The Doctrine of Notice Lecture

OVERVIEW

In this guide on unregistered land, you will notice several elements. First, there is relatively very little case law. Much of what is discussed here forms part of the common knowledge of unregistered land, meaning that you would not be necessarily expected to provide exact sources for your main points when discussing unregistered land.

Those main points are given here in brief and are discussed in detail further below:

1. On a sale of unregistered land, the seller normally needs to show a “good root of title.”
2. This process contrasts with showing title for registered land.
3. There are different types of rights in relation to unregistered land: in particular, the rights of the persons that occupy the land without their rights having been registered.
4. The doctrine of notice applies to unregistered land, not to registered land.
5. One advantage of unregistered land is the protection of the existing owner against an unauthorised sale.
6. The disadvantages of unregistered land are about the onus and uncertainty it imposes on purchasers.

This guide is split into five parts. The first part is an introduction to unregistered land: what unregistered land is, how it is proven, and - briefly - how those people in possession of unregistered land may protect their rights. The second part discusses the different types of rights that a person with unregistered interests can have, and how those different types of rights can be protected. The third part discusses the concept of notice within the context of unregistered land. The fourth part discusses the advantages of unregistered land, and the disadvantages of unregistered land. The fifth part discusses unregistered land in the context of adverse possession.

PART ONE: INTRODUCTION TO UNREGISTERED LAND

Unregistered land is any land which does not have a record of title in the Land Registry. Unregistered land forms an ever-decreasing minority of the land in England and Wales. It is decreasing because there has been a long, if gradual, effort to register all portions of land in the jurisdiction. Although registration is not always compulsory, certain “trigger events” can make it compulsory, including a transfer of an unregistered freehold by sale or gift and the grant of a protected first legal mortgage. Following a transfer that triggers first registration, the transferee normally has two months to apply. The registrar can extend the period for good reason. If the deadline is missed, the transfer becomes void as regards the legal estate, which reverts to the transferor on bare trust for the transferee (Land Registration Act 2002, ss. 4, 6(4)–(5), 7(1)–(2)). Compulsory registration on sale has applied throughout England and Wales since 1 December 1990. Land can remain unregistered until a trigger event occurs.

For unregistered land, title is proved by title deeds. The documents which prove the history of title over property are described as the ‘essential indicia of title’ (Sen v Headley [1991] Ch. 425 per Nourse LJ). These documents, so-called “deeds bundles”, should identify the person who currently holds the best “title” to the land. On a sale the purchaser can normally require the seller to show a “good root of title” at least 15 years old (Law of Property Act 1925, s.44(1)). A typical root is a conveyance of the whole legal and equitable estate which identifies the land and casts no doubt on the title.

In other words, the seller normally demonstrates a clear chain of title from that root to the seller. A person in possession is not necessarily the owner. The rights these persons in possession have over the land may or may not bind a purchaser depending on two factors: the nature of the right, and whether it has been protected.

It should be stressed that the distinction between registered land and unregistered land is substantial. In the case of Lloyds Bank plc v Carrick (1996) 28 H.L.R. 707 Mrs Carrick had paid for and occupied a maisonette without obtaining a conveyance. Her estate contract was void against the bank, which took a legal mortgage for money, because she had not registered it as a Class C(iv) land charge. Notably, Morritt LJ said that if the land were registered, her actual occupation would have protected her interest under the legislation then in force. Today, Schedule 3, paragraph 2 of the Land Registration Act 2002 protects certain interests of persons in actual occupation, subject to its exceptions. The mere act of registration can therefore alter the rights of parties immensely.

Certain rights have to be protected by the use of the Land Charges Act 1972. Using the 1972 Act, the rights are registered against the name of the relevant estate owner, rather than against a title number. The Land Charges Act 1972 was the successor to the Land Charges Act 1925, which provided for the registration of specified charges. The separate Land Registration Act 1925 governed registration of title. It was envisaged that the registration of land in England and Wales would be a slow process, therefore a temporary system was introduced to protect third party rights in unregistered land.

“Can a person still claim to have a right to the land without obtaining protection by documentary evidence?”

In some instances, yes. A person can claim ownership of the land by establishing adverse possession for the applicable limitation period. In this instance, they are not relying on a paper title, but instead must give evidence of possession. A statement of truth under the Land Registration Rules 2003, rule 215A, or a statutory declaration under the Statutory Declarations Act 1835 can support the application. For possessory freehold title, the registrar must be satisfied that the applicant is in actual possession or receives the rents and profits by virtue of the estate, and that no other class of title is available (Land Registration Act 2002, s.9(5)).

PART TWO: TYPES OF RIGHTS

This discussion on unregistered land must also consider the interests of the parties that occupy land from time to time. It is important to distinguish unregistered land from an unregistered interest in registered land. In the latter system certain proprietary entitlements bind a purchaser despite not appearing on the register of title. This is a concept known as “the crack in the mirror.” The so-called “mirror” is the reflection of the paper record (the entry in the register) to the corresponding right over the given estate in land. These overriding interests are defined by Schedules 1 and 3 to the Land Registration Act 2002, for first registration and subsequent registered dispositions respectively. Before first registration, the rules below govern priorities.

For unregistered land the 1925 reforms distinguish between the following rights:

• Legal rights - these generally bind a purchaser whether or not they know of them. A puisne mortgage is an exception: although legal, it requires registration as a Class C(i) land charge.
• Equitable rights - the Land Charges Act 1972 specifies which rights are registrable, such as estate contracts and certain restrictive covenants and equitable easements. Beneficial interests under a trust of land are not land charges. On a sale by trustees, payment of the capital money to at least two trustees or a trust corporation ordinarily overreaches those interests: they attach to the proceeds instead of the land, without increasing the price (Law of Property Act 1925, ss.2, 27).

The ancient doctrine of notice still applies to equitable rights that are neither registrable as land charges nor overreached. Examples include:

• Estoppel rights (ER Ives Investment Ltd v High [1967] 2 Q.B. 379)
• Equitable rights of re-entry (Shiloh Spinners Ltd v Harding [1973] A.C. 691)
• Beneficial interests under a trust which have not been overreached (Kingsnorth Finance Ltd v Tizard [1986] 1 W.L.R. 783).

The Land Charges Register, which comes from the Land Charges Acts, provides different “classes” of third party interests, from Class A (charges created by a person applying under a statute) to Class F (home rights of a spouse or civil partner). If an interest ought to have been registered as a land charge and was not, then the interest will be void against the purchasers specified for that class in section 4 of the 1972 Act. For a post-1925 estate contract or Class D charge, this means a purchaser of a legal estate for money or money’s worth (Hollington Bros Ltd v Rhodes [1951] 2 All E.R. 578).

Class F is the type of class which you are most likely to encounter in a problem question. Class F protects the statutory home rights of a spouse or civil partner under the Family Law Act 1996. If the charge is not registered before completion, it is void against a purchaser for valuable consideration of the land or any interest in it (Land Charges Act 1972, ss.4(8), 17). And this remains the case even if the purchaser knew about the unprotected interest (Midland Bank Trust Co Ltd v Green (No. 1) [1981] A.C. 513). Section 199(1)(i) of the Law of Property Act 1925 confirms that notice does not rescue a charge made void against the purchaser by non-registration.

Key points from ER Ives Investment Ltd v High

• An equitable easement granted or created after 1925 will normally need registration as a Class D(iii) land charge to bind a purchaser of a legal estate for money or money’s worth. A legal easement over unregistered land generally binds without registration.
• An independent equity arising from estoppel or from mutual benefit and burden may bind a successor even where a grant creating an equitable easement would have needed registration.
• What the subsequent circumstances are will always be case-sensitive. In this instance, the circumstances of the right of way were communicated to every subsequent purchaser, and Y had accepted H’s contribution to resurfacing the yard.

Note that all the various classes are only void in certain circumstances; in the case of Class F, if the spouse’s or civil partner’s right to occupy is unregistered at the time the property is purchased, that right to occupy is void against anyone who gives value in exchange for the interest in the land. A gift does not qualify as a purchase for value.

Under s.198 of the Law of Property Act 1925 registration is deemed notice of the registered matter. The purchaser should search against the estate owners’ correct names. An official search certificate is conclusive in the purchaser’s favour according to its terms (Land Charges Act 1972, s.10(4)).

PART THREE: NOTICE

It is important to note that some rights are still governed by the old doctrine of notice, which is not without its problems. This doctrine is employed as a kind of stopgap, because there are some rights which are not registrable as land charges yet would have been recognised prior to the 1925 and 1972 Acts as equitable rights that ought to bind purchasers.

Prior to 1926, it was presumed that all equitable rights in and over land were enforceable against all other parties except for bona fide purchasers of a legal estate for valuable consideration without notice. This is known as the bona fide purchaser rule, and this was an ‘absolute, unqualified, unanswerable defence’ in equity (Pilcher v Rawlins (1871-72) L.R. 7 Ch. App. 259 per James LJ). Priority on a registered disposition is governed instead by sections 28 and 29 of the Land Registration Act 2002.

The distinction between a prior equitable interest in unregistered land and a mere equity, such as a claim to rectify a document, was discussed in Holaw (470) Ltd v Stockton Estates Ltd (2001) 81 P. & C.R. 29. Where the doctrine of notice applies, a bona fide purchaser may take free of a prior equitable interest. This is so, provided that certain conditions are met:

1. The purchaser must show that his absence of notice was ‘genuine and honest’ (Midland Bank Trust Co Ltd v Green (No.1) [1981] A.C. 513).
2. The purchaser must take a legal estate in the land concerned, however a lender who takes a charge “by way of legal mortgage” is regarded as having “the same protection” as if a legal estate had been created in his favour (Law of Property Act 1925, s.87(1)). A purchaser who takes only an equitable interest in the land is, in principle, subject to all pre-existing equitable interests regardless of notice. Where the equities are equal, the first in time prevails. A mere equity may, however, be defeated by a later purchaser of an equitable interest for value without notice.
3. The purchaser must give valuable consideration. A donee (someone who receives the property as a gift) cannot rely on this defence. Nor can a squatter who acquires title by possession without giving value.
4. Finally, a bona fide purchaser must take the property without notice. There are different categories of notice:
   - Actual notice is where the purchaser is consciously aware of relevant matters at the date of purchase, such as the fact of occupation; these are matters which are said to be ‘within his [the purchaser’s] own knowledge’ (Law of Property Act 1925 s.199(1)(ii)(a)). This is effectively a subjective test.
   - Constructive notice relates to matters of which the purchaser would have been consciously aware if he had taken reasonable care to inspect both land and title (Law of Property Act 1925 s.199(1)(ii)(a)). This, unlike actual notice, is an objective test. A purchaser who finds a tenant in occupation must inquire into the terms on which that tenant holds the land (Hunt v Luck [1902] 1 Ch. 428). An example of matters giving rise to constructive notice would be an inspection of the land that discloses the physical presence of persons other than the vendor (the seller).
   - Imputed notice is attributed to a purchaser where the knowledge is held, actually or constructively in the same transaction, by an agent of the purchaser, such as a solicitor (Law of Property Act 1925 s.199(1)(ii)(b)).

Key points from Kingsnorth Finance Ltd v Tizard

• H had attempted to prevent the KF from having notice of the W’s presence.
• That being said, the inspection, according to the court, ought to have resulted in KF undertaking further inspections and inquiries regarding the possibility of a wife being in occupation.
• As with ER Ives Investment Ltd v High above, it was not possible for the wife to register her interest in the land. Where an interest is registrable as a land charge, the effect of non-registration depends instead on section 4 of the 1972 Act.

If A buys the legal estate in Blackacre for value in good faith without notice of C’s equitable interest, A takes free of that interest. A subsequent purchaser, D, who does have notice can normally rely on A’s title (Wilkes v Spooner [1911] 2 K.B. 473). A trustee who reacquires property after selling it in breach of trust cannot use this rule to defeat the beneficiary (Byers v Saudi National Bank [2023] UKSC 51).

PART FOUR: ADVANTAGES AND DISADVANTAGES OF UNREGISTERED LAND

ADVANTAGES OF UNREGISTERED LAND

A person who has no title or authority to convey unregistered land cannot pass the owner’s legal estate to an innocent purchaser. The owner’s protection comes from title, whether or not the owner is in occupation.

Here’s how it can best be understood: A is the owner of the property (we’ll call it Blackacre). B purports to sell the title of Blackacre to C, without title or authority from A. C is unaware that the sale takes place without the consent of A. In this instance, A retains the title.

There are several reasons for this approach:

1. Allowing the innocent purchaser to win in a dispute over ownership would be objectionable to the original occupant, given they did not authorise the disposition of the property. This has been described as ‘anathema to democratic ideals of private ownership.’ (Amy Goymour, ‘Mistaken registrations of land: exploding the myth of “title by registration” (2013) C.L.J. 72(3) 617.) Article 1 of Protocol No. 1 to the European Convention on Human Rights protects possessions against unlawful or disproportionate state interference. It does not itself determine title between private parties.
2. The concept of security of title (meaning, if you have title to property, you have a reasonable expectation it cannot be interfered with without your consent) is arguably strengthened if the original occupant is favoured over a later innocent purchaser. Otherwise, if a buyer could easily take ownership of land, it would give support to the idea that title is actually ‘easy come, easy go.’ (Thomas Mapp, Torrens’ Elusive Title (Alberta) (1978)).
3. The layperson’s view, according to the Scottish Law Commission, is that such dispositions as described above ought to be declared void. As Amy Goymour has said, ‘the popular conception of a just outcome should not be dismissed lightly.’
4. Following what was said above about the layperson’s perspective, the layperson may not realise that they ought to protect their interest by way of a charge. This concern is about third-party interests. A in our scenario owns the legal estate and does not have to register a land charge to protect it. Purchasers will often employ solicitors or conveyancers, but an occupier who acquires a beneficial interest informally may not. It is therefore, as Roger Smith has said, ‘unrealistic and unfair’ to expect such people to protect their interests by way of registration, and the layperson’s view is that their possession of the land ought to protect them absolutely (Roger Smith, ‘Land registration reform - the Law Commission’s proposals’ (1987) Conv. Sept-Oct. 334).

ARGUMENTS AGAINST UNREGISTERED LAND

Given the discussion above, it is perhaps unsurprising that the arguments given against unregistered land tend to be about how they affect the rights of purchasers. This is part of a view about what the Land Registration Act 2002 was intended to do: namely, according to the supporters of this view, priority should be decided under the registered land rules themselves (Roger Smith, Property Law, 4th ed. (2003), 262). On the register’s guarantee of title, see also Elizabeth Cooke, ‘The Register’s Guarantee of Title’ [2013] Conv. 85, 88, and Ruoff and Roper’s Law and Practice of Registered Conveyancing, paras 46.024–46.036 (September 2004 release).

Conversely to the points made above, there are several reasons why favouring the purchaser, which means opting for registered land rather than unregistered land, is preferable:

1. The choice simplifies and makes cheaper the conveyancing process for the purchaser. If the land is registered, they can normally rely on the register for the legal title, subject to matters such as overriding interests, and would not need to go through the cumbersome process of establishing the “good root of title” going back at least 15 years.
   
2. This preference for the purchaser, if made generally, could help to bring about a more confident and dynamic property market.
   
3. The purchaser may also have a possession protected by Article 1 of Protocol No. 1 if they have an enforceable entitlement under domestic law. Payment and a wish to make the land their home do not by themselves confer title.
   
4. There are other arguments against unregistered land. The intersection for example between cases which require notice and those which do not is not always clear, and as a result a purchase of unregistered land can be complicated. This complexity is a chief complaint: Lord Scarman, in Williams & Glyn’s Bank Ltd v Boland [1981] A.C. 487, bemoaned the need to show “good root of title” as a ‘wearisome and intricate task of examining title.’

“Why is it so complex?”

While title remains unregistered, a purchaser will normally look over the chain of title, and come to a judgement about the quality of the relevant title, and would have to weigh the risks that a defect of the title would have on the market value of the land (Kevin Gray and Susan Francis Gray, Land Law (6^th ed.) (2009) (Oxford)). Purchasers can therefore have serious evidential hurdles to surmount when establishing the “good root of title”, and it is clearly not desirable.

Compare the process of tracing title of unregistered land to the process of determining title over registered land. In that instance, when a purchaser comes to inspect the title of the land, it has already been approved by the Chief Land Registrar, both graded and guaranteed by the Registrar. Registration vests title under section 58 of the Land Registration Act 2002, but the class of title matters. A mistake may lead to alteration of the register under Schedule 4 and, in specified circumstances, indemnity under Schedule 8. Compared to the practice of establishing “good root of title” in unregistered land, checking a registered title is usually more straightforward.

PART FIVE: ADVERSE POSSESSION

As you will know from your reading elsewhere, adverse possession grants, so-called “squatters’ rights” to those who are in possession of property without paper title to the property. A key element of adverse possession is limitation. And in the case of unregistered land, there is a defined limitation period, after which objections to adverse possession cannot be enforced. The ordinary limitation period for an action to recover unregistered land is twelve years. The Limitation Act 1980 s.15(1) stipulates that ‘no action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him.’ As you will recall from your reading on adverse possession generally, time ordinarily runs when the owner is dispossessed or discontinues possession and another person is in adverse possession, whether or not the owner knows of it (Schedule 1, paragraphs 1 and 8). There must be factual possession and an intention to possess without the owner’s consent (JA Pye (Oxford) Ltd v Graham [2002] UKHL 30). Different periods apply to certain land, including 30 years for Crown land generally and 60 years for Crown foreshore.

What should be made clear is that the expiry of the twelve-year period does not bring about a conveyance of land from the person with paper title to the person without paper title. Instead, the paper owner’s title is extinguished (Limitation Act 1980, s.17) which makes the squatter’s independent possessory title ‘impregnable, giving him a title superior to all others’ (Buckinghamshire County Council v Moran [1990] Ch. 623 per Nourse LJ).

Finally, the squatter, upon taking possession of unregistered freehold land, takes subject to subsisting legal and equitable interests. And because they have taken possession by operation of law, they cannot rely on the defence of being a bona fide purchaser without notice, and therefore takes subject to any subsisting restrictive covenants even if they have not been registered (Re Nisbet and Potts Contract [1906] 1 Ch. 386).

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