Introduction to Unregistered Land
Introduction to Unregistered Land
Under Property Law, Unregistered land is one that is still not registered with HM Land Registry. “Unregistered title‟ refers to the fact that the title to the property has not yet been registered with HM Land Registry. A prospective buyer and his solicitors have to ensure that the owner has the good title of the land by checking the relevant documents and records for the last 15 years at least.
It is important to note that a considerable number of properties in England and Wales are not registered with HM Land Registry as of yet. However, as a rule from 1st December 1990, every property/land/home in England and Wales must be registered with the Land Registry on the occurrence of specified events. (Detail is provided below).
- 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 the ownership, extent of the land, and other people’s rights and interests in the land.
If someone intends to buy an unregistered piece of land, then, in addition to title deeds, the buyer will need to do other searches, inquiries, and inspections so that he/she can discover whether there are any third-party interests in the land.
To check whether anyone else has an interest in the property, such as a mortgage, easement, or beneficial interests under a trust, that could be binding on the buyer.
Third party’s rights and interests
The third party’s interests can 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 buyer 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:
- Whether the third party has registered his/her right under the Land Charges Act 1972.
- The Doctrine of Notice.
Legal Estates and Interests
- Concerning the legal rights, they will bind any prospective buyer of the land whether he is aware of them or not.
- Legal rights are rights in the land itself and thus bind a buyer irrespective of whether he is aware of them.
- The Land Charges Act, 1972 made certain rights and interests in the land registrable in the Land Charges Registry.
- Once registered, the prospective buyer could find out about them by conducting a simple search at Land Registry. However, only certain types of interests are registrable.
These interests are in the appropriate written form and require that the legal formalities must be fulfilled.
John and his wife bought a family home together and each contributed half of the money. Their names are on the deed as joint owners, both John and his wife hold a legal interest in the family house. Legal interests bind any future buyer of John’s family home.
These are the interests that are not in a written form or the formalities required to make these rights legal, are not met.
John and his wife bought a piece of land. They both contributed half of the money but only John’s name is on the deed. John’s wife will have an equitable interest in the land instead of a legal right.
James and his wife Natasha bought a house together, they agreed among themselves that James will pay the purchase price of the house and Natasha will pay for the reconstruction of the kitchen, and bathrooms. She further agreed to pay utility bills regarding the family home.
The Title deed will only bear James’ name as the owner of the land but Natasha in the given circumstances will hold equitable interest as her name is not on the Title deed.
The key interests which are registerable are the following:
- Class C(i), puisne mortgage: This is a second or subsequent legal Registration that gives priority to the lender over the subsequent buyer.
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 works.
2. Class C(iv), estate contract: Estate contract includes a contract for sale or to lease and options to acquire freehold or lease
3. Class D(ii), restrictive covenants: This includes only those restrictive covenants (promises not to do something) created after 1926. Concerning restrictive covenants created before 1926, the doctrine of notice applies.
- Covenants are promises agreed between a buyer and seller of land to do or not to do certain things on the land.
- 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 the future and not to use the land for business purposes etc.
4. 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.
Please refer to 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 197. The right to occupy the civil partnership home/Family Matrimonial Home under the Civil Partnership Act 2004 is also registrable as Class F land charges.
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.
Where registration is made against an incorrect version of the name it will not bind a purchaser who searches the register against the correct name of the estate owner
John Goldstone the owner of 20 Moore Road agreed and allowed his neighbor Amna resident of number 22 Moore Road to use John’s driveway for her lifetime to park her car. Amna then applied to register her interest against John Goldstone however, she mistakenly registered it against John Goldstein instead of John Goldstone.
Mike now intends to buy 20 Moore Road and he has checked the charges register and did not find any charge against John Goldstone.
Mike will not be bound by the promise made by John Goldstone with Amna. He may refuse or restrict the use of the driveway of 20 Moore Road and do whatever he wishes to do with it.
Effect of Registration
Valid registration of a registrable land charge will act as 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.
John Goldstone the owner of 20 Moore Road agreed and allowed his neighbor, Amna, the resident of number 22 Moore Road to use John’s driveway for her lifetime to park her car. Amna then registers her interest against John Goldstone correctly.
Mike now intends to buy 20 Moore Road and he has checked the charges register and finds out about the charge against John Goldstone.
Mike will be bound by the promise made by John Goldstone with Amna. He cannot refuse or restrict the use of the driveway of 20 Moore 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 buyers. 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
- The interest of a Beneficiary cannot be registered as a land charge hence becomes an equitable interest. This includes trusts which have been expressly created and constructive or resulting trusts.
- The interest of a person with a beneficial interest cannot be registered. Instead of registration as a land charge, overreaching applies.
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. This means that Mike cannot register this right as a legal right but he holds an equitable interest in 20 Sydney Road before he is 25.
- The concept of overreaching means that the equitable interests of the beneficiaries are duly recognized. Overreaching ensures that the beneficiary has duly received his share of equitable interest. The proceeds of the sale are general to a trust.
- This means that, if overreaching has taken place the beneficiary cannot claim any rights in the property against the buyer and this includes a mortgagee but will continue to have an interest in the sale proceeds.
- Upon the sale of the land the proceeds of the sale can be re-invested by the trustees. The proceeds must be divided among all beneficiaries who are entitled either way. However, if a 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.
If overreaching fails, because the money is not paid to two trustees or trust corporation, then the question of whether a buyer is bound by an equitable interest under a trust will be determined by the doctrine of notice.
The Doctrine of Notice
- There are few equitable interests that 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.
- Under the Doctrine the buyer of the land who was genuinely not aware of any equitable interest will take the property free from any equitable interest.
- A buyer 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).
The doctrine of notice does not apply to registered land.
The Doctrine applies under limited circumstances and they are:
- 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.
- 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.
- Rights not contemplated by the 1925 legislation, such as licenses by estoppel.
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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 legallex 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.