Pick v Chief Land Registrar [2011] EWHC 206 (Ch)
Pick v Chief Land Registrar [2011] EWHC 206 (Ch)
The owner of the property was declared bankrupt. Months later the bankrupt transferred the property to the Claimant who then protected her property with a priority search at the land registry. However she then failed to register the property within the priority period.
A search of the register with priority is important. The buyers solicitor can check that the title has not changed since the official copies have been provided
During the priority period the search protects the buyer against anyone else registering an interest as they have priority during this period.
After the priority period had expired the trustee in bankruptcy registered a bankruptcy restriction at the land registry . Despite the restriction being registered the land registrar agreed to register the transfer to the claimant. The land registrar then cancelled the bankruptcy restriction.
Two acts conflicted.One the Insolvency Act 1986 and second, The Land Registration Act 2002.
The Insolvency Act states that the estate of the bankrupt vests with the trustee without registration. The Land Registration Act conflicts and states regardless of whether the transferror is bankrupt if the buyer has no notice because there is no registration of the bankruptcy then the purchase takes without the trustees interest.
The trustee argued that the buyer should not be afforded protection of the Land Registration Act because the restriction was entered on the title before the buyer registered her own title.
Section 86 (5) Land Registration Act 2002
5 Where the proprietor of a registered estate or charge is adjudged bankrupt, the title of his trustee in bankruptcy is void as against a person to whom a registrable disposition of the estate or charge is made if—
a the disposition is made for valuable consideration,
b the person to whom the disposition is made acts in good faith, and
c at the time of the disposition—
(1) no notice or restriction is entered under this section in relation to the registered estate or charge, and
(2) the person to whom the disposition is made has no notice of the bankruptcy petition or the adjudication.
The court disagreed. The important word was disposition. The land registrar was right to disallow the restriction the protection applied at disposition and not registration.
This decision is likely to be unpalatable to Insolvency Practitioners.
It is important that buyers Solicitors complete the registration during the priority period otherwise there would be a potential Solicitors Negligence claim.
It is important also that Insolvency Practitioners complete a search at HM Land Registry to ensure their restriction has been registered.