Land Law Summative - is the LRA 2002 effective PDF

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is the LRA 2002 effective...

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Word Count: 2492 Assignment Title: Property rights worth more than £7 trillion and secured lending worth more than £1 trillion are guaranteed and protected in the Land Register. Annual housing market transactions worth £244.7 billion were able to take place because those rights can change hands swiftly and securely’ HM Land Registry Annual report and accounts 2019/20. P11. Her Majesty’s Land Registry is keen to extol the advantages of their Register, and land registration in general. This masks the reality that the purchase of a freehold or leasehold property is replete with complexity, risk, and cost. In nearly 100 years, land registration has proved itself to be a costly and underwhelming project. The Law of Property Act 1925, the Land Registration Act 2002, and the common law need radical overhaul to achieve the stated aims of land registration, yet there is little political appetite for reform. Market forces, unregulated disruptive technologies, and a process orientated approach to conveyancing compound the risks associated with securely transacting with property. Discuss.

In 1925, the Land Registration Act 1925 (LRA 1925) was formed to clarify conveyancing alongside providing certainty for buyers. This was later replaced by the Land Registration Act 2002 (LRA 2002) which was more radical and aimed to enhance the fundamental philosophy of the LRA 1925 while reforming, simplifying, and enhancing the system of title registration. It aimed to do this by providing the framework for electronic conveyancing in addition to recording additional interests on the Register, strengthening the mirror principle. The LRA 2002 has achieved numerous achievements, though it has “shown that some aspects of it are unclear… inefficient or have unintended outcomes.”1 Due to this the Acts ambition to obtain a perfect and orderly register is unlikely to be achieved. Furthermore, despite the LRA 2002 reforming many aspects of the LRA 1925, there still remain features that require further reform as “the landscape within which land registration operates has changed considerably since the LRA 2002 came into force.”2 Aspects of overriding interests, adverse possession, and electronic conveyancing raise flaws in the LRA 2002 and are thought to need additional reform to ultimately achieve the stated aims of land registration.

There are three main principles of land registration; the mirror principle, the insurance principle, and the curtain principle. The mirror principle states the Register should be a precise reflection of the rights and interests of the land. The insurance principle requires the register to be accurate and when “the register is shown to be incorrect those who suffer loss, as a result, are compensated.”3 The curtain principle states that interests under trusts shall not be displayed on the register. The LRA 2002 was designed to reflect the mirror principle whereby, “the register should be a complete and accurate reflection of the state of the title of the land.”4Nonetheless, overriding interests “seriously undermine the registered land project and the mirror principle.”5 They present a “crack in the mirror principle”6 due to them being interests which will bind a purchaser of the registered estate regardless of the fact they are not reflected on the Register. As a result, the LRA 2002 aimed to reduce their effect as well as removing certain overriding interests altogether. Hence, rights under Section 70(1) of the LRA 1925 were replaced with schedules 1 and 3 of the LRA 2002.

1 The Law Commission, ‘Updating the Land Registration Act 2002’ (Law Com No 380, 2018) para 1.9 2 Ibid 3 Law Commission, ‘Updating the Land Registration Act 2002’ (Consultation paper no 227, 2016) para 2.19. 4 Law Commission, ‘Land Registration for the Twenty-First Century’ (Law Com No 271, 2001) para 1.5. 5 Chris Bevan, Land Law (2nd edn, OUP 2020) 77. 6 MP Thompson, Modern Land Law (5th edn, OUP 2012) 67.

Under Schedule 3 paragraph 17, legal leases granted for a period of 7 years or less are overriding interests and will inevitably bind the purchaser8.Whereas under the LRA 1925 only legal leases over 21 years were entitled to be registered. Moreover, City Permanent Building Society v Miller [1952]9 held “the use of the word granted”10 states that only legal leases will be overriding and possibly dismisses equitable leases as overriding in paragraph 111. This illustrates that significant reform has occurred therefore taking the LRA 2002 a step closer to achieving its aims of a perfect Register. Additionally, the exemption of overriding interests also occurs in foreign land registration systems, made evident by The Queensland Real Property Act 1877.12 Nonetheless, the mere existence of these overriding interests means the register cannot be a perfect reflection as the LRA 2002 aims to achieve. For this to be accomplished the LRA 2002 would have to reflect all legal leases on the register, this would dramatically amplify the burden placed upon the Registry and its resources. Not to mention that to portray all legal leases on to the register would severely disorder the register and be an intensely costly project, where in reality these interests can frequently be exposed by short inspection of the land. This suggests that the LRAs aim of a perfectly reflective register is currently unrealistic and instead it would be more reasonable to further reduce the period of time that renders a legal lease overriding. This would bring them closer to a perfectly reflecting Register, as in a time where advanced electronic conveyancing (e-conveyancing) has not been accomplished, to achieve a perfectly reflecting register is not possible. Under Schedule 3 paragraph 213, the interests of a person in actual occupation are also overriding. Schedule 3 paragraph 214 limited the rights contained in section 70(1)(g), aiming to guard the rights of an individual in actual occupation. It states “particular interests of an individual in actual occupation during the period of a disposition will bind a purchaser, even though they are not shown on the register.”15 A common interest is one of equitable coownership.16 Demonstrated in Williams and Glyns Bank v Boland (1980).17 Mrs Boland, who was in actual occupation, was held to have an overriding interest against her bank as she had 7 Land Registration Act 2002. 8 Ibid, Schedule 3 para 1. 9 City Permanent Building Society v Miller [1952] Ch 840. 10 Ibid. 11 Ibid. 12 The Queensland Real Property Act 1877. 13 Ibid (n7). 14 Ibid. 15 Ibid (n7), Schedule 3 para 2. 16 Pettitt v Pettitt [1970] AC 777 (HL). 17 Williams and Glyns Bank v Boland [1980] 2 All ER (HL).

provided a percentage of the purchase price and made mortgage payments even though she was not a registered proprietor18.While succeeding in achieving the LRA 2002 aims of protecting the rights of an individual in actual occupation, this once again flaws the mirror principle since the interest is not reflected on the register yet overrides the disposition. Nevertheless, these overriding interests could be deemed reasonable and are allowed to “exist because they may afford protection to otherwise vulnerable individuals”19 such as Mrs Boland, who deserves precedence over the bank. Additionally, the actual occupation of an individual on a piece of land needs to be apparent to the buyer on a reasonably careful inspection of the land20.If that were to occur, the purchaser could then raise an enquiry. Lastly, the LRA 2002 narrowed down the degree to which the buyer can be bound by these interests, hence if actual occupation was not apparent on a reasonably careful inspection, they cannot be bound21. Under Schedule 3 paragraph 322, legal easements and profits à prendre arising by an implied grant or prescription are additionally overriding interests23. Furthermore, if they are discoverable on a reasonable careful inspection or if they have been expressed one year before the period of disposition, they will bind the purchaser24. However, equitable easements are not embraced under Schedule 3 paragraph 3. Reversing Celsteel Ltd v Alton House Holdings Ltd [1985]25 which held “equitable easement that were openly exercised and enjoyed”26 were overriding interests. Additionally, many equitable easements, that were previously overriding Under Section 70(1)(a) of LRA 1925, no longer override under the LRA 2002.

The LRA 2002 additionally abolished other interests, for instance, chancel repair liability, in addition to the limitations it made to the interests discussed above. As a whole, this has increased the accuracy of the register. Yet the register is not perfect and “the mirror principle could never … work properly until everything affecting titles was displayed on a register.”27 18 Ibid. 19 Barbara Bogusz, 'Bringing Land Registration into the Twenty-First Century, The Land Registration Act 2002' [2002]65(4) MLR 556. 20 Ibid (n14). 21 Ibid. 22 Ibid (n7). 23 Ibid, Schedule 3 para 2. 24 Ibid. 25 Celsteel Ltd v Alton House Holdings Ltd [1985] 1 WLR 204. 26 Ibid. 27 Gerald Dworkin, “Registered Land Reform” (1961) 24 MLR 135.

There are strong arguments for the need for further reform within overriding interests for the register to be truly accurate and there are suggestions that interests such as rights to mines and minerals should no longer be overring. The law Commission acknowledges the fact overriding interests require reform as “the existence of this uncertainty on a matter of such fundamental importance has been a major consideration … in making our proposals for reform.”28 Although they do not suggest all overriding interests must be registered as it would be unrealistic due to the cost and the burden that would be placed upon the Registry. Despite being currently unrealistic and unreasonable to register all overriding interests, further reform could again limit the number of interests that override, minizine the problem. Additionally, if e-conveyancing becomes fully established, it could allow for more (if not all) overriding interest to be registered as it could be done electronically.

The LRA 2002 has additionally introduced reforms in other areas of the law such as the adverse possession concerning to the acquisition of registered title. Prior to the LRA 2002 adverse possession undermined registered title and proved to be a crack in the mirror. Nonetheless, the LRA 2002 introduced drastic changes in relation to registered land which favoured the registered owner. One being the removal of the limitation period under section 15 of the Limitation Act 1980. Though unfortunately, the law involving unregistered land has in the majority stayed the same. Additional changes in relation to registered land are set out in Schedule 629. Schedule 6 paragraph 130 sets out that a “person may apply to the Registrar to be registered as the proprietor of a registered estate in land, if he has been in adverse possession of the estate for the period of ten years ending on the date of the application”31. Schedule 6 Paragraph 232, then states the Register is obliged to notify the proprietor of the registered land, in addition to any other individuals with interests33. This allows them the opportunity to object to the application and gives them an additional 2 years to evict the adverse possessor if none of the three grounds under Schedule 6 Paragraph 534 are met. This provides additional protection to the registered proprietor and no longer can they lose land without their knowledge. Though this gives rise to the disadvantage that some registered proprietor will get to keep land they are not making use of when it’s likely to benefit the 28 Ibid (n4). 29 Ibid (n7). 30 Ibid. 31 The Land Registration Act 2002, Schedule 6 para 1(1). 32 Ibid (n7). 33 Ibid (n7), Schedule 6 para 2. 34 Ibid (n7).

adverse possessor. The reforms set out in the LRA 2002 substantially decrease the cases of adverse possession in relation to registered land yet not unregistered land. This consequently creates a major incentive for landowners to register their land, which the LRA 2002 aimed to do. Although there has been significant reform under the LRA 2002 in terms of adverse possession “certain aspects of the procedure are unclear.”35 One being that Schedule 6 is not clear on whether the adverse possessor can make a second application if the first application was declined36. As the LRA 2002 aimed to further clarify areas of conveyancing, the law of adverse possession needs reform and clarification. Whereby the law is “providing sufficient protection to registered proprietors from repeated claims based on adverse possession.”37

Arguably the main aim of the LRA 2002 was to effectively introduce electronic conveyancing which would enhance the ability to easily access the register. E-conveyancing would also allow both registration and transfer to occur electronically which would consequently reduce the ‘registration gap’, delays, and complications that occur due to delays. In addition to being quicker and cheaper, e-conveyancing would allow interests (such as the ones previously discussed) to be more obvious and less hazardous. This would clarify many cases similar to Abbey National Building Society v Cann [1991]38 which held “the person claiming the overriding interest had to have been in actual occupation at the time of creation”39 and not the time of registration. The introduction of e-convincing would clarify and enhance the reliability of the Register, yet e-conveyancing unaided would not make the Register a perfect “reflection of the state of the title of the land.”40 Currently, a complete e-conveyancing system has not been accomplished, though in 2011 The Land Registry had “written off nearly £11m spent developing the scheme.”41 Additionally, there are major concerns about the possibility of mistakes, identity theft, and fraud. Though the Law Commission states they “made recommendations … to reduce the risk of fraud”42, the possibility of fraud will always be present as it is in our current paper-based system. The Law Commission also acknowledged that it was “necessary to step back from the original model envisaged in the LRA 2002”43 as it 35 The Law Commission, ‘Updating the Land Registration Act 2002 Summary’ (Law Com No 380, 2018) para 61. 36 Ibid, para 62. 37 Ibid, para 63. 38 National Building Society v Cann [1991] 1 AC 56 (HL). 39 Ibid, para 56. 40 Ibid (n4) 41 Catherine Baksi, 'Land Registry drops e-transfer move' [2011] 1(1) The Law Society Gazette Accessed 29 November 2020 42 Ibid (n1), para 20.16 43 Ibid

was an “ambitious model.”44 This highlights the fact that LRA 2002 still has not achieved its aim to fully introduce e-conveyancing and that the model presented by the LRA 2002 was unrealistic. This suggests reform is needed to develop a new realistic framework for econveyancing that is “feasible and adaptable to future developments.”45 Currently, there has been a discussion for the use of blockchain technology to generate an electronic registry of land which is suggested to be more secure and accurate as it prevents alterations from taking place. However, blockchain technology is not without some problems and further research needs to be completed before a new accurate framework for e-conveyancing can be accomplished.

To conclude, The LRA 2002 has enhanced land registration significantly and has dramatically amended issues the lay in the LRA 1925 and its predecessors. The LRA 2002 has significantly reduced the number of overriding interests as well as guarding the rights of individuals in actual occupation and providing additional protection to registered proprietors against adverse possessors. This illustrates that the reforms set out in the LRA 2002 have assisted the registry to take steps towards achieving their overall aim of having a precise reflection of title. This helps bring security and certainty to buyers as their rights are protected. This being said, the Register is far from flawless and issues such as overriding interests still undermine the Register’s accuracy and prove hazardous for buyers. Moreover, nearly a decade after the formation of the LRA 2002, e-conveyancing has yet to be fully introduced. Both of these issues prove to be fundamental flaws within the LRA 2002. This indicates the need for additional reform by further reducing the number and range of overring interest in addition to the production of a new framework for a realistic e-conveyancing. However, for the register to be effective, compromises have to occur. While it is desired for the Register to be a precise reflection of titles, it is also unrealistic. Therefore, even though the register is not a perfect mirror reflection of titles, it is still a reasonable reflection.

44 Ibid (n1), para 20.2 45 Ibid (n3), para 20.11

Bibliography

Primary Sources Legislation The Land Registration Act 1925.

The Land Registration Act 2002. The Limitation Act 1980. The Queensland Real Property Act 1877.

Table of cases Celsteel Ltd v Alton House Holdings Ltd [1985] 1 WLR 204. City Permanent Building Society v Miller [1952] Ch 840. National Building Society v Cann [1991] 1 AC 56 (HL). Pettitt v Pettitt [1970] AC 777 (HL). Williams and Glyns Bank v Boland [1980] 2 All ER (HL).

Secondary Sources Books Bevan C, Land Law (2nd edn, OUP 2020) Thompson MP, Modern Land Law (5th edn, OUP 2012)

Articles Bogusz B, 'Bringing Land Registration into the Twenty-First Century, The Land Registration Act 2002' [2002] 65(4) MLR 556. Dworkin G, “Registered Land Reform” (1961) 24 MLR 135.

Law Commission Reports Law Commission, ‘Land Registration for the Twenty-First Century’ (Law Com No 271, 2001). Law Commission, ‘Updating the Land Registration Act 2002’ (Consultation paper no 227, 2016). The Law Commission, ‘Updating the Land Registration Act 2002’ (Law Com No 380, 2018). The Law Commission, ‘Updating the Land Registration Act 2002 Summary’ (Law Com No 380, 2018). Online Resources Baksi C, 'Land Registry drops e-transfer move' [2011] 1(1) The Law Society Gazette

Accessed 29 November 2020...