Экзамен зачет учебный год 2023 / ELC, Land Registration

(1)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition; and

(2)of which the person to whom the disposition is made does not have actual knowledge at that time;

will not be protected as an overriding interest under the general principle stated above in paragraph 8.54.

8.62There are a number points to note about the exception in paragraph 8.61(1). It has obvious similarities with the rule of conveyancing law that a seller of land must disclose to an intending buyer prior to contract all latent defects in title (those that are not apparent on a reasonable inspection of the land) and which are not known to the buyer.222 Three points should be noted about this exception¾

(1)For the purposes of the Bill, it is not the interest that has to be apparent (as is the case in relation to contracts for the sale of land), but the occupation of the person having the interest.223

(2)The test is not one of constructive notice of the occupation. It is the less demanding one (derived from the test applicable to intending buyers of land) that it should be obvious on a reasonably careful inspection of the land.224

(3)Even if a person’s occupation is not apparent, the exception does not apply where a buyer has actual knowledge of that occupation.

The object of this exception is, therefore, to protect buyers and other registered disponees for valuable consideration in cases where the fact of occupation is neither subjectively known to them nor readily ascertainable. Once an intending buyer becomes aware of the occupation, he or she should make inquiry of the occupier because of the second exception mentioned above.225 All of those who responded to the proposal in the Consultative Document that a person’s actual occupation should be apparent supported it.226

222See Megarry & Wade’s Law of Real Property (6th ed 2000), 12-068.

223We stress this point because although it was made in the Consultative Document (see Law Com No 254, para 5.73), one correspondent took the view that we had confused the two issues. We had not. We had earlier explained that the authorities were in some disarray as to whether the occupation had to be apparent or not: see Law Com No 254, para 5.58.

224See Megarry & Wade’s Law of Real Property (6th ed 2000), 12-068; Law Com No 254, para 5.72.

225See para 8.60.

226Some raised points or qualified their acceptance. We have given such points careful consideration.

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

8.63The fourth exception is where a leasehold estate is granted to take effect in possession more than three months from the date of the grant and has not taken effect in possession at the time of the disposition. This exception is a necessary corollary of the provisions of the Bill that require the registration of reversionary leases that are to take effect in possession more than three months after their grant.227 Such leases cannot be overriding interests under the provisions on short leases explained above.228 This fourth exception will not often occur. It would only be relevant where¾

(1)a reversionary lease had been granted to take effect in possession more than three months after the date of the grant but had not been registered; and

(2)the grantee was in actual occupation of the land to which the lease would relate, but at a time when the lease has necessarily not taken effect in possession.229

In those circumstances, the reversionary lease would not be binding on any person who acquired an interest in the land for valuable consideration under a registered disposition.

Transitional provisions

8.64We have explained above, at paragraph 8.18, that the protection that is presently enjoyed by those who are not in actual occupation of land but are in receipt of the rents and profits of the land is not retained under the Bill. As will be apparent from the statement of the general proposition in paragraph 8.54, that change will apply as much where there is a registered disposition as it will on first registration. The Bill provides that an interest which, immediately before the coming into force of the Bill, was an overriding interest under section 70(1)(g) of the Land Registration Act 1925 by virtue of a person’s receipt of rents and profits, continues to be so for the purposes of Schedule 3.230 However, that interest will cease to be overriding for these purposes, if at any time thereafter the person having the interest ceases to be in receipt of the rents and profits.231 If, for example, X holds the residue of an unregistered 99-year lease and, before the Bill came into force granted an underlease to Y, X would continue to have an

overriding interest for the purposes of the Bill. If, however, Y’s underlease

227See Cl 4(1)(d) (compulsory first registration); Cl 27(2)(b)(ii) (registrable dispositions); see above, paras 3.32, 4.20.

228Schedule 3, para 1; above, paras 8.50(1), 8.51(1).

229This might happen where the grantee was already occupying the land under a pre-existing lease, or as a licensee or a tenant at will.

230Schedule 3, para 2(1)(C)(i), inserted by Schedule 12, para 8.

231Schedule 3, para 2(1)(C)(ii).

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determined and X then granted a new underlease to Z, X would at that point cease to have an overriding interest.

Legal easements and profits à prendre

The problem

8.65Some of the most far-reaching changes made by the Bill to the scope of overriding interests are in relation to easements and profits à prendre.232 The concerns that we have attempted to address are as follows¾

(1)It is in principle wrong that easements and profits that are expressly granted or reserved should take effect as overriding interests as at present they may.233 Such a grant or reservation constitutes a registrable disposition and should therefore be completed by registration.234

(2)It is almost impossible to prove that an easement or profit once acquired has been abandoned. Mere non-user, even for many years, will not amount to abandonment.235 Indeed this is part of a wider problem. Unless registered, it is often very difficult to discover the existence of easements and profits, particularly those that are either not used at all or only occasionally.236

As regards (2), a purchaser of registered land may be seriously disadvantaged given the wide range of easements and profits that can be overriding under the present law. 237

8.66Although each of those concerns was expressed in the Consultative Document, our ideas as to how to address them have developed considerably since its publication and the Bill reflects this development. The Bill limits the circumstances in which an easement or profit can be an overriding interest more than did our proposals in the Consultative Document.238 Although, as we have explained, we have decided at this stage not to take forward the recommendations in the Consultative Document on prescription,239 the Bill has

232Their impact is, however, softened by the transitional provisions of the Bill: see below, para 8.73.

233See Law Com No 254, paras 5.6¾5.9.

234See Law Com No 254, para 5.14.

235See Law Com No 254, para 5.21.

236See Law Com No 254, para 5.22. The law of prescription, as it presently stands, can lead to the assertion of rights even though they have not been exercised for many years: see Law Com No 254, para 10.86 (criticism of the doctrine of lost modern grant).

237There is no mechanism for the discharge or modification of easements and profits analogous to that which applies to restrictive covenants under Law of Property Act 1925, s 84.

238For those proposals, see Law Com No 254, para 5.24.

239See above, para 1.19.

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been influenced by some of our thinking in the Consultative Document on prescription.240 The policy that we have adopted reflects one of the principal aims of the Bill, already mentioned, which is to ensure that it is possible to investigate title to the land almost entirely on-line with the minimum of additional enquiries.241

Only legal easements and profits may be overriding interests

8.67As regards the first of the concerns explained in paragraph 8.65, the Bill provides that only a legal easement or profit à prendre can be overriding in relation to a registered disposition.242 Any easement or profit that is expressly granted or reserved out of registered land will be a registrable disposition.243 It will not take effect at law until it is registered.244 It follows that it can never be an overriding interest under Schedule 3. As a result of this provision¾

(1)no easements or profits that are expressly created after the Bill is brought into force will be able to take effect as overriding interests;

(2)no equitable easements or profits, however created, will be capable of overriding a registered disposition;

(3)the only legal easements and profits that will be capable of being overriding interests are¾

(a)those already in existence at the time when the Bill is brought into force that have not been registered;245

(b)those arising by prescription; and

(c)those arising by implied grant or reservation.246

Legal easements and profits that are not easily discoverable should not be overriding interests

8.68However, to meet the second concern set out in paragraph 8.65, the Bill goes further by excluding certain categories of legal easements and profits from those that can be overriding. Under the Bill, the following legal easements and profits

240For the treatment of prescription in the Consultative Document, see Law Com No 254, paras 10.79¾10.94.

241See above, para 8.1.

242Schedule 3, para 3(1).

243Cl 27(2)(d); above, para 4.25.

244Cl 27(1). For the registration requirements applicable to easements and profits, see Schedule 2, para 7; above, para 4.26.

245There are also transitional provisions that relate to any easements and profits that were overriding prior to the coming into force of the Bill: see below, para 8.73.

246Implied grant includes easements and profits arising through the operation of Law of Property Act 1925, s 62: see Cl 27(7); above, para 4.25.

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cannot be overriding interests unless they have either been registered under the Commons Registration Act 1965,247 or have been exercised in the period of one year prior to the registered disposition in question,248 namely¾

(1)those that are not within the actual knowledge of the person to whom the disposition was made; and

(2)those that would not have been obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable.249

8.69The effect of this provision can be summarised as follows. Any person who acquires an interest for valuable consideration under a registered disposition will only be bound by an easement or profit that is an overriding interest if¾

(1)it is registered under the Commons Registration Act 1965;250

(2)he or she actually knows of it;

(3)it is patent: in other words, it is obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable, so that no seller of land would be obliged to disclose it;251 or

(4)it has been exercised within the period of one year before the disposition.

8.70The fourth case is important and is intended to cover, in particular, the numerous “invisible” easements such as rights of drainage or the right to run a water supply pipe over a neighbour’s land. These rights have often existed for many years, but because they were commonly not the subject of any express arrangement between the parties are not recorded on the register. The selection of any period will necessarily be arbitrary. However, we consider that a period of one year is not unreasonable.252

8.71What we wish to encourage is the creation of a straightforward system of standard inquiries as to easements and profits which will prompt sellers to disclose what they can reasonably be expected to know. This in turn will ensure that such rights are then registered.253 We anticipate that, prior to contract, a seller

247See Schedule 3, para 3(1).

248Schedule 3, para 3(2).

249Schedule 3, para 3(1).

250Cf Cl 27(2)(d); above, para 4.25, where the interrelationship between this Bill and the Commons Registration Act 1965 is explained.

251See Megarry & Wade’s Law of Real Property (6th ed 2000), 12-068.

252For reasons that we explain in the next paragraph, the period is in practice likely to be longer than one year in most cases. The point has been made to us that some easements and profits might be seasonal in nature, as where a farmer uses a track for bringing in the harvest. Such seasonal activities will obviously not operate according to a strict calendar year.

253See below, para 8.91.

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would be expected to disclose any unregistered easements or profits affecting his or her property of which he or she was aware, at least to the extent that they were not obvious on a reasonably careful inspection of the land. In particular, he or she would be asked to disclose any easements or profits that had been exercised in the year preceding the inquiry.254 The result of such inquiries is likely to be that the buyer will have actual knowledge of any unregistered legal easements and profits long before the transaction is completed.

8.72As regards those who have the benefit of easements or profits that are overriding interests, particularly where their exercise has been intermittent or indeed nonexistent for many years, the onus must be on them to register the rights or, where the title of the servient tenement is presently unregistered, to lodge a caution against its first registration. As we have indicated above, we do not consider that it is unreasonable to expect those who have rights over land to register them.255 Nor, in the light of that, do we see why the risk of undiscoverable and unregistered rights should be imposed upon buyers of land.

Transitional arrangements

8.73The Bill contains two significant transitional provisions.

(1)Where an easement or profit is an overriding interest at the time when the Bill comes into force, but would not be under the provisions of Schedule 3,256 it will retain its overriding status. Those who have the benefit of such rights are not at risk of losing them, though for the future it is hoped that they will register them in any event.257

(2)For three years after the Bill is brought into force any legal easement or profit that is not registered will be an overriding interest.258 However, apart from those easements and profits that fall within (1), that overriding status will cease three years after the date on which the Bill is brought into force.259 There will, therefore, be a period of three years’ grace before the new arrangements take effect, except in relation to equitable easements and profits. Any equitable easements and profits created after the Bill is brought into force will need to be protected by registration.

254As the inquiry will necessarily precede the registered disposition, there will normally be a period of more than one year before the disposition within which any easement must have been exercised.

255See paras 1.9, 8.58.

256That is, para 3.

257Schedule 12, para 9.

258In practice, this will protect easements and profits that arise within the three year period by prescription, or by implied grant or reservation. Easements and profits that are expressly granted or reserved after the Bill comes into force will only be equitable unless and until they are registered.

259Schedule 12, para 10.

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These transitional arrangements will, we believe, achieve a fair balance between the interests of buyers and encumbrancers.

REDUCING THE IMPACT OF OVERRIDING INTERESTS

Introduction

8.74In this final section we examine the ways in which the Bill will reduce the impact of overriding interests. One technique for achieving this goal will be evident from our explanation of the interests that will be overriding under the Bill. It is to narrow and clarify their scope, which we have done. The Bill adopts three other means to the same end.

(1)One existing category of overriding interest will be abolished outright and another is to be dealt with in a different way.260

(2)Certain categories of overriding interests that will initially exist when the Bill is brought into force, will be abolished after 10 years.261

(3)There will be requirements to ensure that when overriding interests come to light they are, so far as possible, entered on the register.262

In addition to these techniques, as we have explained above,263 and will explain more fully below,264 the introduction of electronic conveyancing will in itself reduce the scope of certain categories of overriding interest. This is because, in time, it will become impossible to create most rights expressly except by registering them simultaneously. This means (for example) that the interests that can be protected by virtue of a person’s actual occupation will be significantly reduced.

Categories of overriding interests that are to be abolished

Introduction

8.75Three categories of overriding interests that exist under the Land Registration Act 1925 are not replicated under the Bill, namely¾

(1)“liability to repair the chancel of any church” (section 70(1)(c) of the 1925 Act);

(2)“rights acquired or in course of being acquired under the Limitation Acts” (section 70(1)(f) of the 1925 Act); and

260See below, para 8.75.

261See below, para 8.81.

262See below, para 8.90.

263See above, para 8.2.

264See below, paras 13.74 and following.

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(3)“in the case of a possessory, qualified, or good leasehold title, all estates, rights, interests, and powers, excepted from the effect of registration” (section 70(1)(h) of the 1925 Act).

The first category is no longer enforceable. In a recent decision, the Court of Appeal has held that chancel repair liability contravenes the European Convention on Human Rights and is, therefore, unenforceable.265 It is therefore unnecessary for us to say any more about this.266 The second category is abolished by the Bill. The third category is dealt with in a different way under the Bill.

Squatters’ rights

8.76As we explain in Part XIV of this Report, the Bill introduces a completely new system of adverse possession in relation to registered estates. The circumstances in which a squatter becomes entitled to be registered as proprietor in place of an existing one will be considerably reduced. However¾

(1)there will still be cases where there is such an entitlement to be registered;267 and

(2)there will be cases where a person had become entitled to be registered before the Bill is brought into force.

8.77In the Consultative Document, we recommended that section 70(1)(f) of the Land Registration Act 1925 should not be replicated.268 We noted that¾

(1)a squatter who had acquired a right to be registered as proprietor had a proprietary right that he or she could protect by actual occupation; but

(2)as the law stood, once a squatter was entitled to be registered, his or her rights constituted an overriding interest even if he or she thereafter ceased to be in actual occupation.

If a squatter ceased to occupy the land after he or she had become entitled to be registered as proprietor,269 the following events might occur. The registered proprietor might resume possession of the land and then sell it to a buyer before the squatter’s right to be registered was itself barred by the registered proprietor’s own adverse possession. The buyer would then be bound by the squatter’s overriding interest even though he or she had bought the land from a registered proprietor in possession. The buyer would not be entitled to any indemnity

265Aston Cantlow Parochial Church Council v Wallbank [2001] EWCA Civ 713; [2001] 21 EG 167 (CS); Morritt V-C, Robert Walker and Sedley LJJ.

266Cf Law Com No 254, para 5.37.

267See below, para 14.63.

268Law Com No 254, paras 5.49¾5.55.

269See Land Registration Act 1925, s 75.

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should the register be rectified in favour of the squatter, because he or she would not have suffered loss by reason of the rectification, but because he or she was subject to the squatter’s overriding interest.270

8.78Our recommendation to abolish this category of overriding interests was supported by 80 per cent of those who responded to the point on consultation and the Bill does not, therefore, replicate section 70(1)(f). However, the Bill does contain two provisions that relate to the rights of squatters. First, there are limited transitional provisions to protect vested rights. For three years after the Bill is brought into force a squatter, even if not in actual occupation, will have an overriding interest¾

(1)on first registration, where he or she had extinguished the title of the person who is registered as first registered proprietor prior to the coming into force of the Bill;271

(2)in relation to any registered disposition, where he or she was entitled to be registered as proprietor of registered land prior to the coming into force of the Bill.272

These transitional provisions will provide a reasonable opportunity for any squatter who is no longer in actual occupation of the land which he or she claims, to register his or her rights.273 Secondly, as we have explained in Part III of this Report, on first registration, the legal estate is vested in the first registered proprietor subject to interests acquired under the Limitation Act 1980 of which he or she has notice at the time of registration.274 We consider that these provisions strike a fair balance between the vested rights of squatters and the need to protect innocent buyers who cannot discover the existence of those rights.

Rights excepted from the effect of registration

8.79We explained in the Consultative Document that where land is registered with

possessory, qualified or good leasehold title, we could not see why it was

270See Law Com No 254, paras 5.46, 5.47.

271Schedule 12, para 7, inserting a para 15 into Schedule 1.

272Schedule 12, para 11, inserting a para 15 into Schedule 3.

273In the Consultative Document, we asked whether squatters who had become entitled to the land by reason of their adverse possession should be able to sue for damages in trespass a registered proprietor who sold the land in question: see Law Com No 254, para 5.53. We assumed that the squatter would have such an entitlement at common law. However, after examining such little analogous authority as there is, we are now rather less certain that that would be the case. In any event, the proposal was rejected by a majority of those who responded to the point on consultation. Accordingly, the Bill contains no provision. The matter will, therefore, be left for judicial determination in the event that it arises.

274Cls 11(4)(c); 12(4)(d); above, paras 3.43¾3.48.

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necessary to retain the overriding status of rights excluded from the effect of registration.275 We there explained that¾

On any disposition of property with such a title, the [Land Registration Act 1925] expressly provides that the transferee takes subject to these estates, rights and interests in any event.276 They operate outside the register and it is unnecessary to confer upon them the status of overriding interests. Where the registrar amends the register to give effect to rights which are excluded from the effect of registration of land with a qualified or possessory title, this does not amount to “rectification” of the register, because it does not involve the correction of any error or omission. It follows that such an amendment to the register can never trigger the payment of an indemnity.277

8.80The great majority of those who responded to the Consultative Document agreed with our recommendation. The Bill does not, therefore, replicate section 70(1)(h) of the Land Registration Act 1925. What it does instead is to make express provision¾

(1)to protect the priority of an interest that appears from the register to be excepted from the effect of registration;278 and

(2)for the court or registrar to alter the register to give effect to any estate, right or interest excepted from the effect of registration.279

Categories of overriding interests that are to be phased out

The principle of phasing out overriding status and the objections to it

8.81In the Consultative Document, we considered whether certain rights should lose their overriding status.280 Where such rights existed in significant numbers, we had reservations about so doing. Our reasons were two-fold. First, we had concerns as a matter of principle which we summarised as follows¾

First, many such persons would not appreciate the need to register their rights (though this difficulty could be minimised by consultation and publicity). Secondly, in order to register their rights they would have to pay for legal advice and the costs of registration (though it may be possible to meet this objection in part by transitional

275For these gradations of title and their effect under the Bill, see Cls 9, 10, 11, 12; above, paras 3.42¾3.44, 3.49¾3.51. For the upgrading of such titles, see Cls 62, 63; below, paras 9.16¾9.27.

276Land Registration Act 1925, ss 20(2), (3); 23(2), (3), (4).

277Law Com No 254, para 5.79.

278Cls 29(2)(a)(iii); 30(2)(a)(iii); above, para 5.11.

279Schedule 4, paras 2(1)(c), 5(c). There is no provision for the payment of indemnity in such a case.

280Law Com No 254, paras 4.25¾4.31.

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