The Building Societies Association issued its own standard set of mortgage instructions at the beginning of January. This is partly because some building societies want to remain independent of the Council of Mortgage Lenders, whilst others are reluctant to pay the higher fees charged by the CML. The end result is that we now have a second set of standard instructions – although, in practice, the differences are minor.

One particularly important difference, however, concerns the registration of mortgages when a priority period has expired. BSA Clause E.30 says:

‘If you cannot register our mortgage within the priority period afforded by your original LR Search made before completion you must register a unilateral notice to protect our position. Simply renewing your original LR Search is not acceptable.’ (Emphasis added).

This is an important change – and one that should probably be adopted by all conveyancers (even if not acting on a BSA transaction). The problem, of course, is that a solicitor may act for a buyer and apply for an official search with priority, but problems down the chain delay completion. The solicitor is therefore unable to register the mortgage or transfer within the 30-day priority period, and so submits a new search application and gets a further 30 days. That, of course, is entirely the wrong thing to do! Indeed, it is a common misconception that priority periods can be extended – that is not the case. What you can do, however, is obtain a new search period (although that will not extend the original search period). Accordingly, if a third party has made a search or lodged an application in the intervening period, then that third-party’s interest may have priority. Indeed, as a note from Zurich points out, the misunderstanding that priority periods are renewable is not helped by LR officials routinely misleading solicitors by suggesting that priority periods can be ‘extended’, and it is worth noting that even the new BSA instructions refer to ‘renewing’ searches!

The bottom line is that simply doing a new search will not extend your previous search. That is why the BSA insists that you must register a unilateral notice, which will then provide a clear warning to any third party trying to register an interest that there is a potential issue to be dealt with. At the same time, it is obviously wise to apply for a new priority period as well.

In summary, if the priority period expires, then (a) register a unilateral notice and (b) apply for a new priority period (through a new search). Interestingly, the Law Society has said it regards this new BSA obligation to register a unilateral notice as a ‘major headache’; for our part, we disagree and we recommend the practice adopted by many firms, which is to routinely register a unilateral notice when a priority period is missed. Source: Zurich@risk.