Registered Land

How has LRA 2002 changed land law. Discuss. - Justin Santiago


The Land Registration Act 2002 was introduced in response to the Law Commission and HM Land Registry report, Land Registration for the Twenty-first Century (2001).The Act simplified and modernised the law of land registration. A key change under the new Act is that it is a move from a system of registration of title to one where the fact of registration itself gives a person title to the land. The act also facilitated the introduction of e-conveyancing and made the register reflect a more accurate picture of a title to land, showing more fully the rights and subsidiary interests that affect it.

The Act made some major changes to the law regulating registered land. Specifically, it:

1. Increased the list of events that force compulsory registration and voluntary registration;
2. Enabled shorter leases to be registered;
3. Changed the system of protection of third party rights; and
4. Provided for electronic conveyancing.

The increased list of events that force compulsory registration and voluntary registration would enable more land to come under registered title and reduce the volume of unregistered land conveyancing.

Compulsory registration - if a sale had been completed after 2003, according to LRA 2002 S4, any transfer of an unregistered freehold estate or a leasehold estate in land with more than seven years to run will be subject to compulsory registration. Transfer is broadly defined to include sale, gift, court order or the creation of a first legal mortgage. Originally under LRA 1925 registration of title was only compulsory on conveyance on sale of a fee simple and a grant of a lease for more than 21 years or assignment of a lease with more than 21 years to run.

Voluntary Registration

Under LRA 2002 S3 voluntary registration is encouraged for five types of legal estate which may be registered with their own title :-

1. Freehold
2. Legal lease with over seven years to run
3. Rent charge
4. Franchise (Right granted by the Crown)
5. Profit a prendre in gross

Protection of third party rights

The LRA 2002 attempted to more clearly reflect the true nature of the rights in the land concerned and to depend less on the doctrine of notice. Under registered land, the doctrine of notice supposedly did not have any application due to the fact that the system of registration is based on the mirror principle which reflects all the interests in the land. However there existed interests called overriding interests. Overriding interest loomed large in the scheme of LRA 1925 and although were not registrable protected rights of third parties representing a crack in the mirror and provided the most common pitfall for a purchaser of registered land and were listed in LRA 1925 section 70(1) and include the following 4 categories :-

- S70(1)(a) easements and profits including equitable easements
- S70(1)(f) rights of an adverse possessor
- S70(1)(g) rights of person in actual occupation – date of transfer of title : Abbey National BS v Cann
- S70(1)(k) leases granted for a term not exceeding 21 years

Under LRA2002, the role of overriding interests had been substantially reduced and was replaced by interests that override for which registration was strongly encouraged. Some interests that have been removed are equitable easement whether expressly or impliedly granted S70(1)(a) and the rights of adverse possessors unless accompanied by actual occupation S70(1)(f). The LRA 2002 also reduced the considerable burden to purchasers of the rights of persons in actual occupation under S70(1)(g) where :-

1. Enquiries have been made of the right-holder and he has failed to disclose the right in circumstances where he was reasonably expected to disclose and
2. The right holder’s actual occupation is not obvious on a reasonable inspection of the land and the person bound did not have actual knowledge of the interest

Under the new regime, there are two new categories of interest :-

Schedule 1- a broad category of interests which override on first registration of title that is will override the estate of the person who first registers when the land ceases to be unregistered land including :-

- leases up of to and including seven years
- the rights of occupiers – Schedule 3 Para 2
- easements and profits
- local land charges

Schedule 3 – a shorter list of interests which override on a later disposition of registered that is a sale of land after it has been registered :-

- leases up to and including seven years
- the rights of occupiers
- legal easements actually known to exist by the purchaser, obvious upon a reasonably careful inspection of the land or exercised within one year prior to the date of the disposition in question – overulling Celsteel v Alton
- profits

Section 71(b) imposes a duty for the person applying for registration of a disposition to disclose information about any rights of which he is aware which might fall within the scope of Schedule 3 and thus override. Protection by a notice on the register actually removes overriding status S29(3). Thus the number of overriding interests should be diminished as more dispositions are made under the new legislation with more interests coming onto the register.

Electronic Conveyancing

Electronic conveyancing is set out in Part 8 of LRA 2002 and provides for the conveyancing procedure to be carried out online. The act of creation will be the act of registration and this will be electronic.

The objective of electronic conveyancing is :-

1. A paperless system
2. No registration gap
3. A notional and viewable version of the register as amended to reflect proposed contractual terms
4. Draft documents verified against the title register and requisitions raised there and then as the transaction progresses
5. Quick identification of encumbrances
6. Possibility of simultaneous exchange of contracts or completion instantaneously

Problems

However problems still exists notably in the following areas :-

1. Interests in registered land may sometimes fall into one class and sometimes into another ex. someone with a interest that is neither registrable nor overriding is in actual occupation may protect his interest by entry on the register or rely on his occupation as entitling him to an overriding interest.

2. Interests that are neither registrable nor override allows the doctrine of notice to continue to apply in the case of registered land. These third type of interest formerly known as minor interests now termed third party rights which need to be protected by entry on the register comprising interests in unregistered land that would be registrable under the LCA and those that comprise interests of beneficiaries under trusts of land and strict settlements that were capable of being overreached under LRA 2002 S28-30. A new form of restriction will perform the functions of the current restriction and inhibition and a new form of notice will combine the functions of the current notice and caution. A restriction may be entered, forcing overreaching but the restriction does not protect the equitable interest and no notice may be entered.

2. Also short leases granted for period not exceeding seven years also bind any disponee of a registered and thereby detract, at least marginally, from the completeness of the mirror image which the Land Register is meant to reflect.

3. A periodic tenancy for less than 3 years is legal without a deed or document and is not registered anywhere.

4. A beneficial interest arising under a trust of land may bind a purchaser as an overriding interest even though it is not protected by entry on the register. A beneficial interest arising under a trust of land may be overreached if the purchaser pays to two trustees or a trust corporation whether they are in actual occupation or not. Thus a trust of land neither protects purchaser or interest holder and the LRA 2002 does not cater this type of situation adequately. Thus a person who has negligently failed to protect his interest is protected while the purchaser is bound to make much more extensive enquiries

5. The triggers for compulsory registration do not include a grant of a lease for exactly seven years and transfer of existing leases with less than 7 years left to run

6. Spouse’s right of occupation must be protected by entry on the register although a spouse may incidently have another interest which is capable of overriding the register such as a constructive trust interest.