Difficulties facing banking practitioners as a result of Covid-19
Due to the nature of their work, banking practitioners are often dependent on various public and private bodies and agents in respect of the completion of registrations, submissions and the carrying out of searches. Chief among these bodies are the Property Registration Authority (PRA) and the Companies Registration Office (CRO). The COVID-19 public health requirements have seen many such entities either temporarily close for business or limit the services that they provide. This is an unfortunate consequence of the pandemic and a hindrance for practitioners in carrying out their tasks within the time scales that we have come to expect. While there are limitations to what can be done at present, not all operations have ceased and creative alternative solutions can be utilised.
COMPANIES REGISTRATION OFFICE
The CRO is currently not providing its full repertoire of services. Yet, the limited services that are continuing, albeit at a slower pace, are generally fulfilling the essential urgent needs of practitioners. Applications that are currently being received, processed and registered include company incorporations, change of name, re-registrations, SAP documentation and registration of charges. The online company search facility also remains available.
Though not open to the public, the CRO’s offices in Dublin and Carlow are receiving mail via An Post and DX services. Until further notice, the CRO is not accepting mail delivered by hand or courier. Mail is date stamped on the day on which it is delivered and is processed accordingly. As always, the use of registered post or tracked DX by banking practitioners is recommended to enable the tracing of deliveries.
The CRO’s facility for online registrations, CORE (www.core.cro.ie), continues to operate as normal. As such, there is no change in the process of filing Forms C1, C1A and C1B to register charges. A slight delay in the confirmation of registrations by the CRO however should be expected. Despite the potential delay, our experience to date is that the Certificate of Registration will be dated to reflect the date on which the filing was submitted thus having no effect on the priority attached to the charge.
- Summary Approval Procedure
CRO has introduced an interim process to allow for the filing of Summary Approval Procedures (SAPs). The CRO will accept scanned signed manual documentation, by email, through their firstname.lastname@example.org address.
The only documents that will be accepted into this email address are SAP declarations for SAP 203, 204, 205 and 206s and the associated Special Resolution (G1P or GM1) for that declaration. The presenter must also give authorisation for payment for the form from a customer account only. This can be done either by attaching a separate letter giving the CRO authorisation to deduct the fee from a specific customer account or by filling out and attaching a Payment Authorisation Form (PAF) from the assigned PAF book.
When the documents are emailed into email@example.com the presenter will receive an automatic reply to say that an email has been received. The onus is on the presenter to ensure that the documents are completed accurately and they will not be notified by the CRO when registration has completed. Instead, the presenter must regularly check the Register online to stay updated. As the CRO is accepting post, the original documents may be posted to the CRO, together with a letter noting that the documents had been filed online with the appropriate fee-deduction authorisation. A method of posting to keep track of the document pack, such as registered post, would be recommended in the circumstances.
Presenters must continue to adhere to the filing deadlines as required under the Companies Act 2014.
- Notice re Company in Liquidation or Receivership
While the CRO was fully closed, it appeared that such a notice would no longer show up when a search was made against a company with the CRO to check whether a liquidator or receiver has been appointed over a company. As the CRO has partially reopened (albeit not open to the public), the CRO’s Solvency Section are processing forms and prioritising documents that change the status of a company. Any change in a company’s status will be reflected by the submission of the relevant E-forms relating to the Solvency of a company. Delays are to be expected as many documents are being received by post as per the new requirements, and this has slowed the processing operation. As such, company searches ought to be trusted as being as up to date as possible.
PROPERTY REGISTRATION AUTHORITY
After several weeks of closure, the PRA reopened for receipt of applications sent via An Post or DX on 20 April 2020. As with the CRO, any mail delivered by hand will not be accepted. The delayed re-opening of the PRA was designed to facilitate completion of the backlog of applications received during the period of full closure. It was anticipated by the PRA that all applications in relation to registered title lodged up to and including 20 April 2020 will have been recorded on their system and show up on searches by 21 April 2020.
The PRA is accepting queries by email only at firstname.lastname@example.org.
- Land Registry
The Land Registry will continue to suspend the registration of applications until further notice. Physical applications will be date stamped on the date on which they are received and will be processed accordingly. Until such time as registrations reoccur, practitioners should continue to utilise the online pre-lodgement facility to lodge applications and make payments associated therewith. As is usual, practitioners should take care to lodge the applications in order of the priority that the application ought to take.
An exception to this current practice is that the Land Registry will complete e-registrations (e-discharge and e-nursing home registrations) and will give consideration to urgent requests for registrations which are required in connection with essential services, or those who are vulnerable, on a case by case basis.
A point to note is that some practitioners may have been preparing First Registration applications prior to lockdown and have not had the ability to complete and submit these applications. As such, the Form used for their First Registration application, such as a Form 3, may at this stage be out of date. Practitioners should be aware that a fresh Form may need to be prepared, which is dependent on when the lockdown ends and they are able to return to their office.
Plain copy folios may be downloaded from the website and as of 24th April, certified copy folios and filed plans can be ordered again after weeks of being unavailable. However not all orders of certified copy instruments are currently being accepted.
- Registry of Deeds
As of 20thApril the Registry of Deeds have reopened and are processing applications. For the most part it continues to operate as usual, however it is only accepting applications by post and hand delivery will not be accepted. Official searches or copy memorials are not currently available save for where closings are deemed to be urgent and essential.
Where deeds are to be returned by the Registry of Deeds to solicitors on completion of registration, such can be arranged by DX where possible or alternatively through An Post or, where an application has been rejected, by registered post. In cases of deeds having been lodged by hand prior to the Government’s health restrictions being imposed, the original receipt may be sent in requesting the PRA to post out the deed. Collection of deeds from PRA offices cannot be arranged at present.
Though not fully operational and suffering from inevitable delays, the services currently being provided by the PRA make the completion of transactions manageable for banking practitioners.
SEARCHES AND PRIORITIES
A concern amongst practitioners representing lenders during the Covid-19 crisis is the non-conclusive nature of some searches carried out upon completion of a transaction, which can endanger the priority of charges. In some circumstances, however, the concerns have been partly addressed by changes in the various offices that have partly addressed such ongoing issues. As examined above, in respect of the registration of a charge, priority is not at issue as Forms C1 or C1A can still be registered with the CRO, with the registration being stamped the date of submission as opposed to the date of completion. While also important, the risk associated with delays faced in connection with the registration of the charge with the PRA are partly abated by their registration in the CRO.
It should be noted that not all searches are as yet available to be carried out or, for those that are, they may not be fully up to date. Land Registry (bearing in mind potential delays in registrations), CRO and probate searches can be carried out presently. As mentioned previously, the Registry of Deeds recommenced registrations on 20th April and searches are available from 1970 onwards, however, given the backlog in registrations, only deeds lodged up to 23rd March will appear in searches. Deeds lodged subsequent to 23rd March will be registered in due course and will appear in searches accordingly as registrations progress. Where planning searches are concerned, search companies have been provided with access to records held by Councils from 1992 onwards, however, the majority of councils cannot provide details of possible enforcement notices. While Revenue Sheriff offices appear to be continuing their normal operations, search companies do not have access to all Circuit Court Sheriff results.
A primary concern for practitioners representing lenders also lies in the potential lack of protection that a lender might suffer in the instance of a judgment mortgage being registered against a borrower before registration with the PRA occurs, or in the case of a fraudulent sale or mortgage by a vendor to a purchaser for value. Yet, the concern as to judgment mortgages gaining priority over lenders can be partly assuaged by the fact that a careful consideration of the replies to requisitions ought to confirm that no judgments or proceedings exist over the mortgaged property (and some practitioners are obtaining confirmation from the borrower or the borrowers solicitor that there have been no changes to those replies since they were furnished and drawdown).
Ultimately, practitioners can only advise lending institutions of these risks and it is for lenders to decide, based on the perceived trustworthiness of their client and their risk appetite, whether to provide a drawdown as requested prior to registration occurring.
A potential solution for practitioners to mitigate the risk caused by the suspension of PRA registrations is to take out insurance to cover any losses in the event of a third-party challenging a client’s priority. Certain caveats apply to this however such as that the insured party must not have actual knowledge of any conflicting transactions and the parties to the transaction must not be ‘aware’ of any matters or third parties who have an interest in the property. As such, caution would need to be exercised in proceeding with any transaction, even with insurance cover.
STAMP DUTY RETURNS
A service on which the COVID-19 pandemic has had little to no effect is the ability to file stamp duty forms and obtain stamp certificates. This is due to the electronic system ROS Offline operating as normal. The only noticeable difference, albeit minor, will be that for offices used to printing any authorisation forms, stamp duty returns and stamp certificates, all items should ideally be sent via email now. There does not appear to be any delays in the stamping process. Revenue’s phone services have been suspended until further notice however, should queries arise, they can be resolved by consulting the Stamp Duty pages on www.revenue.ie, submitting a query through 'My Enquiries' or alternatively, practitioners can contact Revenue at email@example.com or through RFTS .
After a period of being closed to the public, the Probate Office is open for the lodgement of all applications and resumed issuing Grants of Probate and Letters of Administration from Thursday 16th April, with expected delays. The office can be contacted through the normal means via the contact details available on the website www.beta.courts.ie.
Practitioners have noticed a stalling by lenders in providing drawdown funds requested by borrowers’ solicitors after loans have been approved and despite pre-drawdown requirements having been completed. The reason behind this appears to be the fact that some lenders are carrying out Covid-19 checks on borrowers after drawdowns have been requested but prior to funds being released. The danger of this practice for borrowers is that many will have engaged in a contract and will be at risk of losing their deposit where it becomes evident at a late stage in the lending process that funds anticipated to be relied on may not be available at that time. Considering these circumstances, practitioners are advised to apply the Law Society Conveyancing Committee’s recommended form of 'Subject to loan clause' in contracts which can be found in its 2009 Practice Note.
Uncertainty as to the ability of banking practitioners to provide their clients with an effective service rippled over the last number of weeks due to limitations caused by the Covid-19 pandemic. Much of that ambiguity has been eased through the limited reopening of the abovementioned entities but care must continue to be exercised, and it is incumbent on each practitioner to keep updated on the services being provided by each of the registries or services mentioned above, as they occur.
What is clear is that until full operation of all services recommence, practitioners must adapt to performing traditional office or paper tasks electronically. Where obstacles present themselves during this pandemic, creative solutions must be sought as much as possible. The lobbying of the Government by the President of the Law Society has proven fruitful and efforts will continue across all legal disciplines. The reopening of services such as the abovementioned and many Town Agent services, together with the cooperation and understanding of clients and colleagues, shows that the legal profession has proven to be more flexible, resilient, and resourceful than its reputation would traditionally maintain.
From a practical standpoint, practitioners should keep a clear record of all transactions that may require registration, and the priority in which they are to be registered, once the Government’s health restrictions have been lifted and work in offices recommences. Through maintaining creativity, organisation, and support for each other, practitioners should be able to perform their usual functions (albeit more slowly and conditional on the Lenders continuing to facilitate drawdowns) during this crisis until it is finally past us.
For more information on the content of this insight please contact:
Brendan Cunningham, Partner | E. Brendan.firstname.lastname@example.org | T. +353 21 4802717