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LAND REGISTRATION for the TWENTY-FIRST CENTURY a Conveyancing Revolution

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LAND REGISTRATION FOR THE TWENTY-FIRST CENTURY A Conveyancing Revolution LAND REGISTRATION BILL AND COMMENTARY Laid before Parliament by the Lord High Chancellor pursuant to section 3(2) of the Law Commissions Act 1965 Ordered by The House of Commons to be printed 9 July 2001 LAW COMMISSION H M LAND REGISTRY LAW COM NO 271 LONDON: The Stationery Office HC 114 The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law. THE COMMISSIONERS ARE: The Honourable Mr Justice Carnwath CVO, Chairman Professor Hugh Beale Mr Stuart Bridge· Professor Martin Partington Judge Alan Wilkie QC The Secretary of the Law Commission is Mr Michael Sayers Her Majesty’s Land Registry, a separate department of government and now an Executive Agency, maintains the land registers for England and Wales and is responsible for delivering all land registration services under the Land Registration Act 1925. The Chief Land Registrar and Chief Executive is Mr Peter Collis The Solicitor to H M Land Registry is Mr Christopher West The terms of this report were agreed on 31 May 2001. The text of this report is available on the Internet at: http://www.lawcom.gov.uk · Mr Stuart Bridge was appointed Law Commissioner with effect from 2 July 2001. The terms of this report were agreed on 31 May 2001, while Mr Charles Harpum was a Law Commissioner. ii LAW COMMISSION HM LAND REGISTRY LAND REGISTRATION FOR THE TWENTY- FIRST CENTURY A Conveyancing Revolution CONTENTS Paragraph Page PART I: THE LAND REGISTRATION BILL AND ITS OBJECTIVES 1 INTRODUCTION 1.1 1 THE OBJECTIVES OF THE BILL 1.4 2 SOME KEY FEATURES OF THE BILL 1.11 4 Electronic conveyancing 1.12 4 Adverse possession 1.13 4 Other changes 1.14 5 THE BACKGROUND TO THE BILL 1.15 6 STRUCTURE OF THE REPORT 1.21 8 PART II: SUMMARY OF THE MAIN CHANGES MADE BY THE BILL 9 INTRODUCTION 2.1 9 FIRST REGISTRATION 2.4 10 CAUTIONS AGAINST FIRST REGISTRATION 2.14 13 POWERS OF DISPOSITION 2.15 13 REGISTRABLE DISPOSITIONS 2.16 14 PRIORITIES 2.17 14 NOTICES AND RESTRICTIONS 2.19 15 CHARGES 2.23 16 OVERRIDING INTERESTS 2.24 16 REGISTRATION 2.28 18 SPECIAL CASES 2.32 19 ALTERATION, RECTIFICATION AND INDEMNITY 2.38 20 CONVEYANCING: GENERAL MATTERS 2.40 21 ELECTRONIC CONVEYANCING 2.41 21 Introduction 2.41 21 Present conveyancing practice in relation to registered land 2.43 22 Electronic conveyancing: the anticipated model 2.48 23 Introduction 2.48 23 How a typical conveyancing transaction might operate 2.52 24 Compulsory use of electronic conveyancing 2.59 27 Finance 2.62 28 Paragraph Page Stamp duty 2.64 29 Electronic conveyancing and first registration 2.65 29 Do-it-yourself conveyancing 2.68 30 ADVERSE POSSESSION 2.69 30 Introduction 2.69 30 Why do we have a doctrine of adverse possession? 2.71 30 An outline of the new scheme in the Bill 2.74 32 JUDICIAL PROVISIONS 2.75 33 RULES 2.76 33 PART III: FIRST REGISTRATION 35 INTRODUCTION 3.1 35 THE LEGAL SCOPE OF TITLE REGISTRATION ANDTHE EXTENT OF LAND THAT MAY BE REGISTERED UNDER IT3.3 35 The legal scope of title registration 3.3 35 The extent of land that may be registered 3.5 36 VOLUNTARY FIRST REGISTRATION 3.6 37 Registrable estates 3.6 37 Who may apply for first registration? 3.6 37 Which legal estates may be registered with their own titles? 3.9 38 A fee simple absolute in possession 3.9 38 Certain leases 3.10 38 Rentcharges 3.18 40 Franchises 3.19 41 Profits à prendre in gross 3.20 41 Manors no longer to be registrable 3.21 42 COMPULSORY REGISTRATION 3.22 42 Introduction 3.22 42 Events that trigger the compulsory registration of title 3.23 43 Introduction 3.23 43 Transfers 3.24 43 Transfer of a qualifying estate 3.24 43 Transfers to which section 171A of the Housing Act 1985 applies 3.28 45 Grants 3.29 45 Leases granted for a term of more than seven years from the date of grant 3.30 45 Reversionary leases 3.32 46 Grant of a right to buy lease under Part V of the Housing Act 1985 3.33 47 Grant of a lease to which section 171A of the Housing Act 1985 applies 3.34 47 Protected first legal mortgages 3.35 47 Crown grants out demesne land 3.36 47 The power to extend the triggers to compulsory registration 3.37 48 The effect of failure to register 3.38 49 The duty to register 3.38 49 The effect of non-compliance with the duty to register 3.40 49 iv Paragraph Page THE EFFECT OF FIRST REGISTRATION 3.42 50 Classes of title 3.42 50 Introduction 3.42 50 Freehold titles 3.43 50 Leasehold titles 3.44 51 The effect of first registration 3.45 52 Freehold title 3.45 52 Registration with absolute title 3.45 52 Qualified title 3.49 54 Possessory title 3.50 54 Leasehold title 3.51 54 Miscellaneous rule-making powers 3.52 55 CAUTIONS AGAINST FIRST REGISTRATION AND THE CAUTIONS REGISTER 3.54 56 The nature of cautions against first registration under the present law 3.54 56 Cautions against first registration under the Bill 3.56 57 The right to lodge a caution 3.56 57 The effect of a caution against first registration 3.60 59 Cancellation of cautions 3.63 60 The cautions register 3.65 61 PART IV: DISPOSITIONS OF REGISTERED LAND 63 INTRODUCTION 4.1 63 POWERS OF DISPOSITION 4.2 63 Introduction 4.2 63 The principles adopted in the Bill 4.4 64 The provisions of the Bill 4.5 65 Owner’s powers 4.5 65 Protection for disponees 4.8 66 REGISTRABLE DISPOSITIONS 4.12 67 Introduction 4.12 67 The general principle 4.13 68 Dispositions required to be registered and the registration requirements that apply to them 4.16 69 Introduction 4.16 69 Transfers of a registered estate 4.17 69 The grant of certain leases 4.20 71 Leases of franchises and manors 4.23 72 Express grant or reservation of an easement, right or privilege 4.24 73 Express grant or reservation of a rentcharge or legal right of re-entry 4.27 74 The grant of a legal charge 4.29 75 Dispositions of a registered charge 4.30 76 Applications for registration 4.31 76 PART V: PRIORITIES 77 INTRODUCTION 5.1 77 PRIORITY UNDER THE BILL 5.5 78 v Paragraph Page The general rule 5.5 78 The principal exception: registrable dispositions that have been registered 5.6 78 The exception 5.6 78 Applicable only to registrable dispositions 5.7 79 Made for valuable consideration 5.8 79 Priority conferred 5.10 79 When the priority of an interest will be protected 5.11 80 The priority of registered charges 5.14 81 The grant of leases that are not registrable dispositions 5.15 81 The irrelevance of notice 5.16 82 SPECIAL CASES 5.22 84 Inland Revenue Charges 5.23 84 Rights of pre-emption 5.26 85 An equity arising by estoppel 5.29 87 A mere equity 5.32 89 Inchoate rights arising under the Prescription Act 1832 5.37 90 PART VI: NOTICES AND RESTRICTIONS 92 INTRODUCTION 6.1 92 THE PROPOSALS IN THE CONSULTATIVE DOCUMENT 6.2 92 THE PROVISIONS OF THE BILL 6.3 93 Prospective abolition of cautions against dealings 6.3 93 Notices 6.5 94 Introduction 6.5 94 Nature and effect of a notice 6.6 94 Interests which may not be protected by notice 6.8 95 Interests under trusts of land and settlements 6.9 95 Short leases 6.10 96 A restrictive covenant between landlord and tenant 6.13 97 An interest which is registrable under the Commons Registration Act 1965 6.14 97 An interest in any coal or coal mine or ancillary rights 6.15 97 A PPP lease 6.16 98 The circumstances in which a notice may be entered on the register 6.17 98 Introduction 6.17 98 Burdens entered on the register on first registration 6.18 99 Entry in respect of an overriding interest 6.19 99 Entry in respect of a registrable disposition 6.20 99 Where the entry is necessary to update the register 6.21 100 Applications for the entry of a notice 6.22 101 Unilateral notices 6.26 102 The nature of unilateral notices 6.26 102 Protection against the improper entry of a unilateral notice 6.27 103 Abolition of inhibitions as a separate form of entry 6.32 104 Restrictions 6.33 104 Introduction 6.33 104 The nature and effect of a restriction 6.34 104 When a restriction may or must be entered 6.38 106 vi Paragraph Page Introduction 6.38 106 When the registrar may or must enter a restriction 6.39 107 Where the registrar may enter a restriction 6.40 107 Where the registrar must enter a restriction 6.46 110 Applications for the entry of a restriction 6.47 111 Where the court may order the entry of a restriction 6.51 113 Notifiable applications for a restriction 6.54 114 Withdrawal of restrictions 6.58 116 Pending land actions, writs, orders and deeds of arrangement 6.59 116 PART VII: CHARGES 118 INTRODUCTION 7.1 118 THE POWER TO CREATE CHARGES AND THE POWERS OF THE CHARGEE 7.2 118 Legal Charges 7.2 118 The creation of charges and the powers of the chargee 7.2 118 The definition of “charge” 7.5 120 Powers of chargees and the need for a deed 7.6 121 Dispositions made by chargees and the protection of disponees 7.7 121 Equitable charges 7.9 123 SUB-CHARGES AND THE POWERS OF THE SUB-CHARGEE 7.11 123 PRIORITIES 7.13 124 Priority of registered charges 7.13 124 Registered sub-charges 7.16 125 Equitable charges 7.17 126 Tacking and further advances 7.18 126 Present law and practice 7.18 126 Provisions of the Bill 7.28 130 Further advances made with the agreement of subsequent chargees 7.29 130 Further advances where the prior chargee has not received notice of the subsequent charge 7.30 130 Where there is an obligation to make a further advance 7.31 131 Further advances up to a maximum amount 7.32 131 Statutory charges 7.37 133 Types of statutory charge 7.38 133 Overriding statutory charges 7.39 134 Charges which are local land charges 7.42 135 MISCELLANEOUS 7.43 135 Application of proceeds of sale
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