(DISCUSSION PAPER No 128) Discussion Paper on Land Registration: Registration, Rectification and Indemnity discussion paper Discussion Paper on Land Registration: Registration, Rectification and Indemnity August 2005 DISCUSSION PAPER No 128 This Discussion Paper is published for comment and criticism and does not represent the final views of the Scottish Law Commission. EDINBURGH: The Stationery Office £21.00 This publication (excluding the Scottish Law Commission logo) may be re-used free of charge in any format or medium for research for non-commercial purposes, private study or for internal circulation within an organisation. This is subject to it being re-used accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the publication specified. For any other use of this material please apply for a Click-Use Licence for core material at www.hmso.gov.uk/copyright/licences/core/core_licence.htm or by writing to: OQPS Licensing Division, St Clements House 2-16 Colegate, Norwich, NR3 1BQ; Fax: 01603 723000; Email: [email protected]. 0 10 888166 0 ii The Scottish Law Commission was set up by section 2 of the Law Commissions Act 19651 for the purpose of promoting the reform of the law of Scotland. The Commissioners are: The Honourable Lord Eassie, Chairman Professor Gerard Maher, QC Professor Kenneth G C Reid, CBE Professor Joseph M Thomson Mr Colin J Tyre, QC. The Chief Executive of the Commission is Miss Jane L McLeod. Its offices are at 140 Causewayside, Edinburgh EH9 1PR. The Commission would be grateful if comments on this Discussion Paper were submitted by 30 November 2005. Comments may be made (please see notes below) on all or any of the matters raised in the paper. 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You may wish to note that an accessible electronic version of this document is available on our website. 1 Amended by the Scotland Act 1998 (Consequential Modifications) (No 2) Order 1999 (SI 1999/1820). iii Contents Paragraph Page Part 1 Introduction Background 1.1 1 The first discussion paper 1.2 1 Facility of transfer v security of title 1.3 1 "Positive" system v "negative" system 1.9 3 An example 1.12 4 The results of consultation 1.15 5 The present paper 1.16 5 Our proposals in summary 1.18 5 Registration 1.19 5 The integrity principle 1.20 6 Rectification 1.21 6 Indemnity 1.22 6 The third discussion paper 1.23 7 New terminology 1.24 7 Which Parliament? 1.25 7 Acknowledgments 1.26 7 Part 2 The Land Register DEFINING THE REGISTER 2.1 8 Component parts 2.1 8 Title sheets and deeds 2.4 9 Storage of data 2.6 10 Proposal 2.7 10 TITLE SHEETS 2.8 11 Primary and secondary rights 2.8 11 Principal title sheets and lease title sheets 2.11 12 A need for reform? 2.12 12 A PUBLIC REGISTER 2.15 13 Introduction 2.15 13 Content of the Register: personal rights 2.17 13 Accessing information: the index of proprietors 2.21 15 ECHR article 8 2.23 16 Personal safety 2.29 17 Three options for reform 2.33 19 OTHER INFORMATION HELD BY THE KEEPER 2.37 20 Deeds 2.37 20 Application forms and other documents 2.41 21 Deeds as interpretative aids 2.42 22 iv Contents (cont'd) Paragraph Page General information about land 2.44 23 Spent rights 2.45 23 Proposals 2.49 24 Part 3 Registration (1): nature and eligibility TITLES OR DEEDS? 3.1 26 Registration of titles 3.1 26 Registration of deeds and other documents 3.3 26 Standard v non-standard cases 3.5 28 Some conclusions 3.9 30 Are deeds registered? 3.13 31 WHAT CAN BE REGISTERED 3.14 31 Register of Sasines 3.14 31 Land Register 3.16 32 Overlap with rectification 3.20 34 A replacement provision 3.24 36 FIRST REGISTRATION 3.28 37 Compulsory first registration 3.28 37 Voluntary first registration 3.35 39 Completing the Register 3.39 40 Part 4 Registration (2): procedure DATE OF REGISTRATION 4.1 44 Receipt of application or appearance on the Register? 4.1 44 Conceptual difficulties 4.4 45 The three stages 4.6 46 Application record 4.7 46 Acceptance 4.9 46 ACCEPTANCE AND REJECTION 4.11 47 The current law 4.11 47 Requisitioning of evidence 4.15 48 Applications which must be accepted 4.20 49 Applications which must be rejected: introduction 4.25 50 Paragraph (a): land insufficiently described 4.26 50 Paragraph (d): no title number 4.27 50 Paragraph (aa): superiorities 4.31 52 Paragraph (b): souvenir plots 4.32 52 The principle 4.32 52 The details 4.35 53 Paragraph (c): applications which are frivolous or vexatious 4.37 54 Paragraph (e): non-payment of fee 4.38 54 v Contents (cont'd) Paragraph Page Deed not self-proving 4.39 54 Additional grounds for rejection 4.40 54 Applications which must be rejected: in summary 4.42 55 Exclusion of indemnity 4.43 56 DEEDS GRANTED A NON DOMINO 4.44 56 Positive prescription 4.44 56 Ownership conferred too soon 4.46 57 Speculative conveyances 4.47 57 Possible solutions 4.51 59 Criterion 4.52 59 Mechanism 4.54 60 Applications which may be accepted or rejected 4.58 61 LAND CERTIFICATES AND CHARGE CERTIFICATES 4.59 61 The present law 4.59 61 Should certificates of title be abandoned? 4.61 62 Office copies: issued automatically or on request? 4.64 63 Part 5 Registration (3): the protection of acquirers CURRENT LAW 5.1 65 Section 3(1) 5.1 65 Three rules 5.8 67 Rule (1): creation or transfer of real rights 5.9 67 Rule (2): variation or extinction of real rights 5.12 68 Rule (3): extinction of omitted encumbrances 5.13 69 A missing rule? 5.16 70 PROPOSALS FOR REFORM 5.17 70 Introduction 5.17 70 From three rules to two 5.19 71 Integrity principle 5.21 72 The first rule: registered proprietor taken to be owner 5.22 72 Relevant date 5.23 72 Minerals 5.25 73 Pertinents 5.28 74 Exceptions 5.29 74 Presumption that registered proprietor is owner 5.32 75 The second rule: title subject only to listed rights and overriding interests 5.33 76 First registrations 5.45 79 Effect of registration 5.46 79 COMPETING RIGHTS 5.51 80 Three cases and two principles 5.51 80 Real Rights Act 1693 5.53 81 vi Contents (cont'd) Paragraph Page 1979 Act section 7 5.55 82 TIME OF REGISTRATION 5.59 83 Day or time of day? 5.59 83 Equalisation: some problems 5.61 84 Three examples 5.63 85 Compatible rights 5.67 86 Competitions with unregistered real rights 5.68 86 Part 6 Rectification CURRENT LAW 6.1 88 Introduction 6.1 88 Actual inaccuracy 6.2 88 Bijural inaccuracy 6.4 88 Effect of rectification 6.6 89 Restrictions on rectification 6.11 90 Difficulties in summary 6.15 91 PROPOSALS FOR REFORM 6.17 92 Introduction 6.17 92 Meaning of "inaccuracy" 6.18 92 Severance of connection with indemnity 6.20 92 Rectification unrestricted 6.21 92 An example 6.22 93 Judicial reduction and rectification 6.24 93 Bringing rectification about 6.25 94 Application procedure 6.28 95 Proposal 6.32 96 ENTRY TO THE REGISTER BY OTHER MEANS 6.33 97 Diversity 6.33 97 In search of unity 6.35 98 Effect of entry 6.36 98 Relationship to inaccuracy 6.37 98 Powers and duties of the Keeper 6.38 98 Rectification and registration 6.39 99 Part 7 Indemnity (1): in principle CURRENT LAW 7.1 100 Introduction 7.1 100 Cost 7.3 100 Four grounds 7.4 100 The link with rectification 7.7 101 vii Contents (cont'd) Paragraph Page Too wide 7.8 102 Too narrow 7.12 103 Inaccuracy not rectification 7.17 104 Fraud and carelessness 7.19 105 Claims by the acquirer 7.20 105 Claims by the true owner 7.21 106 THE KEEPER'S WARRANTIES 7.22 106 Introduction 7.22 106 Two warranties 7.28 107 Warranty as to title 7.29 107 Only registration 7.30 108 Rectification 7.33 109 Noting 7.34 109 First registration 7.35 109 Only the applicant 7.36 109 Only real rights 7.37 110 Only for today 7.38 110 Only that the right is acquired (or varied or extinguished) 7.39 110 Not for administrative mistake 7.40 111 Not for bad faith 7.41 111 Not where indemnity excluded 7.45 112 Not for