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Updating the Land Registration Act 2002 a Consultation Paper

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Updating the Land Registration Act 2002 a Consultation Paper Updating the Land Registration Act 2002 A Consultation Paper Consultation Paper No 227 Law Commission Consultation Paper No 227 UPDATING THE LAND REGISTRATION ACT 2002 A Consultation Paper © Crown copyright 2016 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.lawcom.gov.uk. Print ISBN xxxxxxxxxxxxx ID XXXXXXXX XX/15 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by The Stationery Office ii THE LAW COMMISSION – HOW WE CONSULT About the Law Commission: 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 Law Commissioners are: The Rt Hon Lord Justice Bean, Chairman, Professor Nick Hopkins, Stephen Lewis, Professor David Ormerod QC and Nicholas Paines QC. The acting Chief Executive is Matthew Jolley. Topic of this consultation: Updating the Land Registration Act 2002: registration of title; priorities; indefeasibility; easements; adverse possession; charges; electronic conveyancing; and jurisdiction of the Land Registration Division of the First-tier Tribunal (Property Chamber). Geographical scope: This consultation paper applies to the law of England and Wales. Availability of materials: The consultation paper is available on our website at http://www.lawcom.gov.uk/project/updating-the-land-registration-act-2002/. Duration of the consultation: We invite responses from 31 March 2016 to 30 June 2016. Comments may be sent: By email to [email protected] OR By post to Jennifer Boddy, Law Commission, 1st Floor, Tower, Post Point 1.53, 52 Queen Anne’s Gate, London, SW1H 9AG. Tel: 020 3334 6857 / Fax: 020 3334 0201 If you send your comments by post, it would be helpful if, whenever possible, you could also send them electronically (for example, on CD or by email to the above address, in any commonly used format). After the consultation: In the light of the responses we receive, we will decide on our final recommendations and present them to Government. Consultation Principles: The Law Commission follows the Consultation Principles set out by the Cabinet Office, which provide guidance on type and scale of consultation, duration, timing, accessibility and transparency. The Principles are available on the Cabinet Office website at: https://www.gov.uk/government/publications/consultation-principles-guidance. Information provided to the Law Commission: We may publish or disclose information you provide us in response to this consultation, including personal information. For example, we may publish an extract of your response in Law Commission publications, or publish the response in its entirety. We may also be required to disclose the information, such as in accordance with the Freedom of Information Act 2000. If you want information that you provide to be treated as confidential please contact us first, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic disclaimer generated by your IT system will not be regarded as binding on the Law Commission. The Law Commission will process your personal data in accordance with the Data Protection Act 1998. iii THE LAW COMMISSION UPDATING THE LAND REGISTRATION ACT 2002: A CONSULTATION PAPER CONTENTS Paragraph Page GLOSSARY xiv PART 1 INTRODUCTION TO THE PROJECT AND TO LAND REGISTRATION 1 CHAPTER 1: Introduction 2 The importance of land registration 1.1 2 The background to our current work 1.4 3 The scope of our work 1.13 5 Manorial rights and chancel repair liability 1.19 7 Overreaching and the protection of beneficial interests 1.20 7 Registration of local land charges on the register 1.23 9 Our relationship with Land Registry 1.26 10 Government consultation on privatisation of Land Registry operations 1.29 10 The structure of this Consultation Paper 1.33 12 Acknowledgements 1.34 12 CHAPTER 2: An outline of land registration 13 Introduction 2.1 13 Land, conveyancing and registration 2.2 13 Three basic principles 2.15 17 Some basic concepts 2.21 18 What is registered in registered land? 2.27 20 The registrable interests 2.29 20 Rights that are recorded, not registered 2.31 21 Property rights that can neither be registered nor recorded 2.32 21 Other information recorded on the register 2.36 22 First registration 2.42 23 The register’s guarantee of title 2.46 24 iv Paragraph Page Priorities in registered land 2.55 26 Priority, registration and recording 2.55 26 Interests that override registered dispositions 2.61 27 Conclusion 2.69 29 PART 2 REGISTRATION OF TITLE 31 CHAPTER 3: The registrable estates 32 Introduction 3.1 32 Duplication of fees simple upon enlargement of leasehold estates 3.2 32 Background 3.2 32 The ambiguity of section 153 of the Law of Property Act 1925 3.3 32 Land Registry practice 3.9 35 Mines and minerals 3.15 36 Introduction 3.15 36 The current law 3.18 37 Issues with the current law 3.35 43 Scope of the land registration project 3.44 45 Reform of the registration of mines and minerals 3.47 46 Discontinuous leases 3.68 51 The problem: the protection of discontinuous leases in registered land 3.68 51 Provisional proposals 3.75 53 The length of lease which is registrable 3.80 54 Background 3.80 54 The current law 3.82 55 The prospect of a reduction to three years 3.84 55 Difficulties posed by a reduction 3.87 56 CHAPTER 4: First registration 59 Introduction 4.1 59 Twilight period 4.5 61 Background 4.5 61 Current law 4.8 61 Priority protection of dispositions which occur after first registration is triggered but prior to registration taking place 4.15 64 v Paragraph Page Reform 4.32 70 Whether a person with the benefit of a derivative interest under a trust can lodge a caution against first registration 4.36 71 CHAPTER 5: The powers of the registered proprietor 73 Introduction 5.1 73 The scheme under the LRA 2002 5.4 73 Simplification and clarification of the powers under the LRA 1925 5.12 75 Uncertainties about the application and scope of owner’s powers 5.16 76 Who can exercise owner’s powers? 5.18 77 The scope of owner’s powers 5.31 80 The registration gap 5.67 88 Practical problems: assignments of leases and the reversion 5.69 89 Discussion 5.75 91 Conclusion 5.85 94 PART 3 PRIORITIES 95 CHAPTER 6: The general and special rules of priority in section 28 and section 29: the difference between registrable dispositions and the grant of other interests in registered land 96 The background law 6.1 96 The exclusion of interests which do not amount to registrable dispositions from section 29 6.7 97 The case for reform 6.16 100 Proposals 6.29 104 Registrable dispositions which are not completed by registration 6.32 105 The requirement for valuable consideration 6.38 106 Interests which cannot be the subject of a notice 6.39 107 Home rights 6.43 108 Transitional provisions 6.50 110 Indemnity 6.55 111 Impact of our proposals on conveyancing practice 6.60 112 Priority searches 6.64 113 CHAPTER 7: Priorities under section 29: valuable consideration 118 Introduction 7.1 118 vi Paragraph Page The requirement to give valuable consideration 7.3 118 The meaning of valuable consideration 7.6 119 Problems with the current approach 7.8 119 What constitutes “consideration”? 7.11 120 When is consideration “valuable”? 7.19 122 What constitutes “nominal consideration in money”? 7.38 126 Options for reform 7.50 129 Protecting those who acquire interests gratuitously 7.52 130 A policy which excludes protection for “gifts” 7.59 131 Clarifying the scope of the valuable consideration requirement 7.64 132 Provisional proposals and questions for consultees 7.68 133 “Valuable consideration” elsewhere in the LRA 2002 7.76 134 CHAPTER 8: Priorities under section 29: postponement of interests, and the protection of unregistrable leases 136 Introduction 8.1 136 Postponement of interests under section 29(1) 8.3 136 Background: the 1925 regime 8.4 136 Example scenarios 8.8 138 Land Registry practice on an application to enter a notice in respect of an interest which has been postponed under section 29 8.24 143 The effect of section 29(4) on the grant of an unregistrable lease 8.51 150 Background 8.52 150 The effect of section 29(4) 8.54 151 The impact of a priority search 8.57 152 Question for consultees 8.63 153 CHAPTER 9: Protection of third party rights on the register Part I: notices 154 Introduction 9.1 154 Current law 9.6 155 Agreed notices 9.11 156 Unilateral notices 9.16 157 Duty not to apply for a notice or object without reasonable cause 9.30 161 Stakeholder concerns and proposals for reform 9.34 162 vii Paragraph Page The two-tier system of agreed and unilateral notices 9.35 162 Who may apply for cancellation of a unilateral notice 9.131 191 Noting the beneficiary of an agreed notice 9.144 194 CHAPTER 10: Protection of third party rights on the register Part II: restrictions 197 Introduction 10.1 197 Current law 10.4 197 Stakeholder concerns and proposals for reform 10.7 199 The use of restrictions to protect contractual obligations 10.7 199 The use of restrictions to protect interests under trusts 10.30 206 CHAPTER 11: Overriding interests 212 Introduction 11.1 212
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