The Land Registration Act 2002 - Coursework Example

OVERRIDING INTERESTS AS A STUMBLING BLOCK TO REGISTRATION OF AND THE ROLE OF THE LAND REGISTRATION ACT 2002 IN ADDRESSING THE EFFECTS OF OVERIDING INTERESTS Name Property Law Instructor 24th June, 2015 Introduction Overriding interests to acquisition of land title refers to the various interests held by parties that could derail the acquisition of a property or affect the buyer’s intention to use it in a particular manner or for specific purposes. Under the law, these interests are considered legally binding on the new owner (once purchase of a piece of land is made, or to a prospective owner who may have the legal right to acquire the land for several reasons including owner’s defaulting of mortgages) even when they were not disclosed at the point of ‘change of hands’. The ability of parties to claim overriding interests after property has been purchased by other owners was significantly reduced with the enactment of the Land Registration Act (LRA) 2002. Under the LRA 1925, there existed a large number of allowable overriding interests that were not required to be passed as register entries. Such interests have been associated with difficulties in land registration, prompting review of the law in 2002.1 After the LRA 1925 became law in 2003, the recognised overriding interests include tenancies and leases whose expiry is not more than seven years, rights of people who are occupying the land without knowledge of these rights, the right of the public to a path passing through the parcel of land, right to light, and the right to claim support from the structures adjoining the purchased piece of land. As will be shown in subsequent sections, the LRA 2002 has greatly streamlined the registration of titles since the new purchaser can be able to inquire about some interests that are clearly outlined in law, but which were not categorically classified under the LRA 1925. In its report, the Law Commission noted that the new laws were intended to provide streamlined services in land registration; trying to overcome numerous challenges that had been associated with the LRA 1925.2 This essay argues in concurrence with the notion that overriding interests are impediments to the registration of titles, and provides a brief overview of the extent to which the LRA 2002 has addressed this problem. Overriding Interests as a Stumbling Block to Registration of Titles Registration of title simply implies that the title (right of ownership) to an estate is recorded in a register maintained by Her Majesty’s Land Registry and the same is accessible from district land registries or is accessible from online records created for the purposes of maintenance of such records. Under the LRA 1925, buyers had the perception that any pieces of land they wished to purchase could be subject to numerous prohibitive interests that require them to alter their intended usage of the land they buy since the law provided for the existence and recognition of many such interests. This does not mean that registration of titles is not affected by the existence of the fewer recognised overriding interests as provided for under the LRA 2002. Titles presented to parties who were unaware of the existence of numerous overriding interests were simply inaccurate since a lot of important information was left out when registering a title. To avoid the long registration process occasioning the establishment of the existence of numerous such interests, sellers and brokers resorted to forging documents, sometimes in collaboration with parties working at the Land Registry. This posed a great problem for some time, with many buyers being frisked through fraudulent sales. With the collaboration between government workers and corrupt brokers, corruption was swiftly taking root in land registration.3 In any case, a forged document remains illegal and a risk to the holder, since they cannot develop such a piece of land as they intend. These factors served to discourage purchasing of land, mainly because the title registration process was quite difficult or many sales ended up being declared illegal due to use of underhand methods in generation of titles. An example of an instance in which overriding interests prevented a party from exercising its rights as provided for in law was the case of Williams and Glyn’s Bank v Boland (1980). In this case, Mr Boland borrowed money from Williams and Glyn’s Bank, but later failed to pay. The bank sought to possess the land on which Mr Boland and his wife were living, and which was used to secure the loan for Boland’s company. The wife claimed that she had made substantive contributions to the acquisition of the home. She sought to remain in the residence on these grounds, which the Court of Appeal upheld her wish, noting that since she made the contribution, she had overriding interest in the property. In their decision, the Court of Appeal observed that as in the case of Gissing v Gissing, there arises a trust once parties share in whatever proportions in the acquisition or development of property. The bank could not, therefore, override the interests of Mrs Bolland. In the case of Gissing v Gissing, the Court of Appeal held that the parties were entitled to equal share upon disposal of the property (even though the divorced wife had not paid any amounts directly for the acquisition of the property), a decision that has continued to affect the rulings in cases of overriding interests among parties that cohabit. Importantly, overriding interests in this case are marked on the basis of the contributions from parties residing within a property.4 The Extent to Which the Land Registration Act 2002 Has Addressed the Problem of Overriding Interest Interests that impede on buyers’ ability to utilise an estate in line with their desire have overriding power on the affected party. The Land Registration Act 1925 which preceded the Land Registration Act 2002 was the first to give recognition to the existence of overriding interests in land portions. According to the UK Parliament, one of the primary roles of the LRA 2002 was to reduce the number of overriding interests that parties could claim and ensure that as many as possible of these interests are replaced with register entries. This way, the government argued, the register would be more complete with clearer declaration of material facts that could affect acquisition. By extension, the buyer would be accorded a better chance to make a more informed decision regarding purchase of a property, unlike the initial situation where their interests were subject to a large number of undeclared interests by other parties. The LRA 2002 tries to achieve this important objective by introducing a series of steps that could address the problem of overriding interests by reducing the scope of some of these interests, initiating the eventual abolition of some of the overriding rights, requiring extra information on unregistered interests at the point of land registration to subsequently update registers, and enabling the loss of the ‘overriding interest’ status once an entry is entered into the register.5 Schedule 3 of the LRA 2002 elaborates on the events that can precede recognition of an overriding interest in the registration of a title.6 Taking a different stance from the ruling in Williams and Glyn’s Bank v Boland (1980) described above, 3(2) excludes the recognition of persons to whom inquiry was made before disposition as having overriding interests. This further implies that the new owner has the right over the overriding interests of persons notified (e.g. neighbours) of the intention to change ownership. Conclusion The LRA 1925 provided a dangerous avenue through which parties could fail to report overriding interests in the property they intended to dispose of, exposing buyers to challenges in registering their new acquisitions and opening the way for massive underhand dealings in registration of land titles. Clearly, the existence of overriding interests (despite the fact that it is impossible to require parties to register all such interests) makes registration of titles fairly difficult. This explains why the UK Parliament sought to streamline the process by enacting the LRA 2002, which has greatly eased the process of title registration. The LRA introduced several measures that would help address the challenge, including limiting the number of lawful overriding interests, requiring registration of most such interests, and deregistration of such interests once entered into land registers. Bibliography Eberson, A. ‘Has the Bell Really Tolled for Chancel Repair Liability?’ Property Law Journal 1 (2013): 26-28. Jackson, N. ‘Overreaching in Registered Land Law’, The Modern Law Review 69(2) (2006): 214-241. Law Commission. ‘Land Registration for the Twenty-first Century – A Consultative Document, (2002), Crown Copyright. Panesar, S. ‘The Importance of Possession in the Common Law Tradition’, Coventry Law Journal 8(1): 1-13. Read More