COVID-19: And relax. The Land Registry changes its rules
Nicky Richmond is managing partner & head of real estate finance & banking at Brecher
It’s rare that the Land Registry does anything which anyone outside the world of property law might want to read about, but today, May 4, is that day.
“Changes to identity verification and signing deeds” is not, you might agree, the snappiest title from GOV.UK but it does what it says on the tin. And the changes will be welcomed by lenders as they make not only verification easier where parties are unrepresented, but also relax a registration requirement in relation to deeds, changes which recognise some of the practical challenges facing the industry in this lockdown period.
The new legislation will allow verification for Land Registry purposes to be carried out by an expanded list of professionals. This relates to unrepresented applicants so, for the most part, will not be relevant to the lending market.
Prior to this change, the Land Registry required the applicant for registration to send a certified copy of certain deeds, including legal charges to the Land Registry. A document can only be certified where one is holding an original. This has caused delay during the current crisis, as it is taking much longer to get deeds back to lawyers for them to certify.
The Land Registry will now accept certified copies of deeds that have been signed using what is known as the “Mercury signing approach”.
This means that the signature page of a document e.g. a legal charge, will still need to be signed in wet ink and witnessed in person, not by a video call, but it can then be scanned/photographed back to the lawyer and the document completed and uploaded to the Land Registry on that basis.
In plain English, it means that the wet ink version, which previously had to be with the lender’s lawyer, or under its control through an undertaking, is no longer needed for the application and a scanned version can be certified.
We know that certain lenders have been advised that “virtual” witnessing i.e. by video, would be adequate. The Land Registry statement makes it clear that this is not (and has never been) the case.
For us lawyers, this ability to rely on a scanned version of a signature is an epic change and should mean that transactions can be completed more quickly. A word of caution however: the Land Registry rules are draconian precisely because Land Registry fraud is so rife. Lenders and their lawyers will need to be extra vigilant in the current environment and each lender will form its own view as to what it will be prepared to accept.
The detail of the changes is due to be published today and as ever, the devil is in the detail, but it looks like a move in the right direction for lenders and their clients.
The changes are stated to be temporary, but given the likelihood of a long period of restrictive movement and semi lockdown it is likely that they will become the new normal. Like everything else.