The primary reasons for the introduction of a land registration system in England and Wales were realised by the Land Registration Act 1925 PDF

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Full esssay lan on the land registered system....

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‘The primary reasons for the introduction of a land registration system in England and Wales were realised by the Land Registration Act 1925. That system was not perfect, but it has been enhanced by the entry into force of the Land Registration Act 2002.’ -

Pre-1925 problems – briefly. The mechanics and principles of land registration, including the priority rules (s 28 and s 29 LRA 2002). Titles and the mirror principle. Trusts and the curtain principle. The insurance principle. The role of unregistered interests which override. The role of registered protected interests. Some problems and solutions: undiscoverable but binding interests and the changes made by LRA 2002; protecting the purchaser or the occupier?; the nature of the guarantee of title embodied in s 58; and Scheds 4 and 8.

Extra info: The nature of the guarantee of title in s 58 is a matter of some debate. The decisions in Parshall v Hackney (2013), Richall v Fitzwilliam (2013), Swift 1st Ltd v Chief Land Registrar (2014) and the series of cases surrounding Barclays Bank v Guy (No 1) (2008) have been the subject of much academic commentary. The meaning of ‘mistake’ in Sched 4 is critical to the determination of these issues. The approach to rectification in Baxter v Mannion (2011) and Walker v Burton (2013) should also be considered when analysing the extent to which the LRA 2002 embodies the insurance principle. See Lees, ‘Title by registration: rectification, indemnity and mistake and the Land Registration Act 2002’ (2013) 76 MLR 62, Dixon, ‘A not so conclusive title register?’ (2013) 129 LQR 320 and Goymour, ‘Mistaken registrations of land: exploding the myth of “title by registration”’ (2013) 72 CLJ 617.

Point 1: PRE 1925 PROBLEMS: -

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THE LRA 1925 gave fundamental change in the structure of land law in England and Wales. Before then, the mechanics of conveyancing were hindered by formalism, beset with danger for all but the most conscientious purchaser. The operation of the doctrine of notice meant not only that holders of equitable rights could have their rights destroyed through chance or caprice, but also that purchasers of property might find their land burdened by legal rights of which they had no knowledge. Reliance on title deeds to prove ownership of land was cumbersome and expensive. The net result was a choking of the property market at a time when free movement of capital was essential. The Land Registration Act 1925 sought to simplify and codify. It aimed to bring certainty where there was obscurity, and equity where there was often inequality.

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The LRA 2002 which replaced the Lra 1925 seeks to reinforce this to fit into 21st centaury.

Point 2: LRA 1925 AND 2002: -

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The basic principle of the LRA 1925, and now the LRA 2002, is that title to land should be recorded in a register and guaranteed by the state. On 1 December 1990 all of England and Wales became subject to compulsory registration of title. In addition to establishing a mechanism for registering ownership, the Land Registration Act 1925 also established three other mechanisms for protecting other people’s rights in that land. This has been continued under the LRA 2002.2 If correctly used, these procedures will ensure that rights in land are not destroyed by a transfer of a registered title to a new owner. First, there are registrable charges (mortgages), which must be registered before they can be regarded as legal mortgages – ss 25, 27 of and Sched 2 to the LRA 2002. Once registered, these bind subsequent transferees of the mortgaged land unless the mortgage is paid off (as most will be) by the proceeds of that sale. If not registered, such mortgages take effect as equitable interests only.

Point 3: UNREGISTERD INTERESTS:

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Second, there are unregistered interests which override (‘overriding interests’). These are interests, found in Scheds 1 and 3 to the LRA 2002, that take effect automatically against a first registered proprietor (Sched 1 rights) or a transferee of an existing registered title (Sched 3 rights). They require no registration and the old doctrine of notice is entirely irrelevant – ss 11, 12, 29 and 30 of the LRA 2002. It is immaterial whether such interests are legal or equitable, so long as they fall within one of the classes defined in the appropriateSchedule to the 2002 Act. The logic behind the automatic effect of such interests is that they comprise such rights as should be obvious to a purchaser on physical inspection of the property or are such that they benefit the community as a whole without seriously restricting a purchaser’s enjoyment of the land.

POINT 4: REGISTERED PROTECTED RIGHTS:

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Third, there are registered protected interests. This category essentially comprises all other interests that may subsist in or over land.

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In order to have priority over a first-registered proprietor or a purchaser of a registered title, such interests, whether legal or equitable, must be protected by entry on the register. Actual ‘notice’ of the right (or lack of it) is irrelevant – ss 11, 12, 29, 30 of the LRA 2002. Under the LRA 2002, this class is meant to comprise the vast majority of third party rights in land. Failure to make such an entry means that the right loses its priority over a purchaser of the registered title unless the right fortuitously falls within the category of overriding interests. Note, however, that such rights, whether registered or not, will have priority over a transferee of a registered title who is not a purchaser, such as when there has been a gift or an inheritance. (s28 of the LRA 2002)

POINT 5: -

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Land registration is said to operate on three principles: the mirror principle, the curtain principle and the insurance principle. The mirror principle suggests that the register should be a mirror of all the proprietary of which under the old s 70(1)(g) of the LRA 1925 on an unwary purchaser was first fully appreciated in Williams and Glyn’s Bank v Boland (1981). Another example is Ferrishurst Ltd v Wallcite Ltd (1999), in which the plaintiff’s overriding interest was undiscoverable because his ‘actual occupation’ (under the then s 70(1)(g) of the LRA 1925) extended only to part of that property. However, this difficulty has been largely overcome by Sched 3 to the LRA 2002. Under Sched 3, actual occupation gives rise to an overriding interest only where the occupation is discoverable by a purchaser (or the purchaser already knows about the right) and then only achieves priority to the extent of the land actually occupied (thus reversing Ferrishurst). This should do much to alleviate the problem of undiscoverable adverse rights.

POINT 6: CURTAIN PRINCABLE: -

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The curtain principle was, perhaps, the most ambitious goal of the original 1925 Act. It remains a key principle under the 2002 Act. The aim is to keep certain types of equitable interest off the register completely. Such equitable rights, being those taking effect behind a trust of land, will not bind a purchaser on sale of the land because of overreaching. In essence, a purchaser will not be concerned with such equitable rights – they are behind the curtain of a trust – so long as the purchase money is paid to two trustees of land: s 2 of the LPA 1925.4 The equitable interests then take effect in that purchase money. Such a system works well when the statutory requirement of two trustees exists. However, on some occasions there will be just one trustee of land and so overreaching will not be possible. In such circumstances, a purchaser must ‘look behind the curtain’.

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As Boland shows, if the purchaser does not raise the curtain, the purchaser can easily be bound by such equitable interests. This problem involves striking a balance between protection of the purchaser and protection for the occupier of land and it arose largely due to social and judicial changes. Cases such as Abbey National Building Society v Cann (1991), Mortgage Business plc v Cook (2012), Equity & Homes Loans v Prestridge (1992) and Birmingham Midshires Mortgage Services Ltd v Sabherwal (Sudesh) (2000) illustrate the complexity of this balancing act.

POINT 7: INSURANCE PRINCIBLE:

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Finally, there is the insurance principle. Once title is registered, the state guarantees the authenticity and effectiveness of that title: s 58 of the LRA 2002. Obviously, such a system cannot be absolute and there are provisions for alteration of the register: s 65 and Sched 4 of the LRA 2002. The potential wide-ranging discretion to alter the register is clearly a cause for concern – contrast Derbyshire County Council v Fallon (2008), Baxter v Mannion (2010) and Walker v Burton (2013) – and the interaction of s 58 and s 65 still needs to be clarified. A second limb of the ‘insurance principle’ is to be found in Sched 8 to the LRA 2002, which stipulates the circumstances in which a person suffering loss by reason of the operation of the registration system can receive an indemnity (money compensation). These provisions support strongly the effectiveness of the land registration system. Recent case law has however called the strength of the guarantee of title into question. Fitzwilliam Holdings v Richall (2013) suggests that s 58 guarantees only legal title, such that following a void conveyance, the new registered proprietor would hold on trust for the original proprietor. This decision, based on Malory v Cheshire Homes (2002), if subsequently followed, will render the guarantee of title largely worthless. The effects of this decision have however been lessened by the approach of the court in Swift 1st v Chief Land Registrar (2014).

CONCLUSION: On a general level then, the current land registration system now found in the 2002 Act is a success. The success was built on the 1925 Act and has been enhanced by the 2002 Act. The introduction of a system of land registration brought certainty, fairness and relative simplicity. Of course, there are problems of detail. However, the overhaul of the law by the LRA 2002 has been beneficial. Indeed, the LRA 2002 goes further than a mere tinkering with the system and brings the system up to date, even without the coming into force of the e-conveyancing provisions. Currently, there is a tension between the purchaser of land and the occupier of it, but generally speaking the provisions on overreaching can deal with this if the statutory mechanisms are observed....