This is the first of a series of focus notes on the new Register of Persons Holding a Controlled Interest in Land (the “RCI”).

These focus notes are intended to provide bite sized and practical comments on particular aspects of the RCI.

The Register of Persons Holding a Controlled Interest in Land (the “RCI”) commenced on 1^st April 2022 and the first entries have completed their 30 day standover period and are now visible on the RCI.

While there are still about 10 months left to run before the criminal sanctions start to apply, now is the time for existing arrangements to be assessed to determine whether or not there is an obligation to register, and for new arrangements to be considered in the context of the RCI.

In essence the obligations to register in the RCI are triggered where there is an Associate to an owner or tenant (the “Recorded Person”).

There are five categories of Recorded Person, corresponding to five separate parts of Schedule 1 to the Regulations:

1. Individuals (Part 1);
2. Partnerships (Part 2);
3. Trusts (Part 3);
4. Unincorporated Associates (Part 4); and
5. Overseas Entities (Part 5).

The rest of this first focus note will concentrate on specific issues arising from the first category of Recorded Person: Individuals.

1. What triggers the requirement to register for an Individual?

Registration depends on a three-stage test.

Firstly, the individual (ie a real person, not a company) owns land, or leases land for 20 years or more.

Secondly the Individual has entered into a contract or other arrangement with the Associate.

Thirdly by virtue of that arrangement, either the Individual holds the land on behalf of the associate, or the Associate has the right to exercise or actually exercises significant influence or control over the Individual’s dealing with that land.

2. What if the Individual is registered as the owner, but in fact holds it as a partnership asset or as a trustee?

In such a scenario, the different tests in Part 2 (Partnerships) or Part 3 (Trusts) would apply, and not the test in Part 1.

Where title, particularly farmland, is registered as being in the names of individuals, with no mention of a partnership, the land may still be being held in partnership, and so it is a good idea to test with the seller at an early stage whether or not such land is in fact being held in partnership.

3. What is an arrangement rather than a contract?

I think that it is a bit like a camel: you will generally know it when you see it, but it is hard to describe.

The purpose of the regulations in referring to arrangements in addition to contracts is to widen the scope of the regulations so that if there is a pattern of an Associate having influence or control, then registration will be required, even if there is no actual contract.

4. Are there any exemptions?

Yes, lots. There are 16 exemptions that are specific to Individuals: all set out in Part 1 of Schedule 1 to the regulations.

For housebuilders the two exemptions that are most likely to be relevant are:

Exemption (b)(i): holding a standard security over the property would not trigger registration; and

Exemption (f): where the housebuilder’s contract with the Individual “… is in the form of concluded missives for the sale of the land by the individual to the person where the title to the land has not been transferred to the person,”.

As matters stand the drafting of this exemption needs to be taken at face value, and literally, and so:

(i) an unconditional contracts for the sale and purchase of land concluded in the form of missives, would fall within this exemption and so would not trigger registration in the RCI;

(ii) a conditional contracts for the sale and purchase of land concluded in the form of missives, would on a literal basis fall within this exemption and so would not trigger registration in the RCI. However, there are differing views about this. Given the potential criminal sanctions, the safest approach would be for the Associate and the Recorded Person to agree to apply for registration, even if not strictly necessary.

(ii) conditional or unconditional contracts entered into as an agreement signed by the parties (rather than solicitors), options, exclusivity agreements, and promotion agreements, would not fall within this exemption, and so could potentially trigger registration in the RCI, if their terms controlled the Individual’s dealing with the land.

5. We have an option with an Individual, which does contain prohibitions on granting leases and servitudes, how do we register?

Slow down – put the handbrake on for a second.

The obligation to register in the RCI is an obligation on the owner (the Recorded Person). The owner is obliged to register within 60 days of an Associate having a controlled interest.

Part of the process of registering in the RCI involves making contact with you, as the Associate.

So, if you have not been contacted by the Individual, in terms of the Regulations, at that stage while you do not need to register, you do need to serve notice on the Individual advising the Individual that you are an Associate, and providing certain required information to the Individual.

We hope that these notes have been helpful. If you have any detailed questions, or if you would like any particular issues covered in future focus notes on the RCI do not hesitate to contact us.

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