Land - Unregistered land (3)

Question 1

What is unregistered land?

Answer 1

Unregistered Land: Prior to 1925, all land was ‘unregistered’. More than 40% (area) and 10% (title) remains unregistered.

Question 2

How are third party interests enforced?

Answer 2

Enforcing Third Party Interests: To enforce a third-party right over unregistered land, it must be registered as a ‘Land Charge’, or satisfy the ‘Doctrine of Notice’, depending on the type of right.

Question 3

Which rights must be registered at the Land Charges Department?

Answer 3

Land Charges System: Certain rights must be registered at the Land Charges Department in Plymouth against the estate owner of the servient land - and not the land itself (s3 Land Charges Act 1925).

 (1) Registrable Interests: The following rights must be registered as Land Charges:
	Puisne Mortgage: Subsequent legal mortgages if the first mortgagee retained title deeds - Class C(i).
	Estate Contracts: Contracts exchanged prior to completion for lease or sale - Class C(iv).
	Restrictive Covenants: Restrictive Covenants created since 1926 - Class D(ii).
	Equitable Easements: Equitable Easements created since 1926 - Class D(iii).
	Spousal Rights: Spousal rights under s30 FLA - Class F.

(2) Effect of Registration: Registration protects the right, constituting ‘actual notice’ to purchasers of the estate from date of registration, even if they are actually unaware (s198 LPA).
Failed Registration: Failure to register means the estate can be purchased free of the interest (s4 LCA). Actual knowledge of the right is irrelevant - it must be registered (Midland Bank v Green).
Purchasers: Purchasers include mortgagees and lessees, but not giftees, who are subject to rights.

(3) Constraints: It can be difficult to determine charges where an individual cannot determine prior estate owners (no access to the deeds), or the estate owners have used different versions of their name.

(4) Search: Land charges will bind all future purchasers - it is therefore prudent to search against all estate owners (even those predating the good root of title).
Previous Searches: Searches are conclusive in favour of a searcher - this means purchasers can rely on the searches of previous purchasers if contained in the epitome of title (s10 LCA 1972).
Statutory Compensation: A buyer may be bound by a Land Charge which was not possible to identify by the epitome of title - they may be entitled to statutory compensation for their loss.

Question 4

What is the doctrine of notice?

Answer 4

Doctrine of Notice: Certain rights will only be protected by the ‘Doctrine of Notice’ (the pre-1926 system).

(1) Relevant Interests: The following rights are subject to the doctrine (provided they were validly created):
Trust Rights: Express and implied beneficial trust interests over the land.
Legal Interests: Most legal interests (legal leases, easements, mortgages etc).
Pre-1926 Equitable Interests: Equitable interests created prior to 1926 (these cannot be registered).

(2) Effect of Legal Interest: Legal interests ‘bind the world’, meaning all purchasers are bound irrespective of knowledge.
Exception: A second legal mortgage (‘puisne mortgage’) must be protected by Land Charge, as the first lender retains the title deeds.

(3) Effect of Equitable Interest: Trust and pre-1926 equitable interests are enforceable against purchasers except ‘equity’s darling’, meaning a bonafide purchaser of a legal estate for value without notice.
Bonafide: Purchaser acted in good faith (non-fraud).
Purchaser: Purchaser of estate, including mortgagees and lessees.
Operation of Law: Trustees in bankruptcy and PRs on death do not count.
Legal Estate: A freehold or legal leasehold estate (s1(1) LPA).
For Value: Consideration provided for purchase.
Without Notice: Purchaser had no notice of interest on purchase.
Actual Notice: Purchaser had notice by virtue of facts known to them (not mere rumours).
Constructive Notice: Purchaser had notice by virtue of facts that ‘would have come to their knowledge’ if inquiries and inspections were made as reasonably ought (s199(1) LPA). Purchasers have a duty to make reasonable inquiries (Kingsnorth Finance v Tizard).
Imputed Notice: Purchaser had notice by virtue of their agent or solicitor’s actual or constructive notice.

(4) Removing Interests: Purchasers may be able to negotiate or overreach an interest.
Negotiation: Parties may negotiate to remove an interest, at the interest holder’s absolute discretion.
Overreaching: Trust interests can be ‘overreached’, if purchase money is paid to at least two trustees or a trust corporation (s2(1); s27(2) LPA). The beneficial interest transfers from land to purchase money.

Question 5

How is proof of title of unregistered land assessed?

Answer 5

Proof of Title: Sellers of unregistered land must prove ownership by establishing uninterrupted possession of the land for 15 years (s44 LPA). This is done by ‘epitome of title’.

Epitome of Title
Epitome of Title: The ‘epitome of title’ is the bundle of deeds and documents establishing ownership of an unregistered title.

(1) Good Root of Title: Epitomes begin with a ‘good root of title’, which:
Ownership: Shows ownership of the whole of the legal and equitable interest in the land.
Description: Recognisably describes the land.
Clear Title: Casts no doubt on the title.
15 Years: Is at least 15 years old.
Type of Document: Typically the most recent (15+) deed of transfer for value (best).

(2) Rights in Epitome: Purchasers should investigate epitome of title to discover third party rights over the land. References to rights which precede the root enable the buyer to seek the relevant earlier documents.

(3) Constraints: Epitomes of title carry a number of constraints.
Forgeries: Epitomes are subject to forgery.
Time and Expense: Investigating is time consuming and expensive.
Loss and Destruction: Epitomes are prone to loss or destruction.
Incomprehensible: Epitomes can be difficult to read.
Hidden Rights: Epitomes which do not reveal rights engender purchase without notice of said rights.

Question 6

What triggers compulsory first registration?

Answer 6

Compulsory First Registration: Unregistered land or unregistered leases exceeding 7 years must be compulsorily registered at the Land Registry when subject to a ‘triggering event’, as has been required since 1 December 1990.

(1) Triggering Events: Triggering Events are listed in the Land Registration Act 2002:
Transfer of Freehold: Transfer of a freehold estate for value or as a gift, or by court order (s4(1)(a)). This also includes negative value, meaning creditors and trustees in bankruptcy are also subject (s4(6)).
Grant or Sale of Long Lease: Grant or sale of a lease for a term exceeding seven years, including leases over unregistered freehold (s4(1)(c)). The freehold remains unregistered.
Mortgage: Creation of first legal mortgage over unregistered title (s4(1)(g)).
Assent: An assent is used when PRs gift an estate to a beneficiary on the death of the owner.

(2) Time Limitation: Purchasers must apply for first registration within 2 months of a triggering event (s6 LRA 2002). If this is not achieved, the following may occur:
Transfer: Legal estate will revert to transferor, and held on trust until complete. Defaulting party pays the costs of remedy.
Grant: Legal lease transaction fails, and is held on trust until complete.
Mortgage: Equitable mortgage exists until completion.
Extension: Registrar will extend if there is a good reason.

(3) Voluntary Registration: Landowners may voluntarily register their title, for a fee (s3 LRA 2002).

(4) Effect: The title becomes ‘substantially registered’, adopting a registered title and the pursuant registers.
Missed Event: If a triggering event arose but the title was not registered, then a seller’s solicitor must register the title before selling the property. This is revealed in the search of the epitome.