Perhaps the most important aspect of being a property solicitor is to ensure that transfers of property are registered at HM Land Registry and your client is shown as the registered proprietor. From the simplest freehold sale with vacant possession to the complicated conditional multi-party portfolio sale of tenanted leasehold property with overage and bells and whistles, your client won’t thank you if they are not ultimately registered as the legal owner.
Yet getting the basics right is what clients expect. As far as they are concerned, you have confirmed that “completion” has occurred, they are now entitled to receive rents or are handed the keys.
The recent case of Knight v Fernley and another  EWHC 1343 is a useful reminder of the importance of getting the basics right and what can go wrong.
The facts are straightforward and not unusual: two developers owned and developed a parcel of land into three houses. Importantly they held the property as bare trustees. The claimant in the original trial bought one of the plots (Plot A) on 20 August 2015 for just over £300,000. Once the developers had sold the three plots, they then sold the remaining scraps of land to an adjoining landowner (the defendant) who paid £2,500 for the small parcel of land.
Each plot was sold using Form TP1, being a transfer of part of the land out of the developers’ title. The remaining land was sold using Form TR1, under a not unreasonable assumption that the land in the original title had been reduced following the sales of the three plots.
Unfortunately the claimant’s solicitors failed to register the transfer for Plot A. Mistakes happen – which this clearly was – but the result is well understood: the purchaser only has an equitable interest in property as the transfer does not operate at law until registered.
The knock on effect provided an unintended windfall for the buyer: the transfer of the remaining land had inadvertently included Plot A. Not bad a £2,500 purchase price.
The claimant sought to correct this by applying to HM Land Registry to alter the register. This was declined by HM Land Registry and so the defendant sought judgement from the Court.
Arguments at the original trial and on appeal included that the defendant had not overreached the claimant’s overriding interest (as having an equitable interest in Plot A and being in actual occupation) and that a contractual “mistake” had been made.
The claimant lost on both points: as the property was held by the developers as bare trustees, the claimant’s interest had been “overreached”; also there was no mistake as the developers and the defendant wanted to transfer the whole legal estate in the title and it did not matter that both parties wrongly believed that the remaining land included Plot A. The claimant may be able to sue her solicitors for negligence (, but that only provides financial recompense for the loss of her home. Whilst it seems unduly harsh on the claimant, as the appeal judge noted “hard cases make bad law”.
There is a glimmer of hope for the claimant. The appeal judge invited the claimant to amend her particulars of claim to plead that the registered title be rectified rather than simply altered and it will be interesting to see if the whole fiasco ends with a positive.
If you want to ensure your property is registered properly, or if you have questions about any other commercial property issues, please contact James Letchford on 020 7412 0050 or email@example.com.