1 August 2023 marks the first birthday of the Register of Overseas Entities.
This brings the annual updating duty into sharp focus, with serious consequences for land transactions involving overseas entities who are in default. The updating duty will generally arise on each anniversary of the date that the overseas entity joined the register, subject to the ability for the overseas entity to bring forward the date, perhaps to conform with other key reporting dates.
Land Registration Act 2002, Schedule 4A, para 8(1) (introduced by the Economic Crime (Transparency and Enforcement) Act 2022) provides as follows:
‘For the purpose of this Schedule, an overseas entity that fails to comply with the duty in section 7 of the Economic Crime (Transparency and Enforcement) Act 2022 (updating duty) is not to be treated as being a “registered overseas entity” until it remedies the failure’
An overseas entity may have joined the Register of Overseas Entities and have an OE number, but if and so long as it is in default of the updating duty it cannot register itself as proprietor of a freehold or leasehold title at the Land Registry.
Nor (unless another exemption applies) can it satisfy the restriction on making dispositions of existing properties. Any buyer, tenant or mortgagee from the overseas entity may therefore find itself in the unenviable position of being unable to register its interest at the Land Registry.
And the overseas entity risks committing two separate criminal offences. Failure to comply with the updating duty is itself a criminal offence, as is making a disposition that is prohibited by the restriction.
You have been warned!
For further information, please contact:
Bill Chandler, Hill Dickinson