Previous: Introduction to land law
Conveyancing and land law are significantly linked. Conveyancing is a legal process undertaken to transfer land from one to another. Due to the unique and complex nature of land, conveyancing is more involved than purchasing goods. There are two types of land in England and Wales: registered and unregistered land. Starting with the collective 1925 legislation, and more particularly the Land Registration Act 1925, Parliament sought to create a nation-wide register, within which all land, its owners and interests affecting that land, would be recorded. This would make it significantly easier for purchasers to investigate land they intended to purchase. In 1925, only land in London could be required to be registered. Since then, registration has been expanded to cover all of England and Wales. Although unregistered land can be registered voluntarily, registration is only required when certain transactions take place concerning the land – for example when it is sold.
As a result of these current rules of registration, a significant amount of land remains unregistered. If land is unregistered, in order to buy or sell it, the title deeds conveyancing process must be used. This page will provide an overview of the process.
A brief overview of title deeds conveyancing
In order to sell a parcel of unregistered land, a vendor must firstly find a purchaser. That vendor, in advertising his property for sale, is claiming that he has the right to sell that land. If a price and terms can be agreed on, it is then for the purchaser to satisfy himself that the vendor does have his claimed right to sell the land and to sign a contract (or two identical contracts to be exchanged). The conveyancing transaction will then be completed as the purchaser moves into occupation of his new land. The difference between a sale of ‘goods’ and a sale of land is therefore in the proof of the vendor’s right to sell.
In order to satisfy the burden of proving that the vendor has the right to sell, the purchaser must investigate the vendor’s title (right) to the land. This investigation starts with the vendor’s production of an abstract of title. According to the Law of Property Act (LPA) 1925, as modified by section 23 LPA 1969, if a purchaser can show that the vendor had a good (indefeasible) title 15 years prior to the current purchase, the purchaser will be said to have a good title to the land once the conveyancing transaction has been completed. This usually means producing a conveyance from at least 15 years ago.
In the purchaser’s investigation of title, he will be looking for any and all interests that will bind his purchase; not just the vendor’s interest. There are, as previously mentioned, two types of interests in land: legal and equitable interests.
Legal estates and legal interests will always bind the purchaser. Therefore, if a purchaser purchases a legal leasehold estate, he will remain bound by the freehold interest of the landlord of that estate, for example.
Equitable interests are any interests which are not legal interests. They are not universally enforceable like legal interests, but this does not remove their ability to bind a purchaser of a legal estate. Equitable interests can be divided into ‘family interests’, ‘commercial interests’ and ‘residual interests’. Courtesy of the 1925 legislation, a purchaser need only look for these three types of interests. The legislation does not categorise equitable interests this way, however, such a categorisation is acceptable and was used in Birmingham Midshires Mortgage Services Ltd v Sabherwal .
Family equitable interests
‘Family equitable interests’ refers to trusts. One of the aims of the 1925 legislation was for a purchaser not to be inconvenienced by disappointed beneficiaries of land held on trust. Therefore, according to LPA 1925, s 2(1)(ii) and s 27, if a purchaser obtains a receipt signed by two trustees recognising the purchase, the trust will be overreached: that is, the trustees will be obliged to give the beneficiaries a lifetime interest in the purchase value and the beneficiaries will have no recourse against the purchaser. Contrary to the Law Commission’s recommendation, trustees need not obtain the consent of the beneficiaries to sell land which they hold on trust. According to State Bank of India v Sood , overreaching can take place where no monetary consideration is paid by a purchaser, and according to Shami v Shami , if land is held on trust by one trustee, a purchaser should insist that a second trustee is appointed prior to purchasing the land. This ensures that overreaching will take place.
Commercial equitable interests
‘Commercial equitable interests’ are interests created by a commercial transaction. They are listed exhaustively in section 2 of the Land Charges Act (LCA) 1972 (which replaced a 1925 equivalent) and include puisne mortgages (Class C(i)), estate contracts (Class C(iv)), restrictive covenants (Class D(ii)), equitable easements (Class D(iii)) and home rights (Class F). These interests are required to be recorded in the Land Charges Register, as governed by the LCA 1972 and the LPA 1925. Section 198(1) LPA 1925 provides that if an interest is recorded in the Land Charges Register, it is to be considered that the purchaser had actual notice of that interest. According to LCA 1972, section 4, a commercial interest not recorded in the register is generally unenforceable. Unregistered classes A, B, C(i-iii), E and F will be void against any purchaser, and classes C(iv) and D(i-iii) will be void only against purchasers for money. However, a number of arguments have been made in an attempt to circumvent this section.
Firstly, it has been argued that ‘real’ actual notice only of a commercial equitable interest should bind a purchaser. Although this approach might seem fair, in Midland Bank Trust Co v Green , the House of Lords confirmed that this would not be the case, as allowing such an argument would undermine the need for a registration system for these types of interests. The House of Lords reversed Lord Denning’s attempt at allowing the fair outcome. Secondly, it has been argued actual occupation and or section 14 LPA will override section 4 LCA 1972. This argument was rejected in Lloyds Bank v Carrick  as it would once again undermine the registration system. Section 14 LPA only applies to Part 1 of the LPA 1925, therefore this argument was also rejected. Thirdly, it has been argued that proprietary estoppel will overrule section 4 LCA 1972. This argument was successful in ER Ives Investment Ltd v High . Finally, there is the potential for an ‘independent interest’ argument to succeed, but such an argument failed in Lloyds Bank v Carrick , where a lease was assigned but not recorded on the Land Charges Register.
Residual equitable interests
There is a very narrow category of residual interests, such as commercial interests which came about prior to the LPA 1925. This category also includes non-overreached trusts (where only 1 trustee was appointed, for example), as there was in Kingsnorth Finance v Tizard , and trusts which are unsuitable for overreaching, such as in Shiloh Spinners v Harding . These interest are binding on a purchaser subject to the doctrine of notice.
In conclusion, legal interests are universally enforceable, trusts need to be overreached, the land charges register needs to be checked, and reasonably careful enquiries will still need to be made to ensure that no residual interests catch a buyer unawares. If a buyer is satisfied, he will likely proceed with his purchase.