Registered Unregistered Land PDF

Preview

Summary

Notes which I did on my own for revision purposes. I got a First Class degree ...

Description

The defects within unregistered land and the advantages/ continuing problems within registered land. Intro: (Purpose of the essay, launch the topic) To be able to assess whether land registration is an improvement on unregistered land, we need to consider the problems with the system that existed before registered land was introduced, that is, the conveyancing process. The procedures of conveyancing differ depending upon whether title to the land is registered or unregistered. Land registration is however not a new concept, it dates back to the mid-19th century. Registration was only possible when the deeds were available. Due to the lack of technological services, it led to the downfall of the first land registry, mainly due to the fact that it was not compulsory to register. Further to that, in 1925 land registration took a giant leap with the implementation of 2 new legislation: Land Registration Act 1925 (LRA 1925) and Law of Property Act 1925 (LPA 1925). However, in the early years of the 21 st century, the conveyancing procedure started changing with the introduction of the Land Registration Act 2002 (LRA 2002). Electronic conveyancing was then available whereby online registration was possible. All the changes in the procedure of conveyancing started with the situations of unregistered land. Unregistered land is any land which does not have a record of title in the Land Registry, and then is facing a decrease as certain efforts have been made to register maximum number of lands in UK. S.52(1) LPA 1925 states that deed is required to convey a legal estate or interest in land. Therefore, unregistered land was subjected to LPA 1925. Prior to 1926, it was presumed that all equitable rights in and over land were enforceable against all other parties except for bona fide purchasers of a legal estate for valuable consideration without notice. Such a bona fide purchaser will be known as ‘equity’s darling’ as illustrated in Wilkes v Spooner. The doctrine of notice actually had to be satisfied according to any of the three situations: (i) actual notice – no knowledge of interest, purchaser takes free of it; (ii) constructive notice – the purchaser can claim to be free from notice if he makes all the reasonable enquiries to ensure that persons in occupation do not have any interest in land as established in Hunt v Luck; or (iii) imputed notice – if notice given to solicitor or any other party acting on behalf of purchaser, purchaser is deemed to have been given that notice as stated in Kingsnorth Finance v Tizard. However, the system under unregistered land came along with many problems as the rights of purchasers were affected. The purchaser could be bound by legal rights whether he had knowledge or not. Anybody holding equitable interest could see their rights evaporate upon conveyance of land to equity’s darling. Prior to the LPA 1925 there was too many legal titles; too many legal interests; the doctrine of notice applied to all equitable interests and an unlimited number of legal owners was permitted. This led to some inadequacy to the purchasers under the unregistered land as there was the tendency to avoid the constructive trust and also the conveyancing procedure was time consuming.

Hence, the 1925 Legislation came with few fundamental reforms: restricted legal estates to 2 and legal interests to 4; limited number of legal owners to 4 and introduced overreaching in all systems of land. Conveyance to a purchaser will overreach any equitable interest whether or not he has notice thereof as per S.2 LPA 1925. However, overreaching cannot take place when there is only one trustee. Therefore, S.27 LPA 1925 puts forward the curtain principle, whereby the purchasers of the legal estate shall not be concerned with the trusts provided that there are 2 or more trustees. Yet, the shortcomings of such reforms had to be simplified further and the best way seemed to be land registration. However, this would take a long time since unregistered land still covers about 20-25% in area of land in UK, which is why the reforms of the 1925 Legislation was adopted. After 1926, equitable interest would fall into three categories: (i) Family equitable interest (concept of overreaching) where Kingsnorth Finance v Tizard established that on a sale or mortgage by a sole trustee, overreaching does not operate; (ii) Commercial equitable interest and (iii) Residual interest. Commercial equitable interests were made subject to compulsory registration under the Land Charges Act 1972. The purchaser then received information about existing interest on the land which is constituted as actual notice. However, there exist few problems with the land charges register: - If no proper searching the Land Charges Register to the root of title is done, the purchaser has no excuse not to be bound by any interest. That is, an undiscoverable interest could come to light anytime and bond the purchaser, known as the ‘Frankestein Monster’. - It is necessary to search against exactly the right names for commercial equitable interests as illustrated in Oak Co-operative BS v Blackburn. However, registration against inaccurate name can be relevant where there is either no search for an inaccurate search. - However, Midland Bank v Green states that if a registrable interest has not been registered it is void as against a purchaser of the land whether that purchaser was aware or the interest of not. Under the residual interest, the doctrine of notice applies. In cases where there is only one trustee, overreaching will not apply as explained above as per Tizard. Restrictive covenants and equitable easements created before 1925 cannot be registered but will be subjected to the doctrine of notice. For example, in cases of proprietary estoppel as illustrated in Ives v High. Therefore, we can note that although the defects of unregistered land, its principles continue to be relevant because any transfer of property with unregistered title will be subjected to the rules and it is only when title is transferred to the purchaser that the purchaser then applies to have the tile registered in his name. The traditional system of unregistered conveyancing had no national record of the ownership of the property other than the deeds themselves. Documentations could be lost or damaged and tracing of owners was very difficult. To make conveyancing easier, LRA 1925 introduced the land register which was adopted by LRA 2002. In circumstances of registered land, the purchaser may simply consult the register as opposed to investigating the vendor’s title to the land which he claims the right to sell. Every title in the register contains a sub register: (i) proprietary register – to see the extent of

the property; (ii) proprietorship register – who owns legal estate; and (iii) charges register – details of mortgages and incumbrances. The registration system has 3 key principles which has been established by LRA 2002: (1) Mirror principle – Register should mirror the land, i.e. if there is interest on/in land, it should also appear on the Register; (ii) The Curtain principle – purchaser of legal estate from trustees of land shall not be concerned with the trust affecting the land; and (iii) Insurance principle – All registered titles should be guaranteed by the state. The system of land registration also provides another mechanism to protect interest under a trust, that is, a restriction. This may be entered on the register to show that the legal proprietors hold the property as trustees. This was illustrated in Baker v Craggs as per LRA 2002 S.44. The LRA 2002 puts forward a comprehensive system where the title to land has been registered it is not necessary to demonstrate a sufficient root of title in each circumstance, rather, legal ownership of land is determined by looking into the Land Register. Also, electronic conveyance proved to make the procedures even easier by eliminating the registration gap. The mirror principle reflects the full character of the land whereby any purchaser can check and assure themselves that they are fully protected. However, “overriding interests” are not a mistake. That is, it is up to the purchaser to make sure that there are no adverse rights on the land. The curtain principle is subject to the rules of overreaching as explained above whereby both the beneficiary and purchaser are protected provided that there are two or more trustees. And the insurance principle insures against mistakes or inaccuracies in the register. However, there are some interests in land which need not be registered, yet still binding on a purchaser/ registered proprietor even though it had not been entered on the register, called overriding interests, that is a ‘crack in the mirror’. There are also called a ‘crack in the mirror’ and are the following categories: (i) leases of 7 years or less; (ii) persons in actual occupation; and (iii) legal easements and profits a prendre. These are dealt with by Schedule 3 of the LRA 2002. Also, Schedule 1 override first registration of title, be that title to a freehold (S.11) or a leasehold (S.12). Schedule 3, Paragraph 1, LRA 2002 puts forward that, if a lease is granted and last 7 years or fewer, it need not be registered. A purchaser must make enquiries of an estate’s occupants to determine whether this paragraph will be applicable to his intended purchase. Schedule 3 para 3 LRA 2002 sets out that an unregistered legal easement will bind purchasers if they know about its existence or existence of the easement would have been obvious on a reasonable careful inspection of land. Paragraph 2 of Schedule 2 LRA 2002 protects proprietary interests belonging to those in actual occupation of land despite non-registration. That proprietary interests will take priority only if the purchaser had actual knowledge of the interest of that person’s occupation would have been obvious on a reasonably careful inspection. This was heavily discussed in many circumstances

Williams v Boland stated that minor interest due to contribution to purchase price would amount will become overriding. However, Sch 3 para 2 will not apply if there are two trustees as illustrated in City of London Building v Flegg. Furthermore, gaps in physical absence such as in Chhokar v Chhokar will not disrupt a finding of actual occupation as a short visit away from the property will not prevent actual occupation from continuing. However, when the occupier is absent on reasonable careful inspection, but the person had intention to return, that would amount to actual occupation as in Link Lending v Bustard. The interest and occupation must exist at the same time of the execution of the charge, Abbey National Building Society v Cann. However, Begum v Issa states that it may be reasonable to withhold information as to a beneficial interest where the reason for so doing it that it would prejudice the occupier’s position, or it would be inappropriate to disclose the right at that specific time. Schedule 3 of the LRA 2002, has reduced the extent to which these interests can bind a purchaser on a subsequent registration of title so that a purchaser will not be bound if the occupation would not have been obvious on a reasonable inspection of the land at the time of the disposition. Therefore, in general terms, LRA 2002 seems a clear legislation. The method of registration would work well. Registered land gives much more information and the title details are more easily-accessible. Overriding interest can be a problem in registered land but are usually discoverable by inspection or inquiry of the interest-holder as illustrated in the case law above. However, ultimately a purchaser is still at risk of being bound by unknown interests....