrested

You're buying? Or this is your own property?

If the former, your solicitor will deal with this as part of the conveyancing process.

Mickey666

Not mine and not buying. 
Have been asked by someone because of some complicated circumstances not really relevant to my basic question - does this property have a charge on it?

greatcrested

It's in the Charges Register, so, yes.

Mickey666

Well yes, but I'm trying to confirm any financial charge.
The 'Charges Register' is described thus:  "This register contains any charges and other matters that affect the land"
There are only two items listed - the one I've already mentioned and another one concerned with a covenant . . . which is not a 'charge' in the financial sense so is presumably listed as "other matters".

If the Land certificate is listed on a similar basis then that would suggest there is no financial charge on the property.
I'm just trying to get confirmation of that assumption.

Mickey666

The title 'register extract' clearly states 'Lender: None'  so presumably that means no mortgage on the property?
So why would a bank be holding the land certificate?  And is that even relevant now that land certificates are no longer legal documents?

Mickey666

 . . . and on further investigation, there are no restrictions listed under the 'proprietorship' section, as I believe there should be if there was a financial charge on the property.

So does it even matter if the bank is holding a no longer legally relevant 'Land Certificate'?  After all, the LR title document is the definitive legal record of the property isn't it?

SDLT_Geek

Section 4 of this Land Registry Practice Guide https://www.gov.uk/government/publications/discharge-of-charges/practice-guide-31-discharges-of-charges explains that a notice of deposit was a way of protecting a mortgage.  Although new ones cannot be registered, old ones can still apply to protect a mortgage.  The Practice Guide explains the circumstances and ways in which the notice of dposit can be cancelled.

Mickey666

Thank you for that link.  So it looks like this is a "caution against dealing", according to that practice guide (section 4) because that is what the designated form for cancellation (CCD) seems to be all about.

So, it's looking like the bank is holding the Land Certificate as security for (presumably) a mortgage but has never registered the charge with Land Registry, which is why it is not listed on the title as would normally be the case.  Does that sound right?

This prompts my next question: is there any form of 'statute of limitations' for mortgages or other secured loans?  I ask, because it seems that the registered proprietor has not made any mortgage repayments for this property for over 30 years, no letters of any kind regarding this mortgage have been sent to the property address and the bank has made no known efforts to recover any mortgage on the property.  It's as if the bank has just 'walked away' from anything to do with this property.  It's a very strange situation.

Also, while LR form CCD seems to be vehicle for applying to cancel this 'caution against dealing', it doesn't seem to request any reason for why the request is being made, which seems odd.  I guess that when receiving such a request, LR would then contact the person/company that registered the caution to find out if it can be cancelled.  But if that happens, would the bank suddenly 'wake up' and start chasing a 30+ year old mortgage for which there have never been any repayments?  Indeed, can they suddenly chase up such an old mortgage after so many years of inaction?

davidmcn

I think your answers are going to depend on what's going on with the property. If you're wanting to provide a clear title to somebody else, you're going to have to get rid of the charge (and somebody will at some point!), which in practice means going to the bank. But in general a charge is still going to be enforceable after 30 years, many lending arrangements last longer than that.

Mickey666

davidmcn said:

I think your answers are going to depend on what's going on with the property. If you're wanting to provide a clear title to somebody else, you're going to have to get rid of the charge (and somebody will at some point!), which in practice means going to the bank. But in general a charge is still going to be enforceable after 30 years, many lending arrangements last longer than that.

What's going on is very odd and I've never heard anything like it.  Basically, a freehold house was bought by Mr X with the intention of dividing it into four flats and selling it on.  This was back in 1985.  As each flat was converted it was sold off with a clear title.  The final flat was also sold, mortgage obtained, buyers completed and moved in.  Nearly TWO years later, buyers solicitor contacted them to say they have not been able to register the flat in their name because they can't get clear title!  Obviously a major faux pas by the solicitor, they put their hands up, admitted liability and their insurance paid the buyer compensation (redeemed their mortgage etc etc) but they had to move out.  That is all definitely known.

What is believed is that Mr A owed the bank around £130k, presumably for the original house, but the converted flat was only bought for £67k so was not enough to repay the borrowing, which might explain why the bank would not release its charge.  We have no idea why he didn't partly pay off the charge as the first three flats were sold.  What is known is that Mr X disappeared from the scene after the final flat sale and has never been seen again.  According to the flat title, he remains the registered owner and the bank has the land Certificate as a charge, although the exact details of that charge are not known.  So, all a bit of a mess but at least the buyer of the flat did not lose out.

I also don't understand how the original house title could be converted into the four flat titles without apportioning the original house charge across all of them.  Mr X would then have had to pay off the smaller charge on each flat as they were sold.  For some reason this didn't happen and the first three flats were sold with clear titles.  Or perhaps that was his plan all along, ie take the money and run, which is what he seems to have done.

Now the really odd thing.  Although the buyer moved out they somehow retained 'control' of the flat and have been renting it out for the past 30-odd years!  During all that time the bank has made no attempt to repossess the property to recover its mortgage which has not been paid.  This is why I say it's as if the bank has just walked away from the whole mess and forgotten all about it - which seems very odd but that seems to be the reality.

So the jilted buyer has been in adverse possession of the property for 30+ years and is now wondering if they can make an AP claim and register the property in their name?  

My best guess, in this very odd situation, is that they can easily prove their AP claim and that Mr X is long gone so will not/cannot object, which just leaves the bank.  What will be their reaction?  Presumably, if they haven't lost all their paperwork they'll object on the basis of their charge, so will that need to be paid off before the AP claim can complete?  And what about any accrued interest?  Could it be more than the flat is currently worth?  How to find out without alerting the bank?

The alternative is to simply carry on renting out the flat as they have done for the past 30+ years.  But what will happen when they die?  They don't legally own the property so presumably it can't be part of their estate.  Do they just 'give' it to someone else to rent out for another 30 years?  All very odd.