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There is potential for the priority search procedure to be misused by
someone such as a former, disappointed, buyer. This is well illustrated
by a recent case where a developer entered into a lockout agreement with a company that was planning to buy nine flats in the development.
However, the lockout period expired and the parties were unable to
reach agreement.
Accordingly, the developer went ahead and exchanged
contracts with individual buyers to purchase those flats. In due course
the solicitors acting for those various buyers submitted their searches
but found that the disappointed company buyer had since lodged its own
priority searches (effectively freezing the properties for some six weeks!).
When approached, the company said it would not withdraw its priority
searches unless it was paid a substantial sum of money.
The end result was an application to the court, with the company backing
off and withdrawing its priority searches. But, what became apparent
was that there was no clear legal remedy available to the title holder in
this situation; the arguments before the court had to be based upon the
court having an inherent jurisdiction, or alternatively that the defendant’s
acts amounted to a tortious interference with business. What the Land
Registry Rules do not provide for is any remedy against someone who
wrongfully, and without cause, lodges a priority search application, or
refuses to withdraw an official search once an intended transaction has
gone off. That is in contrast to the position with notices and restrictions
(where acting without ‘reasonable cause’ amounts to a breach of
statutory duty).
The point to appreciate is that there is a potential for misuse of priority
searches. One suspects that the publicity given to this recent case will
result in the Rules being amended. Further details in [2007] 184
Property Law Journal 10.
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March 2007 |
