United Kingdom
| Financial institutions
27-01-2014
News
Land Registry launches Property Alert service
The Land Registry launched a Property Alert service on a trial basis in January 2014, aimed at helping property owners protect property against property fraud.
In order to monitor a property through this service, the property has to be a registered title at the Land Registry. The applicant has to create a Property Alert account and property alerts will be sent to the applicant by email whenever an official search request or registration application is received in relation to the monitored property. The applicant may then alert the Land Registry if it considers that the activity is suspicious.
On-line searches of the Index Map
There will shortly be a new Land Registry product that allows you to search the Index Map directly to find details of the title numbers that affect an area of land. You will be able to search for an area of land using the postcode, partial address or map navigation tools. Registered titles will show up pink on the plan and unregistered land in white. Clicking on a parcel of land will show all title numbers that affect the land.
The FCA’S Mortgage Market Review is due to bite on 26 April 2014
The Mortgage Market Review (MMR) will result in a new way of selling mortgages for lenders and is a result of a comprehensive review of the mortgage market which began in 2009 and culminated in the final rules being announced in 2012. It is regarded as the biggest single change to the mortgage sales process since 2004.
Firms carrying on a home finance activity in the UK must comply with the FCA’s Mortgages and Home Finance Conduct of Business sourcebook (MCOB) and following the MMR, the FCA is making changes to the rules and guidance in MCOB. The new rules in MCOB will lead to significant changes to policies, processes, systems and staff training for some lenders. Most of the changes come into effect on 26 April 2014.
To be ready for the implementation of the new rules, UK Lenders urgently need to (if they have not already):
• Review and update their affordability assessment procedures (including their responsible lending policy)
• Review and update their disclosure process and documentation used
• Review and update their arrears handling procedures
• Ensure that they hold the correct Part 4A permission under the Financial Services and Markets Act 2000 for the services offered
• Have a policy in place to deal with interest-only mortgages
• Have a policy in place to deal with execution-only sales
• Ensure staff are adequately trained and have the appropriate knowledge of any new processes and procedures that the lender introduces
Case law update
Removal of a unilateral notice, even though the beneficiary of it may have a good arguable claim
In Nugent v Nugent [2013] EWHC 4095 (Ch) it was held that the court had to power to order the removal of the unilateral notice.
Background
The Defendant, who owned a farm, sought an order in relation to a unilateral notice registered against the title to the farm by the Claimant. The Claimant was the Defendant’s grandson. He brought proceedings against the Defendant, alleging that in equity he was entitled to the farm or would be entitled to it, upon the death of the Defendant. The Claimant’s case was that he had been promised the farm by the Defendant and his late grandfather and that he had acted to his detriment in reliance on those promises.
The Defendant had made it clear that she did not intend to leave the farm to the Claimant on her death. In 2012, the Claimant’s solicitors registered a unilateral notice against the Defendant’s registered title to the farm, to protect the interest claimed by him. The Defendant sought an order providing for the notice to remain on the register subject to the Claimant giving his consent to all endeavours by her to raise monies against the title (whether by sale, charge or otherwise) for the purpose of funding her defence to the claim but subject to a cap by reference to her solicitors’ estimate of the costs involved.
The issue was whether the court had an inherent power to order the cancellation of a unilateral notice registered against a title registered under that Act, following the enactment of the Land Registration Act 2002 and if so, in what circumstances such a power should be exercised.
Decision
The Application was granted. The Court concluded that the jurisdiction which had been recognised and developed by the courts in relation to the vacation of cautions registered under the Land Registration Act 1925 applied also in relation to unilateral notices registered under the 2002 Act. That jurisdiction applied in different ways in relation to cautions to protect claims which were unsustainable and in relation to cautions to protect claims which were well arguable. The Claimant’s claim appeared to be well arguable. The earlier cases where the underlying claim was well arguable only went so far as to require an undertaking in damages from the beneficiary of the caution, as a condition of keeping the caution in place. However, the line of thinking behind those cases was that the court should not allow the beneficiary of the notice to have the protection of the notice pending trial without the court considering the position of the registered proprietor and whether, and if so how, he should be protected pending trial.
The court proceeded on the basis of an analogy with the position it would adopt if the beneficiary of the notice had, instead of registering a notice, applied for an interim injunction and Clearbrook Property Holdings Ltd v Verrier [1974] 1 W.L.R. 243 and Tiverton Estates Ltd v Wearwell Ltd [1975] Ch. 146 applied.
The court would have regarded this case as an appropriate one in which to restrain the Defendant from disposing of or charging the property. The court would be prepared to approach the case as it would a case where the Claimant sought an injunction to prevent the Defendant from interfering with his property rights. The real question would then be whether the court would allow the Defendant to sell any part of the property to raise funds to pay legal fees for her defence of the claim or to grant a charge over any part of the property to secure the repayment of monies borrowed for that purpose. In that respect, the principles to be applied were those established in relation to permitting a Defendant, the subject of a proprietary freezing order, to have access to the frozen property for the purpose of raising funds to conduct the defence of the underlying claim.
It would be appropriate to accede to the Defendant’s application. She was 99 and had no alternative source of funds to pay the legal expenses of defending the Claimant’s claim. It would be unjust to her, and to those who hoped to inherit her estate, if she did not have the advantage of legal advice and representation in relation to the claim, which was substantial and significant in terms of the amount involved and the importance to those directly and indirectly affected (see paras 49-51, 57 of judgment).
Comment
With a unilateral notice, evidence of the applicant’s grounds for application must be lodged, but an instrument creating the protectable interest need not. It is therefore a device apt for use in connection with claimed, but possibly disputed rights. Because of this, unilateral notices run the risk of being “warned off” through the cancellation procedure under sections 35 and 36 LRA 2002.
It’s already been established that claimed rights shouldn’t be protected on the register without reasonable cause. Under section 77 LRA 2002, a person owes a duty not to exercise the right to apply for the entry of the notice or restriction without reasonable cause. The concept was considered in Fitzroy Development Ltd v Fitzrovia Properties Ltd [2011] EWHC 1849 (Ch), where it was held that a person with a reasonably arguable case in support of the existence of an interest claimed had “reasonable cause” to enter a unilateral notice to protect the interest, even where a court later ruled against the existence of it.
In Nugent v Nugent, the claimant however had an arguable case and had therefore not registered without reasonable cause. So was there an inherent power, regardless of reasonableness? Was the beneficiary entitled to maintain the entry until trial, irrespective of whether the entry would cause un-compensatable prejudice to the owner of the land? The court held here that the notice should be lifted, for the purposes required.
Following Nugent v Nugent, it now seems that they may also be removed by the exercise of an inherent jurisdiction vested in the courts.
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