Land Registration – More Changes On The Horizon For Secured Lenders?

On 24 July 2018 the Law Commission made 53 recommendations for reform of the Land Registration Act 2002 ("LRA 2002") in a long-awaited report which runs to 587 pages¹.

This article highlights the recommendations likely to be of most interest to real estate financiers.

Tacking further advances

Tacking is a useful device which enables a lender to add (or "tack") a further advance to an original secured loan, such that the further advance enjoys the same priority as the original loan.  Absent the ability to "tack" the further advance to a lender's existing security, a subsequent charge would have priority over it.

Under section 49 of the LRA 2002 a further advance made by the proprietor of a registered charge can take priority over a subsequent charge if one of the conditions specified in section 49 is satisfied.  However, the fact that the LRA 2002 only permits tacking by "the proprietor of a registered charge" has long caused concern in the syndicated