Экзамен зачет учебный год 2023 / ELC, Land Registration

12.5When section 110 was first enacted, there were no postal searches — they were not introduced until 1930. It was necessary to attend in person at the Land Registry in London to undertake a search of the register.15 Although there was statutory provision for the creation of district land registries,16 none had been created outside London prior to the Second World War.17 Against that background, the prescriptive nature of section 110 is comprehensible. When the Land Registration Act 1925 was first enacted, searching the register and obtaining office copies were expensive matters.

12.6The contrast with the position today could not be more striking.

(1)The register is now open, and it is no longer necessary for an intending buyer to obtain the consent of the seller to search the register, or to obtain copies of documents referred to in the register.18

(2)The system of searching the register has become very much simpler and cheaper than was formerly the case. A direct access official search by computer costs £2 and an official search in any other way costs £4. An office copy obtained by direct access costs £2 and one obtained by some other means £4.19

(3)Registered conveyancing is now the normal method of conveyancing, with unregistered conveyancing applicable only to dealings with leases granted for 21 years or less and dispositions of unregistered freeholds that trigger first registration.

12.7In the light of these fundamental changes, the present rules that govern proof of title look very prescriptive and heavy-handed. They are certainly badly out of date. In the Consultative Document,20 we recommended that¾

(1)the provisions of section 110 of the Land Registration Act 1925, explained above, should not be replicated in the Bill;

(2)in principle, parties should be left to make their own contractual arrangements as to how title should be deduced;

(3)there should be a safeguard in case this freedom is abused;21

unscrupulous seller of land can foist on a purchaser, and greatly weakens the need for a provision equivalent to Land Registration Act 1925, s 110(5).

15See Brickdale & Stuart Wallace’s Land Registration Act, 1925 (4th ed 1939), p 493.

16See Land Registration Act 1925, s 132.

17Brickdale & Stuart Wallace’s Land Registration Act, 1925 (4th ed 1939), p 283.

18See above, para 9.37.

19See Land Registration Fees Order 2001, Schedule 3.

20Law Com No 254, paras 11.47, 11.48.

266

(4)this should be in the form of a rule-making power to make rules as to the proof of title that a buyer might require; and

(5)such rules would override any contractual term that conflicted with them.

On consultation, some four-fifths of those who responded on this point supported our recommendations.

12.8The Bill accordingly provides a rule-making power to make provision about the obligations with respect to¾

(1)proof of title; or

(2)perfection of title

of a seller under a contract for the transfer or other disposition for valuable consideration of a registered estate or charge.22 The reference to provision about perfection of title is to cover the case of the seller who is not the registered proprietor.23 Any rules that may be made under this power may be expressed to have effect notwithstanding any stipulation to the contrary.24 If any such rules are made, they will be land registration rules, and will be laid before Parliament only.25

What title is a buyer entitled to see?

12.9The Bill makes one other change in relation to the proof of title. This arises, in part at least, as a consequence of the fact, mentioned above,26 that the register is now open, and an intending buyer no longer requires the seller’s consent to search the register. Section 44 of the Law of Property Act 1925 prescribes the statutory commencement of title. Thus, for example, the period of commencement of title is 15 years,27 and there are a series of rules as to the title that an intending lessee or sub-lessee or an intending assignee of a lease or sublease is entitled to see under a contract to grant or assign a lease.28 As regards the latter, an intending tenant or assignee may always inspect any lease under which

21As by buyers making excessive requests for evidence of title, or by sellers who impose terms which unreasonably preclude inquiries on matters upon which the register is not conclusive.

22Schedule 10, para 2(1).

23Cf above, para 12.4.

24Schedule 10, para 2(2). This leaves open the possibility of making rules that are not overriding, for example, by way of guidance as to what might be considered to be good practice. These would then apply unless the parties stipulated to the contrary.

25See Cls 125(3); 129(1); below, para 17.5.

26See para 12.6(1).

27Law of Property Act 1925, s 44(1) (as amended by Law of Property Act 1969, s 23).

28Law of Property Act 1925, s 44(2)¾(5).

267

the other contracting party holds, but there is no right to inspect the title to the freehold.29

12.10The rules found in section 44 are default rules and can be ousted by express provision to the contrary in the contract,30 and in practice, often are. Thus, under condition 8.2.4 of the Standard Conditions of Sale,31 on the grant of a new lease—

If the term of the new lease will exceed 21 years, the seller32 is to deduce a title which will enable the buyer33 to register the lease at HM Land Registry with an absolute title.

12.11Neither the rules on the commencement of title, nor those which apply to the grant of leases, have any practical effect as to the proof of title to the transfer of a registered estate or the grant of a lease out of such a registered estate. This is because the register itself is proof of a registered estate and any transferee or grantee can inspect the title of the estate that is to be transferred or out of which the grant is to be made.34 The Bill therefore disapplies section 44 of the Law of Property Act 1925 in relation to registered land or to a lease derived out of registered land.35

12.12The Bill goes further than that however and introduces provisions in relation to any contract to grant a lease out of an unregistered estate where that lease will be subject to the requirement of compulsory registration.36 Wherever possible, we are anxious to ensure that such leases can be registered with absolute and not merely good leasehold title. This is in accordance with what is now common practice, as the condition of sale quoted in paragraph 12.10 above demonstrates. The Bill therefore disapplies the relevant provisions of section 44 of the Law of Property Act 192537 in relation to contracts to grant leases that trigger compulsory first registration under Clause 4.38 As a result, where the owner of an unregistered freehold contracts to grant a lease that will be subject to the requirement of compulsory registration, he or she will have to deduce his or her

29Megarry and Wade’s Law of Real Property (6th ed 2000), 14-295.

30Law of Property Act 1925, s 44(11).

313rd ed 1995.

32That is, the landlord: Standard Conditions of Sale, c 8.2.2.

33That is, the tenant: Standard Conditions of Sale, c 8.2.2.

34See above, para 9.37.

35Law of Property Act 1925, s 44(12), inserted by Schedule 11, para 2(4).

36For the requirement of compulsory registration, see Cl 4; above, paras 3.22 and following.

37Namely s 44(2) and (4).

38Law of Property Act 1925, s 44(4A), inserted by Schedule 11, para 2(2).

268

title for the statutory period39 unless the parties agree to the contrary. In most cases, the lessee will then be registered with an absolute title.

12.13Section 44 of the Law of Property Act 1925 only applies to contracts to grant or transfer estates. It is of course common for leases to be granted without any prior contract. Nevertheless, the changes that the Bill makes in the default position contained in section 44 will, it is hoped, also establish the default position in relation to the title to be deduced when making grants of leases that are not preceded by a contract.

COVENANTS FOR TITLE

Introduction

12.14The obligation of a seller of land to deduce a title in accordance with the terms of the contract of sale,40 like most other obligations under the contract, is merged in the deed of conveyance under the doctrine of merger, and no action lies for its breach thereafter.41 As the seller’s obligations in relation to his or her title cease to be enforceable on completion, it has long been customary for a seller to provide some kind of warranty as to his title in the conveyance. Such covenants for title are covenants which may be given either by a seller of freehold or leasehold land or, on or after 1 July 1995, by the grantor of a lease.42 Such covenants are the principal, and indeed often the only, remedy that a grantee or transferee of land may have for any defects in title that emerge after completion.

12.15Covenants for title have been implied since the Conveyancing Act 1881 by the use of certain words in a conveyance. The use of the appropriate words carried with it the implication of certain covenants. Prior to July 1, 1995, the relevant words were “as beneficial owner”, “as settlor”, “as trustee”, “as mortgagee”, “as personal representative of X deceased” or “under an order of the court”.43 After June 1995, as part of a major reform of the law governing such covenants,44 the

39That is, for at least 15 years: Law of Property Act 1925, s 44(1), above, para 12.9. The commencement of title would be the first instrument that could be a good root of title that was more than 15 years old.

40See above, para 12.2.

41See generally Knight Sugar Co Ltd v The Alberta Railway & Irrigation Co [1938] 1 All ER 266, 269. Where title is unregistered, merger operates on the execution of the conveyance. Although merger does apply to registered land, it is not settled whether it occurs on the execution of the transfer or on registration. The former seems preferable: see D G Barnsley, “Completion of a Contract for the Sale and Purchase of Land” [1991] Conv 15, 24.

42There were no covenants for title implied on the grant of leases prior to that date.

43See Law of Property Act 1925, s 76(1). This section is repealed as regards dispositions made on or after July 1, 1995: see Law of Property (Miscellaneous Provisions) Act 1994, s 10.

44Brought about by Law of Property (Miscellaneous Provisions) Act 1994, which implemented (with amendments) the recommendations of the Law Commission in Transfer of Land: Implied Covenants for Title (1988) Law Com No 199.

269

relevant words are “with full guarantee” or “with limited guarantee”.45 The Bill does not materially change the substance of the present law as to the implication of covenants for title on the transfer of a registered estate.46 It does, however, create a more coherent framework for it.

No liability for matters on the register

12.16Where a covenant is implied under the Law of Property (Miscellaneous Provisions) Act 1994 and the disposition of property is a registered disposition under the Land Registration Act 1925, rule 77A(2) of the Land Registration Rules 1925 presently provides that any covenant implied by virtue of Part I of the 1994 Act “shall take effect as if the disposition had been expressly made subject to—

(a)all charges and other interests appearing or protected on the register at the time of the execution of the disposition and affecting the title of the registered proprietor;

(b)any overriding interest of which the person to whom the disposition is made has notice and which will affect the estate created or disposed of when the disposition is registered.”

12.17Section 6 of the Law of Property (Miscellaneous Provisions) Act 1994 provides that there is no liability in relation to some of the covenants implied by Part I of that Act47 in certain circumstances. In particular, under section 6(2), the person making the disposition is not liable under any of the relevant covenants for anything that is either within the actual knowledge or is a necessary consequence of facts that are within the actual knowledge of the person to whom the disposition is made.

12.18To deal with the matters that are presently covered by rule 77A(2) of the Land Registration Rules 1925, the Bill inserts a new subsection (4) into section 6 of the Law of Property (Miscellaneous Provisions) Act 1994.48 It provides that where the disposition is of an interest, the title to which is registered under the Bill, the covenantor is not liable for anything which was at the time of the disposition entered in relation to that interest in the register of title under the Bill. It will be noted that there is nothing that corresponds to rule 77A(2)(b)49 in

45Law of Property (Miscellaneous Provisions) Act 1994, s 1. The Welsh language equivalents which may be used (see s 8(4)) are, respectively, “gyda gwarant teitl llawn” and “gyda gwarant teitl cyfyngedig”.

46There are some marginal changes: cf below paras 12.18, 12.19.

47Namely the covenants that the person making the disposition has the right to dispose of the property (Law of Property (Miscellaneous Provisions) Act 1994, s 2(1)(a)), that he or she is disposing of the property free from charges, incumbrances and third party rights (ibid, s 3), and that where the disposition is of leasehold land, the lease is valid (ibid, s 4).

48Schedule 11, para 31(2).

49Overriding interests of which the disponee had notice.

270

relation to overriding interests. However, section 6(2) of the 1994 Act would appear to make that provision unnecessary.50

12.19This new provision does not precisely replicate the effect of rule 77A(2) of the Land Registration Rules 1925. This is because rule 77A(2) applies in relation to all the covenants implied under Part I of the Law of Property (Miscellaneous Provisions) Act 1994, and not merely those listed in section 6. However, this change is unlikely to be material. The effect of the change is to make the law clearer, more coherent and more accessible. The relevant exceptions to the application of the implied covenants will all be found in one statutory provision and apply to the same covenants.

Rules

12.20The Land Registration Act 1925 contains a rule-making power “prescribing the effect” of covenants for title implied under the Law of Property Act 1925 and Part I of the Law of Property (Miscellaneous Provisions) Act 1994.51 The rulemaking powers in relation to covenants for title that are contained in the Bill are more precisely focused.52

(1)First, there is a power for rules to make provision about the form of provisions that extend or limit any covenant that is implied by virtue of Part I of the Law of Property (Miscellaneous Provisions) Act 1994.53 There are certain rules in the Land Registration Rules 1925 that have this effect54 and the power under the Bill will enable similar provisions to be made.

(2)Secondly, there is a power for rules to make provision about the application of section 77 of the Law of Property Act 1925 to transfers of registered estates.55 Section 77, which applies to transfers of registered land, is concerned with the covenants that are to be implied on a conveyance of land subject to a rentcharge.56 Many rentcharges will be

50Rule 77A(2)(b) speaks of an overriding interest of which the disponee “has notice”, whereas under Law of Property (Miscellaneous Provisions) Act 1994, the covenant does not extend to matters that are either within the disponee’s “actual knowledge” or are a “necessary consequence of facts” that are within his or her actual knowledge. A disponee is not therefore affected by matters of which he or she merely has constructive notice under section 6(2). In Ruoff & Roper, Registered Conveyancing, 16-11, it is stated that “notice” in r 77A(2)(b) does in fact have the same meaning as Law of Property (Miscellaneous Provisions) Act 1994, s 6(2), and does not include overriding interests of which the disponee merely has constructive notice.

51See s 38(2).

52See Schedule10, para 3.

53Schedule 10, para 3(a).

54See Land Registration Rules 1925, rr 76A(5), 77A(3).

55Schedule 10, para 3(b).

56At present, Land Registration Rules 1925, r 109, makes provision for the application of the implied covenants to registered land and (somewhat curiously) replicates for registered

271

phased out in 2037 under the Rentcharges Act 1977, and the circumstances in which new ones can be created under that Act are very limited. To the extent that the rules may be needed, they may be employed (for example) to enable the implication of the covenants to be modified or negatived.57

(3)Thirdly, there is a power for rules to make provision about reference in the register to implied covenants, including provision for the state of the register to be conclusive in relation to whether covenants have been implied.58

Covenants implied on the assignment of a lease prior to 1996

12.21In relation to leases granted prior to 1996, a tenant who assigns a lease remains liable to the landlord on the covenants in that lease for its entire duration notwithstanding any assignment by him or her of that lease. Such “first tenant liability” has been abolished for leases granted after 1995 by the Landlord and Tenant (Covenants) Act 1995. However, leases granted prior to 1996 will continue in existence for many years. As regards such leases, section 24(1)(b) and (2) of the Land Registration Act 1925 made provision for implied indemnity covenants on the part of the transferee in favour of the transferor, and, in relation to a transfer of part, an implied indemnity covenant on the part of the transferor in favour of the transferee. Section 24(1)(b) and (2) of the Land Registration Act 1925 were repealed prospectively by the Landlord and Tenant (Covenants) Act 1995,59 but only in respect of “new tenancies” — in essence those granted after the Act was brought into force.60 The Bill replicates in more comprehensible form the effect of section 24(1)(b) and (2) in relation to the assignment of leases which are not “new tenancies” for the purposes of the 1995 Act.61

land certain provisions found in Law of Property Act 1925, s 77, which would in any event apply.

57Cf Land Registration Rules 1925, r 109(6).

58Schedule 10, para 3(c). At present, under Land Registration Rules 1925, r 76A(4), no reference is to be made in the register to any covenant implied by Part 1 of Law of Property (Miscellaneous Provisions) Act 1994, subject to one exception.

59Sections 14(b), 30(3).

60See ibid, s 1.

61Schedule 12, para 20.

272

PART XIII

CONVEYANCING 2: ELECTRONIC

CONVEYANCING

INTRODUCTION

13.1The most important single function of the Land Registration Bill is to create the necessary legal framework for the introduction of electronic conveyancing. In Part II of this Report we have explained how it is envisaged that electronic conveyancing is likely to operate. In this Part we explain in detail the provisions of the Bill on electronic conveyancing. These provisions are contained in Part VIII and Schedule 5 of the Bill and fall into three parts¾

(1)the formal requirements for electronic dispositions;

(2)the provisions governing the land registry network; and

(3)the power to require both the use of electronic conveyancing and that electronic dispositions be simultaneously registered.

13.2It will be recalled from Part II1 that the main features of the proposed system of electronic conveyancing are as follows¾

(1)the system will be operated through a secure electronic communications network;

(2)HM Land Registry will authorise access to that electronic communications network by contract with the users, such as solicitors and licensed conveyancers;

(3)that electronic communications network will be employed to conduct all the stages of a transaction in electronic form;

(4)the electronic communications network may be used to manage chain transactions, at least in relation to residential properties;

(5)the process of registering dispositions will be conducted by persons authorised by the terms of their access to the electronic communications network, and it will take place at the same moment as the disposition;

(6)there will be power to make electronic conveyancing compulsory; and

(7)there will be provision to enable persons who wish to undertake their own conveyancing to take advantage of electronic conveyancing.

273

13.3The issue of electronic conveyancing was one of the main issues addressed in the Consultative Document.2 Nearly 80 per cent of those who responded to the issue were in favour of the principle of electronic conveyancing. There was, however, a widely expressed view that there should be full public consultation over the details of electronic conveyancing and that interested parties should work with HM Land Registry in developing electronic conveyancing. We agree with that view. Indeed, we consider that it would be impossible to establish an effective system of electronic conveyancing without such consultation and the advantage of informed expert comment that it would bring, particularly from those who will have to operate the system. An inter-governmental working party was set up in 2000 to ensure co-ordination within government and this has met a number of times. In preparing the first stage of the introduction of electronic conveyancing by an order under the Electronic Communications Act 2000, which is explained below,3 the Lord Chancellor’s Department set up a steering group to advise it, consisting of representatives from the bodies most likely to be affected. Furthermore, both HM Land Registry and the Law Commission have engaged in extensive informal consultation since the publication of the Consultative Document in 1998, particularly with conveyancing practitioners. The outcome is a legislative framework that differs in a number of respects from that which was visualised in the Consultative Document.

13.4We now examine in detail the provisions of the Bill on electronic conveyancing.

FORMAL REQUIREMENTS FOR ELECTRONIC DISPOSITIONS

Introduction

13.5In the Consultative Document, we explained that, because any system of electronic conveyancing would necessarily be paperless, something would have to be done in relation to the existing formal requirements that apply to most dispositions of land and to contracts for the sale or other disposition of land.4 Those provisions can be summarised as follows¾

(1)It is normally necessary to use signed writing to create or dispose of any interest in land, whether legal or equitable.5

(2)Most conveyances of a legal estate in land have to be made not only in writing but also by deed.6 There are some exceptions to this,7 such as

2See Law Com No 254, Part XI.

3See paras 13.7 and following.

4Law Com No 254, para 11.21.

5Law of Property Act 1925, s 53(1)(a).

6Law of Property Act 1925, s 52(1). A deed must make it clear on its face that it is a deed and must be validly executed: see Law of Property (Miscellaneous Provisions) Act 1989, s 1(2). The requirements for execution vary according to the person or body making the deed. However some form of subscription is required, as is delivery of the deed.

7See Law of Property Act 1925, s 52(2).

274

assents by personal representatives, where the conveyance of a legal estate can be made instead by signed writing.8

(3)Most contracts for the sale or other disposition of land can only be made by signed writing and must meet certain other conditions.9

13.6Our provisional view in the Consultative Document was that there should be a power in the Bill to disapply or modify these provisions, and that this power should be exercisable by statutory instrument.10 Subsequent events have led to the adoption of a somewhat different solution to this problem. The existence of these formal provisions is the immediate impediment to the introduction of any form of electronic conveyancing. If this impediment were removed, it would be possible to take the first steps towards the introduction of electronic conveyancing even in advance of the enactment of the present Bill. There are reasons why this should happen. HM Land Registry is keen to begin the introduction of some aspects of electronic conveyancing as soon as possible. These include¾

(1)the creation of registered charges; and

(2)the making of applications for entries on the register, such as cautions, notices and restrictions;

in electronic form. The Electronic Communications Act 2000 has provided a means of achieving this.11

THE DRAFT LAW OF PROPERTY (ELECTRONIC COMMUNICATIONS) ORDER

13.7Part II of the Electronic Communications Act 2000 contains provisions to facilitate the use of electronic communications and electronic data storage. So far as relevant, section 8 of the Act gives the appropriate Minister12 power to modify by order made by statutory instrument the provisions of any enactment in such manner as he may think fit for the purpose of authorising or facilitating the use of electronic communications or electronic storage (instead of other forms of

8See Law of Property Act 1925, s 52(2)(a); Administration of Estates Act 1925, s 36(4).

9Law of Property (Miscellaneous Provisions) Act 1989, s 2. For those contracts that are not required to meet the requirements of s 2, see s 2(5).

10Law Com No 254, paras 11.22, 11.23.

11Even before the Consultative Document had been published, the Law Commission and HM Land Registry were in discussions with the Department of Trade and Industry about the possibility of using powers under the proposed Electronic Communications Bill to overcome the formal requirements for dealings with land. The Electronic Communications Bill was in fact amended during its passage through Parliament to ensure that it could be employed for this purpose.

12In this case, the Lord Chancellor.

275