Closure of the Property Register's Application Record - Update from Registers of Scotland

Morton Fraser Partner Michael Ramsay
Michael Ramsay
27 March 2020

When we circulated a note on Tuesday about the closure of the Register, we hoped that there would be a temporary work-around announced by the Registers by Friday of this week. The update in fact arrived on Thursday afternoon.

Our hope earlier in the week was that the Registers would adapt to allow solicitors to certify and email signed deeds, permitting applications to be accepted electronically. Essentially, that the Application Record would be re-opened and that a digital solution would be found.

Unfortunately, that has not been possible so far. The Registers have been working closely with UK Finance and the Law Society of Scotland to find an acceptable solution. What we have seen today is only a very limited patch which will affect only a very limited number of transactions.

What is the proposal?

Without getting into too much technical detail, the temporary solution is to allow the protection period offered by an Advance Notice to be extended so that it expires 10 working days after the Register is re-opened to accept new applications. Whether the Register will re-open in some capacity before the current government restrictions on movement are relaxed remains to be seen.

So what does this mean in practice?

In very simple terms, if:

1. your deal was just about to complete and you already have an Advance Notice on the Register (typically that means you will have been no more than a few days away from completing when the Application Register was closed); and

2. the lawyers are already holding the signed disposition and other completion items that need to be provided at completion,

then the buyer could pay the price in the knowledge that although it can't get its title submitted for registration right away, nobody else could jump their place in the registration queue while the Register remains closed.  Once things return to normal, the buyer's lawyer physically possesses everything it needs to submit the registration application and perfect the title.

It is important to remember that where there is secured finance, both the disposition and the standard security will need to be protected by their own Advance Notice.

Are there any risks?

This is a fast moving area and we have had limited time to consider the full implications, but to our mind, the risk we can foresee (provided the buyer's lawyer genuinely has all the completion items within its control before it pays the price), is that of insolvency of a corporate seller prior to the registration being completed. 

The temporary solution does not address this, so anyone attempting to complete under these circumstances would need to find a way to structure their completion so as to get comfortable on this point.

Limited Benefit

This temporary solution is of limited benefit to the wider market, however, since very few transactions will be so far advanced that they meet the criteria set out above. The Registers have said that they might be prepared to re-open the Application Record for new applications for Advance Notices, but there would need to be a compelling reason. Equally, if a buyer/seller can convince the Registers that a failure to complete would cause real hardship, then the Registers are prepared to consider such requests on a case by case basis, but the sense we have is that the bar for this will be set very high. It is likely that this will largely apply to residential deals where a real and compelling case can be made for human hardship.

Further Thoughts

It is clear to us that the Registers, Law Society of Scotland and UK Finance have been working hard under extreme pressure to come up with a fix which satisfies all stakeholders, including, let's not forget, mortgage lenders. The outcome is far from ideal, however, and will not address the problem that closing the Register will have for the wider property market once the initial log jam of imminent completions is dealt with.

For now, the Law Society recommends that transactions are delayed until the Register is re-opened or a better solution is found - this doesn’t address what should happen where the parties are already subject to a binding contract, but their deal does not meet the criteria outlined above (e.g. the Advance Notice is not already on the Register). We have sympathy for those on the front line trying to resolve this problem, but we hope that a more holistic solution is found soon.



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