In the latest of our series of regular updates from HM Land Registry, Andrew Robertson looks at requisitions, and the role of both HM Land Registry and conveyancers in improving application quality
The work we do with conveyancers to improve the conveyancing and registration process is a high priority for us at HM Land Registry (HMLR). This shared responsibility, coupled with the need for clear mutual expectations and standards, is integral to our ambition, mission and values.
There are high and low requisition rates across all sectors, be that high street conveyancers, volume conveyancers or the firms that deal with more complex infrastructure work. This indicates there is scope for improvement
One area that can make a real difference is the quality of the registration applications that conveyancers submit. But that’s not just about conveyancers sending us better quality applications. We also need to be more consistent with how and when we tell you about further work needed on your application (by this, we mean raising requisitions) and improve the quality of our application-related data that gives us the insight.
There are also structural issues in conveyancing that can cause some requisitions to be unavoidable. We know from what conveyancers have told us that it is common practice to lodge applications that they know are incomplete, often because third parties have not provided all that is needed by completion. So there are policy issues to be considered, too.
What is beyond argument is that there is an application quality problem, whatever the root causes. In the first six months of 2017, our caseworkers sent over 450,000 requisitions, covering nearly 700,000 individual points. We send 5,500 requisitions daily: the equivalent of processing 139,000 updates to existing registers or 19,000 new title applications over the course of one year. And these numbers only show the cost to us. There is also, of course, a cost to conveyancers.
What is also clear is that some conveyancers lodge better quality applications than others, and that the range of this is wide. The lowest requisition rate that we see is about eight per cent, but some rates are over 50 per cent.
There are high and low requisition rates across all sectors, be that high street conveyancers, volume conveyancers or the firms that deal with more complex infrastructure work. This indicates there is scope for improvement, and on the whole, we know the areas that should be improved, because we raise almost half of all requisitions on just four overall points. I’ll say more about these later, including top tips on how they can be avoided.
What we can do
There are things we need to improve which are as important as conveyancers improving what they do. We know we need to be more consistent with when and how we raise requisitions. To help address this, we are training our caseworkers to increase their use of standard forms of requisition.
There will always be occasions where our caseworkers need to send ‘free-format’ requisitions that cannot be easily categorised, but we currently do that in about 25 per cent of cases. This is too high, given that many of the requisitions we raise are on the same overall issues. Fewer free-format applications will give us better data that will help us become more consistent about when we raise requisitions, and customers will receive clearer information about the action they need to take.
We are also developing better ways of sharing our data with conveyancers and other stakeholders to drive improvements, such as our new customer ‘workbook’ for firms that lodge certain types and volumes of application. These present firms with better and more usable information about the requisitions we raise, as well as other information such as how many applications we have to cancel or reject. We are now using technology to automate the distribution of these workbooks instead of emailing them out manually.
What conveyancers can do
Many requisitions can be avoided with due care and attention, such as name discrepancies between documents and the register, or documents not being executed properly. Over 40 per cent of requisitions are avoidable because the issue raised was a clear requirement from the register or something well established by practice and/or a standard legal requirement. Our expectation is that conveyancers will inspect the register and check available guidance and the information in forms before sending us an application, which should include all relevant supporting evidence.
Below are HMLR’s tips for avoiding the four most common requisitions we send.
Restriction-related requisitions account for about 20 per cent of all requisitions raised.
When drafting deeds, think carefully about whether a restriction is required. If it is, think about how it should be worded, and have regard to the future. Ensure it is effective, and that a third party will be able to obtain evidence of compliance.
You should consider whether a consent or certificate is required to comply with the restriction, and who would need to provide that. It’s also important to make sure the restriction is clear about which type of disposal it captures. By using the term ‘disposition’, you may catch leases or deeds of grant of easements when you only intended to catch a transfer or charge.
You should consider applying for a standard form restriction whenever possible. This can help avoid situations where a restriction is overly complicated and unnecessarily difficult to comply with.
There are often delays around management company restrictions, especially involving leasehold titles, and we are reviewing our policy about these with stakeholders. These restrictions can require a buyer to, for example, enter into a deed of covenant with the landlord or a management company. This often results in them needing to give their consent before we are able to register a change of ownership. These can cause significant issues, especially if there’s any kind of unresolved dispute.
Always allow sufficient time to obtain the evidence.
Panel 10 of form TR1 asks for specification as to how beneficial joint tenants hold the land. Despite this, we often receive applications without any information or evidence to support this.
We will send a requisition for this information only if we need to raise other points. If there are no other points, we enter a form A restriction by default. This is because, under section 44 of the Land Registration Act 2002, we are under a duty to enter a restriction when two or more people are entered in the register as owners.
Once we register the form A restriction, a fresh application is needed to remove it if it’s not required. This can be avoided by following the guidance for panel 10 of form TR1, and being clear about whether a form A restriction is required.
A recent enhancement to the portal, our online channel for transactions, introduced an easier process to remove form A restrictions entered by default. You can now scan a signed copy of the letter we sent you and submit it as an application form.
Another problem can arise when a form A restriction that has been entered by default needs to be removed at some point in the future. It is not well understood when the restriction will be cancelled automatically following a disposal. Provided all is in order, we will register the transfer and leave the existing form A restriction in the register.
The restriction cannot be cancelled without evidence of the equitable title, and confirmation that the transferee is the absolute owner. If we don’t have proof that the trust of land has come to an end, we require a formal application to cancel, which must be accompanied by evidence that it is no longer required. We also need evidence to show there are no other trust interests.
There are other types of disposals when a form A restriction is left in the register, so don’t always presume it will be cancelled automatically on registration of a disposition. As a rule, on a transfer of the registered estate not made for valuable consideration or on a transfer of a share, we will require a specific application to cancel the restriction if it is no longer needed.
See Practice Guide 19A for more details.
Delays in providing evidence of discharge are a long-standing problem which causes difficulties for all involved in conveyancing. Thirteen per cent of all requisitions are related to discharges.
Without our early completion policy, this number would be higher. We send a requisition for a discharge when the policy can’t be applied – usually where there is a restriction in the register which prevents the other applications (for example, a transfer and new charge) from being completed by registration.
Where the discharge is the only point preventing registration, we delay sending a requisition for two weeks, as some discharges are received during this period.
If you need to find out if a lender has sent us a discharge, you can now do this by using the ‘Application Enquiry’ service in the portal.
For more guidance on discharges of charges, see Practice Guide 31.
If you are acting for an owner redeeming a charge, you must get a redemption statement that is as definitive as possible, and warn them about any further borrowing on the mortgage, which may cause a delay in the lender issuing the discharge.
3. Variations in names
The starting point is always the register. A disposal of the legal estate must be made by all the registered owners. Problems can be avoided by:
- checking names carefully (if a name in a deed is different from that in the register, you need to account for that change, even if that person is coming off the register)
- providing evidence to account for any discrepancies, and
- confirming the correct name.
We accurately complete over 99 per cent of applications, but we can very occasionally enter a name in the register incorrectly. In that case, let us know you believe we have made a mistake, tell us what the correct name is, and confirm who you are representing.
4. Execution of deeds
Execution requirements vary depending on the type of person involved in a transaction. Errors vary from a party’s signature not being witnessed, or a witness’ details not being included, to the wrong form of execution being used.
Not checking that a deed has been executed correctly increases the risk of fraud – incorrect execution can indicate the possibility of fraud – and could be argued as showing a lack of proper care. Incorrect execution can also invalidate the deed.
Comprehensive guidance on execution can be found in our Practice Guide 8.
Finally, remember that if a deed has been executed under a power of attorney, you will need, in addition to the proper form of execution, to lodge either a copy of a power or a certificate in form 1 in schedule 3 to the Land Registration Rules 2003 and confirmation of identity for an attorney, as well as the donor of the power, which we always require unless they have executed a discharge.
We will continue to develop our advice and play our part, while asking that you join us and play your part. It’s my firm belief that together we can make conveyancing simpler, faster and cheaper for all of us.