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Certified a true copy 29 June 2014

Something magical happens when solicitors certify documents as true copies.  Everyone believes them.

Perhaps it started out with abstracts of title to unregistered land, and later with epitomes of title.  For the benefit of non-lawyers, an abstract of title is a document, prepared by a lawyer on the sale of a property, that summarises the owner’s title.   Originally abstracts were handwritten, but were later typed, using a strange language of abbreviations to replicate the chain of conveyances by which property had been conveyed over the years and the incumbrances that they created over the property (such as easements and covenants).  Epitomes of title are the modern equivalent: a collection of photocopies of a property’s title deeds, which became practical once photocopying became available to the masses.  Where land is not yet registered, a buyer’s solicitor investigates title using an abstract or epitome – since the original title deeds are too valuable to release before completion.

Where the sale is of the whole, the original title deeds are handed over at completion in exchange for the purchase money.  But when the sale is of part only (very common when much of the country was in the hands of relatively few landowners, and still encountered today where land is not yet registered), the owner has to keep the originals, and the buyer is given just an “examined abstract” or an “examined epitome” – effectively the summary or the copy of the documents, marked as examined by the owner’s solicitors (whose name was scribbled in the margin, normally legibly, but not always so).  This may well be the origin of the concept of a certified copy.  And for some reason these are accepted as being as good as the real documents, despite the opportunity for fraud or error.  Something about the magic of the solicitors’ barely legible signature.

Nowadays title is normally deduced by showing one’s name on a title register at the Land Register, but there is still plenty of unregistered land around the edges of England and Wales, and the Land Registry still relies upon abstracts and epitomes on first registration – because that is all that the new owner has been given by way of title by the seller.

Why mention this now?  Because starting tomorrow (30 June), the Land Registry will accept certified copies of documents rather than the originals.  Not just abstracts and epitomes but everything, including the transfer document itself.  Indeed, it advises that you send only a certified copy.  This is a monumental change of practice.  Until now, the Land Registry required the original document itself, and it would be returned so long as you sent a certified copy as well; the original would be returned and the copy scanned and then destroyed.  Starting tomorrow, if you send an original document to the Land Registry, it will be scanned and destroyed regardless of how many certified copies accompany it.  (The exception to this new policy is applications for first registration, where all original deeds and documents, including the transfer to the applicant, need to be produced to the Land Registry.)

So for example, on the grant of a lease out of a registered title, you need send only a certified copy of the lease.  And on the transfer of registered land, you need only send a certified copy of the transfer.  As recently as 2000 you needed to send a land certificate and the original transfer.  Now you send just a certified copy of the transfer, and no land certificate.  How things have changed.

The Land Registry’s new policy – available on this page of its website – is ostensibly to bring its paper registration process into line with its electronic Document Registration Service (e-DRS), where (obviously) only copies of documents can be submitted.  I am not sure that there is any need to take this step.  The two processes are entirely different, and do not necessarily need to be identical.  Particularly as electronic applications are safeguarded by being made through solicitors’ own secure IT channels, whereas postal applications can be made by members of the public (or “citizens” as the Land Registry terms them).

Is it a good idea for citizens to be able to create a certified copy that can be relied upon both by the Land Registry and by people who then rely upon the Land Registry’s judgment in the future?  It’s a new idea and I am not necessarily convinced that it is a good one, particularly as the Land Registry felt it necessary to include an explanation of “certified copy” on its website (see note below).

Two thoughts have struck me.  First, my signature is fairly widely available, particularly to someone to whom I have given a  cheque.  In fact, my signature is probably available on the Land Registry’s own website if a copy of the transfer in my favour happens to form part of my title (it doesn’t, as a matter of fact, so don’t bother looking).  So someone can create a “transfer” of my property apparently bearing my signature relatively simply, now that the Land Registry no longer needs to see a so-called “wet-ink” signature on a document submitted for registration.  Perhaps the protection is that the Land Registry reserves the right (in rule 213) to call for the original of a document, but in any case I think it’s definitely worth signing up to the Land Registry’s free Property Alert Service if you have not already done so, so you receive notice of any applications that affect your property.

Secondly, ceasing to return original documents to applicants simplifies the Land Registry’s procedures immensely (not to mention saving money on postage or document exchange costs).  This is important for applications dealt with in the UK, but presumably would save even more postage now that original documents do not need to be returned from a processing centre outside the UK.    Bangalore Land Registry, anyone?

 

** What is meant by a ‘certified copy’?  It is a copy of a document which:

  • the applicant, or
  • a conveyancer, or
  • someone signing on the applicant’s behalf,

has certified on the actual document that it is a true copy of the original and endorsed it with their name and address. If it is certified by someone on behalf of the applicant, it should be clear from the certification that they are signing it on the applicant’s behalf.

See http://www.landregistry.gov.uk/public/faqs/what-is-meant-by-a-certified-copy

 

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Residential tenancy deposits: third time lucky? 24 June 2014

Parliament is about to have a third attempt at getting the residential tenancy deposit legislation into a fit state.

Readers will recall that the Court of Appeal found several holes in the original legislation, which had to be amended. 

However, in Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 the same court held that a landlord needed to protect a deposit where a residential tenancy had been converted into a statutory periodic tenancy at the end of the fixed term.  This was on the basis that it was equivalent to a new tenancy coming into being.  No-one had anticipated this result, and according to official documents it had not been the Government’s intention to catch such situations.

So in amendments to the Deregulation Bill that were published last week (click here to see a copy), new provisions are proposed to be inserted into the Housing Act 2004.  There are two aims.  First, to  reverse the logic in Superstrike, so that it is not necessary to protect a deposit merely because a fixed-term residential tenancy has ended and been replaced either by a periodic tenancy or a new fixed-term tenancy.

Secondly, and unexpectedly, it will be necessary to protect deposits that were taken before 6 April 2007.  There will be a period of 90 days to do this after the legislation comes into force.  This means that all deposits will fall within the tenancy deposit legislation (unless and until the courts decide otherwise, of course).

For a much better explanation of these proposed changes than I can provide, I suggest you look at the article “Make do and mend: Undoing Superstrike on deposits” in the Nearlylegal blog, written by experts in this field.

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Nightmare on Cricklewood Lane 17 June 2014

The recent case of Daejan Properties Ltd v Griffin [2014] UKUT 206 (LC) is a salutary reminder that buyers of part of a larger property – in this case a leaseholder acquiring a long lease of a flat – may find themselves paying for repairs for which they had not budgeted.

The case concerned a three-storey Victorian building in North London comprising nine shops, each with two flats above. A walkway above the front part of each shop provided the means of access to the front doors of the flats. The walkway, together with the parapet in front of it, was held up by three steel beams above each shop concealed in the brickwork, two at the front of the walkway (one directly beneath the parapet) and the third at the back. These beams had corroded over time. Eventually a beam failed: part of the parapet twisted sharply and threatened to fall into the street beneath. The landlord had to make emergency repairs to replace the worst affected beams.  Ultimately it was decided that all 27 beams needed replacement at a cost exceeding £300,000.  The case concerned who should pay the costs of this exercise.

The leases of the flats contained a landlord’s repairing obligation and a covenant by the tenants to pay for the costs.  In relation to the emergency works, the landlord successfully applied for an order dispensing with the consultation requirements in the Landlord and Tenant Act 1987.  This part of the dispute concerned the tenants’ arguments that they should not have to pay the entire cost of the works.  First, they said, the landlord should have carried out the works earlier, when they would have cost less.  Secondly, they said that the works should have been carried out under one contract, rather than under several contracts, as this would have resulted in lower expenditure.

Neither of the tenants’ arguments succeeded.  The tribunal preferred the evidence of the landlord’s expert in both cases.  The tenants were left to bear the entire cost.

The case highlights a curious point of landlord and tenant law.  The landlord had been in breach of its repairing obligation ever since it had acquired the building in 1973, despite the corrosion of the beams coming to light only when the parapet twisted in 2008:

“It is common ground that the appellant has been in breach of its covenant since it acquired its interest in the freehold in 1973, because it is agreed that the steel beams supporting the walkway had deteriorated significantly from their original condition by that time. It is also not in dispute that the appellant’s obligation to repair did not depend on it having actual notice of the condition of the beams. Where part of a building is not demised, but remains within the possession of a landlord which has covenanted to keep it in repair, the risk of undetected deterioration falls on the landlord whether or not it has, or could have, knowledge of the condition of that part (see British Telecommunications plc v Sun Life Assurance Society plc [1996] Ch 69).”

The case provides two reminders.  First, when acquiring part of a building, it makes sense to investigate the physical condition of the whole building, so far as is possible.  Secondly, it seems that there are some risks against which one cannot protect oneself.  Uncovering the beams was a lengthy and expensive process even when it was clear (after the failure of the first one) that the others needed to be inspected.  It was not something that could be done on a routine basis.  Any surveyor acting for a potential buyer of one of the flats would – perfectly reasonably – have excluded liability for any defects in the building that could not be seen from a non-invasive inspection.  Caveat emptor indeed.

The transcript of this case is available on BAILII.

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The future of the Land Registry (Part 4): the Empire strikes back 12 June 2014

It’s time for another “Future of the Land Registry” article.

To be honest, I’m not sure how many of these “Future of the Land Registry” articles to allow for, but I think it’s likely they will very quickly overtake the number of Star Wars films, even with number 7 being filmed as I type (how exciting is that !!  Incidentally, I watched the very first Star Wars film in the Chinese Theatre in Hollywood in 1977, which is where it had received its premiere only a few weeks earlier.  The film was being shown 24 hours a day and the popcorn was inches deep on the carpet).

(And I do know perfectly well that “The Empire strikes back” is Star Wars Part 5, not Part 4.  But I didn’t think that “A new hope” made any kind of sense in the light of what follows.)

Anyway, back to the topic in hand.   If you need to catch up, then read the previous articles in this series: “The future of the Land Registry” (14 March 2014), “The future of the Land Registry (Part 2)”  (24 March 2014) and “Petition to save the Land Registry” (5 May 2014).

There are two concerns.  First, the Government’s proposal that the local land charges registration system should be transferred from local authorities to the Land Registry.  Secondly, that the Land Registry should, in effect, be privatised.  Both suggestions have proved unpopular.

Land Registry 1: Local authorities 0

In relation to local land charges, the local authorities, and those trying to maintain the status quo, appear to have lost the battle.  Clause 23(1) of the Infrastructure Bill states bluntly:

“Schedule 4 (transfer of responsibility for local land charges to Land Registry) has effect.”

This is no simple matter.  As well as containing transitional provisions, Schedule 4 makes amendments to the Local Land Charges Act 1975, the Land Registration Act 2002 and no fewer than 13 other statutes (including the improbably named Disused Burial Grounds (Amendment) Act 1981, which deserves its own blog article one news-free month).   What all this does is explained in the Explanatory Notes to the Bill, which I will leave you to read on your own, as my blog articles always turn out to be twice the length I originally intend and I am trying to put a stop to it.

Reaction to this proposal has been hostile.  The Law Society said, in its consultation response:

“The research conducted by Land Registry does not demonstrate that there is a problem that needs to be resolved. As a result, the Law Society cannot see that there is a real and pressing need for change in this area …”

This does look rather like one of those occasions where the decision has already been made before the consultation paper is issued.  Perhaps it is not unconnected with the second issue …

Update on 18 June 2014: the Land Registry’s official response to the consultation exercisehas now been published (click here to see it).  It includes this multi-coloured “infographic” that actually says remarkably little.  It also reveals just how much opposition was voiced to the proposals.

Privatisation: still all to play for

So to the second issue – privatisation or part-privatisation.  There has been a universally hostile reaction to this – perhaps in part from the same people who are also hostile to the first proposal.  Type “save the Land Registry” into Google and you come across several organisations to join (including www.savethelandregistry.co.uk) and petitions to sign.

There has been no word yet from the Government of the outcome of the recent consultation on the issue.  However, clause 24 of the Infrastructure Bill extends the power of the Land Registry to advise on matters not connected with the keeping of the register.  Currently section 105 Land Registration Act 2002 provides:

“The registrar may provide, or arrange for the provision of, consultancy or advisory services about the registration of land in England and Wales or elsewhere.”

(On the basis of this power, some lucky Land Registry employees have recently travelled all the way to St Helena in the Atlantic to advise on establishing a new registration system there.)

Clause 24 of the Infrastructure Bill extends the Land Registrar’s powers to –

“(a) consultancy or advisory services about land or other property in England and Wales or elsewhere,

(b) information services about land or other property in England and Wales, [and]

(c) services relating to documents or registers which relate to land or other property in England and Wales.”

Notice that (a) is the same power as already exists in section 105(1), except that the words “about the registration of land” have mysteriously disappeared.

Could we be seeing the first preparations for privatisation?  The Explanatory Notes to the Bill do not give any clues, merely paraphrasing the wording in the Bill.

If I were looking to buy (or even work alongside) the Land Registry, I would want it to be able to do as much as possible to enable me to make my return on my investment in the fastest possible time.  Wouldn’t you ?

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Two forthcoming training sessions 9 June 2014

Here are details of two forthcoming training sessions, one to be given by me and the other to be given by my friend Sarah Fox.

Wednesday 25 June 2014 – Swindon

Guarantees and indemnities in real estate transactions 

This is one of the Ten Important Pointers courses.   Each course in the “Ten Important Pointers” series comprises a series of ten deceptively simple questions on difficult areas of law.  I will work through the answers to the questions, using examples and recent cases where appropriate.

Limited availability.  Please contact me if you are interested in attending.

 

Tuesday 1 July and Wednesday 2 July 2014 – London

Protecting stakeholders from construction risks (presented by Sarah Fox)

The aim of this seminar is to provide you with all the skills, knowledge and information you need to advise clients on how they can best protect themselves from risks associated with the construction of a new development. Your stakeholder clients include funders, tenants or purchasers and are all exposed to the normal range of risks associated with construction projects.

You will go from knowing ‘just about enough’ to really getting to grips with the construction aspects of a development. This seminar aims to move you from confused to confident in 48 hours.

Sarah is a dynamic presenter with 10 years’ experience in designing and delivering effective, inspiring and enjoyable learning events. She has substantial technical and legal expertise having worked for a Top 10 national firm in their Constructing and Engineering Group (the same firm for which I used to work, co-incidentally).

For more infomation on this course, click on this link:

Protecting stakeholders from construction risks

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The MEPS consultation: why are we waiting? 4 June 2014

Where is the MEPS consultation?  That is what everyone is asking.  MEPS (more or less) stands for Minimum Building Energy Performance Standards.  It is the acronym currently used to refer to the provisions in the Energy Act 2011 that will ban letting a property (commercial or residential) with an EPC rating below E.  They are intended to come into force by 2018.

Although MEPS applies to all types of property, this article is dealing only with commercial properties.  I do not know enough about how MEPS might apply to residential properties to be able to comment on that aspect.

I wrote about MEPS in my blog article “Three key forthcoming legal developments in 2014” on 15 January this year – almost five months ago.  This is what I wrote:

“Minimum Building Energy Property Standards (MEPS): provisions in the Energy Act 2011 commit the Government to introduce MEPS by April 2018.  A consultation on the secondary legislation is expected in the first quarter of 2014.  The importance of getting this right cannot be exaggerated.  The policy – for both commercial and residential properties – can be summed up as “A landlord will not be allowed to let a property that has an EPC rating of F or G”.  However there are going to be complex exceptions.  The key exception is apparently to be where the landlord has carried out all the work that is possible to the property under the Green Deal (ie that meets the Golden Rule), and the property is still not above an F rating.  I will draw attention to the consultation through this blog when it is issued.  It is vital that everyone in the property industry responds to it.   This is an article that I wrote in 2012 on the subject while a PSL at Eversheds.”

It is now June and there is no sign of the promised consultation paper.  The property industry is getting anxious.  April 2018 is not far away, especially if tens, perhaps hundreds, of thousands of properties have to be upgraded by then.

Indeed today the UK Green Building Council released the text of a letter written to the Prime Minister and signed by almost 30 organisations including Land Securities, Lend Lease, Hammerson, Marks & Spencer, John Lewis and SEGRO, urging the Government to end the delay and issue the consultation document.  It is worth setting out the letter in full here:

Dear Prime Minister

Commercial buildings are responsible for around one fifth of the UK’s total carbon dioxide emissions, and a similar proportion of the UK’s total energy consumption. At the same time, the sector offers some of the most cost-effective carbon abatement and energy efficiency potential. If this potential can be delivered, it will also bring enormous benefits for the UK in terms of business competitiveness, economic growth, and energy security.

With this in mind, the 2011 Energy Act placed an obligation on the Secretary of State for Energy and Climate Change to introduce a minimum energy performance standard for privately rented commercial (and domestic) buildings. Since that time, industry representatives have been working alongside Government officials to help draw up proposals as to how this might best be put into practice. Over that same period, organisations from across the commercial building sector have begun to take practical steps to gear up for the regulations, including undertaking due diligence studies covering their property portfolios, and investing in upgrades to poor performing buildings. In short, the prospect of this legislation is already starting to have a visible and positive effect on the market.

However, at the current time we are still waiting for the consultation on these regulations to be published, amid rumours that there is significant opposition to their implementation within Government.

We are writing to urge you to ensure that Government sees through its commitments on minimum energy performance standards for commercial rented properties. The regulations have the potential to play a transformative role across the sector, impacting as they will at a critical “transaction (leasing) phase” in the building lifecycle. This has repeatedly been highlighted as the point at which strong and cost-effective action can be taken, yet one which has so far been largely neglected by policy-makers.

If these regulations can be designed to be clear, simple and long-term, they could unleash a tidal wave of investment in our most inefficient property stock. In turn, this will drive innovation that would help the UK gain a significant share of a global energy efficiency market that is already worth over £17.6bn to the economy. In contrast, the current prevarication around the policy is preventing timely preparations from being made, raising the potential costs of compliance to industry.

We therefore call on you to end the uncertainty around these regulations, and ensure that a robust and ambitious consultation document is published as soon as possible.

There are a number of points to note here.

First, the letter refers to “rumours that there is significant opposition to their implementation within Government”.  Responsibility for delivery of MEPS lies with the Department for Energy and Climate Change (DECC), but the policy will clearly have an impact across the whole of government.  I imagine the intention is to issue the consultation document complete with a draft set of regulations for implementing MEPS, and perhaps it is settling the policy behind these that is causing a delay.

The one big issue that has divided the property industry in relation to MEPS is whether the rule should apply only to new leases granted from the start date (expected to be April 2018), or whether it should also apply to leases already in existence on that date.  Those aiming to reduce energy use as much as possible in the shortest possible time want the regulations to apply across the board from 2018.  Those with more experience of commercial property do not believe that is realistic.  In most cases, you simply cannot improve the energy rating of a property that is occupied by tenants while the tenants are in the building carrying on their business.  Typical leases will not permit it.  The regulations could override individual leases, but it would be a pretty draconian way to deal with the issue, and probably unnecessary given that the majority of commercial leases that will already exist in April 2018 will probably be for terms of ten years or less.  It could be this issue that is the subject of discussions between different Government departments, holding up drafting the regulations, and therefore also holding up the consultation process.

Secondly, the letter is asking for regulations that are “designed to be clear, simple and long-term”.   Long-term perhaps, but clarity and simplicity are simply not on offer.  As originally described, MEPS relies entirely on the success of the Green Deal.  You only need to do what you can do with Green Deal finance.  After that, if your building is still below an E grade, you can let it. But at what point does the property need to be compliant?  Does the landlord need to bring the property up to standard in order to market it or can it be brought up to standard once a tenant has been found?  What will the position be where the landlord is required by statute to grant a new lease, such as under the Landlord and Tenant Act 1954?  There are dozens of similar issues to consider.  This does not feel to me like a policy that can be expressed in clear and simple regulations.

(In passing, and for comparison, note that the Government has said today in the Queen’s Speech that it will bring forward legislation in England that will outlaw free carrier bags.  This became the law in Wales in 2011, where retailers already have to charge 5p for a single-use carrier bag.  The regulations that set out the law are 32 pages long (although they are in both English and Welsh).  To demonstrate their complexity, there are 15 exceptions from the requirement to charge 5p for a bag, ranging from bags used solely to contain packaged fish or fish products to bags used solely to contain live aquatic animals in water (also fish, presumably).  MEPS will need to be a bit more complex even that that.)

Thirdly, the Green Deal is not yet available for commercial properties.  Reportedly, it has not exactly been a roaring success for residential properties.

Fourthly, there seems to be little appetite on anyone actually to enforce these regulations.  The assumption is that they will be enforced by trading standards officers – but they are not exactly short of work to do already.  There are few stories of enforcement of the EPC regulations, and this will fall to the same people but will be much more complex.

Finally, although the requirement on the Government to introduce MEPS is contained in the Energy Act 2011, it is not yet in force.  So, contrary to everyone’s belief (including the person who drafted the letter received today by the Prime Minister), there is currently no requirement on the Government to introduce MEPS by April 2018.  There are odd bits of odd acts on the statute book that have never been brought into force.  They have been quietly dropped.  The same could happen to MEPS (except it would not be possible to drop it quietly).  I for one would not be surprised if MEPS, as originally envisaged, never makes it to the starting post.  I fear that it is just too complicated to be capable of delivery.

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