Land Law: Unregistered Land and Land Registration

Unregistered Land

Protection of Interests

  • Land Registration Acts aim to increase land registration at HMLR upon sale, gift, or assent.

  • Approximately 88% of land in England & Wales is now registered.

Conveyancing Process with Unregistered Land

  • Buyers investigate title by examining documentation to determine ownership and third-party rights.

  • Section 23 LPA 1969 requires documentation going back 15 years to the good root of title.

  • Seller provides documentation from the root to the present day; buyer's solicitor checks for proof of ownership and third-party interests.

  • Deeds Pack contains Epitome of Title or is drafted by buyer's solicitor for HMLR First Registration.

  • 1925 legislation aimed to simplify title investigation with land charges.

Types of Interests: Which Need to be Protected?

  1. Legal estates (section 1(1) LPA’25):

    • Fee simple absolute in possession (freehold)

    • Term of years absolute (leasehold)

    • These are binding in rem and enforceable against all.

  2. Legal interests (section 1(2) LPA’25):

    • Easements, rentcharges, legal mortgages, rights of entry.

    • These are binding in rem and do not need protection.

  3. Equitable interests (section 1 (3) LPA’25):

    • Life interests, contract to purchase, interests under a trust.

    • Binding in personam and need protection against third parties.

Legal vs. Equitable Rights

  • Legal rights: Bind all the world.

  • Equitable rights: Protection depends on buyer's notice.

Land Charges

  • Governed by the Land Charges Act 1972.

  • Registration puts buyer on notice.

  • Key questions: Against whom/what to register? What interests are land charges? Effect of registration/non-registration?

Registration Details

  • Registered at the Central Land Charges Register in Plymouth against the estate owner.

Classes of Land Charges

  • Divided into 6 classes:

    • Class A & B: Statutory charges.

    • Class C: Interests created on/after January 1, 1926.

    • Ci: Puisne mortgage.

    • Cii: Limited owner’s charge.

    • Ciii: General equitable charge.

    • Civ: Estate contract.

    • Class D:

    • Di: Inland revenue charge.

    • Dii: Restrictive covenants.

    • Diii: Equitable easements.

    • Class E: Annuities.

    • Class F: Spouse's right of occupation.

Effect of Registration

  • Section 198(1) LPA'25: Registration constitutes actual notice.

Problems with Registration

  • Registration is against the estate owner's name, requiring accurate spelling.

  • Searches must cover all estate owners during their ownership period.

Effect of Non-Registration

a) Classes A, B, Ci, Cii, Ciii and F:

  • Void against a purchaser for value of any interest.
    b) Classes Civ, Di - Diii:

  • Void against a purchaser of the legal estate for money or money's worth.

Problems with the Land Charges System

  1. Registered against the estate owner, not the land.

  2. The 15-year title investigation may miss charges registered before that period.

Bona Fide Purchaser Rule (Equity’s Darling)
Key Questions

  1. What is the rule?

  2. Who is the bona fide purchaser?

  3. What constitutes notice?

The Rule

a) Legal interests are good against all the world.
b) Equitable interests are good against all persons EXCEPT the bona fide purchaser for value of the legal estate without notice of the interest.

What is a Bona Fide Purchaser (BFP)?

a) Bona fide: Acts in good faith.
b) Purchaser for value: Pays money for the property.
c) Of the legal estate: Applies to purchasers of freehold or leasehold title.
d) Without notice: Not aware of equitable rights.

What is Notice?

a) Actual: Purchaser is directly aware.
b) Constructive: Deemed to have discovered via appropriate searches.

*   Examination of Title Deeds: Failure to inspect deeds does not negate notice if the interest would have been discovered upon examination.
*   Inspection of the Property: 'Rule in Hunt v Luck' (*Hunt v Luck [1902] 1 Ch 428*) - A purchaser has constructive notice of any interests of a person in occupation but not named on the title deeds.
    *   Modern Solution: Mortgagees obtain written consent from any spouse or occupant over 17 to waive potential equitable interests.

c) Imputed: Deemed to know what their solicitor or agent knows.

  • A purchaser with notice does not fall under the BFP rule.

Purchaser of an Equitable Interest

i) Cannot rely on the bona fide purchaser rule.
ii) If there is a prior equitable interest registered as a land charge, the purchaser takes subject to it (section 198 LPA’ 25).
iii) If the equitable interest is not a land charge, rely on the maxim: 'Where the equities are equal, the first in time prevails'.

Dealing with Unregistered Land for a Prospective Buyer

  1. Conduct a land charge search within 15 days of completion.

  2. Thoroughly check title deeds.

  3. Inspect the land.

  4. Do a local land charges search.

Position Nowadays

  • Since 1990, all areas are subject to compulsory registration.

  • New owners must apply for ‘first registration’ within two months or the transfer becomes VOID (sections 6 & 7 LRA ’02).

Land Registration

Introduction

  • Land registration allows purchasers to check a register for encumbrances.

History

  1. Previously governed by the LRA (1925).

  2. Contemporary legislation needed due to socio-economic changes.

  3. Approximately 88% of land is registered.

Aims and Objectives of LRA (2002)

  • Came into force on October 13, 2003.

  1. Increases circumstances for compulsory registration.

  2. Reduces overriding interests.

  3. Allows registration of title to crown land.

  4. Alters adverse possession law.

  5. Creates the office of adjudicator to H.M. Land Registry.

  6. Paves the way for 'e-conveyancing'.

Principles of Land Registration

  • Registered: ESTATE in land.

Four Classes of Interest

  1. Registered interests: Title registered at the Land Registry.

  2. Registered dispositions: Transfers must be registered.

  3. Interests which may override: Rights binding the purchaser despite not being on the register.

  4. Minor interests: Bind if protected by entry on the register.

The Land Register

  • Purchasers can see who owns the land, and whether rights exist.

  • Each register has a unique title number and is split into 3 parts: Property, Proprietorship, and Charge registers.

  • Entry on the register intends to make the purchaser aware of the right

Four Central Concepts of Land Registration

  1. Substantive registration: State-backed guarantee of title.

  2. Protection of burdens: Minor interests must be protected by registration.

  3. Protection by occupation: Rights protected if in actual occupation.

  4. Interests that override: Some overriding interests subsist.

Three Guiding Principles of Land Registration

  1. The mirror principle

    • The register should give a true, accurate reflection of all estates and interests that affect the land.

    • Reflection distorted by overriding interests.

  2. The curtain principle

    • Interests held under a trust should remain hidden.

    • Purchasers should ensure interests are overreached by paying money to at least two trustees.

  3. The insurance principle

    • Separate registers are created for each registrable estate.

    • State guarantees accuracy; indemnity for mistakes.

    • Restrictions: No compensation for own lack of care or interests that override first registration.

Compulsory and Voluntary Registration of Title

  • Voluntary registration: Encouraged by the 2002 Act.

  • Compulsory registration: In effect since December 1, 1990.

Events Which Trigger Compulsory Registration

  • See LRA (2002) s.4 (1) and (2)

  1. Sale or gift

  2. Transfer via will

  3. Legal lease of 7+ years

  4. First legal mortgage

  • Transferee must register within two months of the ‘trigger’ date (s.6 LRA (2002).

First Registration of Title
What May Be Registered?

  1. Registrable estates: fee simple absolute, leases > 7 years, reversionary/discontinuous lease.

  2. Registrable interests: e.g., rent charges, profits in gross, franchises.

Effect of First Registration

  • The effect depends on the class of title granted: Absolute, Qualified, Good leasehold, Possessory.

  • The Registrar may upgrade a title with further evidence.

Dispositions of Registered Land

  • Section 27 of the LRA 2002 defines dispositions that must be completed by registration.

Dispositions Which Must Be Registered

  1. Transfers: Transfers of registered estate are required to be registered

(i) a transfer on the death of the registered proprietor (ii) a transfer on the bankruptcy of a sole individual registered proprietor (iii) a transfer on the dissolution of a sole corporate proprietor (i.e. a company)

  1. The grant of certain leases: including leases which are (i) in possession and for a term of more than 7 yrs from the date of grant, (ii) a reversionary lease to take effect in possession more than three months after the date of the grant (iii) a discontinuous leases

  2. Leases of franchises and manors (where the title of that manor or franchise is registered)

  3. The express grant/reservation of a legal easement or right of privilege ( e.g. a profit)

  4. The express grant/ reservation of a rentcharge/ legal right of re entry

  5. The grant of a legal charge

  6. Dispositions of a registered charge

Overriding Interests

  • LRA 2002 aimed to reduce overriding interests.

  • “The only overriding interests should be those where protection against purchasers is needed, yet is either not reasonable to expect nor sensible to require any entry on the register”

Unregistered Interests which override first registration

  • Schedule 1 of the LRA (2002) lists these interests. Includes leases under seven years, interests of those in actual occupation, legal easements, etc.

Unregistered interests which override a registered disposition

  • Schedule 3 of the LRA (2002) lists these interests. Reduced compared to LRA 1925.

  • Note: whilst on first glance sch1 and sch3 appear the same, interests 2, 3 and 13 are different. You need to be aware of the detailed provisions of 2 and 3.

Grant of certain short leases

  • Legal leases which do not exceed 7 years

  • The word ‘granted’ means that leases which are not granted i.e. those which arise via estopel or contract are not included – see City Permanent Building Society v Millar [1952] Ch 840

Legal easements and profits

  • The only easements that override (and are thus protected) are those which arise from the operation of s.62 LPA (1925) or via prescription and other forms of implied easements (this means that express legal easements and equitable easements are excluded).

  • An easement will not override a registered disposition if the person that bought the land with the right over it was not aware of the right

  • The right would not be obvious upon a reasonably careful inspection of the land

These qualifications do not apply to easements or profits made under the Commons Registration Act (1965) or if the person entitled to the right has exercised it within one year prior to the disposition.

Interests of persons in actual occupation

  • If an unprotected equitable interest is paired with actual occupation this may result in an interest which overrides, therefore binding a prospective purchaser

  • To rely on this provision the claimant must have a proprietary interest AND be in ‘actual occupation’

Again this protection is subject to certain qualifications:

  1. Protection will be unavailable if when asked the occupier fails to disclose their interest to the purchaser and this disclosure was to be reasonably expected

  2. The occupation was not obvious upon a reasonably careful inspection of the land at the time of disposition and the purchaser had no knowledge of the interest at the time of the acquisition

In practical terms this means that prospective purchasers are expected to inspect the land that they wish to buy and enquire as to the interests of anyone they should happen upon whilst there.

Why are interests that override a registration disposition so important?

  • because they AUTOMATICALLY bind a purchaser

  • Because eventually all land in England and Wales will be registered

Why do some overriding interests subsist after (LRA 2002)?

  • Some interest cannot be recorded on the register (as mentioned above)

  • It was recognised that it was impractical to expect all interests to be registered , for e.g. short tenancies

  • Parliament has protected the rights of those who do not realise that their interest should be protected by an entry on the register

  • Some overriding interests do appear on the register and as time goes on this number will only increase.

Notices and restrictions

  • Notices are now the appropriate way of protecting interests (other than registered charges) that are intended to endure changes in the ownership of land which carries the burden of such interests.

  • Restrictions prevent the registration of a disposition that does not comply with the terms of the restriction.

Rectification and Alteration of the register

  • Schedule 4 allows for the alteration of the register – including rectification of the register

  • Rectification of the register: this is where a mistake which prejudicially effects the title of the registered proprietor is corrected ( 6yr limit as per the Limitation Act 1980)

  • Where the register is rectified the proprietor will be entitled to an indemnity (see sch para 1(1)) however where the register is merely altered they will not. This is because alterations are merely administrative and thus do not adversely affect the registered proprietor

  • See Malory Enterprises Ltd v Cheshire Homes UK [2002] EWCA Civ 151

E-CONVEYANCING

  • One of the most significant features of the LRA 2002 is that intended to introduce a new system of electronic conveyancing (see part 8 and sch 5)

  • Qu. Why the move towards electronic conveyancing?

  • Ans. Quicker and easier to inspect the title deeds in order to discover MOST 3rd party rights over the land if they are on a centralised database

Advantages of electronic conveyancing

  • It allows dispositions to be made and registered simultaneously

  • All stages of conveyancing are to be conducted electronically and the Land Registry will therefore become involved in the transaction much earlier than at present.

  • It was intended that this system would be phased in over a period of 5 yrs but whilst this system