Helping Guernsey holding companies navigate HM Land Registry

If you're selling UK property owned by a Guernsey company, HM Land Registry will likely require a legal opinion, commonly known as a TR1 legal opinion, from Guernsey lawyers before registering the conveyance. This briefing outlines the key issues and practical considerations involved.

What is a legal opinion?

A legal opinion is a formal letter issued by a law firm confirming specific legal matters to a third party – commonly a government registry, lender or counterparty. In the context of UK property transactions, HM Land Registry typically requires a legal opinion when a company incorporated outside the UK (e.g. in Guernsey) is involved in a transaction. The legal opinion confirms the company’s capacity to deal with land in England or Wales.

Why is a legal opinion required?

When a Guernsey company is the transferor, transferee, borrower, or mortgagor in a UK land transaction, HM Land Registry requires confirmation that:

• the company is validly incorporated and in good standing in Guernsey;
  
  
• the company has legal capacity to own, buy, sell, lease, or mortgage property;
  
  
• the person signing the transaction documents on behalf of the company is duly authorised; and
  
  
• the transaction complies with the company’s constitutional documents and Guernsey law.

This is because Guernsey is a separate legal jurisdiction, and English lawyers and HM Land Registry cannot confirm or assume these matters themselves.

The TR1 form is used to transfer the whole of the property in one or more registered titles. If it is executed by a company incorporated outside the UK (e.g. in Guernsey), HM Land Registry requires comfort in the form of a legal opinion that the transferring Guernsey company has the power to make the transfer of UK property. 

What does a legal opinion confirm?

A typical legal opinion prepared for HM Land Registry in this context confirms that:

• the company is duly incorporated and validly existing under Guernsey law;
  
  
• the company has the power and capacity to enter into and perform its obligations under the transaction documents;
  
  
• the company has taken all required corporate action to authorise the transaction;
  
  
• the transaction documents have been duly executed and, when delivered, will constitute binding obligations under Guernsey law;
  
  
• there is nothing under Guernsey law or the company’s constitutional documents preventing the transaction; and
  
  
• no Guernsey governmental consents, filings, or registrations are required to give effect to the transaction.

Opinions will also typically confirm that no winding-up proceedings, insolvency orders, or administrator appointments have been registered against the company, based on public records searched shortly before issuance of the opinion.

When is Form 7 required?

Form 7 is required under Rule 183A of the Land Registration Rules 2003 when a company incorporated outside the UK is dealing with registered land in England or Wales. This includes selling or transferring land (e.g. via a TR1), granting a mortgage, or acquiring title.

HM Land Registry relies on Form 7 to confirm that the overseas company has the legal personality and capacity – under the law of its home jurisdiction – to deal with land in England and Wales.

Form 7 must be given by a Guernsey lawyer (in the case of UK property held through a Guernsey company) and is typically issued as a short-form letter, and in most cases will be attached as a schedule to our usual form of legal opinion.

Practical points to bear in mind when it comes to the issuance of legal opinions

• Timing and searches: public searches of the Guernsey Companies Registry and Royal Court must be conducted on the morning of the opinion’s issuance. A representative from our offices must attend the Court in person, and results are typically available by 10:30am, after which the opinion can be finalised and issued. The provision of a Guernsey legal opinion is often a condition precedent to the completion of a broader transaction, making careful attention to timing essential.
  
  
• Company records: ensure that the constitutional documents (memorandum and articles of incorporation), certificates of incorporation, register of members and directors, and board resolutions are current and available in advance. The company's Guernsey corporate services provider can usually help with the provision of these. 
  
  
• Authority to sign: you will need to confirm who is signing the relevant documents and ensure they have appropriate corporate authority (usually documented in board minutes or written resolutions). Where corporate directors are signing transaction documents, we will typically need to see the list of authorised signatories for the relevant corporate director. 
  
  
• Document review: we have to review executed copies of all transaction documents the company is entering into prior to issuing our opinion. Delays can occur if these are incomplete or unavailable.
  
  
• Opinions held to our order: if exchange or completion (as the case may be) cannot occur without the issuance or our legal opinion, we are able to issue our opinion on the date of exchange or completion with it being held to our order until receipt of the fully signed and dated transaction documents. Where exchange or completion (as the case may be) does not occur on the date on which we have run public searches and issued our opinion, our opinion is automatically withdrawn.  

Please contact any member of our Corporate team for any advice or assistance in relation to legal opinions.