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Registered title conveyancing

Previous: Title deeds conveyancing

A significant amount of unregistered land continues to exist throughout England and Wales. However, registered title conveyancing is now much more prevalent than title deeds conveyancing. It will be dealt with in much more detail on this page than title deeds conveyancing was on the previous page.

The (old) Land Registration Act 1925

The Land Registration Act 1925 had two significant objectives: to eliminate the need for repeated investigations of title and therefore reliance on deeds, and to introduce the concept of the land register, which any person could consult to instantly be informed of (nearly) all of the vendor and third party rights affecting a piece of land. This can now be carried out at the Land Registry’s website, where for a fee, a copy of the register can be downloaded. The land register is a statutory system and a record of titles (titles are numbers assigned to parcels of land, but more than one title number could apply to the same parcel of land). The original rationale of the registration was to provide machinery to facilitate the conveyancing process and not to change the substantive law of conveyancing. It is based on three principles: the mirror principle, that the register should be an accurate representation of the land to which its title corresponds; the insurance principle, that the register’s accuracy is backed by a state guarantee, and the curtain principle, that a purchaser need not be concerned with what is behind notices the register, just that they may need to be addressed.

In 1998, the Law Commission accepted that there were substantive differences in the law between the registered and unregistered systems, the biggest difference being that title deeds conveyancing is based on the concept of possession, whereas the registered system is based on the concept of registration. In 2001, the Law Commission proposed an overhaul of the registered title conveyancing system, which would become the Land Registration Act 2002, creating a legal framework for e-conveyancing (conveyancing online) and allowing the register to conform to the mirror principle to a greater degree.

The (new) Land Registration Act 2002

The major elements of the Land Registration Act (LRA) 2002 will be considered in turn.

The land register

The land register was introduced by the old LRA 1925, and its concept was not significantly altered by the LRA 2002. Every (registered land) legal estate (leasehold or freehold) has its own title number, and, therefore an entry in the land register. The land register is the replacement for title deeds. Prior to a sale, a 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 estate/title in the register contains 3 ‘sub-registers’:

  • Property register – lists details of the estate, including the current owner and any lenders
  • Proprietorship register – lists benefits accruing to the land (and its occupants), including rights of way and trusts
  • Charges register – lists burdens affecting the property to the benefit of third parties, such as a right of way of a neighbour or a legal charge (a bank’s security for a mortgage loan)

You can view an example of a register copy here.

With the introduction of the land register, the Law Commission’s intent was to encourage a culture of registration, such that instead of having to discover interests, a purchaser could simply consult the register. However, there are still some interests which cannot, or do not need to be recorded on an estate’s register. This means that an estate’s register is not a completely accurate representation of an estate’s interests. The implications of this will be explored below.

Registrable interests

A wide variety of interests can be recorded on the title register of an estate, and there is no exhaustive list set out in the LRA 2002. The two types of legal estate which may affect the same parcel of land, as defined in the Law of Property Act 1925 (fee simple/freehold and terms of years absolute/leasehold) will each have their own title number and register entry. However, a leasehold estate’s register will reference its parent freehold estate and the parent register will reference its descendant’s register(s). Leasehold estates may only be registered if they are specified to last for a period of more than 7 years, whereas freehold estates are always registrable.

Some registrable interests are created by registered disposition. This means that the transaction which creates the interest must be registered. This is the case for most third party interests, such as charges, which will be recorded upon the execution of a mortgage to a bank. Third party interests will be recorded on an estate’s charges register. Other registrable interests include the commercial and family interests referred to when discussing title deeds conveyancing. Commercial interests will be recorded on the charges register of an estate, and may include interests such as restrictive covenants or estate contracts. Family interests (trusts) will be recorded on the proprietorship register of an estate.

Some interests are not registrable, but may still bind a purchaser of registered land. These include short leases, implied legal easements and persons with equitable interests in actual occupation. This list has been significantly shortened by the LRA 2002, but can have a significant impact on a purchaser. A short lease’s (granted for 7 years or fewer) lack of registration requirement prevents unnecessary burdens on landlords and tenants and an implied legal easement arises where a right has been exercised for 20 years or more. Actual occupation is a topic of great debate and will be discussed below.

E-conveyancing

Currently, in order to purchase land with registered title, a purchaser will investigate the title of the land in question by consulting the estate’s register and inspecting the land. A contract (deed) will then be formed (and exchanged). It will provide for a completion date on which the contract will be executed (and the purchaser will go into possession). Finally, an application will be sent to the Land Registry to update the register to reflect the purchase. This is not only slow, but means that there is a registration gap – the time gap between the purchase and its registration, during which the register is inaccurate. Although the state will cover losses suffered during this gap if the purchaser has submitted a priority search application, difficulties may arise if a purchaser does not submit this special type of enquiry.

As an intermediary step, register change applications can now be made by solicitors and licensed conveyancers, however e-conveyancing will provide for a much more efficient system whereby a contract is executed online, and the register is changed instantly, removing the registration gap and preserving be mirror principle. Unfortunately, the system has been put on hold as of July 2011; there remains significant technical challenges to overcome as well as legal challenges – the status of unregistrable interests, for example.

First registration

Following the introduction of the registered title system in 1925, more and more of England and Wales progressively became subject to registration requirements. These requirements have covered the whole of the UK since 1990. As being in an area of registration does not automatically require a parcel of land to be registered to be lawfully occupied (which some thought would have been a good step), there are still parcels of land which will at some point need to be transferred to the registered land system from the old title deeds system.

Voluntary registration

This registration may be voluntary or compulsory. Voluntary registration is covered by section 3 LRA 2002, incentivised by the lower transaction fees resulting from registration prior to an action which would trigger compulsory registration. Anyone who is the proprietor of an estate of types including a legal fee simple estate, leasehold estate with more than 7 years left to run or a timeshare may become the registered proprietor of that estate if they are entitled to have that estate vested in them.

Compulsory registration

Compulsory registration, under section 4 LRA 2002, is triggered by a number of different actions performed on an estate, including where there is: a transfer of the legal fee simple; the transfer or grant of a lease with more than 7 years before its expiry; the grant of a reversionary lease (where the right to possession is delayed) or where a first legal mortgage is granted to a bank over an estate. According to section 5 LRA 2002, the Lord Chancellor, following consultation, may extend the list of actions which will trigger compulsory registration.

Effect of registration

Given that the Law Commission intended to create a culture of registration, it is no surprise that section 58 provides that once registered, the person to whom the estate is registered will have that estate vested in him, even if he is not entitled to it. According to Sainsbury’s Supermarkets v Olympia Homes [2006], where registration does not occur, only an equitable title may be dealt with; only registration will grant a legal estate. Within the registered title system, there are several classes of title: absolute title; qualified title; possessory title and good leasehold title. These reflect the descending confidence of the registrar in the registered proprietor to deal with the estate in question, and may be upgraded over time.

After first registration, according to section 11 LRA 2002, the estate will still be subject to benefits accrued and to burdens from the Land Charges Register (which are transferred); the Limitation Act 1980 and to the unregistered interests listed in Schedule 1 to the LRA 2002.

Prior to registration, a person who believes he is the either the owner of an estate or entitled to an interest in an estate may lodge a caution against that estate under section 15 LRA 2002. He will then be notified upon the estate’s registration and will be given the chance to assert his believed right.

Dealings in registered land

Once a person is the registered proprietor of land, he has almost unlimited powers to deal with that land subject to the interests listed on the land register according to section 23 LRA 2002. However, once land has been registered, according to section 27 LRA 2002, registrable dispositions (listed in Schedule 2 to the LRA 2002) of that land will not be operative at law until they are registered. This usually means that wherever an estate is transferred or a new interest is created, it must be reflected on the register for it to be enforceable at common law (equity might have something else to say, however). Section 58 LRA 2002 provides that the register is conclusive unless corrected. In Barclays Bank v Guy [2008], it was the starting point that a fraudulently granted mortgage was binding as it was recorded on the charges register of the estate in question.

Notices and restrictions

Where an estate becomes subject to a new interest which burdens it, section 32 LRA 2002 provides that a notice must be recorded on the charges register of that estate. Notices may either be agreed or unilateral, where the former type has the registered proprietor’s acknowledgement. A unilateral notice will be given the opportunity to be substantiated. A good example of a notice would be the record of a legal charge which a bank uses to secure mortgage payments.

Section 40 provides for a similar system, but for restrictions, which are placed on the proprietorship register of an estate and restrict how the property may be disposed of. The most common use for a restriction is to record the fact that an estate is held on trust. This then informs a purchaser that he should obtain a receipt from two trustees to ensure that overreaching takes place.

If a registrable notice or restriction which remains unregistered will not usually be binding on subsequent registered proprietors following a transfer of the estate. In Peffer v Rigg [1977], it was said that an unregistered interest could override a subsequent registered proprietor due to the presence of bad faith. Although never expressly overruled, following the Law Commission’s remarks in Law Com No 271, it is assumed that Peffer v Rigg [1977] was wrong, and would undermine the culture of registration. Similarly, in Lyus v Prowsa Developments [1982], it was found that actual notice of an unregistered but registrable interest could bind a subsequent purchaser. Although, on its very peculiar facts, the case would still be good law, it is generally considered to be overruled following Chaudhary v Yavuz [2011]. Despite not being registered, a breach of unregistered interest may still give rise to a personal claim against the registered proprietor, for example for breach of trust or knowing receipt of trust property.

Priority of interests

The most significant issue with registered title conveyancing concerns the priority of different interests. When an interest is to be relied on, it will become important whether that interest will take priority over other interests. The issue is ever larger where one of the interests is an interest which is not required to be registered.

The basic rules of priority

Section 28 LRA 2002 firstly provides that except for sections 29 and 30, the priority of interests are unaffected by the registered disposition (dealing) of an estate: priority will be given to interests created earlier in time. Section 30 will not be discussed in this section. Section 29 then states that wherever a registrable disposition is made for valuable consideration, and that disposition is subsequently registered (following the requirements set out in Schedule 2), all interests affecting the estate will be postponed (overridden) unless they are:

  • The subject of a notice on the charges register;
  • Interests which fall within the list set out in Schedule 3; or
  • A residual category which will be ignored

Please re-read the previous paragraph, it is important. In practice, section 29 is often more important than the so-called ‘basic rule’ in section 28. If a registrable disposition is not made for valuable consideration, the disponee (usually the purchaser) will take the estate subject to all interests, as occurred in Halifax v Popeck [2009]. It should also be noted that the register doesn’t give priority to interests absolutely, it merely records that they are present. To take priority, the interests must also be valid, which the register does not warrant.

Interests which are the subject of a notice on the register

These interests are self-explanatory. If an interest was recorded on the charges register of an estate prior to a disposition, it will remain on the register and affect the disponee.

Interests listed in Schedule 3

Schedule 3 defines the lack of conclusiveness of the register. An interest, if listed in Schedule 3, will take priority over the purchaser of a registered estate. According to National Provincial Bank v Hastings Car Mart [1964], these interests cannot be reliably recorded, and according to the Law Commission (Law Com No 254), it is not sensible to require the registration of the interests listed in Schedule 3. Section 117 LRA 2002 abolished a significant number of these interests at midnight on 12th October 2013, 10 years after the enactment of the LRA 2002. If e-conveyancing is adopted under the current registration system, it will require the further narrowing down of Schedule 3’s list. A similar list of interests is contained in Schedule 1 to the LRA 2002: unregistrable interests which will override first registration. Schedule 3 is much more qualified as the priority of Schedule 1’s interests are determined by the date of creation of the interest, whereas the priority of Schedule 3’s interests are determined by the more complex priority principles. Paragraphs 1, 2 and 3 of Schedule 3 are the most important.

Schedule 3, paragraph 1

Schedule 3, paragraph 1 provides for the overriding nature of short leases, common to most rented dwellings in England and Wales. 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, paragraph 2

Schedule 3, paragraph 2 is probably the most controversial provision in the LRA 2002. It provides that if a person with a qualifying interest is  in actual occupation as a matter of fact, that person’s interest will take priority over that of the purchaser’s, unless that person’s occupation would not have been obvious on a reasonably careful inspection and the purchaser had no actual knowledge of the person’s interest. In cases prior to the LRA 2002, the LRA 1925, section 70(1)(g) provided for an equivalent ‘overriding interest’. This paragraph should be read several times.

Qualifying interest

The definition of an ‘interest’, referred to here as a qualifying interest, is undefined by the LRA 2002. According to National Provincial Bank v Ainsworth [1965], it must be proprietary in nature. The most common type of interest in the case law is a ‘constructive trust’, as a result of the occupant contributing to the purchase price of the property. This may be referred to as a Boland interest, from the landmark case of Williams and Glyn’s Bank v Boland [1981]. It should be remembered that in Williams and Glyn’s Bank v Boland [1981], Mr Boland was the sole registered proprietor of the land, therefore the sole trustee (see trusts of land). As such, Mrs Boland’s interest was not overreached. If there are two trustees, and a person’s interest is overreached, Schedule 3 paragraph 2 will not apply, as the interest will cease to exist at the time of disposition. This was the reason for the denial of an interest in City of London Building Society v Flegg [1988]. Webb v Pollmount [1966] confirms that an option to purchase is a qualifying interest, and Hodgson v Marks [1971] confirmed that equitable interest by way of bare trust is enough to constitute a qualifying interest (prior to the ruling in Boland). Often, qualifying interests are so called ‘dual-status’ interests: they can take priority either if recorded on the land register or if accompanied by actual occupation.

Consequences

If an interest is found to take priority by virtue of Schedule 3, paragraph 2, it could provide: a right to rectification, as in Blacklocks v JB Developments [1982]; a right to set aside the transaction for undue influence, as in Thompson v Foy [2010] and Link Lending v Bustard [2010], or a right to set aside the contract on the grounds of estoppel, as in Lloyd v Dugdale [2002].

Residential actual occupation

Most of the case law surrounding Schedule 3, Paragraph 2, concerns residential actual occupation. It should be remembered that there are two objective tests which must be satisfied by actual occupation to be found from a purchaser’s perspective: a lack of factual actual occupation, and a lack of obviousness on a reasonably careful inspection, irrespective of whether any inspection was carried out. In Williams and Glyn’s Bank v Boland [1981], it was said that actual occupation can be equated with residence. Gaps in physical presence, such as hospital visits in Chhokar v Chhokar [1984] will not disrupt a finding of actual occupation, however long gaps, such as 14 months living abroad in Stockholm Finance v Garden Holdings [1995], will disrupt a finding of actual occupation. Actual occupation will not be found where only ‘preparatory acts’ such as laying carpets in Abbey National v Cann [1991] were undertaken.

Since the LRA 2002, the courts appear to have broadened the scope of actual occupation, contrary to the Law Commission’s intent to reduce the scope of Schedule 3 interests. In both Thompson v Foy [2010] and Link Lending v Bustard [2010], actual occupation was found where it could not have been discovered on a reasonably careful inspection, but where the person with a qualifying interest merely had the intention to return. It also seems that where an inspection would not assist a person with a qualifying interest, this requirement will be ruled as irrelevant, as in Chaudhary v Yavuz [2011]. If a purchaser would have to question occupiers during his inspection to ascertain whether someone was in actual occupation, actual occupation will not be found, as was said in Thomas v Cyldesdale Bank [2010]. If the purchaser does ask a person in occupation whether they have an interest in the land and that person answers negatively, they may not later assert an interest.

Non-residential actual occupation

It is more difficult to ascertain what it required to constitute actual occupation of commercial premises. However, the courts seem quite lenient in their findings. Actual occupation was found in all of the following cases: in Blacklocks v JB Developments [1982], where a barn had been constructed; in Malory Enterprises v Cheshire Homes [2002] where a perimeter fence had been constructed; in Saeed v Plustrade [2001] where cars were parked on the premises, and in Lloyds Bank v Rosset [1989], where Mrs Rosset regularly visited a building site where builders were present every day.

Other circumstances

If a person occupies only part of an estate, actual occupation will only be found for that part of the estate, according to Ferrishurst Ltd v Wallcite [1999], which was confirmed by Thompson v Foy [2010]. Occupation of a person’s agent will not be imputed to that person, as illustrated by Strand Securities v Caswell [1965]. Although Lloyd v Dugdale [2002] may question this finding. Children cannot be in actual occupation of land, according to Hypo-Mortgage Services v Robinson [1997], as they live in the shadow of their parents. Although following Kingnorth Finance v Tizard [1986]‘s reversal of Caunce v Caunce [1969], the same is not true for wives in actual occupation. There is some uncertainty over the date upon which a person claiming to be in actual occupation needs to have been in actual occupation. Although it is certain that occupation on the date of registration will be sufficient, as confirmed obiter in Thompson v Foy [2010], in Abbey National v Cann [1990], the House of Lords would have found it acceptable for the relevant date to be that of completion – when the purchaser is scheduled to move in.

The aftermath of Boland

As a result of Williams and Glyn’s Bank v Boland [1981], it is clear that a potential purchaser (or mortgagee bank) must make a careful inspection of the estate in question to ensure that no unregistered interests could override the intended new interest. As an additional step, banks now often require all occupants of a house to provide in writing that they do not have an interest in the estate. According to Gracegrove Estates v Boateng [1997], the effectiveness of this method was upheld. In Paddington Building Society v Mendelsohn [1985], it was said that if a claimant claiming to have been in actual occupation knew of the interest intended to override their own, their interest will have been overridden. Although it should be noted that a bank will only have to rely on this consent should there be an issue with the mortgage granted to them – usually they are given statutory priority. As a result of Paddington and Abbey National Building Society v Cann [1991], which found that a transfer of title and the granting of a mortgage were inseparable events, it can be safely assumed that beneficial interest owners will always be bound by acquisition mortgages.

Schedule 3, paragraph 3

Schedule 3, paragraph 3 applies to easements implied in law (after 20 years of non-objection). Any other legal easement must be registered to be binding following a qualifying disposition (see basic rules above).

Conclusiveness of registration

Section 58 LRA 2002 provides that as long as the name of the registered proprietor on the land register is correct, the register is conclusive, overriding possession. The proposition was illustrated in Sainsbury’s Supermarkets v Olympia Homes [2006]. According to Malory Enterprises v Cheshire Homes [2002], where there is a problem with a transfer, the register will confirm that the old owner is the legal owner, however, he will be said to hold the estate on trust for the ‘true’ new owner. Although this was upheld in Fitzwilliam v Richall Holdings Services [2013], it was also criticised as a backwards step, damaging the conclusiveness of the register. A wide interpretation is to be given to mistakes made on the register and the possibility of rectification.

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