The work involved in investigating an unregistered title is far greater than that involved with a registered title.
Ownership of unregistered land is evidenced by deeds, mostly conveyances. The Seller shows to the Buyer a period of unchallenged ownership, and there is substantial reliance on the integrity of the title deeds. If any are lost, damaged or even forged, serious problems arise for the Seller in proving title.
A seller will need to prove he has a good root of title for at least 15 years which deals with the whole of the legal estate and equitable interest, contains a description of the Property and does not cast any doubt on the title of the Seller [Williams &amp; Lightwood, REF1].
However, it is possible that deeds prior to the root of title produced may contain relevant information that the Buyer will not see.
It is also likely that the title will be unique to the property, revealing an individual set of problems and circumstances. When these have been dealt with, and the matter has been completed, first registration is necessary and this is a tedious job of scheduling deeds in date order and accounting for discrepancies.
Dealings with unregistered land take up more of a solicitor’s time and potentially, cost buyers a lot more money, and give rise to uncertainty [Pottage, REF2] The standard of proof offered by a Seller of unregistered land is agreed with the Buyer – and it is a compromise to a guaranteed title offered by an owner of registered land.
The system prior to the 1925 land law legislation was riddled with difficulties that caused even further problems to purchasers of land.
A purchaser of land (including a mortgagee) could take the land subject to any legal interest that might exist and without a formal register, this meant looking through the deeds provided and inspecting the property in the hope of discovering it. Equitable interests conversely were binding on all purchasers except for ‘equity’s darling’ – the bonafide purchaser for value, of a legal interest, without notice. A purchaser had actual notice if they knew of the interest, or constructive notice if he would have discovered it, had they made reasonable enquiries. Imputed notice arose where an agent for the purchaser had actual or constructive notice. This doctrine of notice created a minefield for potential buyers of a property, who were expected to make detailed enquiries or would risk taking subject to any interests that existed.
After 1925, a new system was introduced to protect interests in both registered and unregistered land. In unregistered land, third party rights could now be registered as land charges. Land Charges protect interests such as restrictive covenants (Class D(ii)), equitable easements (Class D(iii)), second legal mortgages not protected by title deeds (Class C(i)) and, significantly, non-legal owning partner’s right to occupy under the Family Law Act 1996 (Class F). The land charges are registered against the name of the estate owner. Once registered, the charge gives ‘actual notice … to all persons’ [s.198 Law of Property Act 1925] and so offers protection against “equity’s darling”. If not registered, a land charge may be void and not therefore binding on a purchaser [s.4 Land Charges Act 1972 REF3].
The system of registered land is simpler and cheaper in many respects. Ownership of the land or interest is evidenced by the register held by the Land Registry. The register holds a description of the land, a filed plan, the type of estate (freehold/leasehold), rights, restrictions and charges against the Property, and details of the owner. Additionally, the Land Registry afford a guarantee – for example, ‘absolute freehold’, which is the best available title and guarantees that the register is an accurate ‘mirror’ of the land. If anything is wrong with the title, a purchaser has a redress in the form of compensation from public funding.
Registered land changes ownership by means of transfer rather than conveyance. Once the transaction is complete, the transfer must be registered with HM Land Registry (after paying stamp duty if applicable) within two months. On completion, the buyer acquires an equitable interest in the land, but does not acquire the legal interest until the title is registered. This leaves a gap in which third parties could, potentially, register their own interests and so it is necessary to obtain priority at the Land Registry by means of a 94A/B.
An advantage of registered land is that almost all binding interests of third parties appear on the register, as notices or cautions.
The exception to the idealistic system of registration are the third party rights contained at s.70(1) of the Land Registration Act 1925 [REF4]. These are overriding interests and a purchaser takes subject to them, even though they are not registrable. Where the new system of land registration protected the purchaser from the hazardous doctrine of notice, Section 70(1) added a pitfall. For example, s.70(1)(g) protects the rights of ‘every person in actual occupation of the land’. Occupation alone is not enough in itself – the person must also have an interest in the land. [National Provincial Bank Ltd v Ainsworth 1965] AC 1175 [REF5]. A purchaser of the land must make enquiries of the person in occupation and only if the person does not reveal their rights will the purchaser take free from them.
Where the land is unregistered and a person has failed to register a land charge, the courts have applied a strict approach of voiding the land charge, in favour of the purchaser. Class C(iv), D(ii) and D(iii) charges are void against a purchaser of a legal estate for money or moneysworth, whereas classes C(i) and F are void against the purchaser of any estate in land for value. There is no implied requirement that the purchaser should be acting in ‘good faith’ (i.e., have no knowledge of the unregistered interest) as the courts held this would be ‘reintroducing the doctrine of notice by the back door’, and the whole point of the Land Charges Act was to reduce the uncertainty the doctrine caused [Midland Bank Trust Co Ltd v Green 1981 2 WLR 28 REF6].
In contrast, where the land is registered the courts have taken a view that an unregistered minor interest is still protected if a buyer has actual notice. In Peffer v Rigg 1977 1 WLR 285 [REF7], Graham J ruled that a purchaser can only be protected if they give valuable consideration and act in good faith. He went on to say that they were not acting in good faith if they had actual notice of the interest. Battersby also says that actual notice had never been a problem and ought to bind a purchaser [Battersby, REF8]. The Law Commission disagreed and took the view that the doctrine of notice should not apply to registered titles unless statute said otherwise, for various reasons [Law Com No 254, REF9]. Statute supports this as at S.59(6) Land Registration Act 1925 [REF4], a purchaser is not affected by matters which are not protected by a caution or other entry on the register, whether or not he has notice.
It is true in terms of transferring ownership of land that the process has been significantly simplified. Investigation of title is quicker, the title is guaranteed and reveals almost all rights, as oppose to the pre-1925 system where rights depended on notice. The only flaws in achieving the goals outlined by Lord Wilberforce in Williams &amp; Glyn’s Bank Ltd v Boland (1981) AC 487 are overriding interests, which can make registered land even more of a problem than unregistered land – for example, a beneficial interest arising under a trust binds buyers of an unregistered title only if they have notice of it and do not overreach, whereas with registered land, if the beneficiary is in actual occupation and the buyers do not overreach, they will be bound by the equitable interest whether or not they have notice [Unit 3 – 5, p.203 REF11].
In conclusion, whilst the Land Registration Act 1925 has simplified and cheapened conveyancing in many respects, s.(70)(1) has created a set of pitfalls which would clearly be better protected in some other way and which complicate the process (and thus makes it more expensive!). S.70(1) should be revised if the Land Registration Act 1925 is to achieve its purpose fully.
1. Williams, T. C. &amp; Lightwood, J. M. A Treatise on the Law of Vendor and Purchaser (4th Edition, 1936) p.47; in Law Commission Consultative Document, ‘Land Registration for the Twenty First Century’ (Law Com. No. 254); in Reading 19, p.62, Law: Ownership &amp; Trusteeship – rights &amp; responsibilities, Resource Book 1, The Open University, Milton Keynes
2. Pottage, A., Evidencing Ownership in Land Law: Themes and Perspectives, ed. Bright &amp; Dewar, 1998, OUP, pp.135 – 148; in Reading 21, pp.65-72, Law: Ownership &amp; Trusteeship – rights &amp; responsibilities, Resource Book 1, The Open University, Milton Keynes
3. Land Charges Act 1972 in Thomas, Meryl, Blackstone’s Statutes on Property Law (10th Edition) pp. 190 – 199, Oxford University Press, Oxford.
4. Land Registration Act 1925 – found online at www.butterworths.com.
5. National Provincial Bank Ltd v Ainsworth (1965) AC 1175 in Smith, R. J. Property Law – Cases and Materials, pp. 46 – 47, Pearson, Essex.
6. Midland Bank Trust Co Ltd v Green 1981 2 WLR 28 in Smith, R. J. Property Law – Cases and Materials, pp. 307, Pearson, Essex.
7. Peffer v Rigg 1977 1 WLR 285 in Smith, R. J. Property Law – Cases and Materials, pp. 305 – 307, Pearson, Essex.
8. Battersby (1995) 58 MLR 637 at p. 655 in Smith, R. J. Property Law – Cases and Materials, p. 309, Pearson, Essex.
9. Law Commission Consultative Document, ‘Land Registration for the Twenty First Century’ (Law Com. No. 254) in Smith, R. J. Property Law – Cases and Materials, pp. 310 – 311, Pearson, Essex.
10. Williams &amp; Glyn’s Bank Ltd v Boland (1981) AC 487 in Smith, R. J. Property Law – Cases and Materials, pp. 318 – 319, Pearson, Essex.
11. Units 3 – 5 – ‘Proof and Transfer of Ownership of Land’, Consolidation Activity (2) – p.202 – 203, Manual 1: Law: Ownership &amp; Trusteeship – rights &amp; responsibilities, The Open University, Milton Keynes
<span style=”color: #ff0000;”><strong>PLEASE NOTE: I wrote this essay a long time ago when I was studying and the law may be out of date. Please don’t rely on it without taking some time to check!</strong></span>
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