Land Registry Pre-completion Searches

The purpose of the pre-completion searches is to prevent entries being registered against the property (or in the case of the bankruptcy search, the purchaser) from exchange of contracts up to the completion of the registration process, so that the buyer can complete safely.

There are five types of pre-completion searches, as follows:-

• Bankruptcy Search (K16)
• Land Charges Search (K15)
• Official Search of Whole with Priority (OS1)
• Official Search of Part with Priority (OS2)
• Official Search of Whole or Part without Priority (OS3)

Which Pre-Completion Searches are Required and When?

If a purchaser is obtaining a mortgage then a bankruptcy search is needed. When buying the whole of a registered title (as opposed, for example, to a new build plot), an OS1 is needed. If buying part of a title (such as a plot) an OS2 is required. A K15 is done in place of an OS1/OS2 when purchasing unregistered land.

Bankruptcy Search (K16)

Ordering the Bankruptcy Search 

The bankruptcy search can be carried out either online or over the telephone, though as far as I am aware an account with HM Land Registry is required in both cases. It can also be ordered in writing using form K16, which can be completed and printed on the Land Registry's Website The cost of the bankruptcy search is £2 per name searched and the address to write to is given on the form. The bankruptcy search is valid for 3 weeks from the date of issue, and must be valid on completion. The bankruptcy search is generally done following exchange of contracts though there is a school of thought that says that because it is so inexpensive, and because of the potentially very serious problems that are caused when entries are revealed after exchange which actually relate to the purchaser, a bankruptcy search should also be carried out at the start of the transaction as well as the one after exchange.

The Purpose of the Bankruptcy Search

The purpose of the bankruptcy search is to establish whether the purchaser is, or is about to be, bankrupt and is done for the benefit of the lender. There is nothing to stop a bankrupt purchasing property, however it is likely of course that the trustee in bankruptcy/official receiver will claim that property for the bankrupt's creditors. If a notice of the bankruptcy or impending bankruptcy is registered at Land Charges prior to completion of a mortgage then the trustee in bankruptcy's interest ranks above the lender's charge, meaning that the lender, rather that having the property as security for its loan, simply joins the back of the queue of creditors.

The Bankruptcy Search Result

The bankruptcy search result returned will either be a form K17 (if no entries are revealed) or K18 (if there are entries).

What if Entries are Revealed on the Bankruptcy Search?

The fact that entries are revealed on the bankruptcy search does not necessarily mean that the person searched is or is about to be bankrupt. The bankruptcy search is on a person's name only, and therefore the more common the name the more entries will be revealed. For example a bankruptcy search on John Smith or Gareth Jones is almost certain to reveal several results. Steps must be taken however to ensure that the entry does not relate to your client. The first stage is to contact The Insolvency Service on 0845 602 9848. If you give them the details of the entry and your client's date of birth they will be able to tell you whether your client and the bankrupt share the same date of birth. If they do not then it is still advisable to forward a copy of the bankruptcy search result to the client and ask him to sign the result to certify that the entries do not relate to him.

What if Entries are Revealed on the Bankruptcy Search Which Do Relate to My Client?

If it transpires that entries are revealed on the bankruptcy search which do relate to your client then you must not complete without having reported the matter to the lender and obtained authority to proceed. It may be that the lender is already aware. There are many lenders who will lend to discharged bankrupts - this is commonly termed the "sub-prime market". Firstly contact the client to confirm he is aware of the bankruptcy and he has disclosed it to the lender. Secondly the client must provide you with evidence of his discharge. Once this is obtained it should be forwarded to the lender together with a copy of the bankruptcy search result and a letter asking for authority to proceed with the loan (regardless of whether the client or his broker, tells you that the lender is already aware). It is likely that contracts will have exchanged by now therefore time is very much of the essence.

Under no circumstances should completion take place until the lender has authorised it, even if the funds have already been released by the lender. Ultimately it may be that the transaction cannot go ahead. If the bankruptcy is current, i.e. not discharged, then the transaction can certainly not proceed as all the bankrupt's cash and assets will be under the control of the trustee in bankruptcy.

Land Charges Search (K15)

Ordering a Land Charges Search

The land charges search can be ordered online or over the telephone (for which an account is required) or in writing. The form can be printed from the Land Registry's Website. Any person who owns or has owned the property from the purchasers in the root conveyance to the present day should be searched. In the years column, the range should be from the year that the person first acquired an interest in the property to the year that their interest ended. The counties to be listed include the present counties and any other counties which the property has been in since the date of the root conveyance (for example for a property in Hull you would need to include East Riding, East Yorkshire and Humberside). The search costs £2 per name.

An initial search should be ordered at the outset of the transaction and a final search after exchange. For the final search it is only necessary to search the sellers, the search against previous owners does not need to be repeated.

The Purpose of the Land Charges Search

The land charges search is carried out when buying unregistered land. In order to secure an interest in unregistered property it is necessary to either hold the title deeds (which a mortgage lender would do) or to register a land charge. Rather than being registered against the property as is the case with registered land, a land charge is registered against the person, which is why owner's names are searched. Matters which are registered as land charges include 2^nd mortgages, covenants, matrimonial home rights etc. If a land charge is registered then a purchaser is bound by it whether or not a search is actually carried out.

The Land Charges Search Result

The search result will be in either form K17 (if no entries are revealed) or K18 (if entries are revealed).

What if Land Charge Entries are Revealed?

As this is a search against a person's name rather than against the property you first need to establish whether the entry relates to the property. The search result will give you the address to which the entry relates and if that is not your property then it can be ignored. Care should be taken however because over time addresses do change - the deeds should be examined to see if the property has ever been called anything else in the past.

If the entry is relevant then a copy of the entry should be obtained. This can be ordered from the land registry using the reference number given in the search result. This copy will give you some more information on the entry.

Types of Land Charge Entry

There are 6 classes of land charge (A - F) which are each split into several sub-classes, but the four most common types are as follows:-

C(i) - Puisne Mortgage

This is mortgage where the deeds are not held by the usually, which usually means it is a 2^nd mortgage, i.e. there is also (or was) a main mortgage and so the deeds could not be passed to the 2^nd mortgagee, who instead registered a land charge so that future purchasers would have notice of their interest. Where such an entry is revealed you must obtain confirmation from the seller that the entry will be cancelled on completion or else an undertaking that the mortgage will be redeemed and the charge cancelled following completion. The seller's solicitor must first check whether the mortgage has been redeemed. If so he must obtain the vacated mortgage deed either from the seller or if they still have it, from the mortgagee. By vacated mortgage deed, I mean a mortgage deed that is signed or sealed by the lender to say that all the debt has been repaid. The lender can then be asked to contact the land charges department and cancel the entry. Alternatively land charges may accept the vacated deed as sufficient evidence that the entry is no longer relevant in which case they may cancel it. If there is still money outstanding to the lender then it may well be that the seller intends this money to be repaid from the sale proceeds, in which case these steps must be undertaken after completion.

C(iv) - Estate Contract

An estate contract is simply a contract for sale of the property. The equivalent for registered land would be to register a notice, which might be done when buying a new build property which is not going to be ready for months or even years. This prevents the property from being sold to someone else prior to completion. In theory C(iv) entries should not arise, since they should be removed either when the contract is completed or when it is cancelled. Sometimes however they remain, either because they are still valid or because at the time the person responsible for having the entry cancelled forgot to do so. The first step is to check the deeds to see if there is a conveyance which corresponds to the contract, i.e. has the contract actually been completed? If so it can be ignored, though the conveyance should be retained as evidence following registration as the land registry may note the contract in the register. If it has not been completed, and if there is no evidence that the contract was cancelled, then the entry must be removed, which will mean tracking down the would be purchaser. If this cannot be done (the entry may be many years old) then land charges should be contacted to see if they are prepared to cancel the entry.

D(ii) - Restrictive Covenant

If part of an unregistered estate is sold off and the seller as part of the transaction enters into covenants with the buyer that affect the land which the seller retains then these will be registered as a land charge. This is so that a buyer of the retained land has notice of the covenants. When a D(ii) entry is a revealed a copy of the entry should be obtained. This will give details of the document (usually a conveyance) which contains the covenants, and a copy of this document must then be obtained in order to report the covenants to the purchaser.

F - Matrimonial Home Rights Notice

This is the equivalent of the modern day home rights notice and is a notice of a spouse's interest in the property under the Family Law Act 1996. The seller must arrange for the entry to be cancelled on or before completion.

Official Search of Whole With Priority (OS1)

Ordering the OS1

The OS1 is ordered online or over the telephone (for which an account is required) or in writing. The cost is £3.00 and the necessary form can be completed and printed from the Land Registry's website. There are a few points to note when completing the form:-

• Administrative area and postcode - on the Official Copies, just before the Property Register begins, it will give the county and administrative area, for example for a property in Leeds it would say "West Yorkshire : Leeds", therefore Leeds should be entered on the OS1, together with the postcode
• Title Number - this is the title number from the Official Copies
• Registered Proprietor - This is the proprietor(s) as per the Official Copies
• Search From Date - At the very top of the first page of the Official Copies it will say when the Official Copy was produced. This is the search from date.
• Applicant - If the buyer is obtaining a mortgage then the applicant is the lender and must be entered here exactly as it appears on the mortgage deed, i.e. Northern Rock would be Northern Rock PLC, First Active would be Royal Bank of Scotland PLC. If there is to be more than one mortgage then it is the name of the first charge holder that is entered. For cash purchasers the applicant should be entered as the full name(s) of the purchaser(s) i.e. John Jack Smith and Jane June Jones
• Reason for Application - If the purchaser is buying with a mortgage then it is always C. If buying cash then it is P unless the purchaser is buying a brand new lease (i.e. buying from the landlord rather than an existing tenant) in which case it is L.
• Type of Search - For registered land this will always be Registered Land Search. If the land is not yet registered then the OS1 is not used.

The search should be ordered following exchange of contracts. It should be ordered as early as possible in order to allow time to deal with any issues which may arise however it should be borne in mind that the search is valid for just 6 weeks and should be valid until the application for registration is submitted, therefore it should not be ordered more than 3 weeks in advance of completion.

The Purpose of the OS1 Search

The reasons for carrying out an OS1 are twofold. Firstly it will reveal whether any alterations have been made to the register since the date the Official Copies were produced (the search from date mentioned above). This might be an additional charge,notice or restriction , or even a change in ownership. Secondly it gives the applicant priority - that is to say it prevents anything being registered against the title except by the applicant (i.e. the lender of the purchaser, see "ordering" section above). This protection period is vital as otherwise a purchaser could complete only to discover that before he had the chance to lodge his application for registration another charge had been registered which the seller had not agreed to pay off, or a restriction had been registered by someone owed money by the seller, or there had been some other alteration which would prevent his application from succeeding. The protection last for 6 weeks from the date of the search.

The OS1 Result

The result will be a certificate in form OS1(R). At the top it will gave the date and time that the priority period began and the date on which it will end. If the search is clear it will say "Since there have been no adverse entries". If it is not clear, an up to date Official Copy will be attached to the certificate.

What if Entries are Revealed?

If there have been changes to the register since the search from date then an up to date Official Copy will be provided with the search result. This must be checked against the existing Official Copy to establish what the change is. Sometimes it will be inconsequential, for example the Halifax PLC are in the process of updating all their registered charges to refer to Bank of Scotland PLC. Such things as these can be ignored (though you must check that it is simply the existing charge details that have been updated and not a new charge which has replaced the old one - check the dates of the charges to ensure they match). Sometimes however there will be an additional charge, or there may still only be one charge but it may be different to the one you were aware of. In either case the purchaser's conveyancer must insist on having an undertaking from the seller's conveyancer to repay the replacement/additional charge on completion and to supply evidence of discharge.

Other entries to watch out for are notices and restrictions, particularly with regard to matrimonial home rights or bankruptcy. Visit the page "Notices and Restrictions" for assistance on how to have home rights notices removed. A bankruptcy notice or restriction is more difficult to resolve and I will cover this in a separate chapter, but briefly if there is a bankruptcy note then the sale proceeds will probably have to be paid to the trustee in bankruptcy (via the seller's solicitors) before he will agree to remove the notice and if there is a bankruptcy restriction then this means that the seller no longer has a right to sell and the property now vests in (is owned by) the trustee in bankruptcy, who will therefore need to consent to the sale.

Official Search of Part With Priority (OS2)

Ordering the OS2

The OS2 can only be ordered by post, at a cost of £6. The form to be used can be found on the land registry's website. There are a few points to note:-

• Administrative area and postcode - on the Official Copies, just before the Property Register begins, it will give the county and administrative area, for example for a property in Leeds it would say "West Yorkshire : Leeds", therefore Leeds should be entered on the OS2, together with the postcode
• Title Number - this is the title number from the Official Copies
• Registered Proprietor - This is the proprietor(s) as per the Official Copies
• Search From Date - At the very top of the first page of the Official Copies it will say when the Official Copy was produced. This is the search from date.
• Applicant - If the buyer is obtaining a mortgage then the applicant is the lender and must be entered here exactly as it appears on the mortgage deed, i.e. Northern Rock would be Northern Rock PLC, First Active would be Royal Bank of Scotland PLC. If there is to be more than one mortgage then it is the name of the first charge holder that is entered. For cash purchasers the applicant should be entered as the full name(s) of the purchaser(s) i.e. John Jack Smith and Jane June Jones
• Reason for Application - If the purchaser is buying with a mortgage then it is always C. If buying cash then it is P unless the purchaser is buying a brand new lease (i.e. buying from the landlord rather than an existing tenant) in which case it is L.
• Property Details - If buying a new build property then it may be that a plan of the development has been lodged with, and approved by, the land registry. If this is the case then you need only enter the plot number and the date of approval of the estate layout plan here (which should be advised by the seller's solicitors). If no plan has been approved then you must give a description of the property (i.e. the address) and attach a plan showing the extent of the land being purchased. The plan used must be to scale and must have a north point. You must also state, where indicated how the plot is marked on the plan (usually edged red). The plan must clearly identify the extent of the plot within the title out of which it is being transferred, otherwise it will be rejected.
• Type of Search - For registered land this will always be "Registered Land Search". If the land is not yet registered then the OS2 is not used.

The search should be ordered following exchange of contracts. It should be ordered as early as possible in order to allow time to deal with any issues which may arise however it should be borne in mind that the search is valid for just 6 weeks and should be valid until the application for registration is submitted, therefore it should not be ordered more than 3 weeks in advance of completion.

The Purpose of the Search

An OS2 is done for the same reasons as an OS1. the difference is that an OS2 must be done when purchasing part, as opposed to the whole of, a registered title, for example when buying a new build property or perhaps a plot for development.

The OS2 Result

The result will be a certificate in form OS2(R). At the top it will gave the date and time that the priority period began and the date on which it will end. If the search is clear it will say "Since there have been no adverse entries". If it is not clear, an up to date Official Copy will be attached to the certificate.

What if Entries Are Revealed?

The same considerations apply as if entries are revealed in an OS1.

Official Search of Whole or Part Without Priority (OS3)

The OS3 is the same as an OS1 or OS2, except that it does not give the applicant priority and consequently it is rarely used.