Mortgages over real estate – how can lenders meet registration deadlines in the era of Covid-19? Part 2 – HM Land Registry

Where a lender advances a loan to a company incorporated in England and Wales, which is secured by real estate in England, the lender must ensure that the security is registered at Companies House and HM Land Registry within a prescribed time period to ensure that its interests are fully protected. Many parties could struggle to meet the deadlines during the Covid-19 pandemic, however lenders could be assisted by recent proposals that (i) might extend the timings for Companies House filings and (ii) temporarily relax HM Land Registry’s execution requirements.

These posts comprise two parts – this part 2 post covers security registrations at HM Land Registry and our earlier part 1 post covers security registrations at Companies House.

Priority period

A charge over real property in England and Wales should be registered at HM Land Registry.

Lenders typically require priority searches (which give 30 working days’ priority) ahead of completion to “freeze” the title register before the charge is registered. Although the Land Registration (Amendment) Rules 2020 allow the Chief Land Registrar to certify a day as an ‘interrupted working day’ which would extend the expiry date of the priority period HM Land Registry has confirmed that it does not intend to certify that any working days during the lockdown are “interrupted”.

If there is a delay submitting an application, HM Land Registry suggests undertaking a new priority search to obtain a further priority period. This will not extend the original priority period meaning that the lender’s charge would be subject to any other applications submitted to HM Land Registry between undertaking (1) the initial priority search and (2) the new priority search.

Lenders’ solicitors should continue to lodge applications at HM Land Registry as soon as possible, even if the Secretary of State extends the deadline to register security with Companies House (see part 1).

Mercury signing

HM Land Registry is currently unable to accept documents signed by way of an electronic signing platform (other than electronic mortgages).

However HM Land Registry has temporarily relaxed its rules regarding virtual signings provided that the document has been signed in accordance with Option 1 of the Law Society’s practice note “Execution of documents by virtual means”. This is currently an option for dispositions (including charges), discharges (DS1s and DS3s) and powers of attorney. Plans (which may be referred to in charges of part or DS3s) can be signed by the conveyancer as agent (with authority from their client) or by way of a typed signature.

This dispenses with the need for a conveyancer to be holding the wet ink original documents before submitting an application to HM Land Registry so the submission of applications should not be delayed by lockdown restrictions.

Whilst HM Land Registry guidance previously indicated that, for the purpose of "Mercury option 1" virtual completions, it would only accept documents for registration which had been executed by companies by way of one director signing in the presence of a witness, the Land Registry has since indicated (8 June 2020) that execution by two authorised signatories would also be acceptable, provided that the signatories sign on the same physical page in the usual way.

Note updated 9 June 2020.