Change of ownership legal conundrum

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    Change of ownership legal conundrum

    I've refurbished a property that I purchased under a company, lets call it ABC Redevelopment.

    I intend to keep this property as a buy to let. To keep the rental business separate from the redevelopment business I have set up a subsidiary company ABC Rental. It is a wholly owned subsidiary so I can transfer the ownership without stamp duty, and also move money between the two without tax problems.

    I have a problem that the property transfer hasn't been registered in time for the new tenancy. So the insurance, DPS and tenancy will be in the name of the property company because they have to match the name on the land registry. However the date of completion on the land registry (once it is updated) will be a few weeks ago, pre-dating the tenancy.

    So do I:

    1 - Use a copy of the Land Registry form as evidence that the correct title is the rental company?

    or

    2 - Start the tenancy with the development company as listed on the register knowing it is out of date. In this case I will have to get the tenant to sign a new tenancy when the register is updated, as well as updating the insurance and DPS?

    or

    3 - Is there a way of assigning the tenancy to the rental subsidiary without having to get it resigned by the tenant?

    #2
    Originally posted by bluebook View Post
    I have a problem that the property transfer hasn't been registered in time for the new tenancy. So the insurance, DPS and tenancy will be in the name of the property company because they have to match the name on the land registry.
    Why? The landlord of a tenancy doesn't have to be the owner (however defined). Whoever grants a tenancy is the landlord.

    1 - Use a copy of the Land Registry form as evidence that the correct title is the rental company?
    Except it's not. The legal title only transfer once it's registered.

    3 - Is there a way of assigning the tenancy to the rental subsidiary without having to get it resigned by the tenant?
    You could.
    I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

    I do not answer questions through private messages which should be posted publicly on the forum.

    Comment


      #3
      Originally posted by KTC View Post

      Except it's not. The legal title only transfer once it's registered.
      That isn't true. The transfer is complete once documents are signed; not when it's registered. How else do you move into a property before it's been registered? I've waited 3 or 4 months for the registration to come back.

      I am going through this EXACT issue right now with a piece of land in Scotland that I want to sell but isn't registered in my name (because it takes months to do). The Solicitor categorically told me not two weeks ago that just because it isn't registered (yet) in my name, doesn't mean it isn't mine - it legally became mine upon the signing of the transfer and witnessed by solicitors. All it is now is simply in a queue to be inputted on a computer (registered).

      It might be different in Scotland; but once the contract is signed and exchanged, the deal is legally done. You don't have to wait for a land certificate to move in/to prove ownership.

      Comment


        #4
        Originally posted by bluebook View Post
        So the insurance, DPS and tenancy will be in the name of the property company because they have to match the name on the land registry.
        That's not the case.
        The landlord for a tenancy is whoever is named on a tenancy agreement as the landlord (or in the absence of any agreement, whoever rent is paid to).
        Just use the company name you want to be the landlord.

        Originally posted by RedHitman View Post
        It might be different in Scotland; but once the contract is signed and exchanged, the deal is legally done. You don't have to wait for a land certificate to move in/to prove ownership.
        It is slightly different in Scotland - where an agreement to purchase has a different status than in England, but we're confusing two things.

        When a property sale is completed, the transaction is complete and the ownership has transferred.
        The land registry is the definitive record of property ownership and is authoratative.
        The time between completion and the register being updated is legally invisible and it would be a bizzare set of circumstances that caused any issue.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Originally posted by RedHitman View Post
          That isn't true.

          ...
          My statement was strictly correct for registered land. The legal title transfer only on registration. Until then, the buyer only has equitable ownership. For unregistered land, legal title transfer on completion, but will revert if no registration takes place within a set time limit.

          Originally posted by RedHitman View Post
          It might be different in Scotland

          ....
          I always assume England and Wales if not even just England on "Residential Letting Questions" and answer accordingly. There's a separate "Scottish Rental & Legal Issues" forum on here. Having said that, I think the registration gap exist in Scotland as well though many details with land registration differs.

          Originally posted by jpkeates View Post
          The time between completion and the register being updated is legally invisible and it would be a bizzare set of circumstances that caused any issue.
          The registration gap isn't an hypothetical issue for someone buying a property with a sitting tenant with it. The new landlord wouldn't be able to serve notices (such as section 21 under Housing Act 1988 or break notices) until registration.
          I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

          I do not answer questions through private messages which should be posted publicly on the forum.

          Comment


            #6
            Stop worrying about change of ownership. If and when you decide it has happened (see advice about..) simply serve notice(s) compliant with s48 & s3, to sort out change of ownership in line with the law.
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

            Comment


              #7
              Originally posted by KTC View Post
              The registration gap isn't an hypothetical issue for someone buying a property with a sitting tenant with it. The new landlord wouldn't be able to serve notices (such as section 21 under Housing Act 1988 or break notices) until registration.
              A change of equitable ownership is a change of ownership, though. It's just not registered.
              Same as buying a car and then having to notify the DVLA - which is also the definitive register.

              But interesting landlord notice notion, though

              As the landlord doesn't have to own the property, if they serve the correct notices to the tenant advising them that they're the landlord they become the landlord and should be able to serve any other notice that they need to / want to.

              Or is that something that I've just assumed?

              It seems to me that a change in equitable ownership is a change of the landlord's interest in the property, which triggers the requirements in section 3 LTA 1987 for notice to be served.


              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                Thanks for your answers, yes it is in England. The car analogy is a good illustration.

                The title and tenancy documentation will all be in the rental company name so that should to be OK and I can separate the two parts of the business.

                The next step is re-financing the property (currently self financed from other assets). It'll be odd to apply for a charge on the register for a mortgage if the owner isn't listed on the register for that property! Fingers crossed that it's all resolved before I need the funds for the next purchase.

                Comment


                  #9
                  You maybe exceeding the knowledge of this Forum.
                  Find out the T&Cs for each remortgage, then ask for advice before agreeing.

                  Comment


                    #10
                    I have only read summaries of the cases relating to the registration gap and so do not know the reasoning behind the decisions. However, the provisions of sections 23 and 24 of the LRA 2002 would seem to allow the creation of a lease in the registration gap.

                    Comment

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