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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.

CONTENTS

	Para
PART I: THE LAND REGISTRATION BILL AND ITS OBJECTIVES
INTRODUCTION	1.1
THE OBJECTIVES OF THE BILL	1.4
SOME KEY FEATURES OF THE BILL	1.11
Electronic conveyancing	1.12
Adverse possession	1.13
Other changes	1.14
THE BACKGROUND TO THE BILL	1.15
STRUCTURE OF THE REPORT	1.21
PART II: SUMMARY OF THE MAIN CHANGES MADE BY THE BILL
INTRODUCTION	2.1
FIRST REGISTRATION	2.4
CAUTIONS AGAINST FIRST REGISTRATION	2.14
POWERS OF DISPOSITION	2.15
REGISTRABLE DISPOSITIONS	2.16
PRIORITIES	2.17
NOTICES AND RESTRICTIONS	2.19
CHARGES	2.23
OVERRIDING INTERESTS	2.24
REGISTRATION	2.28
SPECIAL CASES	2.32
ALTERATION, RECTIFICATION AND INDEMNITY	2.38
CONVEYANCING: GENERAL MATTERS	2.40
ELECTRONIC CONVEYANCING	2.41
Introduction	2.41
Present conveyancing practice in relation to registered land	2.43
Electronic conveyancing: the anticipated model	2.48
Introduction	2.48
How a typical conveyancing transaction might operate	2.52
Compulsory use of electronic conveyancing	2.59
Finance	2.62
Stamp duty	2.64
Electronic conveyancing and first registration	2.65
Do-it-yourself conveyancing	2.68
ADVERSE POSSESSION	2.69
Introduction	2.69
Why do we have a doctrine of adverse possession?	2.71
An outline of the new scheme in the Bill	2.74
JUDICIAL PROVISIONS	2.75
RULES	2.76
PART III: FIRST REGISTRATION
INTRODUCTION	3.1
THE LEGAL SCOPE OF TITLE REGISTRATION ANDTHE
EXTENT OF LAND THAT MAY BE REGISTERED UNDER IT	3.3
The legal scope of title registration	3.3
The extent of land that may be registered	3.5
VOLUNTARY FIRST REGISTRATION	3.6
Registrable estates	3.6
Who may apply for first registration?	3.6
Which legal estates may be registered with their own titles?	3.9
A fee simple absolute in possession	3.9
Certain leases	3.10
Rentcharges	3.18
Franchises	3.19
Profits à prendre in gross	3.20
Manors no longer to be registrable	3.21
COMPULSORY REGISTRATION	3.22
Introduction	3.22
Events that trigger the compulsory registration of title	3.23
Introduction	3.23
Transfers	3.24
Transfer of a qualifying estate	3.24
Transfers to which section 171A of the Housing Act 1985 applies	3.28
Grants	3.29
Leases granted for a term of more than seven years from the date of grant	3.30
Reversionary leases	3.32
Grant of a right to buy lease under Part V of the Housing Act 1985	3.33
Grant of a lease to which section 171A of the Housing Act 1985 applies	3.34
Protected first legal mortgages	3.35
Crown grants out demesne land	3.36
The power to extend the triggers to compulsory registration	3.37
The effect of failure to register	3.38
The duty to register	3.38
The effect of non-compliance with the duty to register	3.40
THE EFFECT OF FIRST REGISTRATION	3.42
Classes of title	3.42
Introduction	3.42
Freehold titles	3.43
Leasehold titles	3.44
The effect of first registration	3.45
Freehold title	3.45
Registration with absolute title	3.45
Qualified title	3.49
Possessory title	3.50
Leasehold title	3.51
Miscellaneous rule-making powers	3.52
CAUTIONS AGAINST FIRST REGISTRATION AND THE CAUTIONS REGISTER	3.54
The nature of cautions against first registration under the present law	3.54
Cautions against first registration under the Bill	3.56
The right to lodge a caution	3.56
The effect of a caution against first registration	3.60
Cancellation of cautions	3.63
The cautions register	3.65
PART IV: DISPOSITIONS OF REGISTERED LAND
INTRODUCTION	4.1
POWERS OF DISPOSITION	4.2
Introduction	4.2
The principles adopted in the Bill	4.4
The provisions of the Bill	4.5
Owner's powers	4.5
Protection for disponees	4.8
REGISTRABLE DISPOSITIONS	4.12
Introduction	4.12
The general principle	4.13
Dispositions required to be registered and the registration requirements that apply to them	4.16
Introduction	4.16
Transfers of a registered estate	4.17
The grant of certain leases	4.20
Leases of franchises and manors	4.23
Express grant or reservation of an easement, right or privilege	4.24
Express grant or reservation of a rentcharge or legal right of re-entry	4.27
The grant of a legal charge	4.29
Dispositions of a registered charge	4.30
Applications for registration	4.31
PART V: PRIORITIES
INTRODUCTION	5.1
PRIORITY UNDER THE BILL	5.5
The general rule	5.5
The principal exception: registrable dispositions that have been registered	5.6
The exception	5.6
Applicable only to registrable dispositions	5.7
Made for valuable consideration	5.8
Priority conferred	5.10
When the priority of an interest will be protected	5.11
The priority of registered charges	5.14
The grant of leases that are not registrable dispositions	5.15
The irrelevance of notice	5.16
SPECIAL CASES	5.22
Inland Revenue Charges	5.23
Rights of pre-emption	5.26
An equity arising by estoppel	5.29
A mere equity	5.32
Inchoate rights arising under the Prescription Act 1832	5.37
PART VI: NOTICES AND RESTRICTIONS
INTRODUCTION	6.1
THE PROPOSALS IN THE CONSULTATIVE DOCUMENT	6.2
THE PROVISIONS OF THE BILL	6.3
Prospective abolition of cautions against dealings	6.3
Notices	6.5
Introduction	6.5
Nature and effect of a notice	6.6
Interests which may not be protected by notice	6.8
Interests under trusts of land and settlements	6.9
Short leases	6.10
A restrictive covenant between landlord and tenant	6.13
An interest which is registrable under the Commons Registration Act 1965	6.14
An interest in any coal or coal mine or ancillary rights	6.15
A PPP lease	6.16
The circumstances in which a notice may be entered on the register	6.17
Introduction	6.17
Burdens entered on the register on first registration	6.18
Entry in respect of an overriding interest	6.19
Entry in respect of a registrable disposition	6.20
Where the entry is necessary to update the register	6.21
Applications for the entry of a notice	6.22
Unilateral notices	6.26
The nature of unilateral notices	6.26
Protection against the improper entry of a unilateral notice	6.27
Abolition of inhibitions as a separate form of entry	6.32
Restrictions	6.33
Introduction	6.33
The nature and effect of a restriction	6.34
When a restriction may or must be entered	6.38
Introduction	6.38
When the registrar may or must enter a restriction	6.39
Where the registrar may enter a restriction	6.40
Where the registrar must enter a restriction	6.46
Applications for the entry of a restriction	6.47
Where the court may order the entry of a restriction	6.51
Notifiable applications for a restriction	6.54
Withdrawal of restrictions	6.58
Pending land actions, writs, orders and deeds of arrangement	6.59
PART VII: CHARGES
INTRODUCTION	7.1
THE POWER TO CREATE CHARGES AND THE POWERS OF THE CHARGEE	7.2
Legal Charges	7.2
The creation of charges and the powers of the chargee	7.2
The definition of "charge"	7.5
Powers of chargees and the need for a deed	7.6
Dispositions made by chargees and the protection of disponees	7.7
Equitable charges	7.9
SUB-CHARGES AND THE POWERS OF THE SUB-CHARGEE	7.11
PRIORITIES	7.13
Priority of registered charges	7.13
Registered sub-charges	7.16
Equitable charges	7.17
Tacking and further advances	7.18
Present law and practice	7.18
Provisions of the Bill	7.28
Further advances made with the agreement of subsequent chargees	7.29
Further advances where the prior chargee has not received notice of the subsequent charge 7.30
Where there is an obligation to make a further advance	7.31
Further advances up to a maximum amount	7.32
Statutory charges	7.37
Types of statutory charge	7.38
Overriding statutory charges	7.39
Charges which are local land charges	7.42
MISCELLANEOUS	7.43
Application of proceeds of sale	7.43
Consolidation	7.44
Power to give receipts	7.46
PART VIII: OVERRIDING INTERESTS
INTRODUCTION	8.1
THE NATURE OF OVERRIDING INTERESTS	8.3
UNREGISTERED INTERESTS WHICH MAY BE OVERRIDING:
INTRODUCTION	8.6
UNREGISTERED INTERESTS WHICH OVERRIDE FIRST REGISTRATION	8.8
Introduction	8.8
Short leases	8.9
PPP Leases	8.11
Interests of persons in actual occupation	8.14
Legal easements and profits à prendre	8.23
Customary and public rights	8.26
Local land charges	8.29
Mines and minerals	8.31
Rights to coal	8.32
Certain mineral rights where the title was registered before 1926	8.33
Miscellaneous	8.35
Introduction	8.35
Franchises and manorial rights	8.40
Crown rents	8.43
Certain rights in respect of embankments and sea and river walls	8.45
A right to payment in lieu of tithe	8.46
UNREGISTERED INTERESTS WHICH OVERRIDE REGISTERED DISPOSITIONS	8.47
Introduction	8.47
Categories of overriding interest that are the same as those that apply on first registration	8.48
Categories of overriding interest that differ from those that apply on first registration	8.49
Short leases	8.50
Interests of persons in actual occupation	8.53
Introduction	8.53
The general principle	8.54
Qualification: Protection is restricted to the land in actual occupation	8.55
Exception 1: No protection for settled land	8.59
Exception 2: Rights not disclosed on reasonable enquiry	8.60
Exception 3: Rights of persons whose occupation is not apparent	8.61
Exception 4: Leases granted to take effect in possession more than three months after grant	8.63
Transitional provisions	8.64
Legal easements and profits à prendre	8.65
The problem	8.65
Only legal easements and profits may be overriding interests	8.67
Legal easements and profits that are not easily discoverable should not be overriding interests	8.68
Transitional arrangements	8.73
REDUCING THE IMPACT OF OVERRIDING INTERESTS	8.74
Introduction	8.74
Categories of overriding interests that are to be abolished	8.75
Introduction	8.75
Squatters' rights	8.76
Rights excepted from the effect of registration	8.79
Categories of overriding interests that are to be phased out	8.81
The principle of phasing out overriding statues and the objections to it	8.81
The views expressed on consultation	8.85
The scheme adopted in the Bill	8.86
Human rights	8.89
Ensuring that overriding interests are protected on the register when they come to light	8.90
PART IX: THE REGISTER AND REGISTRATION
INTRODUCTION	9.1
THE REGISTER	9.3
REGISTRATION AS PROPRIETOR	9.4
Conclusiveness	9.4
Dependent entries	9.7
Effective date of registration	9.8
BOUNDARIES	9.9
The general boundaries rule	9.9
Accretion and diluvion	9.14
QUALITY OF TITLE	9.16
Introduction	9.16
When title can be upgraded	9.17
Upgrading freehold title which has possessory title	9.17
Upgrading freehold title which has qualified title	9.18
Upgrading leasehold title which has a good leasehold title	9.19
Upgrading leasehold title which has a possessory title	9.20
Upgrading leasehold title which has a qualified title	9.21
No power to upgrade where there is an outstanding adverse claim	9.22
Who may apply for the upgrading of a title	9.23
Effect of upgrading title	9.25
Indemnity	9.28
Use of register to record defects in title	9.29
ACCESSING INFORMATION	9.36
Introduction	9.36
Open registers and their inspection	9.37
The significance of the open register	9.37
The rights conferred by the Bill	9.38
The limitations on the rights to inspect and copy	9.43
Official copies	9.44
Conclusiveness of filed copies	9.48
Introduction	9.48
The preconditions	9.50
Conclusiveness	9.52
Index	9.54
Historical information	9.58
Official searches	9.61
PRIORITY PROTECTION	9.62
The present law	9.62
Priority protection under the Bill	9.67
The circumstances in which priority protection will be available	9.68
The meaning of priority protection	9.70
Rules	9.73
APPLICATIONS	9.76
The form and content of applications	9.76
Registered charges and company charges	9.81
LAND CERTIFICATES	9.83
The nature of a land or charge certificate under the present law	9.83
Present practice	9.86
The impact of the Bill	9.88
Abolition of charge certificates	9.89
Land Certificates	9.90
PART X: ALTERATION, RECTIFICATION AND INDEMNITY
INTRODUCTION	10.1
THE EFFECT OF THE BILL: ALTERATION	10.5
Introduction	10.5
The circumstances in which the register may be altered	10.6
The meaning of alteration and rectification	10.6
Powers of alteration	10.9
The powers of the court	10.10
The circumstances in which the court may order alteration of the register	10.10
Qualified indefeasibility: the protection for the proprietor who is in possession	10.13
The powers of the registrar	10.19
The circumstances in which the registrar may alter the register	10.19
Qualified indefeasibility: the protection for the proprietor who is in possession	10.22
Alteration under network access agreements	10.23
Costs in non-rectification cases	10.24
The circumstances in which the register of cautions may be altered	10.26
Alteration of documents	10.27
THE EFFECT OF THE BILL: INDEMNITY	10.29
Introduction	10.29
The grounds on which indemnity is payable	10.30
Loss by reason of rectification	10.31
Loss by reason of a mistake	10.32
Mistake in an official search	10.33
Mistake in an official copy	10.34
Mistake in a document kept by the registrar which is not an original	10.35
Loss or destruction of a document lodged at the registry	10.36
Mistake in the register of cautions against first registration	10.37
Failure to notify a chargee of an overriding statutory charge	10.38
Mines and minerals	10.39
The measure of indemnity	10.40
Introduction	10.40
Elements to be taken into account in assessing indemnity	10.41
General	10.41
Valuing the loss of an estate, interest or charge	10.42
Interest	10.44
Costs	10.45
Factors that will bar a claim for indemnity or reduce the amount that can be recovered	10.47
When a claim will be barred	10.47
When a claim will be reduced	10.48
The mechanism for determining indemnity	10.49
Rights of recourse	10.51
PART XI: SPECIAL CASES
INTRODUCTION	11.1
THE CROWN	11.2
Acknowledgements	11.2
Crown land	11.3
The issues addressed by the Bill	11.4
Registration of land held in demesne	11.5
The present law	11.5
Voluntary registration under the Bill	11.11
Compulsory registration under the Bill	11.13
Cautions against the first registration of demesne land	11.17
Escheat	11.20
The nature of escheat	11.20
The circumstances in which escheat occurs	11.23
The treatment of escheat in the Bill	11.26
Crown and Duchy land: representation	11.31
The disapplication of certain requirements in relation to Duchy land	11.33
Introduction	11.33
The present law	11.34
The Duchy of Cornwall	11.34
The Duchy of Lancaster	11.36
The provisions of the Bill	11.37
Matters for which the Bill makes no provision	11.38
BANKRUPTCY	11.39
Introduction	11.39
Procedure in relation to bankruptcy petitions	11.40
Procedure in relation to bankruptcy orders	11.41
Protection for disponees in good faith	11.42
SETTLEMENTS	11.45
PART XII: CONVEYANCING 1: GENERAL PROVISIONS
INTRODUCTION	12.1
PROOF OF TITLE	12.2
Introduction	12.2
What proof of title must a seller deduce?	12.4
What title is a buyer entitled to see?	12.9
COVENANTS FOR TITLE	12.14
Introduction	12.14
No liability for matters on the register	12.16
Rules	12.20
Covenants implied on the assignment of a lease prior to 1996	12.21
PART XIII: CONVEYANCING 2: ELECTRONIC CONVEYANCING
INTRODUCTION	13.1
FORMAL REQUIREMENTS FOR ELECTRONIC DISPOSITIONS	13.5
Introduction	13.5
THE DRAFT LAW OF PROPERTY (ELECTRONIC COMMUNICATIONS) ORDER	13.7
THE PROVISIONS OF THE BILL	13.11
Introduction	13.11
The applicability of Clause 91	13.12
The four conditions	13.13
Deemed execution	13.18
Deeds	13.19
Execution by agents	13.20
Notice of assignments	13.22
Execution by corporations	13.24
Execution by corporations which are companies for the purposes of the Companies Act 1985	13.25
Execution by other corporations	13.30
Rights of a purchaser as to execution	13.31
Supplementary rule-making powers	13.32
PROVISIONS GOVERNING THE LAND REGISTRY NETWORK	13.34
Introduction	13.34
Access to the network	13.36
Network access agreements	13.36
The level of access will be variable	13.38
Authority may be given to perform registrar's functions	13.39
Criteria for entry into a network access agreement	13.40
Terms of access	13.47
The purposes for which the power to authorise may be used	13.48
To require transactions to be conducted electronically	13.49
To regulate ancillary purposes	13.50
To enable transactions to be monitored	13.51
The obligation to comply with network transaction rules	13.52
The power to regulate terms of access by rules	13.54
Termination of access	13.55
Appeals	13.57
Overriding nature of network access obligations	13.58
Presumption of authority	13.60
Managing network transactions	13.63
Rules	13.66
Introduction	13.66
Why a rules-based approach is necessary	13.67
Safeguards	13.70
Do-it-yourself conveyancing	13.72
THE POWER TO MAKE ELECTRONIC CONVEYANCING COMPULSORY     AND TO REQUIRE THAT ELECTRONIC DISPOSITIONS SHOULD BE SIMULTANEOUSLY REGISTERED	13.74
The objective of the power	13.74
The application of the power	13.80
Registration requirements	13.84
Rules	13.85
PART XIV: ADVERSE POSSESSION
INTRODUCTION	14.1
THE EFFECT OF THE BILL	14.9
Adverse possession shall not extinguish the title to a registered estate	14.9
The governing principle	14.9
The principle applies only in relation to registered estates and rentcharges	14.10
Provisions of the Limitation Act 1980             which depend on the accrual of a cause of action or the limitation period will not apply	14.11
Mortgagors in possession	14.12
Mortgagees in possession	14.15
The right to apply for registration after ten years' adverse possession	14.19
The prerequisites for an application: the general position	14.19
Where no valid application to be registered can be made	14.24
Where there are possession proceedings against the squatter that are still current	14.25
Where the proprietor is an enemy or held in enemy territory	14.28
Where the proprietor is suffering from mental disability or physical impairment	14.29
Notification of the registered proprietor and others	14.32
Registration where no counter-notice is served	14.34
No registration where a counter-notice is served	14.35
Special case: registration even where a counter-notice is served	14.36
General summary	14.36
Estoppel	14.39
The principle	14.39
Examples	14.42
Some other right to the land	14.43
Reasonable mistake as to boundary	14.44
The principle	14.44
When will this exception be invoked?	14.46
What has to be established to fall within the exception ?factual elements	14.48
What has to be established to fall within the exception ?the mental element	14.50
The right to make a further application for registration after two more years' adverse possession	14.53
Introduction	14.53
The right to make a further application to be registered	14.57
Where the squatter remains in adverse possession two years after the rejection of his application to be registered	14.58
Where the proprietor obtains a judgment against the squatter but fails to enforce it within two years	14.59
Where proceedings are discontinued or struck out more than two years after the squatter's application was rejected	14.61
The status of a right to be registered	14.63
The effect of registration	14.65
Introduction	14.65
The legal background	14.66
The recommendations in the Consultative Document and the response on consultation	14.68
The provisions in the Bill	14.70
No trust	14.70
The squatter is successor in title to the previous proprietor	14.71
Registration of the squatter and the effect on registered charges	14.74
Where the squatter will be bound by charges	14.76
Apportionment	14.77
Possession proceedings	14.82
Introduction	14.82
The general rule: the registered proprietor is entitled to possession as against the squatter	14.83
Exceptions: defences to possession proceedings	14.84
Defences which are unconnected with the squatter's adverse possession	14.84
Other defences	14.85
Reasonable mistake as to boundary	14.86
Where the squatter has become entitled to be registered                     even though his or her application to be registered was rejected	14.87
Special cases	14.88
Rentcharges	14.89
Trusts	14.91
Adverse possession by a stranger of land held in trust	14.91
Adverse possession by a trustee or beneficiary of land held in trust	14.95
Crown foreshore	14.97
Transitional provisions	14.101
Introducing the new system	14.102
Preserving vested rights	14.104
PART XV: THE LAND REGISTRY
INTRODUCTION	15.1
THE LAND REGISTRY	15.2
CONDUCT OF BUSINESS	15.5
ANNUAL REPORT	15.8
FEES	15.9
MISCELLANEOUS FUNCTIONS	15.11
Power to publish information about land	15.11
Consultancy and advisory services	15.12
PART XVI: JUDICIAL PROVISIONS
INTRODUCTION	16.1
THE ADJUDICATOR	16.3
The office of Adjudicator	16.3
Jurisdiction	16.6
The general right to object an application to the registrar             and the registrar's duty to refer to contested applications to the Adjudicator	16.6
Other matters	16.8
PROCEEDINGS	16.11
Proceedings before the registrar	16.11
Proceedings before the Adjudicator	16.15
Power for the Adjudicator to direct a hearing before the court	16.20
Right of appeal	16.23
THE ROLE OF THE COURT	16.24
OFFENCES	16.26
The present law	16.26
The offences under the Bill	16.28
Suppression of information	16.28
Improper alteration of the registers	16.29
Dishonestly inducing another to change or authorize a change to the register	16.30
Intentionally or recklessly making an unauthorized change in the register	16.32
Privilege against self-incrimination	16.33
PART XVII: RULES AND ORDERS
INTRODUCTION	17.1
RULES	17.2
The present law	17.2
The approach to rule-making powers adopted in the Bill	17.4
The rule-making powers under the Bill	17.5
Land registration rules	17.5
Other rules and regulations	17.10
ORDERS	17.12
APPENDIX A: DRAFT LAND REGISTRATION BILL	A
APPENDIX B: LIST OF RESPONDENTS TO CONSULTATIVE DOCUMENT LAW COM NO 254	B