12 February 2014

Despite best efforts, those managing real estate transactions sometimes face the dilemma of what to do about an error in a deed discovered only after completion. Uncompleted blanks or inaccurate cross referencing are not unheard of. Must the solicitor seek consent of all the parties to make and initial a manual correction – with the attendant inconvenience and risk that one party may seek a collateral advantage as the price of its consent? Or can the solicitor just correct the document, mentioning it to their opposite number merely as a matter of courtesy?

The risk of altering a completed document to correct it is not only that the amendment will not take effect, but that it will invalidate the document itself. There is established authority that immaterial alterations to a document after completion will not affect its validity. On the other hand any material alteration made to a deed or other instrument after execution which is not approved by all parties renders the original document void – at least if any party can show the amendment was potentially prejudicial to his legal rights or obligations under it. So what counts as a “material” alteration? Solicitors are inclined to be cautious but two decisions this year dealing with the analogous question of what constitutes a “clerical error” suggest the courts might take a fairly robust approach if there is sufficient evidence that the alteration accords with what was intended.

In Bank of Scotland PLC v Greville Development Co (Midlands) Ltd, the High Court looked at the rule that the Land Registrar may alter the land register, without the consent of all interested parties, to correct a mistake in any document accompanying an application for registration if the mistake is of a “clerical or like nature”. The court regarded mis-spellings, transposition of letters, names or numbers as a clerical errors, as well as when a solicitor omits something that he intended to insert. In this case a legal charge to secure bank lending was being offered over land, legal title to which comprised two registered title numbers. Owing to an oversight the bank’s solicitor specified only one title number in the charge deed executed by the parties. It might have been thought that amending the description of the property to be mortgaged was actually quite material, but there was evidence that the whole property was intended to have been charged. So the court decided this was just a clerical error which the Land Registry was entitled to correct by noting the charge against the second title number – without the consent of the registered proprietor.

In Marley v Rawlings, the Supreme Court found that the testator and his wife each having executed the other's will by mistake – meaning that the entire contents of the will actually signed by the testator were incorrect – was nonetheless a “clerical error” (within the meaning of the relevant statute) which could be rectified to render the will valid.

Even so, the cautious approach of getting all parties consent to any correction, other than the obviously typographical, is clearly preferable to a trip to the Supreme Court.

For further information or advice on any other aspect of real estate law, please get in touch with your usual contact in our Real Estate or Real Estate Disputes teams.

Key contact

Colin Ligman

Colin Ligman Partner

  • Real Estate
  • Banking and Finance
  • Corporate Restructuring and Insolvency

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