Don’t Delay in Completing ‘Formalities’

There is a tendency to think that procedural matters are mere formalities and there is no need to be in a rush to dot the i’s and cross the t’s, but sometimes failing to deal with them promptly can cause significant problems, as a recent case involving a seemingly simple administrative issue after a property purchase shows.

The property purchase was completed in January 2012 and the sale of the land did not reserve a right of way for the adjacent land, which was retained by the vendors. Due to a series of minor issues, the transfer wasn’t registered at the Land Registry until May 2012.

A short while after the initial sale, the vendors also sold the land they had previously retained. That transfer showed a right of way over the land that had been sold beforehand. The title of the land that had originally been retained was registered in March 2012, so when the title of the first piece of land sold was registered, the right of way was shown in the record of title of that land.

Inevitably, a dispute arose over the validity of the right of way. The legal position as regards the transfer of land was that the buyer of the first piece of land had become its beneficial owner on completion in January 2012. However, the legal interest at that stage was what lawyers call ‘equitable’ only. The question the High Court had to decide (the law is complex in this area) was whether the buyers of the land which had originally been retained by the vendor and then sold to them had a legal interest (the right of way) that ‘overreached’ that of the buyer of the first piece of land.

After a series of different arguments were made, the High Court ruled that the first buyer’s interest was overreached and the right of way was valid.

Had the registration of title on the first sale been completed before that of the second, the right of way would have been invalid.