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Land Registration: Void and Voidable Titles

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Land Registration: Void and Voidable Titles SCOTTISH LAW COMMISSION Discussion Paper No 125 Discussion Paper on Land Registration: Void and Voidable Titles February 2004 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 £xx.xx 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 Professor Joseph M Thomson Colin J Tyre, QC. The Secretary 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 14 May 2004. Comments may be made on all or any of the matters raised in the paper. All correspondence should be addressed to: Mr John Dods Scottish Law Commission 140 Causewayside Edinburgh EH9 1PR Tel: 0131 668 2131 Fax: 0131 662 4900 E-mail: [email protected] Online comments at: www.scotlawcom.gov.uk - select "Submit Comments" NOTES 1. Where possible, we would prefer electronic submission of comments, either by e-mail to [email protected] or through the Submit Comments page on our website. We should make it clear that the comments we receive from you may be (i) referred to in any later report on this subject and (ii) made available to any interested party, unless you indicate that all or part of your response is confidential. Such confidentiality will of course be strictly respected. 2. The discussion paper is available on our website at www.scotlawcom.gov.uk or can be purchased from TSO Scotland Bookshop. 3. If you have any difficulty in reading this document, please contact us and we will do our best to assist. You may wish to note that an accessible electronic version of this document is available on our website (text only version). 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 Classification of systems of registration 1.5 1 Constitution or publicity 1.6 2 Registration of deeds or registration of title 1.7 2 Positive system or negative system 1.9 3 Bijuralism or monojuralism 1.11 3 Interactions 1.12 3 The move towards registration of title 1.13 4 England and Australia 1.13 4 Scotland 1.18 6 Comparative law 1.22 8 Our proposals in summary 1.23 9 Which Parliament? 1.24 9 Acknowledgements 1.25 9 Part 2 The Current Law: Exposition and Analysis The 1979 Act 2.1 11 Introduction 2.1 11 The Land Register of Scotland 2.2 11 Registration 2.6 12 Overriding interests 2.10 13 Rectification 2.11 13 Grounds 2.11 13 Defences 2.16 14 Indemnity 2.17 15 Ways of entering the register 2.21 16 Some difficulties 2.22 16 Evaluation 2.22 16 The first difficulty: flawed legislation 2.23 16 The second difficulty: the incidence of error 2.26 18 First registration 2.26 18 Dealings 2.29 19 The third difficulty: error and the balance of interests 2.32 20 Part 3 Void Titles and Guaranteed Titles Titles void, voidable, and absolutely good 3.1 21 Positive prescription 3.4 21 Withdrawal of prescription 3.4 21 Changing registers 3.10 23 iv Contents (cont'd) Paragraph Page Proposals 3.11 23 Guaranteed title 3.12 23 Register error and transactional error 3.15 24 Errors and the 1979 Act 3.19 25 Register error 3.20 25 Transactional error: defective conveyance 3.21 26 Meaning 3.21 26 Good faith 3.22 26 Position in other countries 3.23 26 Position in Scotland 3.28 28 Evaluation 3.30 29 Transactional error: administrative mistake 3.35 30 Exclusion of indemnity 3.42 32 Subordinate real rights 3.47 33 Part 4 The Nature of the Guarantee The property or its value 4.1 34 Introduction 4.1 34 The first difficulty: the position of the "true" owner 4.6 35 The second difficulty: insecurity of title 4.8 36 Achieving a balance 4.9 36 The 1979 Act 4.11 37 Possession 4.11 37 Other factors 4.13 38 Introduction 4.13 38 No guarantee 4.14 38 Agreement 4.18 39 Discretion 4.19 39 Transactional error 4.20 39 The position in summary 4.21 40 Possession: some difficulties 4.22 40 The first difficulty: scope 4.22 40 The second difficulty: self help 4.23 40 The third difficulty: duration 4.27 41 Conclusion 4.28 42 The acquirer and the "true" owner: attempting a balance 4.29 42 Introduction 4.29 42 Protecting the "true owner": the notification principle 4.30 42 Protecting the acquirer: the curtain principle 4.33 43 Other considerations 4.36 44 v Contents (cont'd) Paragraph Page Some possible models 4.37 45 Introduction 4.37 45 Possession 4.38 45 Discretion 4.41 45 Type of error 4.44 46 The problem of notification 4.47 48 Subordinate real rights 4.53 50 Part 5 Positive Systems and Negative Systems Introduction 5.1 52 The position in Scotland 5.1 52 Technique not policy 5.7 54 Positive systems: the advantages 5.10 55 Positive systems: the disadvantages 5.14 56 Introduction 5.14 56 Bijuralism 5.15 56 Ownership in the wrong place 5.23 57 Title from the Register 5.30 59 European Convention on Human Rights 5.33 59 Inflexibility 5.34 60 Negative systems 5.40 62 Characteristics 5.40 62 Advantages and disadvantages 5.42 62 Evaluation 5.43 63 Subordinate real rights 5.45 63 Part 6 Voidable Titles Introduction 6.1 64 Voidable titles: three cases 6.3 64 Actual fault 6.4 64 Transferred fault: bad faith 6.5 64 Transferred fault: absence of consideration 6.7 65 The effect of the 1979 Act 6.8 65 Displacement of the ordinary law 6.11 66 The alternative of reconveyance 6.16 68 Judicial rectification 6.17 68 Effect prior to registration 6.19 68 Subordinate real rights and indemnity 6.20 69 vi Contents (cont'd) Paragraph Page Part 7 Good Faith and Value Good faith 7.1 71 Fraud and carelessness 7.1 71 Some difficulties 7.3 72 Good faith 7.8 74 Meaning 7.8 74 Scope 7.10 74 Register error 7.11 74 Transactional error 7.13 75 Fixed list of defects 7.16 76 Timing 7.17 77 Proposal 7.20 78 Value 7.21 78 Current law 7.21 78 Options for reform 7.24 79 Voidable titles 7.26 80 Arguments against protection 7.27 80 Arguments in favour of protection 7.32 81 Two questions 7.35 82 Part 8 Summary of Provisional Proposals The proposals 83 Effect of the proposals in summary 85 Appendix 1 87 List of law reform publications on land registration Appendix 2 90 List of those who responded to the October 2001 consultation vii Abbreviations Alberta Law Reform Institute, Land Recording and Registration Act Alberta Law Reform Institute, Proposals for a Land Recording and Registration Act for Alberta (Report No 69, 1993) BGB Bürgerliches Gesetzbuch (German Civil Code) Gordon, Scottish Land Law W M Gordon, Scottish Land Law (2nd edn, 1999) Henry Report Scottish Home and Health Department, Scheme for the Introduction and Operation of Registration of Title to Land in Scotland (1969, Cmnd 4137) Joint Land Titles Committee, Renovating the Foundation Joint Land Titles Committee for Alberta, British Columbia, Manitoba, The Council of Maritime Premiers, Northwest Territories, Ontario, Saskatchewan and Yukon, Renovating the Foundation: Proposals for a Model Land Recording and Registration Act for the Provinces and Territories of Canada (1990) Law Com No 271 Law Commission and H M Land Registry, Land Registration for the Twenty-first Century: A Conveyancing Revolution (Law Com No 271, 2001) Mapp, Torrens' Elusive Title Thomas W Mapp, Torrens' Elusive Title: Basic Legal Principles of an Efficient Torrens' System (Alberta Law Review, University of Alberta, 1978) Raff, German Real Property Law Murray J Raff, German Real Property Law and the Conclusive Land Register (PhD thesis, University of Melbourne, 1999) Registration of Title Practice Book Ian Davis and Alistair Rennie (eds), Registration of Title Practice Book (2nd edn, 2000) Reid, Property Kenneth G C Reid et al, The Law of Property in Scotland (1996) (being a revised reprint of the relevant part of The Laws of Scotland: Stair Memorial Encyclopaedia vol 18 (1993)) Reid Report Scottish Home and Health Department, Registration of Title to Land in Scotland (1963, Cmnd 2032; chaired by Lord Reid) viii Ruoff and Roper, Registered Conveyancing T B F Ruoff, R B Roper, E J Pryer, C J West, R Fearnley and J Donaldson, Ruoff & Roper on the Law and Practice of Registered Conveyancing (2002) Torrens, Registration of Title Robert R Torrens, The South Australian System of Conveyancing by Registration of Title, with Instructions for the Guidance of Parties dealing, illustrated by Copies of the Books and Forms in use in the Lands Titles Office (Adelaide, 1859). ix Part 1 Introduction 1. Background 1.1 The Land Register for Scotland was set up under the Land Registration (Scotland) Act 1979 as a replacement for the Register of Sasines, which had been in use since 1617. The new register was brought into operation gradually, county by county, and since 1 April 2003 has applied throughout Scotland.1 Nonetheless the title to a great deal of land is still held on the Register of Sasines, and certain types of deed continue to be registered there rather than in the Land Register.2 In the long term, however, the Register of Sasines will be wholly superseded by the Land Register.
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