Monday, 22 February 2010

When extending a “priority search” is not enough !

One major difference between the BSA instructions, introduced last month, and the CML Handbook is additional clauses dealing with the registration of mortgages where a priority period has expired.

Clause E.30 states “If you cannot register our mortgage within the priority period afforded by your Land Registry Search made before completion you must register a unilateral notice to protect our position. Simply renewing your original Land Registry Search is not acceptable.”

Clause E.31 states:

“If registration at the Land Registry has not been completed within three months from completion you must write to us explaining the reason for the delay and keep us
regularly informed of the position until registration has been completed.”

The above BSA clauses are aimed at dealing with the problem of mortgages not being registered within priority periods: a major cause professional negligence in the field of conveyancing.

The usual situation is that a conveyancing solicitor acts for a buyer on a property purchase and applies to the Land Registry for an official search with priority, but problems further down the chain delay completion. The solicitor isn’t able to register the mortgage or transfer within the 30-day priority period, so he submits a new search application and gets a further 30 days. No problem, right? Wrong! Very Wrong …negligent in fact !!

It is a common misconception among conveyancing solicitors that priority periods can be extended – this is not the case! Whilst you can obtain a new search period, but this will not extend the original one. If a third party has made a search or lodged an application in the intervening period, that third party’s interest may have priority. Some lawyers argue that the misconception of priority periods being renewable is not helped by Land Registry officials routinely misleading solicitors by suggesting that priority periods can be ‘extended’ when this just isn’t possible. Even the new BSA instructions refer to ‘renewing’!

The Law Society has been very vocal in it’s opposition to this particular new BSA requirement describing the BSA obligation to register a unilateral notice as ‘a major headache for conveyancers’ and a ‘heavy handed approach for resolving problems with late/out of time registrations’

The big question is who is going to have to stump up the cost for this additional work.

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