Экзамен зачет учебный год 2023 / ELC, Land Registration II

register is open: any person can search it without any need to obtain the consent of the registered proprietor.35 Such searches can be made orally, by telephone, in writing, by fax or by computer (for those who have direct access to the Registry’s computer system).36

2.12The register itself consists of three parts,37 namely—

(1)The Property Register, which both describes the land and the estate comprised in the title and records the benefit of rights such as easements and covenants that are enjoyed by the property: this is the “credit entry” as regards the title;38

(2)The Proprietorship Register, which records the nature of the title,39 the name, address and description of the proprietor, and any entries which affect his or her right to dispose of the land;40 and

(3)The Charges Register, which records those encumbrances which burden the property: this is the corresponding “debit entry” in relation to the title.41

INTERESTS IN REGISTERED LAND

Registrable interests

2.13The principal interests which can be registered with their own title on the register are a legal freehold and a legal term of years having more than 21 years unexpired.42 It follows that, in relation to any one piece of registered land, there may be several titles, as where a freeholder grants a 99-year lease of the land, and the tenant then sublets for 25 years. The freehold title, the lease and the sublease will each have its own title on the register, though there will be a note on the immediately superior title of the lease and sublease respectively. The owner of the registered estate is called the registered

35Land Registration Act 1925, s 112 (substituted by Land Registration Act 1988, s 1(1)).

36See Land Registration (Official Searches) Rules 1993, r 3. For the direct access scheme, see below, para 11.17.

37Land Registration Rules 1925, r 2.

38Ibid, r 3; see Ruoff & Roper, Registered Conveyancing, 3-05 - 3-08.

39That is, whether it is absolute (as is usually the case), good leasehold, possessory or qualified. For these grades of title, see below, para 5.78.

40Land Registration Rules 1925, r 6; Ruoff & Roper, Registered Conveyancing, 3-09 - 3-10. The entries in question are cautions, restrictions and inhibitions. See below, paras 2.25 and following; and Part VI of this Report.

41Land Registration Rules 1925, r 7; Ruoff & Roper, Registered Conveyancing, 3-11 - 3-15. Such encumbrances fall into two categories: registered charges (mortgages) and other rights which are protected by notice. See below, para 2.26; and Part VI of this Report.

42See generally Ruoff & Roper, Registered Conveyancing, Chapter 9; and below, para 3.6.There are certain other miscellaneous legal interests which, because they are treated as land for the purposes of the Law of Property Act 1925 (see 205(1)(ix), can also be registered with their own titles. These include a legal rentcharge granted for an interest in fee simple or for a term of years of which more than 21 years are unexpired. See Ruoff & Roper, Registered Conveyancing, 26-03. For the position of manors, see below, para 3.20.

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proprietor.43

2.14There are other categories of registrable interests which do not have their own title, but which may be protected by an entry on the charges register of the title burdened by them. First, there are registered charges. These provide the mechanism by which legal mortgages of registered land are created.44 Secondly there are certain incorporeal legal interests, such as easements and profits à prendre.45 These are incapable of being registered with their own title even if they exist in gross.46

2.15Estates and interests which are capable of being registered estates will, until registered, take effect in equity only and not as legal estates or interests.47 As such they will be overridden by any registered disposition for valuable consideration.48 It is the risk that an interest may be defeated in this way that serves as the inducement to register a disposition of registered land.49

Overriding interests

2.16Overriding interests are interests in or over registered land which are not protected on the register but to which all registered dispositions of the land nonetheless take subject.50 They are listed in section 70(1) of the Land Registration Act 1925.51 Amongst the most important are the following—

43He or she will be given a land certificate as an indicia of his or her title. Although this records the state of the title on the date when the certificate was granted, it is the register alone that is conclusive as to the state of that title. The land certificate will be retained in the Registry if the proprietor creates a registered charge (ie, a mortgage) over his or her land.

44Although the registered proprietor of the charge does not have his or her own title, a charge certificate is issued to him or her. We make certain minor recommendations in relation to registered charges in Part IX of this Report.

45Where the rights are appurtenant to and for the benefit of a registered estate (such as the benefit of an easement), they may be noted on the property register of that estate, but will in any event pass with that estate on any transfer.

46See below, para 3.17 for the possible difficulty which this may create. A right in gross is a freestanding right over another’s land, such as a profit à prendre to shoot game or take fish, that is enjoyed for the benefit of the grantee, and not for the benefit of another piece of land. Easements cannot exist in gross (though this view has not gone unquestioned: see M F Sturley, “Easements in Gross” (1980) 96 LQR 557), but some profits à prendre can: see Sir Robert Megarry & Sir William Wade, The Law of Real Property (5th ed 1984) pp 834 - 835, 909 - 912.

47See Land Registration Act 1925, s 101.

48For registered dispositions, see below, para 2.21.

49For the position where a disposition of unregistered land is required to be registered and is not, see Land Registration Act 1925, s 123A (substituted by Land Registration Act 1997, s 1); above, para 2.8.

50See Land Registration Act 1925, s 3(xvi).

51See below, Part V of this Report, where they are considered in detail.

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(1)certain easements and profits, customary and public rights52 and appurtenant rights;53

(2)squatters’ rights;54

(3)rights of persons in actual occupation;55

(4)seignorial and manorial rights and franchises;56

(5)leases granted for 21 years or less;57and

(6)rights in coal.58

2.17Because overriding interests bind transferees of the land even though they are, by definition, not protected on the register, they are widely acknowledged to be a potential source of difficulty in registered conveyancing. They necessarily reduce both the reliability and the comprehensiveness of the register. This is especially so given both the breadth of the rights which can be overriding interests (as the above examples demonstrate) and the fact that some of them are not readily discoverable. It should be noted that most overriding interests - but not quite all - are capable of protection by registration instead.59

2.18In Part IV of this Report we examine the reasons for overriding interests.60 We conclude that the characteristic that most (but not all) share is that it is unreasonable to expect the person having the benefit of the interest to protect it by registration.61 We go on to examine in detail in Part V of this Report ways in which both the numbers and the scope of overriding interests could be reduced, and seek views on our proposals.

Minor interests

2.19Finally, there is a residual category of interests - called minor interests - which are neither registrable nor overriding interests.62 This “definition” is slightly misleading. First, there are rights which may be protected by an entry on the register as minor interests, but which will take effect as overriding interests if they are not so protected. For example, a person in occupation of land under an agreement for a lease may

52Land Registration Act 1925, s 70(1)(a); below, paras 5.2, 5.25 and 5.30.

53Land Registration Rules 1925, r 258; below, para 5.2.

54Land Registration Act 1925, s 70(1)(f); below, para 5.42.

55Ibid, s 70(1)(g); below, para 5.56. Under this category, an occupier may protect rights that are expressly created and which could, therefore, have been protected by registration.

56Land Registration Act 1925, s 70(1)(j); below, para 5.84.

57Ibid, s 70(1)(k); below, para 5.87.

58Ibid, s 70(1)(m); below, para 5.97.

59Leases granted for a term of 21 years or less (Land Registration Act 1925, s 70(1)(k)) cannot be protected on the register, but can only take effect as overriding interests.

60See below, paras 4.4 and following.

61See below, para 4.4.

62Cf Land Registration Act 1925, s 3(xv).

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protect that agreement either by relying on his or her occupation so that it takes effect as an overriding interest,63 or by entering it as a minor interest on the register. Secondly, a disposition of registered land which is a registrable interest takes effect as a minor interest pending its registration. The category of minor interests is in fact enormously wide. It includes rights over registered land which, if the title had been unregistered, would have been registrable as land charges,64 interests under trusts of land and settlements, and interests which, in unregistered land, would have depended for their protection on the doctrine of notice.65 As we explain below, there are four methods of protecting minor interests on the register - notices, cautions, restrictions and inhibitions.66

MAKING DISPOSITIONS OF REGISTERED LAND

Introduction

2.20We set out below the ways in which estates, rights and interests in registered land should be created, transferred or protected, and we explain what form registration should take. As we have already indicated,67 a registered proprietor of land may create interests in or deal with the land in the same way as if the title were unregistered. However, until the disposition is registered, it takes effect as a minor interest. As such it is liable to be overridden by a subsequent registered disposition for valuable consideration.68

Registered dispositions

2.21Certain dispositions by a registered proprietor, called “registered dispositions”, should be completed by registration,69 and the validity of them is then guaranteed by the Registry. What links such registered dispositions is that they involve the grant or transfer of a legal estate, or the creation or reservation of a legal right over the land.70

They include71—

(1)a transfer in whole or part of the registered estate in the land;

(2)a transfer of the mines and minerals in the land apart from the surface or vice versa;

(3)the grant of a rentcharge in possession;

63The rights of persons in actual occupation: Land Registration Act 1925, s 70(1)(g).

64Such as restrictive covenants.

65Such as an equity arising by estoppel.

66See paras 2.25 and following.

67See above, para 2.15.

68Land Registration Act 1925, s 101.

69There is an obvious ambiguity in the term “registered disposition”. It is only when the particular disposition has been registered that it is, in reality, a registered disposition.

70Land Registration Act 1925, ss 18(4), 21(4). The creation of an equitable right over land, such as a restrictive covenant, is not therefore a registered disposition.

71For the main statutory provisions, see Land Registration Act 1925, ss 18, 21, 33, 34. See too Ruoff & Roper, Registered Conveyancing, 15-03.

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(4)the grant of an easement, right or privilege72 in or over land;

(5)the transfer of the registered estate subject to the reservation of a rentcharge, easement, right or privilege;

(6)the grant of a lease or underlease;

(7)the creation of a registered charge;

(8)the transfer of a registered charge.

2.22A registered disposition confers on the transferee or grantee the estate or interest in question, together with the benefit of all appurtenant rights. The transferee or grantee takes the land subject to—

(1)the incumbrances and other entries appearing on the register;

(2)overriding interests;73 and

(3)where the interest is leasehold, “all implied and express covenants, obligations, and liabilities incident to the estate transferred or created”;74

but free from all other estates and interests.75 It is this “special effect or priority” that is the hallmark of registered dispositions.76

2.23The Land Registration Act 1925 makes special provision for the priority of competing registered charges. It provides that they are to rank in order of registration not in order of creation.77 This is in fact no more than an application of the rule set out in the previous paragraph.

Priority searches

2.24We have explained that there is necessarily a period of time between the execution of a transaction, and its registration as a registered disposition.78 To protect a purchaser in the period prior to the transaction up to the time when the transaction is registered, a purchaser may apply to search the register in such a way as to obtain priority for a period of thirty days.79 Any entry which is made during the thirty days is “postponed to a subsequent application to register the instrument effecting the purchase”.80 A “purchaser” is, for these purposes, defined as—

72This phrase includes rights such as profits à prendre.

73Unless the contrary is expressed on the register.

74Land Registration Act 1925, s 23(1)(a).

75Ibid, ss 20(1), 23(1).

76Ibid, s 3(xxii). We consider priorities in detail in Part VII of this Report.

77Land Registration Act 1925, s 29; see below, para 7.5.

78See above, para 2.7.

79See Land Registration (Official Searches) Rules 1993.

80Ibid, rule 6.

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any person (including a lessee or chargee) who in good faith and for valuable consideration acquires or intends to acquire a legal estate in land.81

The intending grantee of some minor interest cannot make a priority search, because he or she does not intend to acquire a legal estate.

Minor interests

2.25Because the transferee or grantee of a registered disposition takes it free of interests which are not protected on the register or which do not take effect as overriding interests, it is incumbent on a person who has the benefit of a minor interest to ensure that an appropriate entry is made on the register. There are four types of entry that can be made: notices, cautions, restrictions and inhibitions. Their functions are very different, and with the exception of a notice, the primary aim of making them may not be to ensure that a particular interest in land will bind the grantee or transferee under a registered disposition. The Registry does not guarantee the validity of minor interests, even though they are protected by registration.82 In this respect they differ from registered dispositions.83

Protection by notice

2.26The entry of a notice is the best method of protecting an encumbrance over land which is not an interest under a trust (and therefore capable of being overreached on a disposition of the land).84 A notice provides a permanent form of protection for a right and will ensure that it binds any person who acquires the land.85 It may be entered on the register only with the concurrence of the registered proprietor, or pursuant to an order of the court or the registrar. The entry on the register will set out the nature of the interest.

Protection by caution

2.27The entry on the register of a caution against dealings is not, as such, a means of protecting an interest in land. Such an entry institutes a procedure whereby a person interested in the land (the cautioner) will be notified of a proposed dealing with the property.86 He or she can then take steps to assert the priority of his or her right. Unlike the notice, a caution may be entered unilaterally, without the permission, or even the prior knowledge, of the registered proprietor. When registering a caution there is no requirement for the cautioner to prove the existence of the right. All that he or she has to do is set out the claim in outline in the accompanying declaration. It is essentially a personal entry as the register will state only the name and address of the cautioner.

81Ibid, r 2(1).

82If, eg, an option were protected on the register by the entry of a caution, and it turned out that the option was void for (say) failure to comply with the formal requirements of the Law of Property (Miscellaneous Provisions) Act 1989, s 2, the grantee of the option would not be entitled to any indemnity if the caution was removed from the register.

83See above, para 2.21.

84For a full consideration of notices, see below, para 6.3. For overreaching, see below, para 2.32.

85Land Registration Act 1925, ss 48(1), 52(1).

86For cautions against dealings, see below, para 6.10.

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2.28The caution entitles the cautioner to notice of any proposed registered dealing of the land. No dealing with the land may be registered without the cautioner’s consent until such notice has been served.87 If on service of the notice the cautioner objects, the Land Registration Rules 1925 provide a procedure for dealing with his or her claim before the registrar.88 At the hearing, the main options open to the registrar are—

(1)to allow the transaction to proceed and to cancel the caution;

(2)to refuse to register the proposed disposition; or

(3)to make an entry on the register to protect the cautioner’s interest on the register in a permanent form, such as by a notice.

It is unusual for the registrar to allow the transaction to proceed while at the same time allowing the caution to continue. Because the entry of a caution does no more than initiate a procedure, it confers no priority on the right or interest of the cautioner.89 In Part VI, we identify this as the principal weakness of a caution.90

The differences between a notice and a caution

2.29The differences between the entry of a caution and of a notice are best illustrated by an example. 1 Acacia Avenue, Newtown has a registered title. A conveyance between John Doe and Richard Roe reserves to the owners of 3 Acacia Avenue a right of passage, through 1 Acacia Avenue. The owner of 3 Acacia Avenue is Joanna Harrison. If she were to lodge a caution, to protect her right of way, she would apply to the Registry stating that she claimed an interest in 1 Acacia Avenue. The entry on the register would read—

Caution in favour of Joanna Harrison of 3 Acacia Avenue, Newtown.

This entry would entitle Ms Harrison to be notified of any subsequent registered dealing with the land, and to object to any such dealing. If she does not object to a dealing her caution is unlikely to remain on the register. On the other hand if Ms Harrison were to register a notice she would apply to the Registry, sending the instrument which created the right, in order to prove her entitlement. The entry on the register would state—

The land is subject to the following rights reserved by a conveyance dated 1 June 1996 made between (1) John Doe and (2) Richard Roe :

Reserving to the owners and occupiers for the time being of 3 Acacia Avenue a right of way over the passageway through 1 Acacia Avenue

87When a caution has been lodged, the Registry notifies the registered proprietor. There is provision under the Land Registration Rules 1925, r 218, by which the proprietor can challenge the caution without having to wait until there is a disposition of the land. For such “warning off”, see below, para 6.15.

88See r 220.

89Clark v Chief Land Registrar [1994] Ch 370.

90See below, para 6.16.

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This entry would preserve the right of way against any registered disposition of 1 Acacia Avenue, and it would be entered as a notice on the charges register of the title.

2.30The example illustrates the fundamental differences between a caution and a notice. The caution is a personal and temporary method of protection designed to warn the cautioner of impending transactions. The notice is impersonal and provides permanent protection for the interest.

Protection by restriction

2.31The purpose of a restriction is to record any limitation on the otherwise unlimited powers of disposition of the registered proprietor. A restriction is only available to restrict the disposition of a registered interest, it cannot be used to restrict the disposition of a minor or overriding interest.

2.32Restrictions are often used to protect interests under a trust, and are indeed the best method of doing so. They provide a means of ensuring that such interests are overreached on any disposition by the trustees.91 Overreaching can only take place if there are two trustees, and a restriction can be employed to ensure that this is so.

Protection by inhibition

2.33An inhibition is an order, made either by the court or the registrar, that inhibits the registration or entry of any dealing with registered land or with a registered charge. The registration of an inhibition effectively freezes the register. It is a draconian remedy of last resort, to be used primarily in cases of fraud and bankruptcy.

Criticisms

2.34In Part VI of this Report, we examine critically the operation of the methods that presently exist for the protection of minor interests.92 They are unnecessarily complicated, and there is, in our view, no need to have four separate methods of protection. We single out for particular criticism the inadequate protection that is offered in respect of cautions. We also identify a number of other miscellaneous defects. We recommend the replacement of the present system with a simple system in which the only types of entry would be notices and restrictions.93

The priority of minor interests

2.35Although the Land Registration Act 1925 sets out the priority of registered dispositions, it is silent on the priority of minor interests between themselves. However, the matter has now been settled by judicial decision, and it is clear that because minor interests take effect in equity only, the traditional rules governing the priority of equitable interests apply to such interests, and that this is so, whether or not the interest is protected by an entry on the register. It follows that the register provides no guide as to the priority of minor interests. We explain these rules on the priority of

91Overreaching applies as much to interests in registered land as it does to interests where the title is unregistered. Even if the interests of the beneficiaries under the trust are overriding interests they may be overreached: see City of London Building Society v Flegg [1988] AC 54.

92See below, paras 6.43 and following.

93See below, paras 6.48 and following.

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minor interests in detail in Part VII of this Report.94 Our conclusion is that the future introduction of electronic conveyancing makes it unnecessary to create any statutory system for regulating such priorities.

RECTIFICATION AND INDEMNITY

2.36Rectification is the process by which mistakes in the register are corrected. If any person suffers loss as a result of either rectification or a decision not to rectify the register, they are entitled to be indemnified by the Registry.

Rectification

2.37We explain in detail in Part VIII of this Report the ten grounds on which the register may be rectified. However, they may be broadly summarised as follows—

(1)Where a court makes an order which either gives effect to an established property right or interest, or orders the removal from the register of an entry in respect of a right which has not been established.95

(2)Where the court or the registrar decides that the register is incorrect in some way.96

(3)Where the registrar decides that a clerical error needs to be corrected.97

Even where a ground for rectification exists, it is a matter of discretion whether or not it is ordered. However, in practice, in a case where a court has concluded that a person is entitled to a right or interest in the land, rectification will always be ordered.98

2.38There is a significant restriction on the power to order rectification of the register, which we refer to as a form of qualified indefeasibility. Where the registered proprietor is in possession, the register may not be rectified so as to adversely affect the registered proprietor’s title unless—

(1)the rectification is required in order to give effect to an overriding interest;99 or

(2)the proprietor caused or substantially contributed to the error or omission, by fraud or lack of proper care;100 or

(3)it would be unjust not to rectify the register.101

94We also consider the difficult subject of the priority of overriding interests, on which, subject to one exception, there is no statutory guidance.

95Land Registration Act 1925, s 82(1)(a), (b).

96Ibid, s 82(1)(c),(d),(e),(f),(g), and (h).

97Land Registration Rules 1925, rr 13, 14.

98See Norwich & Peterborough Building Society v Steed [1993] Ch 116, 139; below, para 8.13.

99Land Registration Act 1925, s 82(3).

100Ibid, s 82(3)(a).

101Ibid, s 82(3)(c).

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As we explain in Part VIII, there is some doubt about exactly who constitutes a proprietor in possession for these purposes, as the definition is potentially wide enough to include all registered proprietors.102 Even if one of these grounds is established, there is still a discretion as to whether the register will be rectified. In practice, it usually will be, particularly where an overriding interest has been established. When rectification is ordered, it may affect not only the title of the registered proprietor but also those with derivative interests in the land.

2.39The present law governing rectification works well in practice and gives rise to few difficulties. Nevertheless, this review of land registration offers an opportunity to simplify and clarify the legislation, and we make provisional recommendations to this effect in Part VIII.

Indemnity

2.40The provisions for rectification and for indemnity are directly linked. Where the register is rectified, any person suffering loss by reason of the rectification may be indemnified.103 However, indemnity also serves a wider purpose in that it protects persons from loss—

(1)caused by errors and omissions on the register, even where the register is not rectified;104

(2)because documents lodged at the Registry have been lost or destroyed; or

(3)as a result of an error in any official search.105

2.41Where the claimant for an indemnity has caused all or part of the loss by fraud, no indemnity will be paid. If the loss is caused by a lack of proper care the indemnity will be reduced, according to what is just and equitable having regard to the person’s responsibility for the loss, unless the loss was caused wholly by a lack of proper care in which case no indemnity will be paid.106

2.42We make no recommendations for the reform of the law on indemnity, because that task was undertaken in the First Report of the Joint Working Group. The recommendations in that Report were implemented by the Land Registration Act 1997.107

ADVERSE POSSESSION

2.43As we have already indicated, the principles of adverse possession apply to registered land in a similar (but not identical) way to the manner in which they apply to

102See below, para 8.24.

103Land Registration Act 1925, s 83(1) (as inserted by the Land Registration Act 1997, s 2). This includes the case where the proprietor of the land or charge claims in good faith under a forged disposition: ibid, s 83(4).

104There is now a power to award indemnity where a person seeks and obtains rectification, but still suffers loss as well: ibid.

105Land Registration Act 1925, s 83(3) (as substituted by Land Registration Act 1997, s 2).

106Ibid, s 83(5) (as substituted by Land Registration Act 1997, s 2).

107See above, para 1.8.

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