INTRODUCTION TO LAND LAW ( PART 2 )

By Law Teacher

THE LAW ESSAY PROFESSIONAL

3.1.1 The Doctrine of Notice – Introduction

Welcome to the first lesson of the third topic in this module guide – Unregistered Land and the Doctrine of Notice! Unregistered land is becoming more and more of a defunct concept, however, in the rare instances that it does come up, it presents a series of very different issues than registered land. The rights that are given as part of unregistered land and the doctrine of notice, form key elements of understanding any scenario involving it.

At the end of this section, you should be comfortable understanding unregistered land as a concept and how the doctrine of notice operates. This chapter begins by outlining what unregistered land is and how those in possession of it can protect their rights. The chapter then moves on to a discussion of the specific rights someone in possession of unregistered land can have and how they can be protected, building on the introduction. The doctrine of notice within this context is then discussed, before the advantages and disadvantages of unregistered land are laid out. Finally, the issue of adverse possession or “squatters’ rights” is discussed.

Goals for this section:

  • To understand what unregistered land is
  • To understand the rights available and those that are still governed by the doctrine of notice

Objectives for this section:

  • To understand what a “good root of title” is as to taking ownership of unregistered land
  • To be able to differentiate between registered and unregistered land, particularly where title is concerned
  • To understand the different types of rights in relation to unregistered land
  • To be able to understand and apply the doctrine of notice
  • To be able to discuss the advantages and disadvantages of unregistered land
  • To understand how adverse possession works

3.1.2 The Doctrine of Notice Lecture

OVERVIEW

This guide is split into four 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. Although registration is not always compulsory, certain “trigger events” can make it compulsory, such as the sale of the land. Indeed, any transfer of land that fails to register the land is automatically void (Land Registration Act 2002, ss. 6(4), 7(1)).

For unregistered land, title is proved by title deeds (Sen v Headley [1991] Ch. 425 per Nourse LJ). These documents “deeds bundles” should identify the person who currently holds the best “title” to the land. When a party looks to purchase that land, they are required to look at least at the previous 15 years in order to show a “good root of title.”

In other words, the purchaser must be able to demonstrate a clear chain of conveyancing relating to the property, up to and including the present person in possession of the property. 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 and will affect rights – Lloyds Bank plc v Carrick(1996) 28 H.L.R. 707.Most rights have to be protected by the use of the Land Charges Act 1972. Using the 1972 Act, the rights are registered as charges.

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

A person can claim ownership of the land by relying on the fact of their having occupied and possessed the property. They would do so under the Statutory Declarations Act 1835, and this approach is sanctioned by the 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. Certain proprietary entitlements are allowed to exist ‘off the register’, meaning they are not recorded in the Land Registry. These rights are classified as ‘unregistered interests’ and are deemed to be ‘overriding interests’, meaning they can bind subsequent purchasers of the land.

The Land Charges Act 1925 was intended to protect the rights of those with unregistered interests in one of three ways:

  • Legal rights – these rights bind the whole world and do not require any further protection.
  • Equitable rights – these form two of the three ways in which the 1925 Act protected third party rights. Equitable rights no longer protected by the doctrine of notice. These are registrable either (1) as land charges if they are “commercial interests”, or (2) should be “overreached” if they are “family interests.” These rights do not bind a purchaser, however the interests are to be reflected in the purchase price, i.e. the satisfaction of these rights will impose a higher financial cost on the purchaser.

There are exceptions however to these categories of legal and equitable rights, and it is here where the ancient doctrine of notice still applies. They are:

  • 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)
  • Non-overreached trusts interests (Kingsnorth Finance Ltd v Tizard [1986] 1 W.L.R. 783).

The Land Charges Register provides different “classes” of third party interests (A-F). If an interest ought to have been registered as a land charge and was not, then the interest will be void against nearly all potential purchasers of the land (Hollington 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 is a spouse’s statutory rights to occupy the matrimonial home. As with any other of the classes, if a spouse had a right to occupy the land, but the Class F land charge was not registered, then such a right will be void. 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). Statutory authority for this is found in s.199 of the Law of Property Act 1925.

Note that all the various classes are only void in certain circumstances; in the case of Class F, if the spouse’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. This couples up with what is said above about equitable rights, in that the value of the interest is reflected in the purchase price.

Conversely, a notice that is registered binds everyone, according to s.198 of the Law of Property Act 1925. Therefore, even if a purchaser does not find the notice in their search, they are still bound by it.

PART THREE: NOTICE

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 (Pilcher v Rawlins(1871-72) L.R. 7 Ch. App. 259 per James LJ). It does not, however, apply in the case of registered land.

Therefore, the doctrine of notice has been confirmed to apply to unregistered land, and not registered land – Holaw (470) Ltd v Stockton Estates Ltd (2001) 81 P. & C.R. 29. That said, the bona fide purchaser rule can still mean overriding interests do not take precedence over the rights of bona fide purchasers. 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).
  1. 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.
  1. A person is a purchaser if they take property by reason of the act of another person, which means they cannot take property as a purchaser if they seek to take possession of the property based solely on an operation of law.
  2. Finally, a bona fide purchaser must take the property without notice. There are different categories of notice:
  1. Actual notice (LPA 1925 s.199(1)(ii)Ia)). This is effectively a subjective test.
  1. Constructive notice (LPA 1925 s.199(1)(ii)(a)). This, unlike actual notice, is an objective test (Hunt v Luck [1902] 1 Ch. 428).
  1. Imputed notice is attributed to a purchaser where the knowledge is held, actually or constructively, by an agent of the purchaser (LPA 1925 s.199(1)(ii)(b)).

Note that in cases of bona fide purchasers without notice purchasing property, the unregistered rights are not only void against that purchaser; in fact, the unregistered right upon being held void against that purchaser are forever extinguished.

PART FOUR: ADVANTAGES AND DISADVANTAGES OF UNREGISTERED LAND

ADVANTAGES OF UNREGISTERED LAND

In the case of unregistered land, rights over land tend to lie with the long-standing occupant(s) of the property, rather than the nascent purchaser. That means that, in the event another party purports to sell the occupant’s property to an innocent purchaser without the occupant’s consent, the occupant retains the right to the property.

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.
  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 (Thomas Mapp, Torrens’ Elusive Title (Alberta) (1976)).
  3. The layperson’s view, according to the Scottish Law Commission, is that such dispositions as described above ought to be declared void.
  4. The layperson may not realise that they ought to protect their interest by way of a charge.

ARGUMENTS AGAINST UNREGISTERED LAND

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. They can take the Register at face value and would not need to go through the cumbersome process of establishing the “good root of title.
  2. This preference for the purchaser could help to bring about a more confident and dynamic property market
  3. 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 –Williams & Glyn’s Bank Ltd v Boland [1981] A.C. 487.

“Why is it so complex?”

Titles have to be investigated afresh on every successive purchase. 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. There is therefore no issue about the validity of title. Compared to the practice of establishing “good root of title” in unregistered land, establishing title for registered land is inexpensive, straightforward, and certain.

PART FIVE: ADVERSE POSSESSION

A key element of adverse possession (squatters’ rights) 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 Limitation Act 1980 s.15(1). As you will recall from your reading on adverse possession generally, the right of action accrues to the person with paper title at the time when they become aware of the person without paper title being in possession of the property.

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 right is extinguished (Limitation Act 1980, s.17) which makes the squatter’s independent possessory title ‘impregnable’ (Buckinghamshire County Council v Moran [1990] Ch. 623).

Finally, the squatter, upon taking possession, must be bound by all prior encumbrances, charges etc. 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 is subject to restrictive covenants and unregistered rights as per the pre-1926 convention (Re Nisbet and Potts Contract [1906] 1 Ch. 386).

3.1.3 The Doctrine of Notice Lecture – Hands on Example

The following questions are designed to test your knowledge about the core elements regarding unregistered land. The answers to the questions can be found at the bottom of the page, however you are encouraged to attempt to answer the questions first based on your own recall or notes of the topic before looking at the answers.

Always think about the relevant principles, the cases, and what the outcome will be based on how those principles and cases apply to the question.

One of the first challenges in an exam is to recognise that the question you’re being asked is about unregistered land. So by applying this step-by-step approach, you should be able to tell if it is a question regarding unregistered land and what issues you should therefore discuss.

As a quick aide-memoire, you will be on the right track if you remember the following steps:

  1. Is the land said to be registered? Does the question state if there is a register of title in the Land Registry, or is the title to be found in a “deeds bundle”?

2.Who is claiming what? For example, a purchaser may be trying to purchase unregistered land, or a homeowner may be trying to sell off the property without the knowledge/consent of their estranged partner?

3.Is someone trying to claim an interest? If so, has the interest been registered?

4.If the interest is unregistered? If so, is it something which would fall into one of the exceptions, such as proprietary estoppel or actual notice, and cannot be registered in any event under the Land Registration Act?

5.When contrasting the rights of a purchaser versus someone with unregistered interests, remember what the priority is for the person you’ve been asked to advise, and indicate whether they would be successful in their claim/defence or not.

6.If the question is an essay question about unregistered land, what are the basic elements of unregistered land, and what are the policy arguments for and against retaining unregistered land?

Q1. Alfred has become estranged from his partner Bert. Alfred is the sole paper owner of Chalk House. Bert still visits the property twice a week to help feed the cats, owned by both Alfred and Bert. Alfred decides to abscond and take several of the cats with him. He therefore arranges for an interested purchaser, Debit Bank plc, to inspect the property and value it at a time when Bert is not present. When an agent from Debit Bank attends, they notice all of the cat food tins, and ask Alfred if he has cats. Alfred does not answer, and the representative does not pursue the question any further. Debit Bank duly take steps to purchase the property, saying the property is free of any occupiers. Bert, upon discovering what has happened, tells Debit Bank he has a right to live at Chalk House.

Advise Bert.

A1. You may be reminded of another case in which the husband had concealed an attempted sale from their estranged partner. Kingsnorth Finance Ltd v Tizard. You may remember in that case that KF were fixed with constructive notice because they had failed to make inquiries that they ought reasonably to have made. Notice that Debit Bank’s representative did make an inquiry. The question is whether the degree to which they made inquiries was reasonable. You may differ with your colleagues about whether it was reasonable or not; the important point is to highlight that this is a relevant consideration. Remember, whichever view you take, answer the underlying question of whether Bert does or does not have a right to live at the property. You may also suggest there is imputed notice, because it is Debit Bank’s agent that attends the property.

Q2. Eleanor is hoping to purchase a property. She is a first-time buyer so is not familiar with the usual risks and challenges. She is considering buying Whiteacre. She has been told its land is unregistered. She seeks advice on whether this would be simpler than purchasing Yellowacre, a neighbouring estate which is said to be registered.

A2. Although presented as a problem question, this could easily be answered as an essay question. You are being asked to discuss the disadvantages of unregistered land from the perspective of purchasers. You need only look at the section above regarding Disadvantages of Unregistered Land. Among those disadvantages, you can discuss how title is established for unregistered land, and point out that it is a complex exercise that is far more complicated and time-consuming than consulting the Land Registry for registered land.

Q3. Florence is intending to buy Greenacre from Harry. Harry’s wife, Irene, has an interest in the property, but she was never named as a joint tenant of the land. Irene would rather stay at Greenacre and doesn’t want Harry to sell it. Harry tells Florence about Irene’s interest in the land and about her wanting to stay at the land. Florence says she will pay more if needed, but she told Harry she was determined to buy the property.

Advise Florence.

A3. Because this is the interest of a spouse, the question is whether the interest was registered. You will remember, from Midland Bank Trust Co Ltd v Green, that a purchaser is not bound by unregistered interests even where they have notice of that interest. Note that Florence has said she will pay more; this is relevant to the question of whether she is paying the equivalent value for the interest. Remember s.199 of the Law of Property Act 1925.

Q4. Alice has been living at Blackacre for 13 years. She does not hold the paper title; that belongs with Charles. She is not related to Charles in any way. In fact, she has set up her space in Blackacre as a squat. Charles has been aware of her presence at Blackacre ever since she moved in: Alice insisted on first moving in that she had a right to live at Blackacre. Dylan has been using the basement of Blackacre to park his car regularly for about six years. Charles gave him permission to do so, even though Dylan never registered this with the Land Registry. Alice had never been aware of this basement, until just recently. She had in any event only become aware of it after 12 years. Charles is rarely at the property, and upon discovering Dylan’s use of the basement Alice decides to tell Dylan that he can no longer park his car in the basement. Dylan thinks he is in fact allowed to do so.

Advise Alice.

A4. On reading this question, it should become apparent that Alice has been taking adverse possession of Blackacre. She has been in possession of the property for more than 12 years, and has indicated to the holder of the paper title (Charles) she has taken possession. Therefore, under the Limitation Act 1980 (remember the relevant section?) she has taken adverse possession and has extinguished Charles’s title. But because Dylan has been parking his car before Charles’s title was extinguished, and because she takes possession of Blackacre by operation of law, Alice cannot rely on the bona fide purchaser without notice defence.

 

Disclaimer:

The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.