The ‘insurance principle’ is whereby the State guarantees the accuracy of the titles on the register. If a discrepancy does occur the Act provides that it may be rectified and compensation is available to those adversely affected. This is a strong benefit of the system as it ensures certainty and makes it safe to rely on the register. These statutory provisions, however, provide a significant flaw in the registered system because compensation is not available to every individual who suffers a loss. Under r13 of the Land Registration Rules (1925), minor slips to not require formal rectification. The cases where the register may be rectified are provided by s82. S82(1) appears to give extremely wide powers to rectify but these are somewhat curtailed by s82(3). Furthermore, the provisions for compensation in s83 appear to be generous, but there is a hidden limitation whereby it must be shown that the loss is due specifically to the rectification. Consequently, it has been held that where rectification is made to give affect to an overriding interest no compensation will be payable. It can be seen, therefore, just how hazardous it can be to a potential purchaser.
Another principle of registered conveyancing is that the system should not, in general, make any substantive changes to land law. While this may, at first glance, appear to have been followed, a more detailed examination demonstrates that the new system incorporates rules and concepts that are substantively different from the principles which have regulated unregistered land. Some of the traditional concepts of unregistered land, such as the equitable doctrine of notice, are rendered completely redundant in registered land. Furthermore, the two regimes can frequently coincide in the solutions which they give for similar solutions. Of greater significance, however, is that there can be a large discrepancy of substantive outcome when this divergence of fundamental principles occurs and this is aptly demonstrated in the case of Lloyds Bank Plc v Carrick. The implication is, therefore, that there are two parallel regimes of land law that continue to operate in this country. It may well be argued that this undermines the aims of land registration but it is, however, equally important to its success. In 1987, the Law Commission readily accepted that “there are substantive differences between the two systems”, but they went on to say that land registration “is … the way forward, the new improving the old.” This surrender to the inevitable is significant because a successful system of land registration depends ultimately upon addressing the failings of the old system. Consequently, this has paved the way for the introduction of computerisation and ‘e-conveyancing’ which would not have been possible within the unregistered land system.
Under s123 of the LRA (1925), an application for registration must be made to register the title within two months of the date of transfer; failure to register the land renders the purchaser’s title void. If on examination the land can be found to have satisfactory title, certain information relating to the land is entered into a ‘register’. The register for each piece of land is actually divided into three separate registers: the property register, the proprietorship register and the charges register. The property register contains a description of the property by reference to a plan and also details any rights to which the land has benefit. The proprietorship register provides the name and address of the landowner and details of any limitations on the powers of dealing with the land. Finally, the charges register details all incumbrances or charges affecting the land. Upon registration the registered proprietor is given a Land Certificate containing copies of the above registers and a copy of the filed plan.
The 1925 Act took all the estates and interests in land and classed them as ‘registered’, ‘minor’ and ‘overriding’. Consequently, the protection of property rights in the registered system is much simpler than in the unregistered system primarily due to the fact that there is no significant distinction between legal and equitable interests. Registered estates and interests correspond to those set out in s1(1) and s1(2) of the LPA 1925. There are seven classes of title: three for freehold and four for leaseholds. An important characteristic is that a registered interest will bind any subsequent holder of the land. s3(xv) defines a minor interest as any interest in land that is not a registered interest or a overriding interest. Minor interests do not, unlike registered or overriding interests, automatically bind a purchaser. Instead they require protection by entry on the title register of the land affected and this is achieved by four methods: notices, cautions, inhibitions and restrictions.
Overriding interests by definition never appear on any register of title, but are quite literally ‘overriding’ in the sense that they automatically bind the disponee of any registered title. It is this aspect of the legislation that sparks such controversy and appears to undermine the ‘mirror principle’. s70(1) LPA 1925 lists the interests that are capable of being overridden. The majority of these are non-contentious but the most important ones are restricted to paragraphs (a), (f), (k) and (g). The latter paragraph is concerned with the rights of persons in actual occupation of a property and represents the biggest flaw in the legislation as it creates a significant danger to the purchaser. This is because the wording is such that the courts have interpreted it as providing protection for holders of equitable interests. This has the effect of distorting the structure of the act and detracts from the basic principles of registration. Consequently, purchasers are being bound by a range of equitable interests. Another failing in the system is that the only protection for the purchaser is the ‘enquiry clause’ which is analogous to the old doctrine of notice. In order to satisfy s70(1)(g), three requirements must be met: Firstly, there must be an existing property right in relation to the land. Secondly, the holder of the right must be in actual occupation of the land or in receipt of rents and profits from the land. Thirdly, the purchaser must have made enquiry of the holder of the right and not been told of it.
The meaning of ‘actual occupation’ has been the subject of two major judicial decisions. In Hodgson v Marks, the Court of Appeal held that a widow, who conveyed her house to her lodger, had her interest protected because she was physically occupying the house. In the leading case on s70(1)(g), Williams & Glyn’s Bank Ltd v Boland, the House of Lords held that Mrs Boland had an equitable interest in land which her husband was the sole registered proprietor of. The significance of the decision in Boland is that the House of Lords chose to prefer the interests of occupiers against those of banks, building societies and conveyancing solicitors. Since then, the courts have found ways to retreat from Boland without actually overruling it. In City of London Building Society v Flegg, for example, in circumstances not unlike those in Boland, it was held that, where two legal owners execute a mortgage (as in Flegg), instead of one (as in Boland), the overreaching guarantee in the LPA 1925 is triggered and protects the mortgage. What can be deduced is that however full the enquiries made by the purchaser, the enquiries may not discover every relevant fact. Registered land is potentially burdened by a fairly extensive list of these overriding interests. The significance of this flaw cannot be underestimated and the implications are far reaching.
To conclude, the system of registered land was perhaps the greatest of the reforms to come out of the 1925 legislation. The new system offered numerous advantages but it is fair to say that the scheme of registration is not as tightly drawn as might perhaps have been desired. This lack of effectiveness can be seen when one considers that the subsequent Land Registration Acts have been enacted, not to develop the system, but simply to cure existing problems. A legitimate criticism is that the completion and development of the register has essentially been sporadic and taken far longer than necessary. In recent years, however, the regime of registered title has begun quickly to surpass unregistered title and, therefore, now constitutes the primary regime of modern land law.
Undeniably, the greatest problem with the registered system is the class of overriding interests. The LRA 1925 appears to destroy the integrity of the registered land concept by allowing these interests to remain effective and binding irrespective of whether or not they appear on the register. It has been seen that s70(1)(g) creates, by far, the greatest potential hazard to a purchaser.
The Law Commission proves to be a useful gauge as to whether the aims of the registered system have been met. The Commission has been successful in its endeavors to reform the system given that three Land Registration Acts enact Law Commission reports. Furthermore, the Commission is at the very forefront of recommending reformation of the 1925 Act and they clearly feel that the present system necessitates this level of attention. According to the Commission, the Land Registry ‘has coped well with the defects in legislation and has made the system work despite it rather than because of it.’
It is reasonable to assume, therefore, that the time has now come for an extensive overhaul of the LRA 1925 and it is likely that forthcoming and long awaited legislation will significantly amend the 1925 Act. This need for reform is heightened by the desire for a system of electronic conveyancing. It is, however, worth bearing in mind that the concept of an absolutely comprehensive register is probably unattainable given that it is impossible to register some rights (for example, squatter’s rights). Furthermore, it is impracticable to register others (for example, short tenancies and local land charges).
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Bright S & Dewar J, Land Law Themes & Perspectives, (1998), Oxford University Press
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Burn E H, Maudsey & Burn’s Land Law Cases & Materials 7th Ed, (1998) Butterworths
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[Word count (excluding footnotes, headings and bibliography):- 1780]
National Westminster Bank v Ainsworth (1965) AC 1175
The Royal Commission of Land Transfer and Registration (1857)
This was deemed to be extremely important in what was, at the time, an increasingly mobile and industrialised society.
In essence this is the system which is in operation today, although its present statutory authority is the Land Registration Acts 1925 to 1997.
Law Commission & HM Land Registry, Land Registration for the twenty-first Century (Law Com No 254, September 1998)
Unregistered land is governed by the Law of Property Act (1925), The Land Charges Act (1925) and common law, whereas the present system of registered land dates from the enactment of the Land Registration Act (1925)
The Law Society argued that the measure would drastically reduce the work of solicitors
Initial estimates of 10 years were touted
Perrins B, Understanding Land Law 3rd Ed (2000), Cavendish Publishing Ltd
This general aim of registration was derived from the Torrens model, as adopted by the Real Property Act 1858 (South Australia)
British American Cattle Co v Caribe Farm Industries Ltd (1998)
Indeed, as Lord Oliver expressed in Abbey National Building Society v Cann (1991) 1 WLR 832, the “governing principle” of the Land Registration Act 1925 is “that the title to land should be governed by and ascertainable from the register alone.”
As amended by the Land Registration Act 1997, s2, which substitutes a new s83 in the 1925 Act, following proposals for reform by the Law Commission, Law Com No 125 (1995)
LRA 1925, s83(1)
Re Chowood’s Registered Land (1933) Ch 574, Hodgson v Marks (1971) Ch 892 and Re Boyle’s Claim (1961) 1 WLR 339
Parkash v Irani Finance Ltd (1970) – “One of the essential features of registration of title is to substitute a system of registration of rights for the doctrine of notice” – per Plowman J
(1996) 4 All ER, where the Court of Appeal reached a conclusion concerning unregistered land which Morritt LJ openly conceded would have been decided in a diametrically opposite direction had the land been registered.
Originally, registration was ‘triggered’ by the sale of unregistered land. The LRA 1925 (s1, substituting a new s123) extends the dealings. For example a mortgage of unregistered land or the acquisition of land by gift.
For example, a right of way. The register also records the particulars of any matters which might be expected to be included with the land but are not (for example, in a flat it would be necessary to say that the parts of the building above and below it are not included).
It is worth noting that it is the register itself, not the Land Certificate, which is the document of title
I.e. legal, equitable, family, commercial and residential
Also referred to as ‘major interests’
Fee simple absolute in possession
Leases exceeding 21 years
Freehold absolute, possessory freehold and qualified freehold
Absolute leasehold, good leasehold, possessory leasehold and qualified leasehold
ss48-52. Ensures that any further dealings with the land are subject to the interest protected by the notice. For example, an equitable notice.
ss53-56. Provides the cautioner with a right to be warned of any imminent transaction so as to have a chance to object. For example, charging orders against the property.
s57. The prohibition of all dealings with the land either for a specified period or until further notice.
s58(1). Prevents any dealing with the land until some condition has been met. For example, ensuring that the overreaching system is followed in order to protect the beneficiaries.
LRA 1925, s3(xvi)
LRA 1925, ss20(1)(6), 23(1)(2)
s70 does not, in fact, provide a complete list of all overriding interests: Celsteel v Alton House Holdings Ltd. (1985) WLR 204 established that there is a further category not contained in the s70 list. In this case it was an equitable easement. Despite criticism, this decision has been followed and applied by the Court of Appeal in Thatcher v Douglas (1995) 146 NLJ 282. This demonstrates a key failing in the effectiveness of the legislation.
Easements and profits a prendre
Leases not exceeding 21 years
This is effectively the statutory application of the rule in Hunt v Luck (1902) 1 Ch 428
(1971) 2 All ER 684
(1981) AC 487
(1988) AC 54
I.e. that the transfer of land was safer, simpler and economical, legal title was guaranteed, the risk of fraud was reduced and there was no need to trace good root of title
Central London Commercial Estates Ltd v Kato Kagaku Co Ltd (1998) Sedley J: ‘The [LRA] has not had good press’. Clark v Chief Land Registrar (1994) Nourse LJ: ‘Legislation of extremely low quality’.
Those of 1986, 1988 and 1997
During the 1980s the Commission issued four reports directed towards a reformulation of major features of the 1925 Act. This culminated in 1998 with the Draft Land Registration Bill, which never reached the statute book and has been overtaken by more recent proposals.
Law Commission, Property Law: 4th Report on Land Registration (Law Com No 123, 8 Nov 1988)