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This article provides an overview of the major changes made by the LandRegistrationAct2002. This Act repeals the 1925 Act of the same name, and replaces it with provision with largely similar effect, but rather different implementation. The main changes affect the metas ofinterest in land that can be substantively registered, the registration of third-party interests (particularly Overriding interests), and the regulation ofadverse possession. There are also a large number of administrative and procedural changes, and some provisions that tidy up areas of uncertainty in the existing law.
Interests that are registerable
The following changes are made to the interests that are registerable with their own title.
- Short, discontinuous, and reversionary leases. Under the 1925 Act, leases of any meta with more than 21 years unexpired were registerable. This period is reduced to seven years by the new Act. Most commercial leases are for fewer than 21 years and, in reality, many are for fewer than seven years. The Act therefore contains a provision allowing the qualifying time to be reduced, but it is unlikely to be substantially reduced until leases can be created on-line; the paperwork burden would be too great at present. As before, if the Tenant has a right to renew the lease within one month of expiry, it is the total duration that determines whether the lease is registerable. In addition, it is now possible, indeed compulsory, to register a lease of any length that is to take effect in possession more than three months after grant. Is it also now possible to register discontinuous leases, of any length. This is to accomodate 'time share' arrangements, where there might be a right to occupy for two weeks each year, for example.
- A Franchise is now voluntarily registerable, as is aprofit aprendre in gross (not attached to another title). These rights are often valuable, and are frequently traded.
- The Crown can now register its Demesne land (see demesne land of the crown). The main purpose of this provision is to allow such land to be protected against adverse possession. Technically, to fit into the registration scheme, registration converts the demense land to freehold.
- Alordship of the manor is no longer registerable, as it creates administrative difficulties for the Registry, with no obvious benefits.
Protection of third-party interests
The protection of third-party interests in registered land is one of major areas of revision by the 2002 Act, both in terms of procedure and substantive law.
New terminology and procedure
Under the 1925 law, a person with an interest to protect, which was eligible to be entered on the register, could apply to enter a Notice, a Caution against dealings, a Restriction, or an Inhibition. An inhibition was stronger than a restriction, but both had the effect of prohibiting dealings with the land without the consent of certain person. Under the 2002 Act, these categories are now merged into one, now called a restriction. In practice this is more a tidying-up measure -- inhibitions were hardly ever encountered in practice.
The 'caution' and 'notice' are now the unilateral notice and AgreedNotice. A difference from the previous law, which may be significant in practice, is that the proprietor of the registered title is notified on application for entry of a unilateral notice, rather than when the land is dealt with. The proprietor therefore has an earlier opportunity to object to a notice to which he does not consent.
Another change is that an overriding interest is now called an 'interest capable of overriding first registration' or an 'interest capable of overriding registered disposition'. This is both a terminological and substantive change, as described below.
Interests that can be protected
The new Act makes few changes to the third-party interests that are capable of entry against a registered charge. Minor additions include:
- a right to determine (that is, bring to an end) a registered title;
- aright of preemption;
- a right arising fromproprietary estoppel.
Overriding interests or, in the new terminology, 'interests capable of overriding...' are generally thought to be a necessary evil. Of course it contravenes the mirror principle that there are any overriding interests at all, and the new Act seeks to reduce the number, scope, and impact of these interests. Under the 1925 Act, a number of interests were made overriding to reduce the administrative burden on the registry in the days when all records were kept on paper. These days this is not a good reason to retain a large number of overriding interests. In addition, over the years judicial action has created new overriding interests, and broadened the scope of existing ones, beyond what was probably intended by the legislation. Examples of cases that have had this effect are celsteel v alton house (1986), and FerrishurstVWallcite1998, which respectively granted overriding status to certain equitable Easements, and allowed the rights of person in actual occupation to be enforced against parts of the title that did not correspond to the land actually occupied.
The principle under the new Act is that an interest will only have overriding status if it would be unreasonable to expect it to be registered. And, as most interests that it is reasonable to register are compulsorily registerable anyway, some interests will cease to override by virtue of being registerable. The Act distinguishes between interests that override first registration (Sch.1) and those that override a subsequent disposition (Sch.3), with the latter category being somewhat narrower. The 1925 Act did not draw this distinction, which meant that the number and scope of interests that were overriding on disposition were necessarily identical to those that were overriding on first registration. This was a bad thing, because the interests that override on first registration should be broader than those that override a disposition. At first registration, the person applying for registration is invariably the person who owns the legal estate already. He will have purchased it according to the principles ofunregistered conveyancing. On such a purchase, a legal easement, for example, should be an overriding interest. The purchaser should have performed adequate searches of the title deeds and charges register -- both of which reveal historical inforamtion -- to be sure that there are no such easements in effect or, if there are, he is prepared to be bound by them. A purchaser should not be able to supress a legal easement by registration of his estate. On a subsequent sale, however, the purchaser has only the Registry entry and his physical inspection of the property to guide him. If an easement is not obvious from reasonable inspection, it is inequitable that he should be bound by it. Similar logic applies to actual occupation rights.
In fact, fewer interests will be overriding than is revealed by a cursory reading of Sch.1 or Sch.3 of the Act. For example, the wording of Sch.1(3) and Sch.3(3), concerning rights of persons in actual occupation, includes the phrase 'so far as relating to land of which he is in actual occuption'. This wording is clearly intended to prevent the application of the Ferrishurst principle. Similarly, although a legal easement remains an overriding interest (in so far as it is obvious from reasonable inspection), in fact an expressly granted legal easement cannot override, because it must have been registered to be legal, and once registered it is no longer overriding.
Another change is that squatter's rights are no longer overriding, unless the purchaser has notice of them.
An interesting obligation that was an overriding interest under the 1925 Act was the liability to repair a church chancel. The fact that the purchaser of property could be saddled with the obligation to pay for expensive church repairs was held to offend against Article 9 of the european convention on human rights, so this interest was originally omitted from the 2002 Act. It was then subsequently reinstated, for a 10-year transitional period, by Statutory Instrument after the Act came into force.
See the article on overriding interest for more technicalities.
Cautions against first registration
Although the 2002 Act removes the term 'caution' from the vocabulary of third-party interests, it retains the caution against first registration. Despite the similarity of names, a caution against first registration was never a meta of caution, as understood by the 1925 Act -- it was a procedural device developed by the Land Registry and given with its own register. Under the 2002 Act, this system of registration continues on a statutory basis, with the difference that it will no longer be possible to register a caution in respect of an estate that one already owns. The Law Commission was keen that cautions not be used as a quick and dirty substitute for proper registration.
Notice and good faith
It has always been the expressed intention of the Law Commission that 'notice' and 'good faith' should have limited application to registered conveyancing. If a minor interest that requires registration is not registered, then it is vulnerable to a purchase of the estate, even if the purchaser is fully aware of it. This principle is consistent with the register being the definitive source of information about title. However, the 2002 Act does make some changes regarding notice and good faith. First, the general definition of 'purchaser' as 'purchaser in good faith' in the 1925 Act has gone. Arguably this prevents a court overcoming the stated purpose of the LRA by holding that a purchaser with notice is not a true purchaser, as in Peffer v Rigg. However, the 2002 Act defines 'valuable consideration' so as to exclude a nominal consideration. It should therefore no longer be possible to set aside inconvenient third-party interests by conveying property for one pound; this may allow Peffer-like cases to be decided the same way, but on different grounds.
On the other hand, the 2002 Act indicates that certain overriding interests will lose their overriding status if they are not evident on a reasonable inspection of the land. These include actual occupation rights and legal easements. While the Law Commission is adamant that these provisions do not amount to a variety of the doctrine of notice, they are clearly more notice-oriented than the corresponding provisions of the 1925 Act.
The public is occasionally alarmed by situations such as that which arose in lodge v wakefield cc (1995), where the tenant of a local authority paid no rent for 20 years, and was then able to take ownership of the house. Nevertheless it is widely accepted that, in general, AdversePossession serves an important social benefit. Most importantly, it prevents land and housing from standing idle; in addition, it reduces disputes over boundaries, by preventing a person who has accepted the position of a boundary for a long period from changing his mind and asserting his notional rights. Moreover, owners of unregistered land who have lost their title deeds (apparently not uncommon) may have no other way but possession to prove their ownership.
In drafting the 2002 Act, the Law Commission set out to make it more difficult for sitations of the Lodge v Wakefield CC to arise, while at the same time retaining the principle of adverse possession, and allowing land that is genuinely vacant to be reassigned without jumping too many hurdles. It is still possible to become the owner of land by adverse possession within 12 years, as before. However, to become registered as proprietor the Squatter must serve a notice to the Land Registry to that effect. The notice must be served after a minimum of ten years, and the registered owner has two years to object. If there is no objection, it will be assumed that the land is truly vacant, and the squatter will be registered as owner with no further enquiries. If there is an objection, then the Registrar must appoint an adjudicator to settle matter; it is hoped that this can mostly be done without a court hearing.
Another important change made to the law of adverse possession is that squatter's rights acquired after 2003 are no longer overriding. This means that a purchaser will not be bound by squatter's rights if he buys an estate from a vendor who has lost his title to a squatter, unless the purchaser has notice of these rights (s.11(4)(c)). However, if the squatter is in occupation, his rights might be protected by virtue of the actual occupation provisions.
Adminstrative and procedural changes
The 2002 Act makes a number of changes to the administration of the registration system and the search procedures available.
Appointment of an adjudicator. The Act makes provision for the appointment of an adjudicator to resolve disagreements between the Land Registry and its clients.
Land and charge certificates. Under the 1925 legislation, when alegal charge was granted over land, the proprietor would have to submit the land certificate to the registry, and obtained acharge certificate in its place. The new Act makes no provision for this practice which, presumably, is obsolete. One of the main intentions of the new act is to make the fact of registration the indicator of entitlement, not merely evidence of entitlement. If registration is equivalent to entitlement, then there is simply no need for paper records.
Historical searches. The new Act (at s.69) gives the Registrar the right to disclose the history of dealings with a particular registered title, although it does not define the circumstances in which this disclosure should be made. One circumstance where this historical information could conceivably by determinative is where a prospective purchaser is considering buying land that appears to be burdened by an easement in favour of neighbouring land, and seeks to find out whether the easement is enforceable against him. A historical search might reveal that the two pieces of land were owned by the same person since the easement was granted, which would have the effect of extinguishing the easement.
Determination of freehold estates. The new Act contains provisions for entering on the register the fact that freehold land has reverted to the Crown by Escheat. This happens only rarely, but there has not been a formal system of registering it until now.
Triggers of compulsory registration. Because the qualifying duration of a lease to be substantively registerable has been reduced to seven years, administrative durations contingenent on the length of the lease have also been reduced to match. So, the grant of a lease of more than seven years is compulsorily registerable, as is the grant of a mortgage over a lease with more than seven years to run.
The 2002 Act makes a number of provisions aimed at clarifying and regularising the existing law.
- The Act gives effect (s.34) to the assumption that by being registered as the proprietor, the registered proprietor can exercise all the powers of an absolute owner. This was necessary because of the uncertainties that arose when, for example, a corporation sold land outside its powers. The effect of the 2002 Act is to allow these transfers to be valid: the transferee gets good title. However, it doesn't make them lawful; the transferor is not protected from legal action in respect of an unlawful transfer simply because he was the registered proprietor.
- It is no longer possible to create amortgage by demise. Such mortgages were effectively obsolete, so this is, in practice, more a tidying-up than a substantive change in the law.
- Schedule 2 sets out in detail who should be entered as proprietor in a registered disposition, and what notices have to be entered against other titles in the register. This puts on a statutory footing the procedures which were largely in place already.
- Where there are conflicting third-party interests in a registered title (for example, the proprietor has granted two different mortgages to different mortgagees), the Act makes clear that the priority of interests is determined by the data of creation of the interest, not the date of registration.
What's not new in 2002?
One striking omission from the 2002 Act is any power to compel the registration of the 15% or so of England and Wales that is not registered. While the Law Commission continually decries the continued existence ofunregistered conveyancing, it felt that it would be impractical to implement a massive system of compulsory registration -- apart from anything else, the Land Registry doesn't have the resources to cope with the paperwork.
There are also a number of less striking ommissions, that were included in the draft Bill and never made it into the statute. For example, the Bill attempted at least a partial definition of 'actual occupation', but the Act has no more to say about that than its predecessor.