Update on interim measure discussions with Law Society and UK Finance

Published: 25 March 2020 - 2:00pm

RoS has proposed an interim measure to the Law Society of Scotland and UK Finance.

We are waiting on the Law Society of Scotland’s decision to share updated guidance with their members, and we are also engaging with UK Finance on its members’ views. Our proposal should enable the majority of transactions that are imminently about to settle to proceed as planned.

Further detail on the specifics of our joint proposals are noted below.

Risk

The risk which applicants are exposed to is that they are unable to register deeds in their favour (which creates the relevant real right). In the normal scenario that would mean exposure to the additional risk of some other party creating a competing real right in their favour or insolvency of the granter. Given the whole paper application record is closed, registration of a competing real right is not possible. The remaining risk is therefore insolvency of the granter.

Analysis

Advance Notices, provided for by Part 4 of the Land Registration etc. (S) Act 2012 are designed to deal with this risk generally. They offer protection for a 35 day period, but the current circumstances mean that 35 days may not be sufficient for the application record to reopen.

RoS position/proposal

We are investigating if it is possible to seek emergency legislation to make a relevant amendment to the 2012 Act. We would seek provision along the lines that the protected period of advance notices extends until 10 days after the next full reopening of the application record, unless discharged by the parties in the usual way. This offers the highest level of legal certainty for applicants.

If we are unable to achieve legislation we will take a dual pronged approach. Firstly, we will proactively work with parties who have advance notices in the system for pending transactions which are due to settle to renew them as soon as is possible. That will allow another 35 day period to commence. Within that 35 day period we will endeavour to have a digital system up and running for applications themselves.

However, it will remain possible for advance notices to be renewed by the parties for as long as is required and we would expect in the usual case that will be achievable. If there is any reason or indication either (a) that the granter in the advance notice may become insolvent or (b) that the protected deed would not be entered on to the application record by the date five working days prior to the expiry of the protected period (under the original or any renewed advance notice) then we would open the application record (digitally) for the application to be taken on (digitally).  Given the likelihood of the wider market slowing down we think it is likely we could make this approach work for all applications pending in this way.

Specific cases

If there are any immediate cases where an advance notice is not in place we will work with the Law Society and the solicitors involved to open the application record for those applications. In particular if there are DPA cases pending which require advance notices we will deal with them digitally.

RoS are continuing to work with the LSS to identify other issues that might prevent people proceeding with transactions over the period of this COVID-19 crisis.  Wherever possible RoS will do whatever it can to assist in finding pragmatic solution that can be delivered within the constraints of the current circumstances.

The Law Society are now considering how they wish to update their guidance in the light of these proposed measures. They are working with UK Finance colleagues to engage the lending community in seeking their consent to operating in this way.


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