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Non-compliant deeds causing costly delays for housing associations
A change in approach by the Land Registry is leading to documents for transferring or leasing property being rejected or slowed down, says Rachel Gwynne
A recent crackdown by the Land Registry has resulted in greater scrutiny on housing associations over the way that key property documents are executed.
The move, thought to be part of a widespread effort to prevent fraud, is causing an administrative headache for many organisations that are finding themselves issued with unexpected requisitions on documents which have previously been processed without issue.
The increased number of requisitions (requests from the Land Registry for missing information that can delay business) are affecting both associations operating as companies and registered societies when executing deeds such as land transfers, leases or deeds of easements.
The guidelines issued by the Land Registry which are causing the problem are not new and many providers have become used to processing documents in a certain way.
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However, the Land Registry’s approach to the guidelines has changed.
Where previously the Land Registry had been less vigilant in ensuring that documents are executed correctly, it is now applying greater scrutiny to deeds to ensure they are being signed by appropriate individuals with sufficient authority.
“The Land Registry is now applying greater scrutiny to deeds to ensure they are being signed by appropriate individuals with sufficient authority.”
Many housing associations will have been unaffected by the increased scrutiny. But others that have been using the term ‘authorised signatory’ in attestation clauses – rather than referencing board members and/or the secretary – are likely to have seen deeds and other documents being rejected.
Under the Land Registry guidelines and in current legislation, an authorised signatory is defined as being a director of the company, and the company secretary; or in the case of a registered society, every member of the committee or board and the secretary.
Documents which fail to make clear reference to the authorised signatory being either a director of the company or member of the board, or the secretary, are being declined pending such confirmation or re-execution.
While a rise in Land Registry requisitions has been seen recently across the board, associations are being hit particularly hard, in comparison to commercial entities where it is more usual practice for property deeds to be signed by the directors and company secretary.
“Associations are being hit particularly hard, in comparison to commercial entities where it is more usual practice for property deeds to be signed by the directors and company secretary.”
Associations, because of the volume of deeds being executed, often delegate authority to execute documents to ‘authorised signatories’, usually executive team members or other employees, in order to free up the board’s time for strategic and business-critical activities.
Such delegation of execution powers to employees by way of a board resolution, is not sufficient for signing deeds and instead, powers of attorney need to be put in place.
However, until the relevant powers of attorney have been secured, deeds must continue to be executed by board members and/or the secretary.
With a large number of property documents needing to be executed by way of a deed, finding board members who are free and available to sign can be an administrative burden for some housing associations.
If the Land Registry rejects a document or deed, this slows the completion of transactions and can increase costs.
Delays of this nature can have significant consequences for both associations and third-party purchasers who are unable to register their title, for example when dealing with a large development or where funding can only be secured on the registration of title documents.
A universal focus on fraud prevention is likely responsible for the Land Registry’s increased scrutiny, which arrived alongside an update of its guidance relating to the execution of deeds and powers of attorney late last year.
“Delays of this nature can have significant consequences for both associations and third-party purchasers.”
It seems probable that these updates spurred on a tightening of internal processes, and a renewed focus on ensuring deeds are executed correctly.
Many providers will be unaffected by the crackdown, but for those who are, a simple process review is all that’s required.
Checking that deeds are being signed and witnessed by the appropriate people, with the correct delegated powers in place, would be a good first step in avoiding frustrating delays.
Rachel Gwynne, legal director and affordable and social housing specialist, Shakespeare Martineau
