Unregistered Land

Introduction

  • Unregistered land is one which is still not registered with HM Land Registry
  • “Unregistered title‟ refers to the fact that title to the property has not yet been registered at HM Land Registry.
  • A large number of properties in England and Wales are not registered with HM Land Registry
  • From 1st December 1990, all land in England and Wales must register the title of unregistered land on the occurrence of specified events. (Details is provided below)

Title Deeds

  • The title deeds consist of the documents which have been used in the past to deal with the land (only applies to unregistered land)
  • The owner/seller of unregistered land has to prove that he has a good title to the land by providing the buyer with the “title deeds” to the property.
  • The purpose of producing the documents relating to ownership is to demonstrate to the buyer that the seller has a good title (ability and capacity to sell) to pass on to the buyer.
  • It enables the buyer to check on the ownership, and extent of the land, and other people’s rights and interests in the land.

Important Note

If someone intends to buy unregistered land, then, in addition to title deeds, the buyer will need to do other searches, enquiries and inspections so that he/she can discover whether there are any third-party interests in the land

Example

To check whether anyone else has an interest in the property, such as mortgage, easement or beneficial interest under a trust, that could be binding on the buyer of land.

Third Party’s rights and interests

The third party’s interests may bind a buyer, it will depend upon whether the third-party’s interest is legal or equitable.

  • A legal estate or interest will always bind the purchaser of the land.
  • However, the enforceability of equitable interests in the unregistered title is governed by one of three rules. Only one of these rules can apply in any given situation. The doctrine of notice only applies if neither of the other two rules is applicable.

These rules are:

  1. Registration under Land Charges Act 1972
  2. The Doctrine of Notice
  3. Overreaching

Legal Estates and Interests

  • In relation to legal estates and interests, they will bind any prospective buyer of land whether he is aware of them or not.
  • Legal rights are rights in the land itself and thus bind a purchaser of that land irrespective of whether the new owner was aware of them.

Equitable Interests

  • The Land Charges Act, 1972 made certain rights and interests in the land as registrable in the Land Charges Registry.
  • Once registered, the prospective purchaser could find out about them by doing a simple search. However, only certain types of interests were registrable.

Legal Interests

These interests are in appropriate written form and required formalities are fulfilled.

Example

John and his wife bought a family house together and each contributed half of the money. Their names are on the deed as joint owners, both John and his wife hold legal interest in the family house

Equitable Interests

These are the interests which are not in written form or the formalities required to make these rights legal, are not fulfilled

Example

  1. John and his wife bought a piece land they both provided half of the total money but only John’s name is on the deed. John’s wife may have an equitable interest in the land
  2. John and his wife Amma bought a house together, they agreed among themselves that John will pay the purchase price of the house and Amma will pay for the reconstruction of the kitchen, bathrooms and will also pay bills in regards to the family house. The deed may only show John as the owner of the land but Amma may hold equitable interest as it is not in the deed but she has contributed to the house

Registerable Interests

The key interests which are registerable are  that registrable are:

  1. Class C(i), puisne mortgage: This is a second or subsequent legal Registration gives priority to the later mortgagee over subsequent persons acquiring the land, particularly a purchaser or mortgagee.

Note

Please note that puisne mortgage is considered a legal right, which is deprived of its normal automatic enforcement by being made subject to registration as a land charge. This is rather unusual but this is how the system operates.

  1. Class C(iv), estate contract: Estate contract includes a contract for sale or to lease and options to acquire a freehold or lease
  2. Class D(ii), restrictive covenants: This includes only those restrictive covenants created after 1926. In relation to restrictive covenants created before 1926, the doctrine of notice applies.

 

Covenants

  1. Covenants are promises agreed between a buyer and seller of land to do or not to do certain things on the land.
  2. Restrictive Covenants restrict the use of land in a particular way for example not to build anything on the current garden or maintain the garden in future and not to use the land for business purposes etc.
  1. Class D(iii), equitable easements: This includes only those equitable easements created after 1926. In relation to equitable easements created before 1926, the doctrine of notice applies

Easements

Please refer to the chapter on Easements

5. Class F, matrimonial home rights: This right is also contained in s 30 Family Law Act 1996 and s2(7) Land Charges Act 1972 has been amended accordingly. Rights to occupy the civil partnership home under the Civil Partnership Act 2004 are also registrable as Class F land charges

Matrimonial Home

Please refer to Trusts of Family Homes

Registration of Equitable Interests

  • Registration is at the Land Charges Registry. Under s3, Land Charges Act 1972 –
  • The charge must be registered against the name of the owner of the estate that is subject to the charge.
  • The full and correct name of the estate owner must be used.

Important

Where registration is made against an incorrect version of the name it will not bind a purchaser who makes a search of the register against the correct name of the estate owner

Example

John Goldstone the owner of 20 Sydney Road agreed and allowed his neighbour Anna resident of number 22 Sydney Road to use John’s driveway for her lifetime to park her car. Anna then registered the interest against John Goldstone however, she mistakenly registered it against John Goldstein instead of John Goldstone.

Mike now intends to buy 20 Sydney Road and he has checked the charges register and did not find any charge against John Goldstone.

Result

Mike will not be bound by the promise made by John Goldstone with Anna. He may refuse or restrict the use of the driveway of 20 Sydney Road and do whatever he wishes to do with it.

Effect of Registration

Valid registration of registrable land charge will act as an actual notice to all persons for all purposes connected with the land under s198 LPA 1925. This means that a right that has been registered under the Act will bind anyone acquiring the land.

Example

John Goldstone the owner of 20 Sydney Road agreed and allowed his neighbour Anna resident of number 22 Sydney Road to use John’s driveway for her lifetime to park her car. Anna then registered the interest against John Goldstone.

Mike now intends to buy 20 Sydney Road and he has checked the charges register and finds out about the charge against John Goldstone.

Result

Mike will be bound by the promise made by John Goldstone with Anna. He cannot refuse or restrict the use of driveway of 20 Sydney Road if he wishes to purchase the property.

Effect of Non-Registration

If the registrable interest is not registered, it is void against certain types of buyer. This simply means that if the registrable interest (listed above) is not registered then it is not binding on the purchaser even if he knew about it. 

Equitable interests held under trust

  • One of the interests that cannot be registered as a land charge is the interest of a beneficiary under a trust of land. (please refer to Trusts, Wills and Probates)
  • This includes trusts which have been expressly created and constructive or resulting trusts.
  • The interest of a person with beneficial interest cannot be registered. Instead of registration as a land charge, overreaching applies.

Example

John in his will declared a trust of land for the benefit of his son till he attains the age of 25, “my house 20 Sydney Road to my Son Mike upon his marriage”, Mike is a beneficial owner and holds equitable interests under Trust.

Overreaching

  • The concept of overreaching means that the equitable interests of the beneficiaries are following a sale, transferred to the proceeds of the sale, provided that the purchase money has been paid to at least two trustees or a trust corporation.
  • This means that, if overreaching has taken place the beneficiary cannot claim any rights in the property as against the purchaser and this includes a mortgagee but will continue to have an interest in the sale proceeds.
  • The proceeds of sale may be re-invested, or perhaps were due to be divided among the beneficiaries. Either way, if the beneficiary is dissatisfied, that the price obtained was insufficient, or on finding that the trustees have embezzled the sale proceeds, the beneficiary’s only remedy is in damages against the trustees. (Please refer to Trusts, Wills and Probates)
  • It is not possible to claim the land, or an interest in the land, from the purchaser.

Important

If overreaching fails, because the money is not paid to two trustees/trust corporation, then the question of whether a purchaser is bound by an equitable interest under a trust will be determined by the doctrine of notice.

Doctrine of Notice

  • There are few equitable interests which are still outside the system of registration as Land Charges and are not subject to overreaching.
  • These interests are still subject to the doctrine of notice. Once all land in England and Wales has been registered, the doctrine will no longer apply to the land
  • Under the Doctrine the purchaser of the land and who was genuinely not aware of any equitable interest will take the property free from any equitable interest
  • Purchaser/Buyer of the land is a person who has paid the money at arm’s length and who has not acquired the property without paying money (as a gift or inheritance etc)

Important

The doctrine of notice does not apply to registered land.

The Doctrine applies under very few limited circumstances and they are:

  1. The interest of a beneficiary under a trust where overreaching has not occurred due to a failure to comply with the requirements e.g. payment made to one trustee instead of two.
  2. Rights not subject to registration under the Land Charges Act 1972 including all restrictive covenants in freehold land made before 1st January 1926 and equitable easements made before 1st January 1926.
  3. Rights not contemplated by the 1925 legislation, such as licences by estoppel.

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.