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Registration Notes s58 Land Registration Act 2002 - the register is conclusive as to title
What are the objectives of the scheme of land registration?
There are often said to be three principles which underpin registration:
(a) The mirror principle -
a. According to this all facts material to the title are to be found on the register
(b) The curtain principle -
a. Purchasers need not look behind the register and, in particular, need not be concerned with the operation of trusts
(c) The insurance principle -
a. Where any flaws occur so that the register fails to reflect the title to the property, the person who loses should receive compensation
It has been said that the effect of the new registration scheme to be found in the Land
Registration Act 2002 is that it creates a simple system of title by registration as opposed to a system of registration by title - the register is conclusive as to title in relation to registered land.
The potential benefits of a land registration system include:
(a) A record of land ownership which is created and maintained by the state a. The single system will improve its consistency and thus people's ability to rely upon it i. BUT: the initial expense pf creating and maintaining the system must be taken in to account, including various transaction costs and the like
(b) A record of land ownership which is publicly accessible a. Information relating to the ownership of land is readily and easily available i. BUT: there is a potential compromising of the privacy of land owners
1. These compromises can be overcome, though, whereby there are exceptions to the publicity of the register a. For instance, the absence of witness protection programmes and the like
(c) The state guarantees the accuracy of the system a. BUT: there is a potential loss of rights as a result of a failure to register or the result of mistakes on the register i. This risk is mitigated by the existence of rectification
He de Soto (2001) has argued that the central reason that capitalism has triumphed in the
West and failed in the rest of the world is that most of the assets in Western nations have been integrated in to one formal representational system. The potential of a given asset has become easier to evaluate and exchange thus enhancing the production of capital. Which dispositions need to be registered and what is the effect of their registration?
There are three types of interest that depend upon their existence in the register for their ability to bind third parties. These are:
(a) Registrable interests -
a. These are primarily legal fee simples and leases
(b) Registrable dispositions -
a. Those dispositions made by a registered proprietor which must be completed by registration. They include:
i. A transfer ii. A grant of years absolute (i.e. a lease)
1. Generally only where this is longer than 7 years iii. An express grant or reservation of an easement iv. The grant of a legal charge (i.e. mortgages)
(c) Minor interests -
a. This refers to a residual category of interests that must be protected on the register before a third party can be bound
We usually refer to registering registrable interests and dispositions and protecting minor interests.
Registrable Interests: First Registration
We should distinguish between:
(a) The fee simple a. s3 - any holder of a fee simple can apply for registration i. Chapter 2: Cautions against First Registration
1. s15: Where a person owns an unregistered estate, they may lodge a caution against the registration of its title. Per s16,
this will have the effect of forcing the registrar to give the cautioner notice of the application and his right to object to it b. Compulsory Registration:
i. s4 - registration of the fee simple is compulsory after a transfer of the legal title or a mortgage
1. s6 - the registration must take place within two months of the transfer ii. s5 - grants a power to the Secretary of State to order make amendment to s4 so as to add to the events which would impose compiler registration iii. s7 - failure to comply with compulsory registration will render the transfer, grant, or creation void as regards to the transfer, grant or creation of a legal estate
1. But there will be no impact upon the equitable estate which will be retained iv. s8 - failure to comply with compulsory registration leading to the need for retransfer regrant or recreation will render the transferee,
grantee or mortgagor liable to pay the relevant transaction costs for the retransfer, regrant or recreation c. Forms of Registered Title:
i. s9 establishes three classes of title
1. Fee simple absolute - this accounts for virtually every case of the fee simple being registered a. There is nothing wrong or dubious with the title
2. Fee simple qualified - this means that there is a specific problem with the title such as the deed being lost a. There will be no guarantee in respect of the specified defect
3. Fee simple possessory - these are designed for cases where the documentary title cannot be proved and the titled deeds depend upon adverse possession a. This confers no guarantee at the time of registration i. Subsequent problems such as forgery of the newly registered proprietor's signature on a title will be covered by the guarantee b. Possessory titles might be upgraded to absolute titles upon the completion of the requisite period of adverse possession d. Effect of First Registration:
i. s11(3) - registration with absolute title has the effect of vesting in the proprietor the relevant estate alongside all interests subsisting for the benefit of the estate
1. This is subject to two exceptions:
a. s11(5) - where the proprietor is a trustee, the beneficiaries' interests where he has notice of them b. s11(4)(c) - adverse possession claims will bind a first proprietor who has notice of them ii. s11(4) - the estate is vested in the proprietor subject only to the interests protected in the register and overriding interests
1. Entry of a notice on to the register does not guarantee that the interest will be protected per Lord Goff in Kitney v MEPC
(b) Leases -
a. Compulsory Registration:
i. s4(c)(i) - whether the landlord's title is registered or not the grant of a lease for more than 7 years must be registered within 2 months of the grant b. Forms of Registered Lease:
i. s10 - there four classes of lease:
1. Absolute title 2. Good leasehold title - where the freehold to which the lease relates isn't registered. This is guaranteed until the freehold is registered in which case the title will be upgraded
3. Qualified title
4. Possessory title ii. There are two special categories of lease beyond the established classes:
1. Future leases - a lease (not merely a contract for a lease under which possession will be taken from the future a. These must be registered b. They are not overrising interests
2. Discontinuous leases (interrupted lease) - for instance, a lease for the first week of August in the next 4 years a. These should be registered b. They are not overriding interests c. They are not subject to compulsory registration upon grant c. Effect of First Registration:
i. s12 - the various forms of freehold title (absolute qualified and possessory) and their effects apply to leases.
Per s23, registered proprietors have the power to sell, lease or mortgage their title (their powers of disposition).
Under s26, the proprietor's powers of disposition are said to be is free of any limitation,
o BUT: the proprietor remains liable for breach of duty if a limitation is disregarded. This is particularly important for trusts of land, as this is the context in which such limitations will most likely be found
According to s27, the following dispositions must be registered before they can be legal:
(a) Transfers -
a. A delay in registering transfers might prejudice the purchaser if other interests are protected or (for some interests) become overriding i. Prior to registration the purchaser will obtain an equitable interest as a result of their giving consideration and use of singed writing per (s2
(b) Leases -
a. There is no two-month period as for leases granted by an unregistered landlord i. A registrable disposition has no effect at law until registered ii. s27(b)(i) - leases for less than 7 years are not registrable
1. Future and discontinuous leases constitute registrable dispositions regardless of their length (c) Easements and Profits -
a. Easements do not have their own title b. s27(2)(d) - compulsory registration only applies where there is an express grant i. Thus implied easements do not have to be registered, but will constitute overriding interests (see below)
c. One peculiarity is that easements contained in short leases have to be registered even though the short lease itself may be an overriding interest.
(d) Registered Charges (Mortgages) -
a. Unlike the fee simple and the lease, charges do not have their own titles -
they can only be entered on an existing registered title b. Per the LRA 2002, the only form of legal mortgage can be created and resisted is a legal charge: mortgages by long lease are not permitted.
The effect of registering these dispositions is considered below.
The LRA 2002 ceases to use the term 'minor interest', however it is a useful descriptive label for those residual interests.
Included in this category of interest are, for example, restrictive covenants and nonlegal fee simples
A minor interest will not bind a registered interest unless it is entered on the register
Unlike registrable dispositions protected minor interests have no priority over earlier unprotected interests
Minor interests are in no way exclusive of other categories of interest
Most overriding interests can be protected by notice, as can a registrable interest
There are two methods of protecting minor interests:
(a) Notice -
a. s32 - a purchaser will be bound by a notice, although the interest is not guaranteed b. s33 - generally speaking, any interest can be protected by a notice, but there are three exceptions to this:
i. Interests under trusts of land must be protected by restriction rather than by notice ii. Notice only allows for the protection of leases between 3 and 7 years iii. Restrictive covenants which are not entered in the register and are binding on the tenant remain enforceable c. s34 - the 2002 Act distinguishes between:
i. Agreed notices - the proprietor can have no objection to this sort of notice as they have agreed to it ii. Unilateral notices - 1. s35 - the registrar must notify the non-submitting party to a unilateral notice
2. s36 - the notified party can apply to the registrar to have the notice cancelled
(b) Restriction -
a. s41 - A restriction operates to prevent a future entry on the register:
registration will be refused if the restriction is not complied with i. For instance, the trust of land. Trustees can sell the land, overreaching the beneficial interests, so long as they purchase money is paid to two trustees
1. A transfer by fewer than two trustees cannot be registered b. s43 - the registrar can reject a restriction so as to ensure that restrictions are reasonable and workable c. A restriction only operates to prevent registration. If registration takes place,
then the restriction will not be binding upon registration.
What is the effect of registration on prior interests? When is the priority of an interest
Where A and B have conflicting property rights, the LRA 2002 resolves the conflict by creating the following priorities analysis:
(a) Section 28 - the basic rule a. "The first in time prevails" unless ss29-30 apply i. The priority of an interest is not affected by a later disposition even if that disposition is entered on the register
(b) Section 29/30 - the effect of registered dispositions a. A registrable disposition of a registered estate made for valuable consideration postpones previous interests affecting the estate whose priority is not protected at the time of registration i. s1(3)(2) establishes that valuable consideration cannot be nominal consideration
Which dispositions need to be registered?
(c) Section 27 -
a. The following dispositions must be registered in order to take legal effect:
i. Transfers ii. Leases of more than 7 years
1. NOTE: s29(4) establishes that leases which are for less than 7 years are treated as if they were registered iii. Express grants or reservations of interests of a kind falling in s1(2)(a)
LPA 1925 (easements)
Assuming that the disposition needed to be and was registered, how can the previous interest's priority be protected?
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