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Sarah owns the fee simple in 3 Willow Court, an unregistered leasehold flat. BankSafe has a first-ranking charge by way of legal mortgage over 3 Willow Court which is protected by a deposit of the title deeds. You act for Safe Mortgages, which is proposing to take a second charge over 3 Willow Court.
Which of the following statements best describes the legal position?
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The grant of the mortgage to Safe Mortgages will not trigger compulsory first registration of the estate at HMLR. You should protect Safe Mortgages' charge with the registration of a Class C(i) Land Charge. The creation of a second legal charge does not require the estate to be registered. The appropriate method to protect a second charge (also known as a Puisne Mortgage) on an unregistered title is to register it as a Class C(i) Land Charge under the Land Charges Act 1972. Since the first charge is already protected by the deposit of the title deeds with BankSafe, depositing the title deeds with Safe Mortgages is not an option.
Key Point: Under the Land Charges Act 1972, a second charge on an unregistered title must be protected by registering it as a Class C(i) Land Charge. This ensures that the second charge is properly noted and can be enforced against subsequent purchasers.
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