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Registration of Property

Info: 3225 words (13 pages) Essay
Published: 9th Jul 2019

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Jurisdiction / Tag(s): UK Law

First registration operates after there has been a transfer of the legal title and normally takes place as a result of the provisions for compulsory registration. (Smith, 2003)LRA, ss4-8 provide for the registration of the fee simple within 2 months of conveyance (either on sale or gift), a first legal mortgage or an assent by personal representatives. Failure to register within this time means legal title reverts in the vendor on trust for the purchaser. Purchaser will only have equitable interest. (Bogusz, 2009) On application for first registration, the purchaser produces all the title deeds to the registry. The land registry then conducts its own thorough investigation of the title and decides what title to grant. (Bogusz, 2009) In virtually every case a fee simple is registered, this indicates there is nothing wrong or doubtful about the title. It need not, however be perfect. Some registration systems look for perfection in titles presented for registration, but our scheme uses more of a cost-benefit approach. This, however, is done at the risk of paying compensation if an error is later discovered due to registration without stringent inquiries. Flaws in a title will not generally act as a bar to registration if there is a specific problem with the title, then there may be registration with qualified title its sufficient the registrar believes that any defect ‘will not cause the holding under the title to be disturbed’. Possessory titles are designed for cases where a documentary title cannot be proved and the title depends upon adverse possession. It confers no guarantee of title at the time of registration. (Smith, 2003) ‘The various forms of freehold title (absolute, qualified and possessory) and their effects are duplicated for leases. A legal lease for a period exceeding seven years may be registered in just the same way as a fee simple. There may be two titles (more if there are subleases) in respect of the same plot of land: one for the fee simple and the other for the lease. There are two justifications for having separate registered titles for leases. First is there are many long leases where the freehold is unregistered. It would impede dealings with such leases to say that they cannot be registered. The second reason is that leases may be bought and sold, be mortgaged and have other subordinate interests created out of them. All this could be reflected in a single register based on the fee simple. In practice, such a register might become unduly cumbersome because rights affecting the leases would have to be distinguished from those affecting the fee simple (and vice versa)’. (Smith, Property Law, 2003)Future leases must be registered when granted. Leases pose one common problem. If the freehold is not registered, then the registrar would not know whether the landlord owns the fee simple (essential if the lease is to be effective) and whether the land is free from encumbrances such as restrictive covenants. This leaves the lessee with a good leasehold title until the landlord registers the freehold then it can be upgraded to absolute title. (Smith, Property Law, 2003) Compulsory registration also applies where a lease is granted to take effect more than three months after it is granted. A buyer of land so affected may not be able to discover the existence of the lease, because the tenant will not be in possession. Grants of a lease out of an unregistered legal estate under the right to buy provisions of Part 5 of the Housing Act 1985 will also be subject to compulsory registration (replicating the present law). Compulsory registration will also apply to the creation of a protected first legal mortgage out of a legal freehold estate, or a lease with more than seven years to run. (Smith, Property Law, 2003)

the registration of interests created by registrable dispositions

Registrable disposition means a disposition which is required to be completed by registration under s.27, LRA 2002. In the case of dispositions only, an interest is not protected if it is not obvious, on a reasonably careful inspection of the land, that the person claiming it is occupying the land. This provision does not apply on first registration, and it does not apply if the person taking the disposition actually knows about the claimant’s interest. Interests belonging to persons receiving rents and profits, but not actually occupying the land, are no longer protected. There is a transitional provision which gives limited protection against dispositions, but not against first registration, to any such interests that exist after LRA 2002. Schedule 2 of the Act lays down the registration requirements. Thus, for example, paragraph 3 provides in relation to the grant of a lease that: (a) ‘the grantee, or his successor in title, must be entered in the register as the proprietor of the lease, and (b) a notice in respect of the lease must be entered in the register.’ S38 requires that when the registrar enters a person as the proprietor of an interest falling within s27(2)(b) to (e) he must also make a corresponding entry by way of notice in the charges register of the land out of which was created. A restriction on the proprietorship register prevents the registration of a disposition unless complied with. This is the appropriate way of alerting a purchaser of the existence of an equitable family interest which arises under a trust of land. A restriction does not protect the priority of that interest, nor any right of occupation, it notifies the purchaser of the interest. In any event, in the normal case, the purchaser will overreach and in such cases it is immaterial whether the purchaser knows of the equitable family interest or not. (Law of Property Act 1925; Trusts of Land and Appointment of Trustees Act 1996) Restrictions are also useful to control dealings with the land as a secondary means of protection. For example, a person with an option to purchase land (e.g. a developer) should protect that interest by means of a Notice. However, they may also enter a restriction to prevent, or to be alerted to, any attempt to transfer the land in breach of the option. ‘Section 29 of the LRA 2002 states that the buyer of a freehold estate is able to buy the land free from all encumbrances except for registered charges, interests protected by notices on the register of the estate and interests under Schedule 3 of the act that override the disposition but are not registered. The use of restrictions and notices goes very far in making sure interests are protected and well noted.

b) Explain how and why other (minor) interests should be protected by registration under the Land Registration Act 2002.

Minor interests are all those interests are capable of protection by way of notice or restriction (ss 33 & 42). There are 2 ways in which minor interests are protected, notices and restrictions. For the point of view of the owner of a minor interest, the entry of a notice is the best method of protecting that minor interest. (Bogusz R. s., 2009) The mirror principle dictates that a minor interest is binding if protected by an entry on the register whether or not the purchaser inspected the register. Conversely if a minor interest is not protected by such an entry it will not bind a subsequent purchaser for valuable consideration (s29 (1)). Valuable consideration is defined in s132 (1) “does not include marriage consideration or a nominal consideration in money.” However, what amounts to nominal consideration is not clear. In the unregistered land case of Midland Bank Trust Co Ltd v Green [1981] AC 513 Lord Wilberforce expressed the view, obiter dicta that £500 was not nominal consideration in relation to a farm worth about £40,000. It is possible for a minor interest to also be an overriding interest and bind a purchaser even though not protected by an entry on the register (Williams & Glyns Bank v Boland [1981] AC 487). (Smith, Property law, 2003) Unsurprisingly, a notice is agreed if requested by the proprietor or consented to. It also applies if the registrar is satisfied as to its validity. Any other notice is unilateral, in which case the proprietor has to be told about it by the registrar and may apply for it to be cancelled, whereupon it must be justified by the person who entered it. Even so, the entry of a unilateral notice could damage the proprietor, especially if it caused a sale to fall through. To cover this, compensation is payable if it is entered without reasonable cause; the same applies to restrictions and more generally to objections to applications to the registrar. The second method of protection is the restriction. Its principal feature is that it enables future entries on the register to be limited in some way: registration will be refused if the restriction is not complied with. The trust of land provides an excellent example. The trustees can sell the land, overreaching the beneficial interests, so long as the purchase money is paid to two trustees. This can be reflected in a restriction that a transfer by fewer than two trustees cannot be registered. It follows that a restriction is helpful to purchasers because they know what to do in order to be registered and take free of the interest in question. It is also more effective for the beneficiary than a notice. Instead of having to argue a case against a registered transferee, the beneficiary knows that no registration can take place. Indeed, so appropriate is the restriction that we have seen that interests under trusts of land cannot be protected by notice. On the other hand, a restriction will at most only prevent a registration: it does not confer any priority on the interest. It is significant that the circumstances in which a restriction is can be entered are unlimited; in particular, it is not limited to the protection of interests in land. (Bogusz R. s., 2009)

2a) Charles and his partner Charmaine have recently purchased the freehold of Rose Cottage, having received a clear search from HM Land Registry shortly before completion. They purchased the property from Derek who was the sole registered proprietor of Rose Cottage with absolute freehold title. Derek and his partner Elizabeth (who are unmarried) purchased the property in 1995 for £150,000. Elizabeth contributed her life savings of £15,000 toward the purchase price. By virtue of this contribution, Elizabeth obtained an equitable interest in Rose Cottage under an implied trust.

On inspecting the property prior to purchase, Charles and Charmaine met Elizabeth who was watching television. Elizabeth had recently suffered a nervous breakdown and had just returned from a stay in hospital. Charles asked her if she had ‘any interest’ in the property. Elizabeth shrugged her shoulders and said nothing.

Advise Charles and Charmaine whether they are bound by Elizabeth’s equitable interest in Rose Cottage.

Equity follows the law. A transfer of the legal title is presumed to carry with it the absolute beneficial interest in the property conveyed; pettitt v pettitt [1970] AC 777. Trusts of land must be evidenced in writing: s.53 (1) (b)LPA 1925(statute of frauds 1677). However, one exception from this requirement of writing is the creation or operation of resulting, implied or constructive trusts: s.53 (2) LPA 1925. 1.2.2 Transfer of an interest under a Trust: ‘A disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same …’: s.53(1)(c) LPA 1925. Exception: Where the disposition is brought about through the creation or operation of a resulting, implied or constructive trust: s.53 (2) LPA 1925. If the conveyance of the legal title expressly declares the beneficial interests in the land (e.g., ‘to A and B as beneficial tenants in common in equal shares’) then, in the absence of fraud or mistake, this is conclusive and binds the parties to the conveyance: Goodman v Gallant [1986] Fam 106. However: the rule only applies to parties to the conveyance. Thus if A, B and C all contribute to the purchase of Redacre, and the conveyance is to A and B beneficially, this does not prevent C from claiming a beneficial interest: City of London BS v Flegg [1988] AC 54; Elizabeth can claim under implied trust. She contributed £15,000 to the purchase price at the time the property was purchased. In the absence of evidence to the contrary equity presumes that the provision of money for the purchase of property is not intended as a gift. It was not intended as a gift because it states the money was Elizabeth’s life savings. She made a direct contribution to cash price: Also the fact she was staying in the house shows intention of contribution for a home for her and her partner. Thus, a person who provides money towards the purchase of a property is presumed to obtain an equitable interest in that property proportionate to the amount of her contribution. Charles and Charmaine visited the house and saw Elizabeth was living there. They questioned her as to whether she had any ‘interest’ in the property as required by law. It will be argued, however, that they did not make sufficient enquiries and clearly a shrug from Elizabeth could not legally stand to mean anything. Elizabeth can claim an equitable interest in Rose cottage.

Would your advice to Charles and Charmaine change if Derek and his brother Bob were joint registered proprietors of Rose Cottage at the time of sale to Charles and Charmaine.

The advice would be different because Derek and his brother bob are registered as joint proprietors. Their names would both appear on the register and so they would both have an equitable interest in the property. They will need both signatures to purchase the property. If the conveyance of the legal title expressly declares the beneficial interests in the land (e.g.) ‘to A and B as beneficial tenants in common in equal shares’) then, in the presence of fraud or mistake, this is conclusive and binds the parties to the conveyance: Goodman v Gallant [1986] Fam 106.

b) Alice recently purchased the freehold of Winsley Manor. Upon moving in, Alice was dismayed to find that several large stone statues have been removed from the garden, together with a number of ornamental plant pots. The contract of sale for Winsley Manor made no reference to fixtures.

Advise Alice as to whether she can insist that the previous owner of Winsley Manor returns these items.

Given that the items were not expressly mentioned in the contract of sale for Winsley Manor, whether Alice can legally recover will depend on whether they are classed as fixtures or chattels. Any physical object classed as a fixture as a matter of law merges with the land and title to it automatically vests in the owner of the freehold, and the object itself cannot be severed from the land by anyone other than the freehold owner. Further the purchaser of a freehold is entitled to all fixtures on the land at the date of exchange of contracts. Therefore, if Alice can show that the items are fixtures and they were removed after date contracts were exchanged, then she should be able to recover the items. Chattels are physical objects which retain their independent character as personality despite close association with the realty. They thus do not attach to the land and do not pass with a conveyance of the land unless stipulated in the conveyance. The first test concerns the physical degree of annexation to the land. The more permanently and irreversibly the object is affixed to the land the more likely it is to be considered a fixture. A form of gravity test for a chattel has developed out of this, in that an object that merely rests on the land due to their own weight will be classed a chattel, and one more permanently fixed will be classed as a fixture. In Holland v Hodgson (1872) spinning looms bolted to the floor were classed as fixtures, but in Hulme v Bingham (1943 heavy machinery otherwise unattached was considered a chattel. On this test assuming the large stone statues in the garden were large enough to stand alone and were not fixed to the ground by any other means but their weight it would mean they would be chattels and Alice would not be able to claim them. However, in the case of D’Eyncourt v Gregory (1866) LR 3 Eq 382 heavy marble statues of lions not otherwise attached to the land but as part of a scheme were fixtures. If this is the case with the large stone statues, Alice could claim. This also applies to the plant pots if they were not fixed to the ground by any other way but gravity they would most likely be chattels. The following tests were laid down in Berkley v Poulett [1977] 1 EGLR 86: Degree of annexation and Purpose of annexation. Degree of annexation means the degree to which the objects are fixed to the building, including the ease with which they can be removed and any damage caused to the structure or object by their removal. In this case it doesn’t explicitly explain as to how these were fixed and if any damage was caused in removing them. These things would be taken into consideration. Purpose of annexation means the objective or purpose of their annexation to the building, whether for improvement of the property or for ornamentation and the enjoyment of the objects themselves. The architectural merit of the pieces and their place in the design of the building as a whole is relevant to this point. Considering this point, the ornamental plant pots may be seen as fixtures. Consideration, as stated, would also be given as to reasons why the statues and pots were placed in the garden. Holland v Hodgson (1872) L.R. 7 C.P. 328, 335: if the intention is apparent to make the articles part of the land, they do become part of the land. Blackburn J concluded: “[that] it is possible for a thing, for example a garden statue, to be land in one set of circumstances and not in another.” In light of the above Alice could pursue a claim given she provided all the information not stated in the scenario and she could also use above mentioned cases.

Table of Cases

Berkley v Poulett [1977] 1 EGLR 86:

City of London BS v Flegg [1988] AC 54;

D’Eyncourt v Gregory (1866) LR 3 Eq 382

Goodman v Gallant [1986] Fam 106.

Holland v Hodgson (1872)

Holland v Hodgson (1872) L.R. 7 C.P. 328, 335:

Hulme v Bingham (1943)

Midland Bank Trust Co Ltd v Green [1981] AC 513

pettitt v pettitt [1970] AC 777

Williams & Glyns Bank v Boland [1981] AC 487

Table of Legislation

List of Statutes

LRA 2002

LRA, ss4-8

Part 5 of the Housing Act 1985

s.27, LRA 2002

LRA 2002 Schedule 2 paragraph 3

LRA 2002 S38

LRA 2002 s27 (2) (b) to (e)

Law of Property Act 1925

Trusts of Land and Appointment of Trustees Act 1996

Section 29 of the LRA 2002

Ss 33 & 42

LRA 2002 s29 (1)

LRA 2002 s132 (1)

s.53 (1) (b) LPA 1925

Statute of frauds 1677

s.53 (2) LPA 1925

s.53 (1) (c) LPA 19

s.53 (2) LPA 1925

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