When the Land Registry uses the word "dematerialisation", it means that it has decided to discontinue the practice of issuing Charge Certificates after registering a lender's legal charge and Land Certificates when a title was not subject to a legal charge.
When a lender uses this word, it means that they do not want to hold any "unnecessary" documentation following their charge being registered at the Land Registry. The solicitor acting for the purchaser/borrower/lender therefore usually sends any such documents to the borrower/purchaser.
Such documents can include, but are not limited to, leases, NHBC or equivalent guarantees, planning permissions and building regulation certificates.
Whilst one can understand that lenders do not wish to pay for the storage space for these documents, these documents may well be required if the lender takes possession of the property and wishes to sell it.
Although most planning documents can be obtained from the local authority and duplicate NHBC certificates can also be obtained, this is at a cost and had the lender kept the documentation in the first place, that cost could have been avoided. It also takes time to obtain copies and for every day a sale is delayed, further interest accrues and the lender's potential loss increases.
There is also the added problem that if the property was registered with NHBC or Zurich, it may have been registered or described by way of the plot address which the solicitor may not know. The solicitor will usually only have the postal address of the property.
Furthermore, in some cases of new build properties, lenders rely on a professional consultant's certificate as opposed to a conventional guarantee. In that case there is no central organisation where copies can be obtained, nor will it be easy to track down and identify the professional that gave the certificate.
As a solicitor acting for a lender, I often find myself writing to the solicitor who completed the mortgage advance for my client, asking them for copies of such certificates. This takes time and again costs my client money, thereby increasing the amount of the potential loss
Leases may also be difficult to obtain in certain cases. In a number of cases I have had, the Land Registry has failed to retain a copy of the lease. I have had to obtain a copy from the landlord if he is traceable and contactable.
These problems can be avoided if the lender insists on receiving some basic, but important documentation on completion of the mortgage advance.
In my view dematerialisation is a false economy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
