Mind the gap – making sure your property purchase doesn’t trip you up

It's easy to assume that on the day you 'complete' on the purchase of the property you're buying, you become the legal owner. Let the champagne corks fly and the celebrations begin!

But you may be moving too fast because of something that has become known as the 'registration gap' - the period between a buyer buying a property and the Land Registry registering the buyer as its legal owner. During the 'registration gap', the former owner remains the legal owner of the property.

The recent High Court case of Baker v Craggs illustrates once again the extent of the problems - including whether a right of way accidentally granted during the 'registration gap' was binding - that can arise as a result and the importance of making applications to register titles within the prescribed priority period.

What happened?

Back in January 2012, Mr and Mrs Charlton sold off part of their Somerset farm, including stables and a stable yard, to Mr Craggs. His solicitor applied to register him as the new owner but the plan attached to the transfer of the property was not complete and the Land Registry asked for a replacement and gave a new deadline.

Because the new plan was not submitted in time to meet this deadline, the Land Registry cancelled Mr Craggs' application to be registered as the legal owner of the property.

This meant that he lost the benefit of the priority period - which lasts for 30 working days - to be registered as the new owner. Mr Cragg's solicitors then put in a new application to register him, although this did not go through till May 16.

In the meantime, some weeks earlier in February, Mr and Mrs Charlton sold off a barn on their property to Mr and Mrs Baker which included (by accident) the grant of a right of way over the stable yard that Mr and Mrs Charlton had already sold to Mr Craggs.

The Bakers' solicitors were successful in having the title to the new property registered showing that it had the benefit of the right of way over the stable yard. When Mr Craggs' title was finally registered, some weeks later, it showed that his property was subject to this right of way.

The court then had to determine whether the right of way should remain registered against his title.

What did the court decide?

A complex area of law, but the upshot for Mr Cragg was that the court ultimately decided that the right of way should remain and he was stuck with it across his newly acquired property.

The reason for this was because until the buyer has been registered, the seller retains all the powers of a legal owner, including the power to grant easements over the land.

What does this mean?

The case highlights the difficulties that can be caused by the 'registration gap' and the importance of making applications to register titles within the prescribed priority period.

For help and advice on this area of the law, please contact Wards Solicitors' Commercial Property team.