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III. THE SYSTEM OF REGISTRATION OF TITLES
A. Introduction
The idea underlying registration of titles is that titles should be recorded on a central register, and that the register should, so far as possible, specify precisely what rights the title to the property enjoys (e.g. easements and restrictive covenants over neighbouring property) and to what rights the title is subject (e.g. easements and restrictive covenants in favour of neighbouring property).
Registration of title to land began in a systematic way only in 1926, under the Land Registration Act 1925. It was impossible, however, to register all titles to land in England and Wales as of that date – there were hundreds of thousands of titles, and to investigate these would have been completely impractical – it would have taken years, and it would have been incredibly expensive. The only practical thing was to introduce registration of title gradually. This was achieved in two ways: first, by applying it to certain areas of the country only – by declaring certain areas to be areas of compulsory registration; secondly, by requiring title to any piece of land in that area to be registered only when there was a dealing with the land which “triggered” registration – such as a conveyance on sale.
B. Initial registration of title
In 1925, it was thought that registration of title would proceed fairly quickly, but it was a slow process, and it was not until the 1970s and 1980s that system was becoming more widespread. As the weaknesses of the unregistered system (especially of the Land Charges Act) became more evident, serious attempts were made to speed up the process of getting titles registered. Two important things were done:
(i) from 1 December 1990, the areas of compulsory registration were extended to include the whole of England and Wales;
(ii) from 1998 (1 April) the types of dispositions triggering first registration were extended, essentially to include dispositions by way of gift and transfers following the estate owner’s death.
So we see from this that, gradually, more and more of the titles in the country are becoming registered titles. But will unregistered titles ever disappear? Note:
(i) if the legal estate to land continues to be held by a public body or a corporation (which never dies), and such body never mortgages the land (a triggering event), the land will continue to be unregistered;
(ii) note that at present legal leases of 7 years or less are not registrable. Why not?
As the Land Registry becomes increasingly computerised it becomes easier to register shorter titles. Under the Land Registration Act 2002, the grant or assignment of a lease with more than 7 years to run are triggering events. The 2002 Act also makes provision for shortening this period still further, and the aim is that eventually the period of 7 years will be reduced still further to 3, so that a grant of a lease of 4 years (or the assignment of a lease of which 4 years are unexpired) will be a triggering event. See LRA 2002, s 3(3).
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The Land Registration Act 2002 (LRA 2002) came into force on October 13th 2003. One of the major innovations that it paves the way for is the introduction of electronic conveyancing. The importance of this is that it is expected that instantaneous registration will eliminate the “registration gap” that caused so many of the problems to the forerunning registration systems. It was also intended to facilitate the registration of previously unregistered land and interests in land.
Part 2 of the LRA 2002 is concerned with first registration of title and makes provisions for the following: Voluntary first registration Compulsory first registration The effect of first registration Cautions against first registration
Voluntary first registration S.3 LRA 2002 details the circumstances in which a person may apply to the registrar to be registered as proprietor of an unregistered estate. The most important types of interest that are subject to this are: an estate in land a profit à prendre in gross
Registrable Estates a fee simple absolute in possession a lease that has more than 7 years unexpired
Registrable Interests S.3 (1-3) outlines a number of rights that may have their titles registered. a profit à prendre in gross granted equivalent to a fee simple absolute in possession or with more than 7 years unexpired
Compulsory first registration Compulsory first registration is triggered by either the transfer of a legal estate in unregistered land, by the creation or grant of a legal estate or a legal charge (a legal mortgage). S.4 refers to a ‘qualifying estate’. This means an unregistered legal estate which is either a freehold estate in land or a leasehold estate in land with 7 years or more to run.
Dispositions of unregistered land that must be completed by registration: (i) Transfers of a qualifying estate For valuable or other consideration By gift (except transfer to trustees under bare trust for benefit of the owner) Transfer in pursuance of an order of the court. (ii) Leases granted for more than 7 years (iii) Reversionary leases If the lease is to take effect in possession 3 months or more from the date of grant (irrespective of how long the lease is for). (iv) Protected first legal mortgages.
Effect of first registration First registration reflects the state of the title at the time of first registration and does not change the priority of interests that affect it. (nb first registration does not bring about any dispositions with regards to land but registration of a registered disposition necessarily does, hence differences between Sch. 1 and Sch. 3) See later section on the effect of registration.
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C. The grades of titles
If satisfied that the title is registrable, the registrar will award one of several grades of title. There are different grades for freehold and leasehold, but essentially the distinction between the different titles depends on the quality of the title. S.9 LRA 2002.
(a) absolute title
This is the best title that is obtainable. It is granted when the registrar has no serious doubts about the title. A leasehold title can also be absolute.
An absolute title will be granted of a leasehold if the registrar is satisfied both with the leasehold title and with the freehold title out of which the lease is granted. If the registrar cannot inspect the freehold title, he is likely to award merely a good leasehold title (described below).
The other grades of title have the same effect as registration with absolute title, but with certain exceptions.
(b) possessory title
This will be granted when the registrar has doubts about the title. Perhaps some of the title deeds have been lost, so the applicant cannot show a good root of title, or the applicant may simply be in adverse possession of the land, and there might be a possibility of his being ejected by the paper owner. In these cases, the registrar will grant a possessory title. The registration takes subject to adverse rights existing at the time of first registration. (LRA 2002, s 9(5).
(c) qualified title
This is by far the rarest. It will be granted where the registrar would otherwise be satisfied that the applicant is entitled to an absolute title, but there is some doubt in respect of one particular aspect of it. (LRA 2002, s 12).
d) good leasehold
See s.10 (1)(b) As mentioned above, if the freehold title is registered, a purchaser of a lease granted out of the freehold will be able to inspect the freehold title (since the register is open to public inspection). If the lease is registrable with its own title (i.e. it has more than 7 years to run), the registrar is likely to award an absolute leasehold.
See Sch 11 para 2 LRA 2002, from which you will deduce that these are likely to be a dying breed.
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D. The register of title
The Registrar records the title awarded, and all other relevant information relating to the property of which she is aware (including all the rights and interests benefiting the property (the plusses) and all the rights and interests to which it is subject (the minuses) – -) on what is called the register of title, which is kept at the Land Registry. There is a separate register of title at the Land Registry for every registered title in England and Wales. There used to be a card index system, but now the register is computerised. Since 1990, the register has been open to public inspection (Land Registration Act 1988).
The register of title is in three parts:
a) property register
This:
Describes the land, specifies the estate for which the land is held, refers to a map or plan of the land (the filed plan), and specify what interests the land benefits from, e.g. easements and restrictive covenants for the benefit of the land (the plusses +).
Usually the map or plan is stated to be for identification only.
(b) proprietorship register
This states: the grade of title awarded (i.e. absolute, possessory, qualified, or good leasehold); the name, address and description of the registered proprietor; certain entries made which affect his right to deal with the land (restrictions).
(c) charges register entries of rights adverse to the land, e.g. mortgages, easements or restrictive covenants in favour of neighbouring land, and notices protecting rights over the land (the minuses -).
All incumbrances that were formerly entered against the estate owner as land charges under the LCA are entered against the title; as are any incumbrances, such as pre-1926 restrictive covenants, that formerly depended upon the equitable doctrine of notice to be binding.
When a title is registered for the first time, the old title deeds are returned to the estate owner marked with a cancellation stamp. It is important to remember that the proprietor’s proof of title is that contained in the Land Registry.
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E. Third party interests
1. Notice
A notice (entered on the charges register) is the best method of protecting a right over the land, since any disposition of the land made thereafter takes effect subject to the right protected by the notice. The entry of a notice does not itself confer validity on the right protected; but since a notice can in most cases only be entered with the co-operation of the registered proprietor, validity is not usually an issue.
S.33 LRA 2002 lists various rights that cannot be protected by entry of a notice. (The sort of rights that can be protected are similar to those that can be protected as Land Charges in the unregistered system (e.g. estate contracts and restrictive covenants)).
Note an important exception: a beneficial interest under a trust cannot be protected by a notice: LRA 2002 s.33 (a)(i). The reason, of course, is that it is not envisaged that a purchaser will be bound by such an interest, since it is capable of being overreached (and so attaches instead to the purchase moneys on a sale). The appropriate method of safeguarding a beneficial interest under a trust is by a restriction (discussed below).
2. Restriction
A restriction is usually entered where there is some limitation on the registered proprietor’s powers to deal with the land. A restriction (which is entered on the proprietorship register) prevents any dealing with the land without the registered proprietor’s complying with some procedure. A restriction is not intended to make any incumbrance binding on a third party.
A restriction may be entered either by the registered proprietor themself, or with their consent, so it is not a hostile act.
The most common example of a restriction is where the land is held in trust. In order for overreaching to apply, a restriction may be entered providing that no disposition made by a sole proprietor of the land under which capital moneys arise (i.e. proceeds of sale, or mortgage moneys) is to be registered.
If the land is held in trust and the trust provides that the trustees are not to dispose of the land without the consent of a specified person (e.g. one of the beneficiaries) then a restriction to that effect should be entered. We will come back to this in Trusts of Land later in the module.
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F. How conclusive is the register?
The effect of registration with a particular title is that the person is deemed to have that title, even if, for instance, they obtained it by a forgery, or (on first registration) from somebody who had no title to give. In other words, nemo dat does not apply. S.11 LRA 2002 details the effect of registration as proprietor with an absolute freehold title.
s.11 (3) “the estate is vested in the proprietor together with all interests subsisting for the benefit of the estate”
s.11 (4) “the estate is vested in the proprietor subject only to the following interests affecting the estate at the time of registration – (a) interests which are the subject of an entry in the register in relation to the estate, (b) unregistered interests which fall within any of the paragraphs of Schedule 1 [and Schedule 3], and [(c) interests acquired under the Limitation Act 1980 of which the proprietor has notice.]
s.11 (5) “if the proprietor is not entitled to the estate for his own benefit, or not entitled solely for his own benefit, then, as between himself and the persons beneficially entitled to the estate, the estate is vested in him subject to such interests as he has notice of”.
s.11 (6) and (7) provide that registration of qualified and possessory titles have the same effect as registration of an absolute title.
.12 of the Act lays out similar provisions for the registration of leasehold estates.
s.58 registration as proprietor is conclusive position under LRA 1925 set out in Malory Enterprises Ltd. V Cheshire Homes (UK) Ltd [2002] see Fitzwilliam v Richall Holdings Services [2013] EWHC 86 Ch for consideration of effect of s.58 LRA 2002. Note Martin Dixon’s argument that the case wrongly decided and that Schedule 4 of 2002 Act ought to have been used to remedy the problem. See the following for approaches that he would approve of: Walker v Burton [2013] EWCA Civ 1228 Parshall v Hackney [2013] EWCA Civ 240 [2013] 77 Conv 222
(a) interests which are the subject of an entry in the register in relation to the estate The principle that the register reflects exactly the state of the title (the mirror principle) is shattered because of two things:
The first is the possibility of alteration. The LRA 2002, s.21 provides that the register can be altered in certain circumstances, including where any entry has been obtained by fraud or mistake.
The second is what are known as overriding interests. These are rights and interests to which the registered proprietor takes subject even though they are not entered on the register. Even the best title that can be awarded, the absolute title, takes subject to overriding interests. Thus we see that the LRA 2002 s.11 (4)(b) goes on to state that registration with an absolute freehold title is also:
b) subject to unregistered interests which fall within any of the paragraphs of Schedules 1 and 3. The original idea behind overriding interests was that, whilst the register should be a substitute for the title deeds in unregistered land, it was not intended to relieve a purchaser of the need to make inquiries and inspections of the land. This may have been the intention, but it is not wholly correct. Many of the rights that comprise overriding interests are legal rights, so their existence might seem to reflect the unregistered land position, where legal estates and interests bind the world regardless of notice. But the registered land system itself is based on
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whether an interest is an interest protected by an entry on the register or takes effect as an overriding interest.
The categories of overriding interests are set out in the LRA 2002 Schedules 1 and 3. All other interests in registered land are interests that require protection by entry on the register. Note that the LRA 2002 reduced the number of overriding interests (compared to s70 LRA1925) and made more interests “registrable interests”
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G. The categories of overriding interests
There are three paragraphs that set out the most important types of overriding interests. These are :
para (1): “ a leasehold estate in land granted for a term not exceeding seven years from the date of grant, except for a lease the grant of which falls within s.4 (1)(d),(e) or (f).”
para (2): “an interest belonging to a person in actual occupation, so far as relating to land of which he is in actual occupation,…” This paragraph seems innocuous, but it has had the most startling effect in the context of registered land. It seems that it was originally intended to be analogous to the principle in unregistered land that a purchaser is treated as having notice of the rights of a person in possession. However, the courts have interpreted section 70(1)(g) of LRA 1925 in such a way as to make it much wider than the position in unregistered land. Note the contraction of the width of s.70 (1)(g) when it was translated into Schedules 1 and 3 of the LRA 2002. (note the cases outlined were all decided under the LRA 1925.) Schedule 1 of the LRA 2002 applies to first registrations and Schedule 3 to registered dispositions.
The right must be proprietary in character, e.g.
an equitable lease an option to purchase: Webb v Pollmount Ltd [1966] Ch 584 the benefit of an estate contract: Bridges v Mees [1957] Ch 475 the right to rectify a conveyance because of a mistake: Blacklocks v JB Developments (Goldalming) Ltd [1982] Ch 183 a beneficial interest under a trust of land (unless overreached): Williams & Glyn’s Bank Ltd v Boland [1981] AC 487
Schedule 3 para 2: “interests of persons in actual occupation”: “an interest belonging at the time of disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for: (a) an interest of a person of whom enquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (b) an interest – (i) which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and (ii) of which the person to whom the disposition is made does not have actual knowledge at the time; (d) a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition.
Compare this with the position under the now repealed s.70(1)(g) LRA 1925.
need to be apparent? See Lloyds Bank plc v Rosset [1991] 1 AC 107 Thomas v Clydesdale Bank PLC [2010] EWHC 2755 (Ch) Link Lending Ltd v Bustard [2010] EWCA Civ 424
Note that the law has changed under the LRA 2002. Under the LRA 1925, any rights which a person in actual occupation had in relation to the whole of the land were protected even if they were in actual occupation of only part: Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355.
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Under the LRA 2002, only the part in actual occupation will have the rights protected, Sch3 para2.
See the saving in sub-paragraph (b)
Cf the earlier wording in LRA 1925, s 70(1)(g) (repealed): “save where inquiry is made of such person and the rights are not disclosed”
Hodgson v Marks [1971] Ch 892.
Under the 1925 Act it was not clear what the position was if the person was incapable of giving a rational reply, e.g. because the occupier was mentally ill, or a young child. See Hypo-Mortgage Services Ltd v Robinson [1997] 2 FCR 422. This position has now been clarified by para 2(b) of Sch 3 to the 2002 Act.
Thompson v Foy [2009] EWHC 1076 Link Lending v Hussein 24/9/2009 Newcastle CC HSBC Bank v Dyche [2009] EWHC 2954
para (3): Some legal easements or profits à prendre (depending on method of creation)
Note that the position of easements as overriding interests has been dramatically reduced under the LRA 2002, Sch 3, para 3: the effect of various provisions of the LRA 2002 is that only easements implied into a deed and easements acquired though prescription (long use) will continue to be overriding interests. Express easements will not, and so will therefore have to be protected by registration.
H. The “registration gap”
Once the title to an estate in land is registered at the Land Registry, it can be transferred only by entry of the name of the transferee in the register of title; until such time, the proprietor of the registered estate remains the transferor. LRA s.27. This means that although the transferor will execute a form of transfer (really equivalent to a conveyance in unregistered land), the transfer does not itself transfer the legal estate to the transferee. The purchaser’s solicitor will have to apply to the Land Registry for a transfer.
This means that there is a “gap” (the “registration gap”) between the execution of the transfer and its registration at the Land Registry (which is treated as the date of application). This raises a more serious problem than in conveyances of unregistered land (where the legal title passes on the conveyance); namely, how can the purchaser protect themself against interests that are entered on the register of title between the date they searches the register, and the date they (or their solicitor) applies for registration? This is dealt with by a priority period for an official search.
the problem of overriding interests
So a search can protect a purchaser against entries of minor interests, but what of overriding interests (which will not of course be disclosed on the register, but to which he takes subject)?
In the case of all but one of the categories of overriding interests in Sch. 3, the relevant date is the date of registration (i.e. the right must exist at the date the application is made to the Land Registry to register the disposition). See Barclays Bank plc v Zaroovabli [1997] Ch 321.
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The exception is paragraph 2 of Sch.3 (which corresponds to s.70(1)(g) under LRA 1925). The House of Lords has held that the relevant date to determine whether an interest under the forerunner of this paragraph (s.70(1)(g) LRA 1925) takes effect as an overriding interest is the date the transaction is completed, not the (later) date of registration: Abbey National Building Society v Cann [1991] 1 AC 56 (HL). Quere: does the actual occupation have to exist also at the date of the application for registration? Thompson v Foy [2009] EWHC 1076 (Ch)
NB: Scott v South Pacific Mortgages [2014] UKSC 52
the moves towards electronic conveyancing
The “registration gap” will disappear when the provisions for electronic conveyancing introduced by the LRA 2002 come into force. The aim is that electronic communications should extend to the whole of the conveyancing transaction. Electronic conveyancing will, however, be introduced in stages over a period of years, with some pilot schemes in the early years. Eventually the “registration gap” will be closed in that completion and registration will be simultaneous. This goal is still some way off, however, since there will also have to be e- banking to move completion moneys simultaneously.
