The Land Registration Act 2002, which is the outcome of several years’ joint work by the Law Commission and the Land Registry, has been described as potentially more far-reaching than the great property reforms affected by the 1925 legislation (Bogusz, 2002). Under the LRA 2002 compulsory registration will be triggered by: A land transfer by sale, gift, and court order or assent.
The creation of a protected legal first mortgage; the grant or assignment of a lease of seven years or more; and the grant of a lease which takes effect more than three months after the date it is granted. An important change is introduction of a new system in relation to adverse possession for registered land. The effect of this new regime will make registered land virtually squatter-proof and clients owning unregistered properties are advised to consider applying to the Land Registry for voluntary registration to take advantage of this. GENERAL DISCUSSION
The Act paves the way for the introduction of electronic conveyancing to replace the traditional paper-based procedure as we discussed in a previous edition and replaces all existing legislation relating to land registration with the aim of exploiting the potential of an electronic system and eliminating defects in the present law (Thompson, 2003). There are also several important changes to property law in general. The number of dispositions and interests capable of registration is increased with the aim of providing as complete a picture on the register as possible.
Matters capable of registration will now include: all leases of 7 years or more; leases of any length granted to take effect in possession more than 3 months after the date of grant; local land charges; some overriding interests e. g. rights of occupation; easements acquired by implied grant or prescription; profits for instance fishing and shooting rights; land owned directly by the Crown (demesne land) which includes most of the foreshore; and franchises e. g. the right to hold a fair or market (Pollock, 2005).
Of the above, the compulsory requirement to register leases of 7 years or more is likely to have the biggest impact in practice and in time it is probable that there will be compulsory registration of leases of 3 years and over. Dealings with leases are the most common type of property transaction and this new requirement has attracted criticism, as it will inevitably involve more bureaucracy and increased costs. Conversely, the Government’s view is that the advantage of a more transparent system will outweigh the extra work and expense.
In line with the Act’s objective that the Register should show a full picture of any registered title, the number of overriding interests, to which property is subject to, will be reduced and some are to lose their overriding status after 10 years (Thomas, 2005). For the first time, overriding interests are to be treated differently on first registration and on subsequent dealings. The stated aim of The Land Registry is for all land in England and Wales to be registered by 2012 which means that it is keen to encourage voluntary registration (Smith, 2003).
There are important benefits to be gained from voluntary registration: It is carried out under the owner’s control rather than being triggered by an event such as a sale or mortgage application which it may then delay; The chance of a successful adverse possession claim is greatly reduced; The eviction of travellers and squatters is easier and less costly; A clear record is created of restrictive covenants and reserved rights such as sporting or mineral rights which carry a value to the land owner to be realised at a later date; Conveying previously registered land is quicker and cheaper, especially with the proposed introduction of electronic conveyancing; Unauthorised encroachments such as extended garden boundaries will be highlighted; Future valuations, for example, for inheritance purposes will be simpler and cheaper; The cost of establishing good title in the future is expected to rise; Current concessionary land registry fees for voluntary first registration may be withdrawn; An accurate up to date estate plan will be produced; and Some “over-riding interests” (for example franchises and manorial rights) will lose their protected status after 10 years unless registered (Abbey and Richards, 2003). The Act clarifies the protection of third party interests over registered land and cautions and inhibitions are to be abolished, although existing ones will remain on the title (Holdsworth, 2004. ). Notices and restrictions will be either “Agreed” for instance entered with the registered proprietor’s consent or “Unilateral” for instance entered without consent. Unilateral notices will take the place of cautions.
The registered proprietor will be informed by the Land Registry of the registration of such a notice and can then apply to have it removed. Restrictions will be used in similar circumstances as at present, but will also be used in cases of insolvency and other situations where an inhibition is currently used. The Act will allow increased rights of access to the documents relating to a registered title, so far as the Land Registry has the information, and will permit inspection of leases and charges. Other general changes include the creation of a new independent adjudicator for the Land Registry whose function will be to determine contested applications. Decisions of the adjudicator may be appealed through the Courts.
The Land Registration Act 2002 has much to say about the way proprietary rights affect land of registered title and, as is well known, its primary purpose is to facilitate the introduction of electronic conveyancing and thereby the compilation of a register that is a near perfect mirror of the title to the land and all the proprietary rights and interests affecting it. 28 Many strategies are employed to this end and not all are relevant here. 29 However, there are provisions that will have an impact for the circumstances in which a proprietary right may be granted, transferred or enforced and, in consequence, a potential impact on the law of estoppel. First, under the provisions of the Land Registration Act 2002 and the Electronic Communications Act 2000, it will be possible in due course to create or transfer proprietary rights either by means of a paper deed or written contract or by an “electronic” deed or written contract.
This raises no fundamental concerns because it is clear that the electronic deed or contract will be treated as having the same effect as its paper counterpart. Presumably, on the other hand, some defect in the execution of the electronic deed or contract will be curable by proprietary estoppel, at least to the extent and in the same circumstances that a defect in a paper deed or written contract is curable. So, for instance, a failure to meet one of the four conditions specified in s. 91(3) LRA 2002 for the validity of an electronic disposition would render the disposition itself ineffective but, we might suppose, a claim in proprietary estoppel could still succeed.
It is the ultimate aim of the Land Registration Act 2002 that the act of creation or transfer of certain proprietary rights will occur simultaneously with their electronic entry on the register. Or, to put the matter the other way round, the attempted creation or transfer of certain proprietary rights will be completely ineffective to create or transfer a right at law or in equity unless an appropriate entry is made on the register. This is the effect of section 93(2) LRA 2002 when it stipulates that a disposition or a contract to make a disposition to which the section applies “only has effect” when made in electronic form and entered on the register.
Of course, what this means in practice is that for those estates and interests specified in the Rules as requiring to be electronically entered on the register in order to be effective, compliance with the “old” formality requirements of a deed or written contract will be futile. The parties who deliberately set out to create or transfer a proprietary right by paper deed or contract will find that have created or transferred nothing. There is no “default position” such as that the interest will subsist in equity and so there is no property right which might nevertheless take effect as an “interest that overrides” a first registration or registrable disposition within Schedules 1 or 3 of the LRA 2002.
It even seems that the original parties will not be bound in contract under such a document because failure to meet the electronic requirements renders the transaction without effect and thus does not create “mere” rights in persona sufficient to found a claim for breach. 33 Although it seems strange that a statute about land registration should invalidate contracts between the original parties. 93 LRA 2002 which says that a disposition falling within the section “or a contract to make such a disposition, only has effect” if the electronic formalities are complied with (Platt, 2004). It seems inevitable that the imposition of such a system undoubtedly necessary if electronic conveyancing is to become a reality will generate an estoppel boom.
First, it is anticipated that the great majority of proprietary rights will be subject to section 93 LRA 2002 in due course. The creation or transfer of a remittable estate or disposition will fall within its ambit, as will the creation or transfer of many third party rights that are required to be protected by the entry of a unilateral or consensual notice against the registered title (Witte, 2002). The latter will include expressly created easements, options, covenants and possibly even leases not required to be entered as a registered estate and which are not within the short lease exception of ss. 52 & 54(2) LPA 1925. Of course, the point is precisely to ensure that virtually all expressly created rights appear on the register.
Thus, if they do not appear, they do not exist and resort to estoppel may be the only hope for a disappointed claimant. Secondly, we cannot assume that all property professionals immediately will understand that deeds and written contracts could be completely ineffective, and a remedy in negligence will not secure the proprietary right denied by s. 93 LPA 2002. Thirdly, registration (i. e. the act of creation or transfer) will be electronic, and only authorised persons will be able to transact. Not only will private individuals continue to deal with each other without the benefit of legal advice and hence without understanding the relevant formality rules, even if they did comprehend section 93 LRA 2002, how would they ensure the registration of their right?
While it may be true that less than 1% of all transactions are DIY conveyances,37 the Act will apply to much more than conveyances: as already noted, it will extend to the creation or transfer of many (indeed most) third party rights in land. While DIY conveyances may be relatively rare, the DIY attempted creation or transfer of other rights in property is far more common. 38 Fourthly, and perhaps most importantly, it is now clear from Lloyd v Dugdale that an “estoppel” is a proprietary right capable of binding a third party as an overriding interest under the current. 70(1) (g) LRA 1925. Indeed, even if Lloyd had said otherwise, s. 116 LRA 2002 puts the matter beyond doubt.
39 Thus, whereas the failed creation or transfer of a proprietary right under the rubric of electronic conveyancing will be of no effect at all, even if attempted by deed or valid contract, and so cannot trigger an “interest that overrides” within the Schedules, a successful estoppel can do just this – the Act itself makes that clear even without Dugdale. How tempting then to use estoppel both to acquire the right despite the absence of compliance with sections 91 or 93 LRA 2002 and then when the estoppel is established to ally it with actual occupation to make it binding against a third party. In other words, estoppel may well come to be the single most effective way of creating, transferring and enforcing property rights outside of electronic formalities.
The greater the injunction to use electronic measure, the greater the scope for claims in estoppel. Of course, this analysis rather assumes that estoppel actually can save a transaction that fails to comply with the relevant formalities relating to creation and registration as required by the LRA 2002. We might think, for instance, that such is the conveyancing revolution and so clear is the Act that the above analysis overestimates the role for estoppel in land registration. However, in reality, this is no new dilemma but merely a version of an old problem: viz. when can proprietary estoppel protect a claimant who has not used the degree of formality or followed the correct process required by statute. CONCLUSION
The protections afforded to both occupier and purchaser have made for an edgy equilibrium throughout the evolution of overriding interests in relation to actual occupation, but always the law has struggled to balance the disparities in this relationship. Although purchasers have historically faced hardship in overcoming the “intermediate, or hybrid, class” of overriding interests wielded by occupiers, their position has been improved somewhat by the evolution of both statutory and common law. However, the interests of the two parties have yet to achieve legal equivalence. The very existence of overriding interests has been labelled as “disquieting” for purchasers, not least because indemnity cannot be awarded to a purchaser trapped by such an interest.
This has placed purchasers on an uphill struggle to have their interests judicially and statutorily recognised and accorded significance that endures today. Solace lies at the advent of compulsory e-conveyancing, promoted heavily by the 2002 Act, which envisages synchronicity of disposition and registration in land transfers. This development will render many equitable interests unprotected unless registered, despite being currently overriding upon actual occupation. Schedule 3, paragraph 2 will then is restricted only to the protection of those occupiers’ interests which arise informally, through resulting or constructive trusts or through estoppel, effectively narrowing an occupier’s ability to override registration.
The underlying and pervading expectation that overriding interests will eventually be drawn onto the Land Register through positive registration will ultimately abolish the subsistence of occupiers’ unregistered and overriding interests upon a transfer of registered land which so adversely affects purchasers. The aim of the Act is to simplify improve and modernise land registration law. The Act provides a framework for the development of electronic conveyancing. There are many significant changes to the law and practice for registered land. In particular changes affect: protection of third party interests; overriding interests; what interests in land may or must be registered; and adverse possession of registered land.
The Land Registration Act 2002 achieves the following: it simplifies and modernises land registration law and is the first major overhaul of the land registration system for 75 years; it makes the register a more complete picture of a title to land – showing more fully the rights and interests affecting it; and it provides a framework for the development of electronic conveyancing. Major changes to the law and practice affect all those involved with registered land. In particular: shorter leases must now be registered; voluntary registration is available for new types of interest in land; changes affect the protection of third party interests; and the law of adverse possession has been reformed.
Full implementation of the Act and development of an electronic conveyancing system were included among the aims in the Land Registry’s 10-year plan. This will bring about a new age for all involved with property, but there is still much work to be done to create new systems and rules before this can be achieved.
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