Land Registration up for Review

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Introduction

The Law Commission have published a consultation paper called “Updating the Land Registration Act 2002”. It is a wide-ranging review of the current law on land registration and this article discusses some of the areas which are up for a review.

Land is a complex asset to purchase and the idea of registration is to eliminate much of the investigation of Title needed prior to the Land Registration regime. The Law Commission estimates that 86% of land in the UK is now registered and this amounts to over 24 million titles.

The Land Registration Act 2002 (“LRA 2002”) governs how registration of the ownership of land and third party rights over land takes place. As well as details of the owner and third party rights, the Register, which is maintained by Her Majesties’ Land Registry (“Land Registry”) contains a description of the land.

Preventing Fraud

Section 58 of the LRA 2002 guarantees Title to registered land.  The guarantee provides that by virtue of registration, any person showing on the Title Registrar as proprietor of the legal estate is the owner of the property even if they would otherwise not be.  A party who relies on the Register who subsequently suffers loss can claim an Indemnity from the Land Registry.  Over 50% of the Land Registry pay outs under the guarantee between 2008 and 2009 were due to fraud. The prevention of fraud seems to be top of the agenda in the consultation paper.

In their paper, the Law Commission give the following example: ‘A’ owns a house, ‘B’ impersonates ‘A’ and sells the property to ‘C’. They propose a new formula to “clarify and simplify” who, in such a case, would end up with the property and how innocent victims should be compensated.

Indemnity

The Law Commission considers whether there should be a cap on the Land Registry’s indemnity.  The Law Commission thinks not, although it notes that when the Land Registration system was introduced the average house price was £43,000 and it is now £194,000.  The Indemnity is funded by Land Registration fees. There is a discussion of making the duty of care owed to the land registry by solicitors a statutory duty.

Leases

The Law Commission will consult on whether Leases of 7 years or less should be registered, although its primary views are that it should not take place, primarily because any advantages would be outweighed by the costs and other burdens of so doing.

Jurisdiction of the Upper Tribunal to determine a Boundary

Section 60(3) of the LRA 2002 allows an applicant to apply for a boundary determination.  The Land Registration Division of the First Tier Tribunal does not currently have jurisdiction to determine a boundary.  The Law Commission recommends the Tribunal should have jurisdiction so as to reduce stress and litigation between neighbours.

Notices and Restrictions

The consultation paper makes proposals to resolve doubt about the extent to which a person can rely on the register to ascertain if there are any restrictions placed on the ability of the owner to deal with their land.  The Law Commission considers the use of restrictions should continue.

The paper also proposes reforms to the unilateral notice procedure so that some evidence of a right over land must be provided before a unilateral notice can be entered on a Register (this is not currently the case, although wrongly entering a unilateral notice is a statutory tort).  The Law Commission also proposes changing the terminology from ‘agreed notice’ and ‘unilateral notice’ to ‘full notice’ and ‘summary notice’ respectively.

E-Conveyancing

The Law Commission considers that the E-Conveyancing envisaged by the LRA 2002 has not come to fruition, partly because the LRA 2002 requires simultaneous completion and registration.  The Law Commission proposes the removal of that requirement from the LRA 2002.  The Law Commission thinks simultaneous completion and registration is the ideal to work towards, but it is not practical whilst paper based conveyancing has not been phased out.

Adverse Possession (squatter’s rights)

Under the current regime, generally an application to the Land Registry to be registered as an owner relying on adverse possession would be rejected if the registered proprietor objects to the application, but the Law Commission propose three conditions which would allow registration to take place anyway, notwithstanding the registered owner’s objection. The first condition is where the applicant is entitled to the land through a proprietary estoppel. The second is where the applicant has held a “reasonable belief the land in question belongs to him”. The final condition encompasses a number of other scenarios.

The Law Commission does not propose any fundamental changes to the framework governing applications for adverse possession nor the policy behind adverse possession. The policy is, of course, that land which is not used can be acquired through possession so as to put it back into use.

The full consultation paper can be found here http://www.lawcom.gov.uk/wp-content/uploads/2016/03/cp227_land_registration_web.pdf.

For more information, please contact us on 01273 324041 or email enquiries@griffithsmith.co.uk

Author: Rosa Marie Kane, Solicitor @ Griffith Smith Farrington Webb LLP