The impact of the Land Registration Act 2002 on the conveyancing process in registered land - Essay Example

The impact of the Land Registration Act 2002 on the conveyancing process in registered land. “The conveyancing process in registered land has recently undergone radical The Land Registration Act 2002 has implemented the first major overhaul in over 75 Years. Discuss. The system of registered land was perhaps the greatest of the reforms that came out of the wholesale restructuring of English property law in 19251. While the original system of land registration inaugurated by Land Registration Act (LRA) 1925 had many flaws; it served well for nearly 80 years and was able to cope with the fundamental economic and social changes that took place over that time. Today, nearly all land is ‘registered land’ and the system underwent significant reform with the enactment of the Land Registration Act (LRA) 2002 that entered into force on 13 October 2003. The Land Registration Act 2002 has been received with much critical acclaim, and rightly so. It is a work of monumental importance and monumental effort. Law Commission Report No 2712 was itself the last in a long series of Reports discussing, proposing, rejecting and recommending changes to the fundamentals of the land registration system established by the Land Registration Act 19253. As is well known, the Act of 2002 is designed to revolutionize conveyancing in England and Wales and to bring the land registration system established by the 1925 Land Registration Act into the modern age. In fact LRA 2002 was primarily designed to facilitate e-conveyancing: that is the holding and transfer of estates and interests in land electronically. This goal of a virtually paper free conveyancing system has not yet been achieved because the e-conveyancing provisions of the LRA 2002 have not yet been triggered4, but the structure of registered land under 2002 Act is designed to ensure that e-conveyancing will work when the remaining technological issues have been resolved. In this sense, the 2002 Act is ‘transaction driven’ – its primary aim is to ensure the quick, efficient, and inexpensive transfer of estates and interests in land while ensuring that third party interests in land (the proprietary rights of others in the registered estate) are properly protected. To further this in a practical way, the 2002 Act seeks to implement a number of policies through changes to the substantive law. The first policy is to ensure that as many estates in land as is possible become registered. The second is to ensure that as many third party rights as possible are recorded on the register of title of the estate that is affected by those rights. The necessary corollary is, of course, that failure to protect rights by registration when required may well mean that the interest ceases to affect the estate when it is sold. The third policy is to minimize the number and effect of those third party proprietary rights that can be effective against the new owner of land even without being registered (‘unregistered interests which override’). In turn, this will do much to ensure that the Register provides a very clear picture of the legal state of the land. The fourth and final policy, eventually, under e-conveyancing, is to provide that the effective transfer and creation of most proprietary rights in land cannot occur without their simultaneous entry on the register. The Basic Concept of Title Registration: The fact that our system depends on registration of title, not of land, also means that it is perfectly possible for one plot of land to have more than one type of title registered in respect of it. Where this occurs, it is clearly identified on the Register and a suitable cross-reference made. As things currently stand under the LRA 2002, not quite every ‘estate’ in land is a ‘registrable title’ because some estates are excludable for practical or legal reasons. In addition, the 2002 Act also provides for voluntary registration of titles5and for registration by the Crown of its land6. Registered Land: The nature and purpose of registered land is to ensure the free alienability of land by easing the coveyancing process through the establishment of certainty; by eliminating the vagaries of the old doctrine of notice and thereby protecting the purchaser; by enhancing the role of overreaching and there by removing some obstacles to the sale of land which is subject to a trust of land. Under the LRA 2002, proprietary rights fall into four broad classes, not necessarily coterminous with their quality as legal or equitable interests. Registrable titles are the legal freehold absolute in possession and the legal leasehold of over seven year’s duration. Registration as registered proprietor confers the relevant estate at law, subject to the rights specified in ss 11 and 12 LRA 2002 (first registration) and ss 28, 29 and 30 LRA 2002 in respect of dispositions of registered land. The imperatives of the LRA 2002 are to ensure both that as much as possible about the land is registered, and, for those rights which are not registrable under the Act, that they are capable of discovery by a normal inspection of the land. Consequently, although the image reflected by the Register under the LRA 2002 remains imperfect, the imperfection will not necessarily cause loss to a diligent purchaser. Title registration exists to ease the purchaser’s path, not to exclude his participation in the conveyancing process. Overriding Interest: These are defined in s37 (xvi) LRA 1925 as: ‘all the encumbrances, interests, rights and powers not entered on the register, but subject to which registered dispositions are to take effect’ In simpler terms overriding interest can be defined and determined as the interest which override. It is liable on the purchaser to inspect the land and make inquiries as there are few dispositions like overriding interest which do not appear on the register8. It is thus very important to know whether a third party interest in land is one which overrides or one which requires protection on the register. The Transformation of Overriding Interest into Interests that Override: There is, perhaps, no other creation of the Land Registration Act 1925 that aroused as much fierce comment as the infamous s 70(1) and its list of overriding interests. The very fact that there is a category of property right that can bind a purchaser of a registered title without either that interest appearing on the register or necessarily being discoverable is thought by many to be an anathema to the very idea of a registration system. More importantly, it is unarguable that changes in the substance of land law and in the way in which land is now used have turned s 70(1) LRA 1925 into a different creature from that envisage by the drafters of 1925 Act. The development of principles permitting the informal acquisitions of interests in land – such as resulting and constructive trusts and proprietary estoppel – have dramatically increase both the chance that an adverse right might exist and that it might be undiscoverable, being neither materially recorded nor necessarily obvious to a prudent purchaser. Likewise, the rise to prominence of a different kind of ‘purchaser’, the institutional mortgagee, and the importance of such lending to the domestic economy9 has both exposed the latent power of s 70(1) and released a tidal wave of litigation that may still not have abated. Effect of LRA 2002 on Overriding interest: The LRA 2002 seeks to reduce the number of overriding interests, and to replace as many as possible of them with register entries. This is in keeping with its overall objective of making the register as complete a record of title as possible. This could be made possible by narrowing the scope of overriding interests, eventually abolishing the others, asking people to make aware about the unregistered interests, so that these could be registered and providing that, once an interest has been noted on the register, it loses its overriding status forever, even if the register entry is cancelled. Adverse Possession: The law of adverse possession is something of a peculiarity in English law. It is, in effect, a set of rules that offers an opportunity10 to a mere trespasser actually to acquire a better title to land than the person who ‘legally’ owns it and to whom it was once formally conveyed with all the solemnity of a deed or registered disposition. Although it remains the case under the Land Registration Act (LRA) 2002 that a person is still registered with an estate – not with the land itself – registration as proprietor under the 2002 Act is a more absolute guarantee of ownership than anything that has gone before. There is still room for alteration of the Register and adverse possession of a registered title is not possible – just impossibly difficult – but registration as proprietor under the LRA 2002 is the closest thing in over 900 years to absolute ownership of land. This has led, in relation to registered land, to a radical overhaul of the effects of a claim of adverse possession on a registered title and this must be remembered in the ensuing discussion. However, despite the radical surgery performed by the 2002 Act, the fact that the common law should have developed a set of principles that might operate to deprive a ‘paper’ owner of his title to land is not as remarkable as might first appear. How is Adverse Possession Established: The Rules common to Registered and Unregistered Land. Whether the claim for adverse possession is made in respect of land of unregistered title, registered land prior to entry into force of the LRA 2002, or registered land subject to the new regime of the LRA 2002, the crucial question still remains: when will possessions of a trespasser be such as to trigger a claim to title. Or to put it another way, how is the reality of ‘adverse possession’ established? Fortunately the rules about this are the same irrespective of whether the land is unregistered land or the registered land? The relevant principles are not found in statute, not even in the Limitation act (LA) but have been developed through case law over generations. As judge-made law, these are flexible, changeable, malleable and not always consistent. This has the advantage that the substantive principles may respond to changing time, but the disadvantage of making it less easy to predict a court’s decision. There is no doubt, for example, that some recent decisions have been ‘adverse possessor friendly’, in the sense that the courts no longer manifest an inbuilt hostility to the adverse possessor, but they may be contrasted with the decision of the High court in Beaulane Properties v Palmer (2005), which attacks the essence of the law of adverse possession on human rights grounds. That said, the house of Lords in JA Pye Ltd v Graham (2002) sought to codify the principles of adverse possession in an attempt to bring some certainty and clarity to the law and together, with the earlier decision of the Court to Appeal in Buckinghamshire CC v Moran (1990), may be regarded as the definitive statement of the modern law. Their reasoning forms the basis of the following discussion. In simple terms, adverse possession may be established by demonstrating the required degree of exclusive physical possession of the land, coupled with an intension to possess to the exclusion of the others, including the paper owner. It is therefore, the conjunction of acts of possession with an animus possidendi that establishes adverse possession. The major issue in the case11 was whether the principles of adverse possession that was applicable to unregistered land and registered land prior to the entry into force of the LRA 2002, were compatible with human rights law as introduced by the Human Rights Act 199812.It was concluded that, in respect of adverse possession under the old regime of the LRA 1925 (and by implication in respect of unregistered land), adverse possession could be established if, but only if, the ‘possession’ was inconsistent with the use to which the paper owner intended to put the land. CONCLUSION: Conveyancing is the legal process involved when transferring ownership of land or building from one person to another. Registered conveyancing entails the owner quite simply demonstrating that the registered proprietorship is recorded at the Land Registry. In registered land the documents of title are replaced by the fact of registration. Therefore, the equivalent to the title deed is the various entries in the Land Registry. There are three registers of title at the Land Registry, the Property Register, The Proprietor ship Register and the Charges Register. The Land Registration Act 2002 (LRA 2002) and the Land Registration Rules 2003 (LRR 2003) came into force on 13 October 2003. The new legislation replaces the statutory framework for the Land Registration Act 1925, now repealed. The Act makes a number of key changes. Essentially these are:  More information placed on the register, streamlining conveyancing investigations. The range of interests that can or must be registered is increased, and the number of interests that can exist off the register (e.g. overriding interests) is reduced. This should increase the certainty in property transactions, resulting in fewer investigations to be carried out.  Better title for registered owners. The interests of registered owners are given better protection against adverse possession. A squatter will not be able to acquire the interest of the property no matter how long he has been in adverse possession if the existing owner objects (some exceptions exist). Unregistered land does not have this protection.  Electronic conveyancing. The development of an electronic conveyancing system setting out a framework of in which interests of registered land can be transferred and created electronically will facilitate land transactions.  The new post of Adjudicator to HM Land Registry is created. The role entails determining disputes in land registration applications referred from the Land Registry. Thus we conclude that the conveyancing process in registered land has recently undergone radical change. The Land Registration Act 2002 has implemented the first major overhaul in over 75 years. REFERENCES:  Dixon Martin, 2005: Modern Land Law 5/E. Routledge Cavendish  Hewitson Russell, 2006: The Conveyancer’s Yearbook. Shaw & Sons Ltd.  Hudson Alastair, 2004: New Perspectives on Property Law, Obligation and Restitution. Routledge Cavendish  Stewart Alan, 2004: Easyway Guide to Conveyancing. Straightforward co Ltd UK  Wonnacott Mark, 2006: Possession of Land. Cambridge University Press Read More