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LAND REGISTRATION FOR THE TWENTY-FIRST CENTURY

A Conveyancing Revolution

LAND REGISTRATION BILL AND COMMENTARY

Laid before Parliament by the Lord High Chancellor pursuant to section 3(2) of the Law Commissions Act 1965

Ordered by The House of Commons to be printed 9 July 2001

LAW COMMISSION H M LAND REGISTRY

LAW COM NO 271

LONDON: The Stationery Office

HC 114

The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law.

THE COMMISSIONERS ARE:

The Honourable Mr Justice Carnwath CVO, Chairman

Professor Hugh Beale

Mr Stuart Bridge

Professor Martin Partington

Judge Alan Wilkie QC

The Secretary of the Law Commission is Mr Michael Sayers

Her Majesty’s Land Registry, a separate department of government and now an Executive Agency, maintains the land registers for England and Wales and is responsible for delivering all land registration services under the Land Registration Act 1925.

The Chief Land Registrar and Chief Executive is Mr Peter Collis The Solicitor to H M Land Registry is Mr Christopher West

The terms of this report were agreed on 31 May 2001.

The text of this report is available on the Internet at:

http://www.lawcom.gov.uk

Mr Stuart Bridge was appointed Law Commissioner with effect from 2 July 2001. The terms of this report were agreed on 31 May 2001, while Mr Charles Harpum was a Law Commissioner.

ii

LAW COMMISSION

HM LAND REGISTRY

LAND REGISTRATION FOR THE TWENTY-

FIRST CENTURY

A Conveyancing Revolution

CONTENTS

 

Paragraph

Page

PART I: THE LAND REGISTRATION BILL

 

 

AND ITS OBJECTIVES

 

1

INTRODUCTION

1.1

1

THE OBJECTIVES OF THE BILL

1.4

2

SOME KEY FEATURES OF THE BILL

1.11

4

Electronic conveyancing

1.12

4

Adverse possession

1.13

4

Other changes

1.14

5

THE BACKGROUND TO THE BILL

1.15

6

STRUCTURE OF THE REPORT

1.21

8

PART II: SUMMARY OF THE MAIN CHANGES

 

MADE BY THE BILL

 

9

INTRODUCTION

2.1

9

FIRST REGISTRATION

2.4

10

CAUTIONS AGAINST FIRST REGISTRATION

2.14

13

POWERS OF DISPOSITION

2.15

13

REGISTRABLE DISPOSITIONS

2.16

14

PRIORITIES

2.17

14

NOTICES AND RESTRICTIONS

2.19

15

CHARGES

2.23

16

OVERRIDING INTERESTS

2.24

16

REGISTRATION

2.28

18

SPECIAL CASES

2.32

19

ALTERATION, RECTIFICATION AND INDEMNITY

2.38

20

CONVEYANCING: GENERAL MATTERS

2.40

21

ELECTRONIC CONVEYANCING

2.41

21

Introduction

2.41

21

Present conveyancing practice in relation to registered land

2.43

22

Electronic conveyancing: the anticipated model

2.48

23

Introduction

2.48

23

How a typical conveyancing transaction might operate

2.52

24

Compulsory use of electronic conveyancing

2.59

27

Finance

2.62

28

 

Paragraph

Page

Stamp duty

2.64

29

Electronic conveyancing and first registration

2.65

29

Do-it-yourself conveyancing

2.68

30

ADVERSE POSSESSION

2.69

30

Introduction

2.69

30

Why do we have a doctrine of adverse possession?

2.71

30

An outline of the new scheme in the Bill

2.74

32

JUDICIAL PROVISIONS

2.75

33

RULES

2.76

33

PART III: FIRST REGISTRATION

 

35

INTRODUCTION

3.1

35

THE LEGAL SCOPE OF TITLE REGISTRATION ANDTHE

 

 

EXTENT OF LAND THAT MAY BE REGISTERED UNDER IT3.3

35

The legal scope of title registration

3.3

35

The extent of land that may be registered

3.5

36

VOLUNTARY FIRST REGISTRATION

3.6

37

Registrable estates

3.6

37

Who may apply for first registration?

3.6

37

Which legal estates may be registered with their own titles?

3.9

38

A fee simple absolute in possession

3.9

38

Certain leases

3.10

38

Rentcharges

3.18

40

Franchises

3.19

41

Profits à prendre in gross

3.20

41

Manors no longer to be registrable

3.21

42

COMPULSORY REGISTRATION

3.22

42

Introduction

3.22

42

Events that trigger the compulsory registration of title

3.23

43

Introduction

3.23

43

Transfers

3.24

43

Transfer of a qualifying estate

3.24

43

Transfers to which section 171A of the Housing Act 1985

 

 

applies

3.28

45

Grants

3.29

45

Leases granted for a term of more than seven years from the

 

 

date of grant

3.30

45

Reversionary leases

3.32

46

Grant of a right to buy lease under Part V of the Housing

 

 

Act 1985

3.33

47

Grant of a lease to which section 171A of the Housing

 

 

Act 1985 applies

3.34

47

Protected first legal mortgages

3.35

47

Crown grants out demesne land

3.36

47

The power to extend the triggers to compulsory registration

3.37

48

The effect of failure to register

3.38

49

The duty to register

3.38

49

The effect of non-compliance with the duty to register

3.40

49

iv

 

Paragraph

Page

THE EFFECT OF FIRST REGISTRATION

3.42

50

Classes of title

3.42

50

Introduction

3.42

50

Freehold titles

3.43

50

Leasehold titles

3.44

51

The effect of first registration

3.45

52

Freehold title

3.45

52

Registration with absolute title

3.45

52

Qualified title

3.49

54

Possessory title

3.50

54

Leasehold title

3.51

54

Miscellaneous rule-making powers

3.52

55

CAUTIONS AGAINST FIRST REGISTRATION AND THE

 

 

CAUTIONS REGISTER

3.54

56

The nature of cautions against first registration under the

 

 

present law

3.54

56

Cautions against first registration under the Bill

3.56

57

The right to lodge a caution

3.56

57

The effect of a caution against first registration

3.60

59

Cancellation of cautions

3.63

60

The cautions register

3.65

61

PART IV: DISPOSITIONS OF REGISTERED LAND

63

INTRODUCTION

4.1

63

POWERS OF DISPOSITION

4.2

63

Introduction

4.2

63

The principles adopted in the Bill

4.4

64

The provisions of the Bill

4.5

65

Owner’s powers

4.5

65

Protection for disponees

4.8

66

REGISTRABLE DISPOSITIONS

4.12

67

Introduction

4.12

67

The general principle

4.13

68

Dispositions required to be registered and the registration requirements

 

that apply to them

4.16

69

Introduction

4.16

69

Transfers of a registered estate

4.17

69

The grant of certain leases

4.20

71

Leases of franchises and manors

4.23

72

Express grant or reservation of an easement, right or privilege

4.24

73

Express grant or reservation of a rentcharge or legal right of re-entry

4.27

74

The grant of a legal charge

4.29

75

Dispositions of a registered charge

4.30

76

Applications for registration

4.31

76

PART V: PRIORITIES

 

77

INTRODUCTION

5.1

77

PRIORITY UNDER THE BILL

5.5

78

v

 

Paragraph

Page

The general rule

5.5

78

The principal exception: registrable dispositions that have been

 

 

registered

5.6

78

The exception

5.6

78

Applicable only to registrable dispositions

5.7

79

Made for valuable consideration

5.8

79

Priority conferred

5.10

79

When the priority of an interest will be protected

5.11

80

The priority of registered charges

5.14

81

The grant of leases that are not registrable dispositions

5.15

81

The irrelevance of notice

5.16

82

SPECIAL CASES

5.22

84

Inland Revenue Charges

5.23

84

Rights of pre-emption

5.26

85

An equity arising by estoppel

5.29

87

A mere equity

5.32

89

Inchoate rights arising under the Prescription Act 1832

5.37

90

PART VI: NOTICES AND RESTRICTIONS

 

92

INTRODUCTION

6.1

92

THE PROPOSALS IN THE CONSULTATIVE DOCUMENT

6.2

92

THE PROVISIONS OF THE BILL

6.3

93

Prospective abolition of cautions against dealings

6.3

93

Notices

6.5

94

Introduction

6.5

94

Nature and effect of a notice

6.6

94

Interests which may not be protected by notice

6.8

95

Interests under trusts of land and settlements

6.9

95

Short leases

6.10

96

A restrictive covenant between landlord and tenant

6.13

97

An interest which is registrable under the Commons

 

 

Registration Act 1965

6.14

97

An interest in any coal or coal mine or ancillary rights

6.15

97

A PPP lease

6.16

98

The circumstances in which a notice may be entered on the register

6.17

98

Introduction

6.17

98

Burdens entered on the register on first registration

6.18

99

Entry in respect of an overriding interest

6.19

99

Entry in respect of a registrable disposition

6.20

99

Where the entry is necessary to update the register

6.21

100

Applications for the entry of a notice

6.22

101

Unilateral notices

6.26

102

The nature of unilateral notices

6.26

102

Protection against the improper entry of a unilateral notice 6.27

103

Abolition of inhibitions as a separate form of entry

6.32

104

Restrictions

6.33

104

Introduction

6.33

104

The nature and effect of a restriction

6.34

104

When a restriction may or must be entered

6.38

106

vi

 

Paragraph

Page

Introduction

6.38

106

When the registrar may or must enter a restriction

6.39

107

Where the registrar may enter a restriction

6.40

107

Where the registrar must enter a restriction

6.46

110

Applications for the entry of a restriction

6.47

111

Where the court may order the entry of a restriction

6.51

113

Notifiable applications for a restriction

6.54

114

Withdrawal of restrictions

6.58

116

Pending land actions, writs, orders and deeds of arrangement

6.59

116

PART VII: CHARGES

 

118

INTRODUCTION

7.1

118

THE POWER TO CREATE CHARGES AND THE POWERS OF

 

 

THE CHARGEE

7.2

118

Legal Charges

7.2

118

The creation of charges and the powers of the chargee

7.2

118

The definition of “charge”

7.5

120

Powers of chargees and the need for a deed

7.6

121

Dispositions made by chargees and the protection of disponees

7.7

121

Equitable charges

7.9

123

SUB-CHARGES AND THE POWERS OF THE SUB-CHARGEE

7.11

123

PRIORITIES

7.13

124

Priority of registered charges

7.13

124

Registered sub-charges

7.16

125

Equitable charges

7.17

126

Tacking and further advances

7.18

126

Present law and practice

7.18

126

Provisions of the Bill

7.28

130

Further advances made with the agreement of subsequent

 

 

chargees

7.29

130

Further advances where the prior chargee has not received

 

 

notice of the subsequent charge

7.30

130

Where there is an obligation to make a further advance

7.31

131

Further advances up to a maximum amount

7.32

131

Statutory charges

7.37

133

Types of statutory charge

7.38

133

Overriding statutory charges

7.39

134

Charges which are local land charges

7.42

135

MISCELLANEOUS

7.43

135

Application of proceeds of sale

7.43

135

Consolidation

7.44

136

Power to give receipts

7.46

137

PART VIII: OVERRIDING INTERESTS

 

138

INTRODUCTION

8.1

138

THE NATURE OF OVERRIDING INTERESTS

8.3

139

UNREGISTERED INTERESTS WHICH MAY BE OVERRIDING:

 

INTRODUCTION

8.6

140

vii

 

Paragraph

Page

UNREGISTERED INTERESTS WHICH OVERRIDE FIRST

 

 

REGISTRATION

8.8

141

Introduction

8.8

141

Short leases

8.9

142

PPP Leases

8.11

143

Interests of persons in actual occupation

8.14

145

Legal easements and profits à prendre

8.23

148

Customary and public rights

8.26

150

Local land charges

8.29

151

Mines and minerals

8.31

152

Rights to coal

8.32

152

Certain mineral rights where the title was registered before 1926

8.33

152

Miscellaneous

8.35

153

Introduction

8.35

153

Franchises and manorial rights

8.40

155

Crown rents

8.43

157

Certain rights in respect of embankments and sea and river walls

8.45

158

A right to payment in lieu of tithe

8.46

158

UNREGISTERED INTERESTS WHICH OVERRIDE

 

 

REGISTERED DISPOSITIONS

8.47

159

Introduction

8.47

159

Categories of overriding interest that are the same as those that

 

 

apply on first registration

8.48

159

Categories of overriding interest that differ from those that apply on

 

first registration

8.49

161

Short leases

8.50

161

Interests of persons in actual occupation

8.53

162

Introduction

8.53

162

The general principle

8.54

163

Qualification: Protection is restricted to the land in actual occupation 8.55

163

Exception 1: No protection for settled land

8.59

165

Exception 2: Rights not disclosed on reasonable enquiry

8.60

165

Exception 3: Rights of persons whose occupation is not apparent

8.61

165

Exception 4: Leases granted to take effect in possession more than three

 

months after grant

8.63

167

Transitional provisions

8.64

167

Legal easements and profits à prendre

8.65

168

The problem

8.65

168

Only legal easements and profits may be overriding interests

8.67

169

Legal easements and profits that are not easily discoverable should not

 

be overriding interests

8.68

169

Transitional arrangements

8.73

171

REDUCING THE IMPACT OF OVERRIDING INTERESTS

8.74

172

Introduction

8.74

172

Categories of overriding interests that are to be abolished

8.75

172

Introduction

8.75

172

Squatters’ rights

8.76

173

Rights excepted from the effect of registration

8.79

174

Categories of overriding interests that are to be phased out

8.81

175

viii

 

Paragraph

Page

The principle of phasing out overriding statues and the objections to it 8.81

175

The views expressed on consultation

8.85

177

The scheme adopted in the Bill

8.86

177

Human rights

8.89

179

Ensuring that overriding interests are protected on the register when

 

they come to light

8.90

180

PART IX: THE REGISTER AND REGISTRATION

182

INTRODUCTION

9.1

182

THE REGISTER

9.3

183

REGISTRATION AS PROPRIETOR

9.4

183

Conclusiveness

9.4

183

Dependent entries

9.7

184

Effective date of registration

9.8

184

BOUNDARIES

9.9

185

The general boundaries rule

9.9

185

Accretion and diluvion

9.14

187

QUALITY OF TITLE

9.16

188

Introduction

9.16

188

When title can be upgraded

9.17

189

Upgrading freehold title which has possessory title

9.17

189

Upgrading freehold title which has qualified title

9.18

190

Upgrading leasehold title which has a good leasehold title

9.19

190

Upgrading leasehold title which has a possessory title

9.20

190

Upgrading leasehold title which has a qualified title

9.21

190

No power to upgrade where there is an outstanding adverse claim

9.22

191

Who may apply for the upgrading of a title

9.23

191

Effect of upgrading title

9.25

192

Indemnity

9.28

192

Use of register to record defects in title

9.29

192

ACCESSING INFORMATION

9.36

195

Introduction

9.36

195

Open registers and their inspection

9.37

195

The significance of the open register

9.37

195

The rights conferred by the Bill

9.38

196

The limitations on the rights to inspect and copy

9.43

197

Official copies

9.44

197

Conclusiveness of filed copies

9.48

199

Introduction

9.48

199

The preconditions

9.50

199

Conclusiveness

9.52

200

Index

9.54

201

Historical information

9.58

202

Official searches

9.61

203

PRIORITY PROTECTION

9.62

204

The present law

9.62

204

Priority protection under the Bill

9.67

206

The circumstances in which priority protection will be available

9.68

206

ix

 

Paragraph

Page

The meaning of priority protection

9.70

207

Rules

9.73

209

APPLICATIONS

9.76

209

The form and content of applications

9.76

209

Registered charges and company charges

9.81

211

LAND CERTIFICATES

9.83

212

The nature of a land or charge certificate under the present law

9.83

212

Present practice

9.86

213

The impact of the Bill

9.88

214

Abolition of charge certificates

9.89

214

Land Certificates

9.90

215

PART X: ALTERATION, RECTIFICATION AND

 

INDEMNITY

 

216

INTRODUCTION

10.1

216

THE EFFECT OF THE BILL: ALTERATION

10.5

218

Introduction

10.5

218

The circumstances in which the register may be altered

10.6

218

The meaning of alteration and rectification

10.6

218

Powers of alteration

10.9

219

The powers of the court

10.10

220

The circumstances in which the court may order alteration

 

of the register

10.10

220

Qualified indefeasibility: the protection for the proprietor

 

who is in possession

10.13

221

The powers of the registrar

10.19

226

The circumstances in which the registrar may alter

 

 

the register

10.19

226

Qualified indefeasibility: the protection for the proprietor

 

who is in possession

10.22

227

Alteration under network access agreements

10.23

228

Costs in non-rectification cases

10.24

228

The circumstances in which the register of cautions may be altered

10.26

229

Alteration of documents

10.27

229

THE EFFECT OF THE BILL: INDEMNITY

10.29

231

Introduction

10.29

231

The grounds on which indemnity is payable

10.30

231

Loss by reason of rectification

10.31

231

Loss by reason of a mistake

10.32

232

Mistake in an official search

10.33

233

Mistake in an official copy

10.34

233

Mistake in a document kept by the registrar which is not an original

10.35

233

Loss or destruction of a document lodged at the registry

10.36

234

Mistake in the register of cautions against first registration

10.37

234

Failure to notify a chargee of an overriding statutory charge

10.38

234

Mines and minerals

10.39

235

The measure of indemnity

10.40

235

Introduction

10.40

235

x