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Assess the Advantages of the Current System

Info: 1451 words (6 pages) Essay
Published: 9th Jul 2019

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Jurisdiction / Tag(s): UK Law

‘cracks in the mirror’ (60% of the marks);

the rules on rectification (20% of the marks), and

third party rights being registered against the encumbered land, compared to the Land Charges System (20% of the marks)

In 1925 Land law in England and Wales went through significant reform. A system of registration of title was set up in the Land Registration Act 1925 on some areas of land. Under this system, ownership of land and any burdens on that land are officially documented and placed on a public Land Register [1] . The system is currently governed by the 2002 Land Registration Act (LRA) and since 1990 the whole of England and Wales has been subject to compulsory registration on ‘triggering events’ [2] . In section 4 it outlines situations in which first registration is compulsory, which include when the freehold estate is transferred, a lease for longer than 7 years is newly granted and when the estate becomes subject to a first legal mortgage and the lender takes the title deeds.

One of the main aims of the LRA was to transform the Land Register into an entirely electronic registry system which ‘should be a complete and accurate reflection of the state of the title of the land at any given time, so that it is possible to investigate title to land on line, with the absolute minimum of additional enquiries and inspections’ [3]. This is sometimes defined as the ‘mirror principle’.

However, there are some interests in land which need not be registered, yet still bind any person who acquires an interest in the land, called overriding interests [4] . Overriding interests on first registration are listed in Schedule 1 of the LRA 2002; overriding interests on registered disposition are listed in Schedule 3. These interests are sometimes called a ‘crack in the mirror’ because the Register does not reflect these binding rights; they contradict a fundamental essence of the registration system [5] . Under the Land Charges System if a charge is registered incorrectly or not at all, it is at risk of being unenforceable, which contradicts overriding interests that are not registered yet still binding. These rights can create great problems of unfairness for potential purchasers as they may be bound by rights of which they are unaware (such as where actual occupation was not discovered, despite reasonable inspection of the property). The 2002 Act can be seen a step towards being fully reflecting as it aims to restrict such interests as far as possible by reducing the number available [6] (unless unreasonable to expect them to be registered [7] ). The LRA tries to balance rights of purchasers and third parties with firmer rules regarding overriding interests [8] . Yet the current system of overriding interests seems to be a double edged sword [9] .

Rectification is the process of altering the Land Register in a way which may affect a registered proprietor [10] . Alteration of the register is needed in order to update the register when land is transferred or encumbered. In a now increasingly electronic system of registration, mistakes by man and machine are expected. If there were no system to rectify these mistakes it could seemingly make the LRA worthless, creating another large ‘crack in the mirror’. In order to strike a balance between correcting genuine mistakes and fraudulent attempts to change the register, the methods and occasions in which it is possible to alter the register are restricted, and listed in Schedule 4 of the LRA 2002. It was argued in Sainsbury’s Supermarkets v Olympia Homes Ltd [11] whether in some situations the law was being sidestepped through rectification [12] . It should be asked whether rectification should be allowed to enhance a proprietor’s position while causing detriment to another if both parties were at fault.

The main difference between registered and unregistered land is how title and encumbrances on the register are shown [13] . Under the Land Charges System of registering encumbrances, set up by the Land Charges Act (LCA) 1972, each burden on the land is registered against the name of the present burdened estate owner. Although when registering a burden against a registered piece of land the encumbrance is registered against the land and title number.

The Land Charges System seems impractical and illogical as there is a likelihood that there could be a mistake when registering the name which can render the right unenforceable (Diligent Finance Ltd v Alleyne [14] ); there could also be a mistake when searching for the names which can also leave the right unenforceable (Oak Co-Op BS v Blackburn [15] ). These mistakes would inevitably make the process harder and lengthier when searching through the system. The registration of encumbrances under the LRA 2002 seems a more coherent system. It is quicker to search for a single property or title number and receive all possible burdens on that land, with minimum additional enquiries [16] , rather than searching through all previous owners of the land; especially as it seems unlikely that many new purchasers would have evidence or actual knowledge, of all previous proprietors of the land dating back to 1925.

In general terms, the LRA is a clear and easy to use piece of legislation [17] ; the method of registration seems to work well, especially compared to the Land Charges System. But for a law which was meant to reduce problems and modernise law [18] , overriding interests cause a severe failing compared to the original aims of the act. On one hand these ‘cracks’ could be justified; the reduction and restriction of the interests in the LRA should mean that less people rely on these interests [19] in the future. But ultimately a purchaser is still at risk of being bound by unknown interests. It may be arguable whether the concerns about the LRA are worth paying for an efficient system of electronic conveyancing [20]. But in an individual purchaser’s world, it is doubtful that these provisions appear fair.

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