Mind the (registration) gap!

20 January, 2017
by: Cripps Pemberton Greenish

In a recent case ((1) Stodday Land Ltd and (2) Ripway Properties Ltd v William Pye [2016] EWHC 2454 (Ch)) the perils of the registration gap led to the purchaser of some agricultural land being prevented from obtaining possession of its newly acquired land from its tenant on the basis of a notice to quit that was served before the purchaser became the legal owner of the land.

 

Due to the time it takes to enter a transaction on the register of title at Land Registry, there is a gap between (a) the date of the deed of transfer (ie when the transaction between the seller and the purchaser is completed) and (b) the date that the legal estate vests in the purchaser following the transaction being entered on the register of title at Land Registry.  This gap is known as the “registration gap”.

 

The facts of this case were that, during the registration gap, the purchaser gave its tenant notice that it was the new landlord, and then a few days later served on the tenant a notice to quit seeking possession of the land as it was required for other uses.

 

The tenant argued that the notice to quit was not valid as it had not been given by the legal owner of the land as the legal estate was still vested in the seller during the registration gap.  The purchaser argued that the case law that supported the tenant would not apply to agricultural land as the definition of who is a landlord was wider in an agricultural context and/or that the purchaser had been given the procedural right to enforce the legal owner’s ability to seek possession by serving a notice to quit.  The High Court agreed with the tenant, with the outcome being that, as the purchaser could not terminate the tenancy by notice to quit during the registration gap, the tenant could remain on the land (for now at least).

 

There are ways to enable the purchaser, as an agent of the seller (who is still the legal owner until the registration of the transfer is completed), to serve a notice to quit and these issues should be addressed during the transfer process otherwise the registration gap period can delay a purchaser from dealing with its land.