Charges
Form of charge deeds
Rule 66 provides that a charge for payment of money may be in LR Form 28 (Precedent 8.B). Where a charge relates only to part of the land in a folio, a covering letter should also be lodged explaining whether a new folio is to be opened for the portion charged. Rule 66 also prescribes forms for a charge for future advances and a charge by way of annuity.
NOTE: Where the land being charged is being created as a result of a Transfer of Part
From an existing folio, you must first generate a Transfer of Part transaction which will create a new folio reference number which can be used to reference your Charge transaction.
It is not mandatory to use any of these forms, and lending institutions are perfectly entitled to produce their own standard charge deeds. Such documents are acceptable to the Registry but care should be taken in their completion to ensure that:
- they contain a Land Registry heading;
- they identify the property accurately, refer to the relevant folio and indicate whether the property to be charged comprises all or part of the land in the folio (all too often charge deeds refer to a property by its postal address but omit the vital expression “being all the land comprised in the above-mentioned folio”);
- the borrower charges the property with payment to the lender of the sum to be secured; and
- the document is properly executed.
PRECEDENT 8.B
LR FORM 28 CHARGE DEED
LAND REGISTRY
Folio:
County:
Registered Owner: AB
I, AB, the above-named registered owner, in consideration of £.......... hereby charge all the land comprised in the above-mentioned folio with payment to CD of ...... on .......... 20.., of the principal sum of £.......... with interest thereon at .......... per cent per annum payable monthly on the first day of each month.
I hereby covenant for payment of the said principal sum.
Dated:
Signed Sealed and Delivered etc.
Charges created by companies
Where a charge created by a company is lodged for registration it should be accompanied by proof that the charge has been registered with the Registrar of Companies (Rule 68). It is also necessary to satisfy the Registry that the company is empowered to enter into the charge see Precedent 7.M.
PRECEDENT 7.M
CERTIFICATE REGARDING A DISPOSITION BY A COMPANY
LAND REGISTRY
Folio:
County:
Registered Owner:
I, the undersigned .......... a partner/solicitor in the firm of .......... of .......... hereby certify that:
1. The disposition created by the deed of .......... dated .......... lodged herewith is within the powers of disposition of .......... (“the Company”).
2. The said deed has been validly executed by the Company.
Dated:
Signed:
Charges of land comprised in applications for sub-division
It is not uncommon for registered owners, particularly farmers, to apply to the Registry for sub-division of a folio so that a charge which is to be registered against a dwelling house will not affect the rest of the land. The heading of the charge deed should state the folio number followed by the word “PART”, and the description of the charged property should state:
“That part of the land in the above folio which is shown coloured …...on the map attached to an application for sub-division dated .......... (and which is situate at and known as ..........)”.
In transactions of this type lending institutions often insist that the land being charged should enjoy easements over the remaining land in the parent folio. However, this may create a problem because a person cannot grant himself an easement over his own property. The usual method of overcoming this difficulty is to transfer the land in one of the folios into the joint names of the registered owner and his wife. An alternative approach is to grant the lending institution a power to create easements over the land in the parent folio, in the event of it exercising its power of sale.
PRECEDENT 8.C
ADDITIONAL CLAUSES TO BE INSERTED IN A CHARGE DEED CONFERRING POWER FOR THE LENDER TO GRANT EASEMENTS OVER THE LAND OF THE BORROWER
(a) The borrower hereby grants unto the (Lender) full power and authority as part of its security to grant and transfer in due exercise of its power of sale along with the land hereby charged and as easements appurtenant thereto exercisable over the land remaining in the above folio all the rights set out in the Schedule hereto and for this purpose the borrower hereby irrevocably appoints the (Lender) to be his lawful attorney.
(b) The borrower hereby covenants with the (Lender) not to transfer or otherwise part with possession of all or part of the land remaining in the above folio without the consent of the (Lender) and, in the event of the (Lender) consenting to such a transfer, to reserve thereout as easements appurtenant to the land hereby charged the said rights set out in the Schedule hereto.
(c) The borrower hereby assents to registration of the said power and the said covenant in favour of the (Lender) as burdens affecting the land remaining in the above folio and further assents to registration of an entry on the folio inhibiting all dealings with the land remaining in the folio except with the consent of the (Lender).
(Insert a schedule detailing the relevant easements.)
Inhibitions in charge deeds
Where a charge deed incorporates an inhibition, as in the above precedent, a request for registration of the inhibition should be made. Unless such a request is made, and the appropriate fee is paid, the inhibition will not be registered.