Land Legislation
- Elliot Tierney
- Aug 15, 2023
- 7 min read
Key Legislation:
The Settled Land Act 1925 (SLA)
The Trustee Act 1925 (TA)
The Law of Property Act 1925 (LPA)
The Land Charges Act 1925, updated 1972 (LCA)
The Land Registration Act 1925, updated 2002 (LRA)
The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)
Parliaments Goals in Reforming Land Law:
Unranked goals - Parliament was aware that pursuing one goal would potentially mean compromising another.
Simplification:
The 1925 legislation limited the existence to 2 types of estates: freehold and leasehold. [1]
Transparent Title Registration:
Land Title Registration was introduced to keep track of land holdings.
After WW1, many landowners died. Discovery of estates and interests in land depended on the existence and inspection of physical title deeds. Many of these were unable to be located. If a Land Register had existed, this issue would not have been a problem.
Title by Registration:
To own an estate in land, a person must hold the title to it.
Prior to 1926, evidence of title was simply a name on a deed. Now, due to title registration on the Land Registry, a buyer’s solicitor can consult the Land Register to discover who has rights over the land and what rights those are.
When an estate is registered, it is given a unique number and details of the estate are recorded on the Land Register.
The register keeps information on the type of estate the land is, of any mortgages or other charges on the estate, and any other interests (notices of 3rd party rights or restrictions) protected by registration.
The ‘insurance principle’ is the idea that the Register is the source of a person’s title, not merely a record of it (‘substantive registration’). [4] If a title is duly registered, it is guaranteed by the State. Where the Register is incorrect, compensation is available and it may be possible for the Register to be rectified. [5]
The ‘mirror principle’ is the idea that the register should reflect, in totality, the rights and interests concerning a title of registered land. However, since not all rights are registered due to the impracticality of doing so, this is not fully implemented.
e-conveyancing:
The Land Register has mostly moved online.
Information can be found of the title holder, the type of title and other registered interests through the online system.
However, land title cannot be transferred electronically as the physical transfer of deeds must take place. There are plans for this to change, but these are on hold, supposedly due to concerns regarding fraud. [6]
Mortgage deeds (from approved lenders) may be submitted digitally to HM Land Registry now. They can also be discharged automatically and electronically when paid off.
Unregistered and Registered Titles:
Parliament did not just create one system of holding title to and registering interests in land (on the Land Charges Register) under the LCA 1925.
In England and Wales, land transfers were governed by the land title registration system but all rights relating to a plot of land are recorded on the central Land Registry. Land only became registered once it was transferred (on first conveyance).
Where titles are unregistered with the Land Registry, inspection of the physical deeds are still necessary. Done correctly, this is an expensive and time-consuming process. Interests in the land did have to be registered if they were legal rights in rem. [7]
The aim was that all unregistered titles would be phased out by the end of the 20th century. Eventually, everything was to be added to the Land Registry. This was not achieved as there are still plots of land that have not been transferred in the last 100 years.
EG: places of worship, schools etc.
Protect Disorganised and Vulnerable Interests:
Some rights are acquired over time, potentially without the knowledge of the rights holder. Parliament wanted to protect these rights.
EG: the ‘overriding interests’ of people who have lived in a property for a number of years shouldn’t be kicked out despite being unregistered.
Parliament also wanted to make these rights clear and publicly accessible. Interests in land can, in some instances, significantly jeopardise the value of a piece of land. By registering these interests, the price paid for the land can reflect its economic value when the purchaser makes an informed decision.
Foster Free Alienability of Land:
By making people more confident about who owns the legal title to land, and of any other interests related to it, on an accessible register, the sale of land becomes increasingly simple and barrier-free. This makes the economic land market more optimal.
Cheaper Conveyancing:
The aim of making land conveyancing cheaper was not fulfilled. Fees increased considerably in the subsequent years due to the cost of learning new legislation was passed on from lawyers to their clients.
Link to Contract Law:
While general contract law principles apply to land transactions, land exchange is not simply about contract law. Land law has the deed and registration requirement, land litigation concerns proprietary (in rem) rights rather than personal (in personam) rights, and the principle of overreaching applies to land law.
Doctrine of Overreaching:
Overreaching is a legal mechanism set out by the LPA 1925 whereby equitable property rights are no longer binding to the purchaser of an estate when land has been transferred in exchange for money. [8]
The LPA 1925 was premised on assumptions that trusts of land would be expressly created, with readily identifiable beneficiaries, holding defined shares, often as investments and primarily in respect of larger land holdings. [9] This is simply no longer the case with land today.
The overreaching doctrine ensures that a potential buyer can be sure that the interests of the title holder and others with interests in the land come to an end. The rights are turned from legal rights in the land to equitable rights to the value of the property.
Both personal property rights and land rights can be subject to overreaching.
Example:
Where C wants to buy a house with a mortgage, C is providing valuable consideration in exchange for it, but also not actually in exchange for the house. The valuable consideration is in exchange for the acquired secured rights that the mortgage lender has in exchange for agreeing to cover the sellers anticipated future debts.
Equitable / Beneficial Entitlement in rem after Overreaching:
Once the land is sold, their equitable interest in the land is transferred to the right to the proceeds of the sale derived from the land.
Where land is held by one party and another party contributes to the purchase price, the other party has an equitable claim to the proceeds of the sale. This only applies if the money was not a gift.
Two Trustee Rule:
The ‘curtain principle’ is the idea that certain equitable interests in land should be hidden behind the ‘curtain’ of a special type of trust. A purchaser, wishing to buy registered land that is subject to a trust of land, needs to only be concerned with the legal title to the land.
They do not need to look behind this ‘curtain’ because rights will be overreached if the proper formalities of purchase take place.
If one of the parties wants to sell and the other does not, the doctrine of overreaching takes effect providing the money paid by the buyer has been paid to at least two trustees (or a trust corporation). [10]
If the money is only paid to one person, overreaching doesn’t take place. Therefore, the interests of both the parties are not extinguished and the buyer cannot be registered as the new legal title holder.
This would be a breach of trust, due to a duty on trustees of land to consult beneficiaries and to act in accordance with their wishes, and the beneficiary would be able to sue for this. [11] Overreaching won’t occur if the trustee’s breach of trust amounts to fraudulent behaviour. [12]
In City of London v Flegg, A&B bought a house with financial help from B’s parents (F). F lived with A&B in the house. A and B were registered co-owners (trustees) of the legal estate. A&B re-mortgaged their house with L when they ran into financial difficulties without telling F of additional charges.
When A&B default on repayments, L sought repossession to sell. F argued that their rights took priority over L’s rights because they paid towards the purchase price and have a right in property and were in actual occupation.
The HL held that when L provided the mortgage to A&B, it was paying money to them for the value of the house as 2 trustees. L won as the beneficial entitlements of F had been overreached under the two-trustee rule.
Since A&B should have consulted F about the mortgage, F had a right to recover their investments from them. A&B were bankrupt, so F’s right to recover was of no practical value.
Arguably, Flegg curtails the practical application of Boland by creating a sharp divide between one and two trustee trusts. [13]
Flegg marks a policy choice in favour of creditors over beneficiaries – gives precedence to overreaching over overriding interests. [14]
Resources:
References:
[1] Law of Property Act s1 [2] Land Registration Act 2002, s32(1) [3] Land Registration Act 2002, s40(1) [4] Dixon, Modern Land Law (12th edn, Routledge 2021) 34 [5] Land Registration Act, schedule 4 and schedule 8 [6] Gardner (2014) 77 MLR 763, 768-71. [7] Land Charges Act 1925, updated 1972 [8] Law of Property Act 1925 s2, 27 [9] Dixon, “To Sell or Not to Sell” (2011) 70 Cambridge L. J. 579 [10] Law of Property Act 1925 s27 [11] Trusts of Land and Appointment of Trustees Act 1996 s11 [12] HSBC v Dyche [2009] EWCA Civ 2954 (Ch) [13] Hopkins, “Homes as Wealth”, in Landmark Cases in Land Law, ed. N. Gravells (Oxford Hart, 2013), 205-28 [14] Hopkins, “Homes as Wealth”, in Landmark Cases in Land Law, ed. N. Gravells (Oxford Hart, 2013), 205-28
Cases Mentioned:
City of London Building Society v Flegg [1988] AC 54
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