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Early completion - questions and answersEarly completion is a new policy that Land Registry will apply from 3 August 2009 to ensure that applications for registration are completed as quickly as possible. You may also wish to consult Practice bulletin 16 - Early completion , which has information about this change.
What does Land Registry mean by early completion? When will these changes take effect? Why is Land Registry making these changes? Did Land Registry consult on these changes? How are these changes being publicised? Will training be provided for external customers? Won't early completion increase the risk of registration fraud? Why have you left the seller's mortgage in the register? How can I get these entries removed? What about applications lodged with Land Registry before 3 August 2009? Will Land Registry continue to contact lenders directly? Is Land Registry making this change just to achieve its targets? Won't this change make conveyancing more expensive? Won't this change make conveyancing more difficult and create delays? Isn't the new policy punishing conveyancers for delays in the redemptions process? What will happen if there is something wrong with the DS1? What will happen if there is an END (INV) pending when the application is made? Will Land Registry apply early completion to new title applications? Will early completion apply just to paper discharges? I paid a fee on my original application. Do I have to pay a fee on my follow-up application? Has Land Registry completed an impact assessment for this change? How will I know that my application has been processed under early completion?
What does Land Registry mean by early completion?Early completion is a new policy that Land Registry will apply from 3 August 2009 to ensure that applications for registration are completed as quickly as possible. The policy will apply to all situations where an application for a discharge of whole has been made with another application but proof of satisfaction (evidence of the discharge of the charge) has not been provided. For example, it will apply where applications are made in form AP1 for the registration of a discharge of an existing charge, a transfer and a new charge. Without proof of satisfaction of an existing charge Land Registry will reject the application for discharge but complete the other applications where it is possible to do so. The entries relating to the existing charge will be left in the register until proof of satisfaction is received. Note: Although the examples given in these questions and answers relate to a discharge, transfer and charge, the early completion policy will apply to any situation involving a discharge of whole and another application. If the discharge of a charge is the sole application, regardless of the method of discharge we will reject it as being substantially defective if proof of satisfaction has not been supplied. When will these changes take effect?The policy will apply to all applications received on or after 3 August 2009. Why is Land Registry making these changes?When application is made in form AP1 for, for example, the discharge of an existing charge, a transfer and a new charge by the transferee, three distinct applications are being made:
Our practice has previously been to treat the three separate applications collectively, so if there was difficulty obtaining proof of satisfaction of the existing charge, not only might the application for discharge be cancelled but also the applications to register the transfer and new charge. We do not believe this policy can be justified where the transfer and new charge are capable of completion by registration, particularly as cancellation may risk a loss of priority for the interests of the transferee and new chargee. We believe that dispositions should be reflected in the register as soon as possible after they have taken place. The interests of buyers and lenders should not be placed at risk by a refusal to register their transfers and charges because of delays in the completion of discharges of prior charges. Did Land Registry consult on these changes?We consulted with key stakeholders, principally the Law Society, the Council of Mortgage Lenders and the Council for Licensed Conveyancers. In reaching a decision to implement early completion, we considered a submission from the Law Society recommending rejection of the proposal and correspondence from the Council of Mortgage Lenders supporting the proposal. We were also informed that the Council for Licensed Conveyancers supported the Law Society's view. How are these changes being publicised?Practice bulletin 16 - Early completion, published on 5 May 2009, provides guidance on the new policy. An Important Developments article on our website, a letter to account holders and various messages printed on correspondence further publicise the change. Will training be provided for external customers?There will be no specific training package. Practice bulletin 16 - Early completion, published on 5 May 2009, provides guidance on the new policy. Won't early completion increase the risk of registration fraud?No. We take fraud very seriously and have thought about the possibility that early completion might provide fraudsters with additional opportunities. We cannot see, however, that the temporary retention of an existing charge in the register would make fraud easier to perpetrate. There are, in contrast, obvious problems if an application to register a transfer and new charge are cancelled because of a problem with the application to discharge an existing charge, as the transferee and new chargee will not then receive any notices of potentially fraudulent transactions from us, precisely because they will not have been registered as proprietors with addresses for service. Furthermore the seller, who retains the legal title even though no longer having any equitable interest in the property, might, for example, charge the title as security for a further loan or otherwise deal with it. Although legally effective, that dealing would potentially be a fraud against both the buyer and the new lender. Early completion removes the opportunity for such a fraud. Why have you left the seller's mortgage in the register?The charge still appears in the register because we have not received proof of its satisfaction and the entry will remain until an application is successfully made to remove it. How can I get these entries removed?A conveyancer, acting for the seller, will usually have given an undertaking to the buyer's conveyancer to ensure that the money required to discharge the charge will be paid to the lender and proof of satisfaction of the charge sent to them. The buyer's conveyancer will be responsible for ensuring that application is made to discharge the existing charge. We advise customers who ask us how to get the seller's mortgage removed to contact their conveyancer. Methods of discharge are covered in detail in Practice Guide - 31 Discharges of charges. An updated version of the guide will be available to view or download from the Land Registry website ahead of the implementation of the new practice. What about applications lodged with Land Registry before 3 August 2009?Early completion applies to all applications received on or after the 3 August 2009. Any application received before this date will be processed under existing procedures, that is, we will requisition for a discharge if this is not lodged ahead of or with the application. Will Land Registry continue to contact lenders directly?No. We will apply our policy of early completion. Early completion should ensure that there is no risk of a loss of priority in respect of any application that accompanies the application for discharge, and the existing charge can then be discharged once the proof of satisfaction of the charge is to hand. Many lenders refuse even to discuss with Land Registry missing evidence of discharge. Even where a lender is prepared to discuss the position Land Registry has no power to compel a lender to produce the proof of satisfaction. Will Land Registry requisition and allow additional time if an applicant is having problems obtaining the evidence of discharge?No. We will apply early completion. Early completion should ensure that there is no risk of a loss of priority in respect of any application that accompanies the application for discharge, and the existing charge can then be discharged once the proof of satisfaction of the charge is to hand. Is Land Registry making this change just to achieve its targets?Land Registry is required to meet progressively improving performance targets agreed with the Lord Chancellor. By meeting targets we have significantly enhanced the services we offer to all customers. The new policy should reduce the number of requisitions raised and allow a quicker service to be provided at a lower cost. But the principal reason for the change is our belief that dispositions should be reflected in the register as soon as possible after they have taken place and that the interests of buyers and lenders should not be placed at risk by a refusal to register their transfers and charges because of delays in the completion of discharges of prior charges. Applications are at present being cancelled for lack of proof of satisfaction of a charge. The fact that discharge applications may not be in order should not prevent the registration of accompanying applications provided those accompanying applications are independently capable of completion by registration. Land Registry's current practice carries a substantial risk of loss of priority to both a buyer and new mortgage lender. The new policy is intended to end this risk. Won't this change make conveyancing more expensive?No. No fee is payable at present in relation to an application to discharge a registered charge. As a result any follow up application required to discharge a charge subsequent to early completion will not result in additional costs. In addition to the costs to Land Registry, there are costs for conveyancers in dealing with Land Registry requisitions. A conveyancer may have to spend considerable time in trying to comply with a requisition requiring proof of satisfaction of a discharge within the period permitted, particularly where the inability to comply with the requisition may threaten the priority of other applications made at the same time as the discharge application. It will not necessarily be cheaper for a conveyancer to deal with the lack of proof of satisfaction of the charge in response to requisitions than it will be to make a further application to discharge the charge that has remained in the register once proof of satisfaction of the charge has been obtained. Early completion will save a substantial part of the costs that presently arise from requisitions for discharge, all of which are ultimately passed on to the consumer through Land Registry fees and conveyancers' and lenders' charges. Won't this change make conveyancing more difficult and create delays?Under Land Registry's existing policy the charge would not be discharged until proof of satisfaction was provided and the new transferee would not be registered as proprietor at all until proof of satisfaction of the existing charge was produced. Accordingly, registration of the legal estate will under current practice be delayed and (unless the transferee can satisfy a purchaser that he is entitled to enter into a disposition as a person entitled to be registered) the ability of the transferee to deal with the land will be entirely dependent upon the provision by the seller of proof of satisfaction of the original charge. Early completion will remove a delay in registration and safeguard the position of the transferee and chargee. Why aren't we treating a discharge, transfer and charge as three indivisible parts of a larger transaction?Whilst the three elements may form part of an intrinsically linked series of transactions, they constitute three separate and distinct applications to Land Registry -
There is no legal basis for treating the separate applications collectively. Won't the new policy cause conveyancers to be in breach of the requirements under the Council for Mortgage Lenders Handbook?Completing the applications to register the transfer and new charge subject to the existing charge would not appear to affect the obligations of any party in relation to that existing charge. Early completion will not prevent the new charge taking effect as a first legal charge; it can never become a first charge until the existing charge is discharged. This is so whether or not the new charge is entered in the register. The entry of the new charge under early completion simply protects the priority of that new charge as against any other interest whose priority is not protected at the time of registration. Isn't the new policy punishing conveyancers for delays in the redemptions process?The policy change is intended to ensure that customers do not lose priority for their interests because of a problem in obtaining proof of satisfaction of a charge. Land Registry has no control over the time that a lender may take to produce evidence of satisfaction of the charge following receipt of the moneys necessary to redeem that charge. The customer who is potentially at risk under the current policy is not the lender who may have proved dilatory in providing proof of satisfaction of the existing charge; it is the new lender (and/or transferee) who is seeking to register the transfer/charge. So potentially all lenders (and other customers) are at risk to the same extent under the current policy, irrespective of how quickly the applicant lender may itself provide proof of satisfaction of their redeemed charges. Where a lender uses either our Electronic Discharge or e-DS1 services delays in discharging charges are likely to significantly reduce. What if there is a restriction in the register in favour of the existing mortgagee. Will Land Registry still register a transfer and new charge?If there is a restriction registered in favour of the existing mortgagee which provides either that no disposition or that no charge of the registered estate is to be registered without the consent of that mortgagee, Land Registry will requisition for proof of satisfaction or evidence that the terms of the restriction have been met. If the requisition is not addressed, Land Registry will, in the case of a restriction against the registration of any disposition, have to cancel not only the application for discharge but also the applications to register the transfer and charge. In the case of a restriction against the registration of a charge only, Land Registry will complete the registration of the transfer, cancelling the other applications and leaving the existing charge entries in the register. What will happen if Land Registry has to raise a requisition because there is something wrong with the applications to register the transfer or a new charge?If Land Registry has to raise requisitions because of the transfer or new charge, we will point out that proof of satisfaction of an existing charge has not been lodged. But if the transfer and charge points are resolved we will complete the registrations on the basis of early completion. We will not continue to stand over applications to await the discharge. What will happen if there is something wrong with the DS1?If a DS1 is lodged but there is a problem with it Land Registry will accept the application to discharge the charge and raise a requisition. What will happen if there is an END (INV) pending when the application is made?Land Registry will accept the application. The END (INV) will be investigated in the usual way. In the unlikely event of the END being rejected we will requisition for evidence of discharge. If my applications are completed on the basis of early completion how will I know when Land Registry has received an electronic form of discharge?The lender should always tell a conveyancer redeeming a charge when they have sent an Electronic Notification of Discharge (END) to Land Registry, but in the case of Electronic Discharges (ED) or electronic discharges (e-DS1) some lenders specify in their redemption statements that they will discharge electronically but no further communication will be sent once this has been done. You will not have to lodge an application if the discharge is by way of an ED or e-DS1 as the application is an intrinsic part of the discharge. But, if the lender sends an END, you or the lender will need to apply in form AP1 or DS2E for the charge entries to be cancelled. Using the Land Registry portal or Land Registry Direct, you can make a daylist enquiry to find out if an END transmitted by the lender is pending, or view the register to find out whether the charge has been removed electronically. Alternatively, if you phone the relevant local Land Registry office, we will be able to confirm either that:
Customers can also contact our telephone services centre to make an END enquiry. They should ring 0845 308 4545 for properties in England and 0845 307 4535 for properties in Wales. Will Land Registry apply early completion to new title applications?Land Registry will not complete applications to register transfers of part on the basis of early completion at this time but will keep this under review. We will requisition for a discharge of part if one is required and not lodged with an application to register a transfer of part. Land Registry already applies a form of early completion when dealing with applications to register a dispositionary first lease where there is a charge registered against the landlord's title. Although the charge is not usually discharged when a lease is granted, the absence of the chargee's consent to the grant of a lease by the landlord will not prevent the lease from being registered with absolute title. Will early completion apply just to paper discharges?No early completion applies regardless of the method of discharge. I lodged evidence of identity with my original application. Do I have to provide it again when applying to remove the charge entries after early completion?If Land Registry has retained form ID1 or ID2 in respect of the lender in a charge being discharged by way of a paper DS1, we will not require a new ID form provided the form is no more than three months old at the time of a follow-up application made after early completion. You should add a note to panel 13 of form AP1 to refer us to the ID form already provided. This will also apply to evidence of identity for the borrower or lender in a new charge in respect of which we cancelled an application on early completion. I paid a fee on my original application. Do I have to pay a fee on my follow-up application?If your follow-up application is simply to remove the charge entries that remained after early completion, no fee is currently payable. If your follow-up application also includes the registration of a new charge rejected under early completion, no fee will be required provided that you lodge a copy of the 'Completion of registration' letter sent with the documents on completion of your original application. Has Land Registry completed an impact assessment for this change?Generally impact assessments are required for "government interventions" which affect the private sector. This is not, in our view, such an intervention. It is a relatively minor change in Land Registry's practice which will ultimately produce exactly the same results for our customers albeit in some cases sooner than would otherwise have been the case. We have consulted with stakeholders and there does not appear to be any disagreement with our assessment of the current costs in dealing with delayed discharges. Costs to conveyancers and lenders should not rise when this change takes place. How will I know that my application has been processed under early completion?The 'Completion of registration' letter issued after early completion will give details of any application(s) that could not be dealt with. |
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