UK: Real Estate: Keeping Prejudicial Information Confidential

Last Updated: 9 July 2003
Article by Martin Dawbney

With effect from Monday 13 October (when the Land Registration Act 2002 comes into effect) anyone will be able to inspect and obtain copies of any document held by the Land Registry, subject to certain exceptions to that right. This will include a right to inspect any leases or charges referred to on the register which are not currently available on general request.

Seeking an Exemption

You will be able to apply to exclude what is defined as "prejudicial information" from the public domain. This is "information that if disclosed to other persons would, or would be likely to, prejudice the commercial interests of the applicant". Where the information relates to an individual the test is whether the information "if disclosed to other persons would, or would be likely to, cause substantial unwarranted damage or substantial unwarranted distress to the applicant or another".

If you are either a party to a document or are affected by prejudicial information in the document you will be able to apply to the Land Registry for an exemption to keep part or parts of the document from the public domain. The application form will need to be submitted with the original document (unless already held at the Land Registry) and an edited version of the document.

Your application will be successful if the Land Registry are satisfied that the claim is not "groundless". This may not be a particularly difficult hurdle, but it must be remembered that the Registrar has a discretion to refuse an application where he is not satisfied that the information sought to be excluded is truly prejudicial information. The Land Registry have also stated that they "will not accept applications that omit large sections of a document without apparent good reason". There is a danger that if too much information is sought to be excluded the application will be rejected, resulting in the whole document becoming available to the public.

Obtaining copies of exempt information

Anyone may apply for an official copy of the full copy of an exempted information document giving reasons why he considers that none of the information omitted from the edited version is prejudicial information. If it appears to the Registrar that there is a case for issuing a full copy a notice will be served on the person who applied for exemption. There is an opportunity for the person with the benefit of the exemption to object to the full copy being issued, with any unresolved objections being referred to the Adjudicator. If you have successfully applied for exemption you must ensure that any change of address is notified to the Land Registry as soon as possible, in order to preserve your opportunity to object.

Transferring the benefit of an exemption

The benefit of an exemption cannot be passed to anyone else. When the interest behind the successful application for exemption is being transferred, such as when a development subject to a number of leases is being sold, a new application for exemption must be made by anyone (such as the new purchaser) likely to be prejudiced by the disclosure of information. Obligations relating to this will need to be addressed in the contract documentation.

Transitional Provisions

Not all documents held by the Land Registry will be available for inspection with effect from 13 October. During a two-year transitional period commencing on that date copies of documents held by the Land Registry prior to 13 October will only be available at the Registrar's discretion. It is therefore important where there are existing documents at the Land Registry containing prejudicial information that you apply well before 12 October 2005 to have the relevant part or parts of those documents exempted. Indeed, the safer course is to apply as soon as possible after 13 October 2003.

What should I do now?

You need to consider carefully the terms of documents which are being negotiated now, if they contain prejudicial information and will be lodged for registration on or after 13 October.

There are two possible approaches, the first being to keep confidential information in ancillary documents which will not be called for. One example is to keep all financial information relating to a charge on a property in the related loan agreement. In that case the Land Registry have indicated that they will no longer call for " incorporated documents" to be lodged and will be checking only to see that the charge charges the land, is dated, is entered into by the correct party and is properly executed.

The second approach is to produce an edited document with the sensitive information omitted. By way of example, in a lease the initial rent, the length of any rent-free period and any unusual assumptions and disregards on rent review could be edited out and made the subject of an application for exemption. However, we doubt the Land Registry would agree to the initial rent remaining confidential and they have declined to comment. They are under a duty to enter the price paid on a freehold transfer and they are likely to adopt the same approach when dealing with leases.

Generally, the Land Registry has not yet issued firm guidelines as to how they will exercise their discretion when considering applications for exemption. When further guidance is made public we will send you a further bulletin.

© Herbert Smith 2003

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

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