The Law Commission

 


APPENDIX A

Draft Land Registration Bill

Land Registration Bill

CONTENTS

PART 1

PRELIMINARY

1 Register of title

2 Scope of title registration

PART 2

FIRST REGISTRATION OF TITLE

CHAPTER 1

FIRST REGISTRATION

Voluntary registration

3 When title may be registered

Compulsory registration

4 When title must be registered

5 Power to extend section 4

6 Duty to apply for registration of title

7 Effect of non-compliance with section 6

8 Liability for making good void transfers etc

Classes of title

9 Titles to freehold estates

10 Titles to leasehold estates

Effect of first registration

11 Freehold estates

12 Leasehold estates

Land Registration Bill

Dependent estates

13 Appurtenant rights and charges

Supplementary

14 Rules about first registration

CHAPTER 2

CAUTIONS AGAINST FIRST REGISTRATION

15 Right to lodge

16 Effect

17 Withdrawal

18 Cancellation

19 Cautions register

20 Alteration of register by court

21 Alteration of register by registrar

22 Supplementary

PART 3

DISPOSITIONS OF REGISTERED LAND

Powers of disposition

23 Owner.s powers

24 Right to exercise owner.s powers

25 Mode of exercise

26 Protection of disponees

Registrable dispositions

27 Dispositions required to be registered

Effect of dispositions on priority

28 Basic rule

29 Effect of registered dispositions: estates

30 Effect of registered dispositions: charges

31 Inland Revenue charges

PART 4

NOTICES AND RESTRICTIONS

Notices

32 Nature and effect

33 Excluded interests

34 Entry on application

35 Unilateral notices

36 Cancellation of unilateral notices

37 Unregistered interests

38 Registrable dispositions

39 Supplementary Restrictions

40 Nature

41 Effect

42 Power of registrar to enter

43 Applications

44 Obligatory restrictions

45 Notifiable applications

46 Power of court to order entry

47 Withdrawal

PART 5

CHARGES

Relative priority

48 Registered charges

49 Tacking and further advances

50 Overriding statutory charges: duty of notification

Powers as chargee

51 Effect of completion by registration

52 Protection of disponees

53 Powers as sub-chargee

Realisation of security

54 Proceeds of sale: chargee's duty

55 Local land charges

Miscellaneous

56 Receipt in case of joint proprietors

57 Entry of right of consolidation

PART 6

REGISTRATION: GENERAL

Registration as proprietor

58 Conclusiveness

59 Dependent estates

Boundaries

60 Boundaries

61 Accretion and diluvion

Quality of title

62 Power to upgrade title

63 Effect of upgrading title

64 Use of register to record defects in title

Alteration of register

65 Alteration of register

Information etc.

66 Inspection of the registers etc

67 Official copies of the registers etc

68 Index

69 Historical information

70 Official searches

Applications

71 Duty to disclose unregistered interests

72 Priority protection

73 Objections

74 Effective date of registration

Proceedings before the registrar

75 Production of documents

76 Costs

Miscellaneous

77 Duty to act reasonably

78 Notice of trust not to affect registrar

PART 7

SPECIAL CASES

The Crown

79 Voluntary registration of demesne land

80 Compulsory registration of grants out of demesne land

81 Demesne land: cautions against first registration

82 Escheat etc

83 Crown and Duchy land: representation

84 Disapplication of requirements relating to Duchy land

85 Bona vacantia Pending actions etc.

86 Bankruptcy

87 Pending land actions, writs, orders and deeds of arrangement

Miscellaneous

88 Incorporeal hereditaments

89 Settlements

90 PPP leases relating to transport in London

PART 8

ELECTRONIC CONVEYANCING

91 Electronic dispositions: formalities

92 Land registry network

93 Power to require simultaneous registration

94 Supplementary

PART 9

ADVERSE POSSESSION

95 Disapplication of periods of limitation

96 Registration of adverse possessor

97 Defences

PART 10

LAND REGISTRY

Administration

98 The land registry

99 Conduct of business

100 Annual report

Fees and indemnities

101 Fee orders

102 Indemnities

Miscellaneous

103 General information about land

104 Consultancy and advisory services

PART 11

ADJUDICATION

105 The adjudicator

106 Jurisdiction

107 Procedure

108 Functions in relation to disputes

109 Appeals

110 Enforcement of orders etc

111 Fees

112 Supplementary

PART 12

MISCELLANEOUS AND GENERAL

Miscellaneous

113 Rights of pre-emption

114 Proprietary estoppel and mere equities

115 Reduction in unregistered interests with automatic protection

116 Power to reduce qualifying term

117 Power to deregister manors

118 Conclusiveness of filed copies etc

119 Forwarding of applications to registrar of companies

Offences etc.

120 Suppression of information

121 Improper alteration of the registers

122 Privilege against self-incrimination

Land registration rules

123 Miscellaneous and general powers

124 Exercise of powers

Supplementary

125 Rules, regulations and orders

126 Crown application

127 Application to internal waters

128 .Proprietor in possession.

129 General interpretation

Final provisions

130 Minor and consequential amendments

131 Transition

132 Repeals

133 Short title, commencement and extent

Schedule 1 . Unregistered interests which override first registration

Schedule 2 . Registrable dispositions: registration requirements

Part 1 . Registered estates

Part 2 . Registered charges

Schedule 3 . Unregistered interests which override registered dispositions

Schedule 4 . Alteration of the register

Schedule 5 . Land registry network

Schedule 6 . Registration of adverse possessor

Schedule 7 . The land registry

Schedule 8 . Indemnities

Schedule 9 . The adjudicator

Schedule 10 . Miscellaneous and general powers

Part 1 . Miscellaneous

Part 2 . General

Schedule 11 . Minor and consequential amendments

Schedule 12 . Transition

Schedule 13 . Repeals

A

B I L L

TO

Make provision about land registration; and for connected purposes.

BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

PART 1

PRELIMINARY

1 Register of title

(1) There is to continue to be a register of title kept by the registrar.

(2) Rules may make provision about how the register is to be kept and may, in particular, make provision about:

(a) the information to be included in the register,

(b) the form in which information included in the register is to be kept, and

(c) the arrangement of that information.

2 Scope of title registration

This Act makes provision about the registration of title to -

(a) unregistered legal estates which are interests of any of the following kinds.

(i) an estate in land,

(ii) a rentcharge,

(iii) a franchise,

(iv) a profit a prendre in gross, and

(v) any other interest or charge which subsists for the benefit of, or is a charge on, an interest the title to which is registered; and

(b) interests capable of subsisting at law which are created by a disposition of an interest the title to which is registered.

PART 2

FIRST REGISTRATION OF TITLE

CHAPTER 1

FIRST REGISTRATION

Voluntary registration

3 When title may be registered

(1) This section applies to any unregistered legal estate which is an interest of any of the following kinds:

(a) an estate in land,

(b) a rentcharge,

(c) a franchise, and

(d) a profit a prendre in gross.

(2) Subject to the following provisions, a person may apply to the registrar to be registered as the proprietor of an unregistered legal estate to which this section applies if:

(a) the estate is vested in him, or

(b) he is entitled to require the estate to be vested in him.

(3) Subject to subsection (4), an application under subsection (2) in respect of a leasehold estate may only be made if the estate was granted for a term of which more than seven years are unexpired.

(4) In the case of an estate in land, subsection (3) does not apply if the right to possession under the lease is discontinuous.

(5) A person may not make an application under subsection (2)(a) in respect of a leasehold estate vested in him as a mortgagee where there is a subsisting right of redemption.

(6) A person may not make an application under subsection (2)(b) if his entitlement is as a person who has contracted to buy under a contract.

(7) If a person holds in the same right both:

(a) a lease in possession, and

(b) a lease to take effect in possession on, or within a month of, the end of the lease in possession, then, to the extent that they relate to the same land, they are to be treated for the purposes of this section as creating one continuous term.

Compulsory registration

4 When title must be registered

(1) The requirement of registration applies on the occurrence of any of the following events.

(a) the transfer of a qualifying estate

(i) for valuable or other consideration, by way of gift or in pursuance of an order of any court, or

(ii) by means of an assent (including a vesting assent);

(b) the transfer of an unregistered legal estate in land in circumstances where section 171A of the Housing Act 1985 (c. 68) applies (disposal by landlord which leads to a person no longer being a secure tenant);

(c) the grant out of a qualifying estate of an estate in land.

(i) for a term of years absolute of more than seven years from the date of the grant, and

(ii) for valuable or other consideration, by way of gift or in pursuance of an order of any court;

(d) the grant out of a qualifying estate of an estate in land for a term of years absolute to take effect in possession after the end of the period of three months beginning with the date of the grant;

(e) the grant of a lease in pursuance of Part 5 of the Housing Act 1985 (the right to buy) out of an unregistered legal estate in land;

(f) the grant of a lease out of an unregistered legal estate in land in such circumstances as are mentioned in paragraph (b);

(g) the creation of a protected first legal mortgage of a qualifying estate.

(2) For the purposes of subsection (1), a qualifying estate is an unregistered legal estate which is:

(a) a freehold estate in land, or

(b) a leasehold estate in land held for a term which, at the time of the transfer, grant or creation, has more than seven years to run.

(3) In subsection (1)(a), the reference to transfer does not include transfer by operation of law.

(4) Subsection (1)(a) does not apply to:

(a) the assignment of a mortgage term, or

(b) the assignment or surrender of a lease to the owner of the immediate reversion where the term is to merge in that reversion.

(5) Subsection (1)(c) does not apply to the grant of an estate to a person as a mortgagee.

(6) For the purposes of subsection (1)(a) and (c), if the estate transferred or granted has a negative value, it is to be regarded as transferred or granted for valuable or other consideration.

(7) In subsection (1)(a) and (c), references to transfer or grant by way of gift include transfer or grant for the purpose of:

(a) constituting a trust under which the settlor does not retain the whole of the beneficial interest, or

(b) uniting the bare legal title and the beneficial interest in property held under a trust under which the settlor did not, on constitution, retain the whole of the beneficial interest.

(8) For the purposes of subsection (1)(g).

(a) a legal mortgage is protected if it takes effect on its creation as a mortgage to be protected by the deposit of documents relating to the mortgaged estate, and

(b) a first legal mortgage is one which, on its creation, ranks in priority ahead of any other mortgages then affecting the mortgaged estate.

(9) In this section "land" does not include mines and minerals held apart from the surface; "vesting assent" has the same meaning as in the Settled Land Act 1925 (c. 18).

5 Power to extend section 4

(1) The Lord Chancellor may by order:

(a) amend section 4 so as to add to the events on the occurrence of which the requirement of registration applies such relevant event as he may specify in the order, and

(b) make such consequential amendments of any provision of, or having effect under, any Act as he thinks appropriate.

(2) For the purposes of subsection (1)(a), a relevant event is an event relating to an unregistered legal estate which is an interest of any of the following kinds:

(a) an estate in land,

(b) a rentcharge,

(c) a franchise, and

(d) a profit a prendre in gross.

(3) The power conferred by subsection (1) may not be exercised so as to require the title to an estate granted to a person as a mortgagee to be registered.

(4) Before making an order under this section the Lord Chancellor must consult such persons as he considers appropriate.

6 Duty to apply for registration of title

(1) If the requirement of registration applies, the responsible estate owner, or his successor in title, must, before the end of the period for registration, apply to the registrar to be registered as the proprietor of the registrable estate.

(2) If the requirement of registration applies because of section 4(1)(g):

(a) the registrable estate is the estate charged by the mortgage, and

(b) the responsible estate owner is the owner of that estate.

(3) If the requirement of registration applies otherwise than because of section 4(1)(g):

(a) the registrable estate is the estate which is transferred or granted, and

(b) the responsible estate owner is the transferee or grantee of that estate.

(4) The period for registration is 2 months beginning with the date on which the relevant event occurs, or such longer period as the registrar may provide under subsection (5).

(5) If on the application of any interested person the registrar is satisfied that there is good reason for doing so, he may by order provide that the period for registration ends on such later date as he may specify in the order.

(6) Rules may make provision enabling the mortgagee under any mortgage falling within section 4(1)(g) to require the estate charged by the mortgage to be registered whether or not the mortgagor consents.

7 Effect of non-compliance with section 6

(1) If the requirement of registration is not complied with, the transfer, grant or creation becomes void as regards the transfer, grant or creation of a legal estate.

(2) On the application of subsection (1):

(a) in a case falling within section 4(1)(a) or

(b), the title to the legal estate reverts to the transferor who holds it on a bare trust for the transferee, and (b) in a case falling within section 4(1)(c) to (g), the grant or creation has effect as a contract made for valuable consideration to grant or create the legal estate concerned.

(3) If an order under section 6(5) is made in a case where subsection (1) has already applied, that application of the subsection is to be treated as not having occurred.

(4) The possibility of reverter under subsection (1) is to be disregarded for the purposes of determining whether a fee simple is a fee simple absolute.

8 Liability for making good void transfers etc

If a legal estate is retransferred, regranted or recreated because of a failure to comply with the requirement of registration, the transferee, grantee or, as the case may be, the mortgagor-

(a) is liable to the other party for all the proper costs of and incidental to the retransfer, regrant or recreation of the legal estate, and

(b) is liable to indemnify the other party in respect of any other liability reasonably incurred by him because of the failure to comply with the requirement of registration.

Classes of title

9 Titles to freehold estates

(1) In the case of an application for registration under this Chapter of a freehold estate, the classes of title with which the applicant may be registered as proprietor are:

(a) absolute title,

(b) qualified title, and

(c) possessory title; and the following provisions deal with when each of the classes of title is available.

(2) A person may be registered with absolute title if the registrar is of the opinion that the person's title to the estate is such as a willing buyer could properly be advised by a competent professional adviser to accept.

(3) In applying subsection (2), the registrar may disregard the fact that a person's title appears to him to be open to objection if he is of the opinion that the defect will not cause the holding under the title to be disturbed.

(4) A person may be registered with qualified title if the registrar is of the opinion that the person's title to the estate has been established only for a limited period or subject to certain reservations which cannot be disregarded under subsection (3).

(5) A person may be registered with possessory title if the registrar is of the opinion:

(a) that the person is in actual possession of the land, or in receipt of the rents and profits of the land, by virtue of the estate, and

(b) that there is no other class of title with which he may be registered.

10 Titles to leasehold estates

(1) In the case of an application for registration under this Chapter of a leasehold estate, the classes of title with which the applicant may be registered as proprietor are:

(a) absolute title,

(b) good leasehold title,

(c) qualified title, and

(d) possessory title;

and the following provisions deal with when each of the classes of title is available.

(2) A person may be registered with absolute title if:

(a) the registrar is of the opinion that the person.s title to the estate is such as a willing buyer could properly be advised by a competent professional adviser to accept, and

(b) the registrar approves the lessor.s title to grant the lease.

(3) A person may be registered with good leasehold title if the registrar is of the opinion that the person.s title to the estate is such as a willing buyer could properly be advised by a competent professional adviser to accept.

(4) In applying subsection (2) or (3), the registrar may disregard the fact that a person.s title appears to him to be open to objection if he is of the opinion that the defect will not cause the holding under the title to be disturbed.

(5) A person may be registered with qualified title if the registrar is of the opinion that the person.s title to the estate, or the lessor.s title to the reversion, has been established only for a limited period or subject to certain reservations which cannot be disregarded under subsection (4).

(6) A person may be registered with possessory title if the registrar is of the opinion:

(a) that the person is in actual possession of the land, or in receipt of the rents and profits of the land, by virtue of the estate, and

(b) that there is no other class of title with which he may be registered.

Effect of first registration

11 Freehold estates

(1) This section is concerned with the registration of a person under this Chapter as the proprietor of a freehold estate.

(2) Registration with absolute title has the effect described in subsections (3) to (5).

(3) The estate is vested in the proprietor together with all interests subsisting for the benefit of the estate.

(4) The estate is vested in the proprietor subject only to the following interests affecting the estate at the time of registration:

(a) interests which are the subject of an entry in the register in relation to the estate,

(b) unregistered interests which fall within any of the paragraphs of Schedule 1, and

(c) interests acquired under the Limitation Act 1980 (c. 58) of which the proprietor has notice.

(5) If the proprietor is not entitled to the estate for his own benefit, or not entitled solely for his own benefit, then, as between himself and the persons beneficially entitled to the estate, the estate is vested in him subject to such of their interests as he has notice of.

(6) Registration with qualified title has the same effect as registration with absolute title, except that it does not affect the enforcement of any estate, right or interest which appears from the register to be excepted from the effect of registration.

(7) Registration with possessory title has the same effect as registration with absolute title, except that it does not affect the enforcement of any estate, right or interest adverse to, or in derogation of, the proprietor.s title subsisting at the time of registration or then capable of arising.

12 Leasehold estates

(1) This section is concerned with the registration of a person under this Chapter as the proprietor of a leasehold estate.

(2) Registration with absolute title has the effect described in subsections (3) to (5).

(3) The estate is vested in the proprietor together with all interests subsisting for the benefit of the estate.

(4) The estate is vested subject only to the following interests affecting the estate at the time of registration:

(a) implied and express covenants, obligations and liabilities incident to the estate,

(b) interests which are the subject of an entry in the register in relation to the estate,

(c) unregistered interests which fall within any of the paragraphs of Schedule 1, and

(d) interests acquired under the Limitation Act 1980 of which the proprietor has notice.

(5) If the proprietor is not entitled to the estate for his own benefit, or not entitled solely for his own benefit, then, as between himself and the persons beneficially entitled to the estate, the estate is vested in him subject to such of their interests as he has notice of.

(6) Registration with good leasehold title has the same effect as registration with absolute title, except that it does not affect the enforcement of any estate, right or interest affecting, or in derogation of, the title of the lessor to grant the lease.

(7) Registration with qualified title has the same effect as registration with absolute title except that it does not affect the enforcement of any estate, right or interest which appears from the register to be excepted from the effect of registration.

(8) Registration with possessory title has the same effect as registration with absolute title, except that it does not affect the enforcement of any estate, right or interest adverse to, or in derogation of, the proprietor's title subsisting at the time of registration or then capable of arising.

Dependent estates

13 Appurtenant rights and charges

Rules may:

(a) make provision for the registration of the proprietor of a registered estate as the proprietor of an unregistered legal estate which subsists for the benefit of the registered estate;

(b) make provision for the registration of a person as the proprietor of an unregistered legal estate which is a charge on a registered estate.

Supplementary

14 Rules about first registration

Rules may:

(a) make provision about the making of applications for registration under this Chapter;

(b) make provision about the functions of the registrar following the making of such an application, including provision about:

(i) the examination of title, and

(ii) the entries to be made in the register where such an application is approved;

(c) make provision about the effect of any entry made in the register in pursuance of such an application.

CHAPTER 2

CAUTIONS AGAINST FIRST REGISTRATION

15 Right to lodge

(1) Subject to subsection (3), a person may lodge a caution against the registration of title to an unregistered legal estate if he claims to be:

(a) the owner of a qualifying estate, or

(b) entitled to an interest affecting a qualifying estate.

(2) For the purposes of subsection (1), a qualifying estate is a legal estate which:

(a) relates to land to which the caution relates, and

(b) is an interest of any of the following kinds:

(i) an estate in land,

(ii) a rentcharge,

(iii) a franchise, and

(iv) a profit a prendre in gross.

(3) No caution may be lodged under subsection (1).

(a) in the case of paragraph (a), by virtue of ownership of:

(i) a freehold estate in land, or

(ii) a leasehold estate in land granted for a term of which more than seven years are unexpired;

(b) in the case of paragraph (b), by virtue of entitlement to such a leasehold estate as is mentioned in paragraph (a)(ii) of this subsection.

(4) The right under subsection (1) is exercisable by application to the registrar.

16 Effect

(1) Where an application for registration under this Part relates to a legal estate which is the subject of a caution against first registration, the registrar must give the cautioner notice of the application and of his right to object to it.

(2) The registrar may not determine an application to which subsection (1) applies before the end of such period as rules may provide, unless the cautioner has exercised his right to object to the application or given the registrar notice that he does not intend to do so.

(3) Except as provided by this section, a caution against first registration has no effect and, in particular, has no effect on the validity or priority of any interest of the cautioner in the legal estate to which the caution relates.

(4) For the purposes of subsection (1), notice given by a person acting on behalf of an applicant for registration under this Part is to be treated as given by the registrar if:

(a) the person is of a description provided by rules, and

(b) notice is given in such circumstances as rules may provide.

17 Withdrawal

The cautioner may withdraw a caution against first registration by application to the registrar.

18 Cancellation

(1) A person may apply to the registrar for cancellation of a caution against first registration if he is:

(a) the owner of the legal estate to which the caution relates, or

(b) a person of such other description as rules may provide.

(2) Subject to rules, no application under subsection (1)(a) may be made by a person who:

(a) consented in such manner as rules may provide to the lodging of the caution, or

(b) derives title to the legal estate by operation of law from a person who did so.

(3) Where an application is made under subsection (1), the registrar must give the cautioner notice of the application and of the effect of subsection (4).

(4) If the cautioner does not exercise his right to object to the application before the end of such period as rules may provide, the registrar must cancel the caution.

19 Cautions register

(1) The registrar must keep a register of cautions against first registration.

(2) Rules may make provision about how the cautions register is to be kept and may, in particular, make provision about:

(a) the information to be included in the register,

(b) the form in which information included in the register is to be kept, and

(c) the arrangement of that information.

20 Alteration of register by court

(1) The court may make an order for alteration of the cautions register for the purpose of:

(a) correcting a mistake, or

(b) bringing the register up to date.

(2) An order under subsection (1) has effect when served on the registrar to impose a duty on him to give effect to it.

(3) Rules may make provision about:

(a) the circumstances in which there is a duty to exercise the power under subsection (1),

(b) the form of an order under that subsection, and

(c) service of such an order.

21 Alteration of register by registrar

(1) The registrar may alter the cautions register for the purpose of:

(a) correcting a mistake, or

(b) bringing the register up to date.

(2) Rules may make provision about:

(a) the circumstances in which there is a duty to exercise the power under subsection (1),

(b) how the cautions register is to be altered in exercise of that power,

(c) applications for the exercise of that power, and

(d) procedure in relation to the exercise of that power, whether on application or otherwise.

(3) Where an alteration is made under this section, the registrar may pay such amount as he thinks fit in respect of any costs reasonably incurred by a person in connection with the alteration.

22 Supplementary

In this Chapter, the cautioner, in relation to a caution against first registration, means the person who lodged the caution, or his personal representative.

PART 3

DISPOSITIONS OF REGISTERED LAND

Powers of disposition

23 Owner's powers

(1) Owner's powers in relation to a registered estate consist of:

(a) power to make a disposition of any kind permitted by the general law in relation to an interest of that description, other than a mortgage by demise or sub-demise, and

(b) power to charge the estate at law with the payment of money.

(2) Owner's powers in relation to a registered charge consist of:

(a) power to make a disposition of any kind permitted by the general law in relation to an interest of that description, other than a legal sub-mortgage, and

(b) power to charge at law with the payment of money indebtedness secured by the registered charge.

(3) In subsection (2)(a), legal sub-mortgage means:

(a) a transfer by way of mortgage,

(b) a sub-mortgage by sub-demise, and

(c) a charge by way of legal mortgage.

24 Right to exercise owner's powers

(1) A person is entitled to exercise owner's powers in relation to a registered estate or charge if he is:

(a) the registered proprietor, or

(b) entitled to be registered as the proprietor.

(2) The right conferred by subsection (1)(b) is subject to rules.

25 Mode of exercise

(1) A registrable disposition of a registered estate or charge only has effect if it complies with such requirements as to form and content as rules may provide.

(2) Rules may apply subsection (1) to any other kind of disposition which depends for its effect on registration.

26 Protection of disponees

(1) Subject to subsection (2), a person's right to exercise owner's powers in relation to a registered estate or charge is to be taken to be free from any limitation affecting the validity of a disposition.

(2) Subsection (1) does not apply to a limitation:

(a) reflected by an entry in the register, or

(b) imposed by, or under, this Act.

(3) This section has effect only for the purpose of preventing the title of a disponee being questioned (and so does not affect the lawfulness of a disposition).

Registrable dispositions

27 Dispositions required to be registered

(1) If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met.

(2) In the case of a registered estate, the following are the dispositions which are required to be completed by registration:

(a) a transfer,

(b) where the registered estate is an estate in land, the grant of a term of years absolute:

(i) for a term of more than seven years from the date of the grant,

(ii) to take effect in possession after the end of the period of three months beginning with the date of the grant,

(iii) under which the right to possession is discontinuous,

(iv) in pursuance of Part 5 of the Housing Act 1985 (c. 68) (the right to buy), or

(v) in circumstances where section 171A of that Act applies (disposal by landlord which leads to a person no longer being a secure tenant),

(c) where the registered estate is a franchise or manor, the grant of a lease,

(d) the express grant or reservation of an interest of a kind falling within section 1(2)(a) of the Law of Property Act 1925 (c. 20), other than one which is capable of being registered under the Commons Registration Act 1965 (c. 64),

(e) the express grant or reservation of an interest of a kind falling within section 1(2)(b) or (e) of the Law of Property Act 1925, and

(f) the grant of a legal charge.

(3) In the case of a registered charge, the following are the dispositions which are required to be completed by registration:

(a) a transfer, and

(b) the grant of a sub-charge.

(4) Schedule 2 to this Act (which deals with the relevant registration requirements) has effect.

(5) This section applies to dispositions by operation of law as it applies to other dispositions, but with the exception of the following:

(a) a transfer on the death or bankruptcy of an individual proprietor,

(b) a transfer on the dissolution of a corporate proprietor, and

(c) the creation of a legal charge which is a local land charge.

(6) Rules may make provision about applications to the registrar for the purpose of meeting registration requirements under this section.

(7) In subsection (2)(d), the reference to express grant does not include grant as a result of the operation of section 62 of the Law of Property Act 1925.

Effect of dispositions on priority

28 Basic rule

(1) Except as provided by sections 29 and 30, the priority of an interest affecting a registered estate or charge is not affected by a disposition of the estate or charge.

(2) It makes no difference for the purposes of this section whether the interest or disposition is registered.

29 Effect of registered dispositions: estates

(1) If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration.

(2) For the purposes of subsection (1), the priority of an interest is protected:

(a) in any case, if the interest:

(i) is a registered charge or the subject of a notice in the register,

(ii) falls within any of the paragraphs of Schedule 3, or

(iii) appears from the register to be excepted from the effect of registration, and

(b) in the case of a disposition of a leasehold estate, if the burden of the interest is incident to the estate.

(3) Subsection (2)(a)(ii) does not apply to an interest which has been the subject of a notice in the register at any time since the coming into force of this section.

(4) Where the grant of a leasehold estate in land out of a registered estate does not involve a registrable disposition, this section has effect as if:

(a) the grant involved such a disposition, and

(b) the disposition were registered at the time of the grant.

30 Effect of registered dispositions: charges

(1) If a registrable disposition of a registered charge is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the charge immediately before the disposition whose priority is not protected at the time of registration.

(2) For the purposes of subsection (1), the priority of an interest is protected

(a) in any case, if the interest:

(i) is a registered charge or the subject of a notice in the register,

(ii) falls within any of the paragraphs of Schedule 3, or

(iii) appears from the register to be excepted from the effect of registration, and

(b) in the case of a disposition of a charge which relates to a leasehold estate, if the burden of the interest is incident to the estate.

(3) Subsection (2)(a)(ii) does not apply to an interest which has been the subject of a notice in the register at any time since the coming into force of this section.

31 Inland Revenue charges

The effect of a disposition of a registered estate or charge on a charge under section 237 of the Inheritance Tax Act 1984 (c. 51) (charge for unpaid tax) is to be determined, not in accordance with sections 28 to 30 above, but in accordance with sections 237(6) and 238 of that Act (under which a purchaser in good faith for money or money's worth takes free from the charge in the absence of registration).

PART 4

NOTICES AND RESTRICTIONS

Notices

32 Nature and effect

(1) A notice is an entry in the register in respect of the burden of an interest affecting a registered estate or charge.

(2) The entry of a notice is to be made in relation to the registered estate or charge affected by the interest concerned.

(3) The fact that an interest is the subject of a notice does not necessarily mean that the interest is valid, but does mean that the priority of the interest, if valid, is protected for the purposes of sections 29 and 30.

33 Excluded interests

No notice may be entered in the register in respect of any of the following

(a) an interest under:

(i) a trust of land, or

(ii) a settlement under the Settled Land Act 1925 (c. 18),

(b) a leasehold estate in land which:

(i) is granted for a term of years of three years or less from the date of the grant, and

(ii) is not required to be registered,

(c) a restrictive covenant made between a lessor and lessee, so far as relating to the demised premises,

(d) an interest which is capable of being registered under the Commons Registration Act 1965 (c. 64), and

(e) an interest in any coal or coal mine, the rights attached to any such interest and the rights of any person under section 38, 49 or 51 of the Coal Industry Act 1994 (c. 21).

34 Entry on application

(1) A person who claims to be entitled to the benefit of an interest affecting a registered estate or charge may, if the interest is not excluded by section 33, apply to the registrar for the entry in the register of a notice in respect of the interest.

(2) Subject to rules, an application under this section may be for:

(a) an agreed notice, or

(b) a unilateral notice.

(3) The registrar may only approve an application for an agreed notice if:

(a) the applicant is the relevant registered proprietor, or a person entitled to be registered as such proprietor,

(b) the relevant registered proprietor, or a person entitled to be registered as such proprietor, consents to the entry of the notice, or

(c) the registrar is satisfied as to the validity of the applicant's claim.

(4) In subsection (3), references to the relevant registered proprietor are to the proprietor of the registered estate or charge affected by the interest to which the application relates.

35 Unilateral notices

(1) If the registrar enters a notice in the register in pursuance of an application under section 34(2)(b) (.a unilateral notice.), he must give notice of the entry to:

(a) the proprietor of the registered estate or charge to which it relates, and

(b) such other persons as rules may provide.

(2) A unilateral notice must:

(a) indicate that it is such a notice, and

(b) identify who is the beneficiary of the notice.

(3) The person shown in the register as the beneficiary of a unilateral notice may apply to the registrar for the removal of the notice from the register.

36 Cancellation of unilateral notices

(1) A person may apply to the registrar for the cancellation of a unilateral notice if he is:

(a) the registered proprietor of the estate or charge to which the notice relates, or

(b) a person entitled to be registered as the proprietor of that estate or charge.

(2) Where an application is made under subsection (1), the registrar must give the beneficiary of the notice of the application and of the effect of subsection (3).

(3) If the beneficiary of the notice does not exercise his right to object to the application before the end of such period as rules may provide, the registrar must cancel the notice.

(4) In this section "beneficiary", in relation to a unilateral notice, means the person shown in the register as the beneficiary of the notice; "unilateral notice" means a notice entered in the register in pursuance of an application under section 34(2)(b).

37 Unregistered interests

If it appears to the registrar that a registered estate is subject to an unregistered interest which

(a) falls within any of the paragraphs of Schedule 1, and

(b) is not excluded by section 33, he may enter a notice in the register in respect of the interest.

38 Registrable dispositions

Where a person is entered in the register as the proprietor of an interest under a disposition falling within section 27(2)(b) to (e), the registrar must also enter a notice in the register in respect of that interest.

39 Supplementary

Rules may make provision about the form and content of notices in the register.

Restrictions

40 Nature

(1) A restriction is an entry in the register regulating the circumstances in which a disposition of a registered estate or charge may be the subject of an entry in the register.

(2) A restriction may, in particular:

(a) prohibit the making of an entry in respect of any disposition, or a disposition of a kind specified in the restriction;

(b) prohibit the making of an entry:

(i) indefinitely,

(ii) for a period specified in the restriction, or

(iii) until the occurrence of an event so specified.

(3) Without prejudice to the generality of subsection (2)(b)(iii), the events which may be specified include

(a) the giving of notice,

(b) the obtaining of consent, and

(c) the making of an order by the court or registrar.

(4) The entry of a restriction is to be made in relation to the registered estate or charge to which it relates.

41 Effect

(1) Where a restriction is entered in the register, no entry in respect of a disposition to which the restriction applies may be made in the register otherwise than in accordance with the terms of the restriction, subject to any order under subsection (2).

(2) The registrar may by order:

(a) disapply a restriction in relation to a disposition specified in the order or dispositions of a kind so specified, or

(b) provide that a restriction has effect, in relation to a disposition specified in the order or dispositions of a kind so specified, with modifications so specified.

(3) The power under subsection (2) is exercisable only on the application of a person who appears to the registrar to have a sufficient interest in the restriction.

42 Power of registrar to enter

(1) The registrar may enter a restriction in the register if it appears to him that it is necessary or desirable to do so for the purpose of:

(a) preventing invalidity or unlawfulness in relation to dispositions of a registered estate or charge,

(b) securing that interests which are capable of being overreached on a disposition of a registered estate or charge are overreached, or

(c) protecting a right or claim in relation to a registered estate or charge.

(2) No restriction may be entered under subsection (1)(c) for the purpose of protecting the priority of an interest which is, or could be, the subject of a notice.

(3) The registrar must give notice of any entry made under this section to the proprietor of the registered estate or charge concerned, except where the entry is made in pursuance of an application under section 43.

(4) For the purposes of subsection (1)(c), a person entitled to the benefit of a charging order relating to an interest under a trust shall be treated as having a right or claim in relation to the trust property.

43 Applications

(1) A person may apply to the registrar for the entry of a restriction under section 42(1) if:

(a) he is the relevant registered proprietor, or a person entitled to be registered as such proprietor,

(b) the relevant registered proprietor, or a person entitled to be registered as such proprietor, consents to the application, or

(c) he otherwise has a sufficient interest in the making of the entry.

(2) Rules may:

(a) require the making of an application under subsection (1) in such circumstances, and by such person, as the rules may provide;

(b) make provision about the form of consent for the purposes of subsection (1) (b);

(c) provide for classes of person to be regarded as included in subsection (1)(c);

(d) specify standard forms of restriction.

(3) If an application under subsection (1) is made for the entry of a restriction which is not in a form specified under subsection (2)(d), the registrar may only approve the application if it appears to him:

(a) that the terms of the proposed restriction are reasonable, and

(b) that applying the proposed restriction would:

(i) be straightforward, and

(ii) not place an unreasonable burden on him

(4) In subsection (1), references to the relevant registered proprietor are to the proprietor of the registered estate or charge to which the application relates.

44 Obligatory restrictions

(1) If the registrar enters two or more persons in the register as the proprietor of a registered estate in land, he must also enter in the register such restrictions as rules may provide for the purpose of securing that interests which are capable of being overreached on a disposition of the estate are overreached.

(2) Where under any enactment the registrar is required to enter a restriction without application, the form of the restriction shall be such as rules may provide.

45 Notifiable applications

(1) Where an application under section 43(1) is notifiable, the registrar must give notice of the application, and of the right to object to it, to. (a) the proprietor of the registered estate or charge to which it relates, and (b) such other persons as rules may provide.

(2) The registrar may not determine an application to which subsection (1) applies before the end of such period as rules may provide, unless the person, or each of the persons, notified under that subsection has exercised his right to object to the application or given the registrar notice that he does not intend to do so.

(3) For the purposes of this section, an application under section 43(1) is notifiable unless it is:

(a) made by or with the consent of the proprietor of the registered estate or charge to which the application relates, or a person entitled to be registered as such proprietor,

(b) made in pursuance of rules under section 43(2)(a), or

(c) an application for the entry of a restriction reflecting a limitation under an order of the court or registrar, or an undertaking given in place of such an order.

46 Power of court to order entry

(1) If it appears to the court that it is necessary or desirable to do so for the purpose of protecting a right or claim in relation to a registered estate or charge, it may make an order requiring the registrar to enter a restriction in the register.

(2) No order under this section may be made for the purpose of protecting the priority of an interest which is, or could be, the subject of a notice.

(3) The court may include in an order under this section a direction that an entry made in pursuance of the order is to have overriding priority.

(4) If an order under this section includes a direction under subsection (3), the registrar must make such entry in the register as rules may provide.

(5) The court may make the exercise of its power under subsection (3) subject to such terms and conditions as it thinks fit.

47 Withdrawal

A person may apply to the registrar for the withdrawal of a restriction if. (a) the restriction was entered in such circumstances as rules may provide, and (b) he is of such a description as rules may provide.

PART 5

CHARGES

Relative priority

48 Registered charges

(1) Registered charges on the same registered estate, or on the same registered charge, are to be taken to rank as between themselves in the order shown in the register.

(2) Rules may make provision about:

(a) how the priority of registered charges as between themselves is to be shown in the register, and

(b) applications for registration of the priority of registered charges as between themselves.

49 Tacking and further advances

(1) The proprietor of a registered charge may make a further advance on the security of the charge ranking in priority to a subsequent charge if he has not received from the subsequent chargee notice of the creation of the subsequent charge.

(2) Notice given for the purposes of subsection (1) shall be treated as received at the time when, in accordance with rules, it ought to have been received.

(3) The proprietor of a registered charge may also make a further advance on the security of the charge ranking in priority to a subsequent charge if:

(a) the advance is made in pursuance of an obligation, and

(b) at the time of the creation of the subsequent charge the obligation was entered in the register in accordance with rules.

(4) The proprietor of a registered charge may also make a further advance on the security of the charge ranking in priority to a subsequent charge if:

(a) the parties to the prior charge have agreed a maximum amount for which the charge is security, and

(b) at the time of the creation of the subsequent charge the agreement was entered in the register in accordance with rules.

(5) Rules may:

(a) disapply subsection (4) in relation to charges of a description specified in the rules, or

(b) provide for the application of that subsection to be subject, in the case of charges of a description so specified, to compliance with such conditions as may be so specified.

(6) Except as provided by this section, tacking in relation to a charge over registered land is only possible with the agreement of the subsequent chargee.

50 Overriding statutory charges: duty of notification

If the registrar enters a person in the register as the proprietor of a charge which:

(a) is created by or under an enactment, and

(b) has effect to postpone a charge which at the time of registration of the statutory charge is:

(i) entered in the register, or

(ii) the basis for an entry in the register, he must in accordance with rules give notice of the creation of the statutory charge to such person as rules may provide.

Powers as chargee

51 Effect of completion by registration

On completion of the relevant registration requirements, a charge created by means of a registrable disposition of a registered estate has effect, if it would not otherwise do so, as a charge by deed by way of legal mortgage.

52 Protection of disponees

(1) Subject to any entry in the register to the contrary, the proprietor of a registered charge is to be taken to have, in relation to the property subject to the charge, the powers of disposition conferred by law on the owner of a legal mortgage.

(2) Subsection (1) has effect only for the purpose of preventing the title of a disponee being questioned (and so does not affect the lawfulness of a disposition).

53 Powers as sub-chargee

The registered proprietor of a sub-charge has, in relation to the property subject to the principal charge or any intermediate charge, the same powers as the sub-chargor. Realisation of security

54 Proceeds of sale: charge's duty

For the purposes of section 105 of the Law of Property Act 1925 (c. 20) (mortgagee's duties in relation to application of proceeds of sale), in its application to the proceeds of sale of registered land, a person shall be taken to have notice of anything in the register.

55 Local land charges

A charge over registered land which is a local land charge may only be realised if the title to the charge is registered.

Miscellaneous

56 Receipt in case of joint proprietors

Where a charge is registered in the name of two or more proprietors, a valid receipt for the money secured by the charge may be given by:

(a) the registered proprietors,

(b) the survivors or survivor of the registered proprietors, or

(c) the personal representative of the last survivor of the registered proprietors.

57 Entry of right of consolidation

Rules may make provision about entry in the register of a right of consolidation in relation to a registered charge.

PART 6

REGISTRATION: GENERAL

Registration as proprietor

58 Conclusiveness

(1) If, on the entry of a person in the register as the proprietor of a legal estate, the legal estate would not otherwise be vested in him, it shall be deemed to be vested in him as a result of the registration.

(2) Subsection (1) does not apply where the entry is made in pursuance of a registrable disposition in relation to which some other registration requirement remains to be met.

59 Dependent estates

(1) The entry of a person in the register as the proprietor of a legal estate which subsists for the benefit of a registered estate must be made in relation to that estate.

(2) The entry of a person in the register as the proprietor of a charge on a registered estate must be made in relation to that estate.

(3) The entry of a person in the register as the proprietor of a sub-charge on a registered charge must be made in relation to that charge.

Boundaries

60 Boundaries

(1) The boundary of a registered estate as shown for the purposes of the register is a general boundary, unless shown as determined under this section.

(2) A general boundary does not determine the exact line of the boundary.

(3) Rules may make provision enabling or requiring the exact line of the boundary of a registered estate to be determined and may, in particular, make provision about:

(a) the circumstances in which the exact line of a boundary may or must be determined,

(b) how the exact line of a boundary may be determined,

(c) procedure in relation to applications for determination, and

(d) the recording of the fact of determination in the register or the index maintained under section 68.

61 Accretion and diluvion

(1) The fact that a registered estate in land is shown in the register as having a particular boundary does not affect the operation of accretion or diluvion.

(2) An agreement about the operation of accretion or diluvion in relation to a registered estate in land has effect only if registered in accordance with rules.

Quality of title

62 Power to upgrade title

(1) Where the title to a freehold estate is entered in the register as possessory or qualified, the registrar may enter it as absolute if he is satisfied as to the title to the estate.

(2) Where the title to a leasehold estate is entered in the register as good leasehold, the registrar may enter it as absolute if he is satisfied as to the superior title.

(3) Where the title to a leasehold estate is entered in the register as possessory or qualified the registrar may:

(a) enter it as good leasehold if he is satisfied as to the title to the estate, and

(b) enter it as absolute if he is satisfied both as to the title to the estate and as to the superior title.

(4) Where the title to a freehold estate in land has been entered in the register as possessory for at least twelve years, the registrar may enter it as absolute if he is satisfied that the proprietor is in possession of the land.

(5) Where the title to a leasehold estate in land has been entered in the register as possessory for at least twelve years, the registrar may enter it as good leasehold if he is satisfied that the proprietor is in possession of the land.

(6) None of the powers under subsections (1) to (5) is exercisable if there is outstanding any claim adverse to the title of the registered proprietor which is made by virtue of an estate, right or interest whose enforceability is preserved by virtue of the existing entry about the class of title.

(7) The only persons who may apply to the registrar for the exercise of any of the powers under subsections (1) to (5) are:

(a) the proprietor of the estate to which the application relates,

(b) a person entitled to be registered as the proprietor of that estate,

(c) the proprietor of a registered charge affecting that estate, and

(d) a person interested in a registered estate which derives from that estate

(8) In determining for the purposes of this section whether he is satisfied as to any title, the registrar is to apply the same standards as those which apply under section 9 or 10 to first registration of title.

(9) The Lord Chancellor may by order amend subsection (4) or (5) by substituting for the number of years for the time being specified in that subsection such number of years as the order may provide.

63 Effect of upgrading title

(1) On the title to a registered freehold or leasehold estate being entered under section 62 as absolute, the proprietor ceases to hold the estate subject to any estate, right or interest whose enforceability was preserved by virtue of the previous entry about the class of title.

(2) Subsection (1) also applies on the title to a registered leasehold estate being entered under section 62 as good leasehold, except that the entry does not affect or prejudice the enforcement of any estate, right or interest affecting, or in derogation of, the title of the lessor to grant the lease.

64 Use of register to record defects in title

(1) If it appears to the registrar that a right to determine a registered estate in land has become exercisable, he may enter the fact in the register.

(2) Rules may make provision about entries under subsection (1) and may, in particular, make provision about:

(a) the circumstances in which there is a duty to exercise the power conferred by that subsection,

(b) how entries under that subsection are to be made, and

(c) the removal of such entries.

Alteration of register

65 Alteration of register

Schedule 4 (which makes provision about alteration of the register) has effect. Information etc.

66 Inspection of the registers etc

(1) Any person may inspect and make copies of, or of any part of:

(a) the register of title,

(b) any document kept by the registrar which is referred to in the register of title,

(c) any other document kept by the registrar which relates to an application to him, or

(d) the register of cautions against first registration.

(2) The right under subsection (1) is subject to rules which may, in particular:

(a) provide for exceptions to the right, and

(b) impose conditions on its exercise, including conditions requiring the payment of fees.

67 Official copies of the registers etc

(1) An official copy of, or of a part of:

(a) the register of title,

(b) any document which is referred to in the register of title and kept by the registrar,

(c) any other document kept by the registrar which relates to an application to him, or

(d) the register of cautions against first registration, is admissible in evidence to the same extent as the original.

(2) A person who relies on an official copy in which there is a mistake is not liable for loss suffered by another by reason of the mistake.

(3) Rules may make provision for the issue of official copies and may, in particular, make provision about:

(a) the form of official copies,

(b) who may issue official copies,

(c) applications for official copies, and

(d) the conditions to be met by applicants for official copies, including conditions requiring the payment of fees.

68 Index

(1) The registrar must keep an index for the purpose of enabling the following matters to be ascertained in relation to any parcel of land:

(a) whether any registered estate relates to the land,

(b) how any registered estate which relates to the land is identified for the purposes of the register,

(c) whether the land is affected by any, and, if so what, caution against first registration, and

(d) such other matters as rules may provide.

(2) Rules may:

(a) make provision about how the index is to be kept and may, in particular, make provision about:

(i) the information to be included in the index,

(ii) the form in which information included in the index is to be kept, and

(iii) the arrangement of that information;

(b) make provision about official searches of the index.

69 Historical information

(1) The registrar may on application provide information about the history of a registered title.

(2) Rules may make provision about applications for the exercise of the power conferred by subsection (1).

70 Official searches

Rules may make provision for official searches of the register, including searches of pending applications for first registration, and may, in particular, make provision about:

(a) the form of applications for searches,

(b) the manner in which such applications may be made,

(c) the form of official search certificates, and

(d) the manner in which such certificates may be issued.

Applications

71 Duty to disclose unregistered interests

Where rules so provide:

(a) a person applying for registration under Chapter 1 of Part 1 must provide to the registrar such information as the rules may provide about any interest affecting the estate to which the application relates which:

(i) falls within any of the paragraphs of Schedule 1, and

(ii) is of a description specified by the rules;

(b) a person applying to register a registrable disposition of a registered estate must provide to the registrar such information as the rules may provide about any unregistered interest affecting the estate which:

(i) falls within any of the paragraphs of Schedule 3, and

(ii) is of description specified by the rules.

72 Priority protection

(1) For the purposes of this section, an application for an entry in the register is protected if:

(a) it is one to which a priority period relates, and

(b) it is made before the end of that period.

(2) Where an application for an entry in the register is protected, any entry made in the register during the priority period relating to the application is postponed to any entry made in pursuance of it.

(3) Subsection (2) does not apply if:

(a) the earlier entry was made in pursuance of a protected application, and

(b) the priority period relating to that application ranks ahead of the one relating to the application for the other entry.

(4) Subsection (2) does not apply if the earlier entry is one to which a direction under section 46(3) applies.

(5) The registrar may defer dealing with an application for an entry in the register if it appears to him that subsection (2) might apply to the entry were he to make it.

(6) Rules may:

(a) make provision for priority periods in connection with:

(i) official searches of the register, including searches of pending applications for first registration, or

(ii) the noting in the register of a contract for the making of a registrable disposition of a registered estate or charge;

(b) make provision for the keeping of records in relation to priority periods and the inspection of such records.

(7) Rules under subsection (6)(a) may, in particular, make provision about:

(a) the commencement and length of a priority period,

(b) the applications for registration to which such a period relates,

(c) the order in which competing priority periods rank, and

(d) the application of subsections (2) and (3) in cases where more than one priority period relates to the same application.

73 Objections

(1) Subject to subsections (2) and (3), anyone may object to an application to the registrar.

(2) In the case of an application under section 18, only the person who lodged the caution to which the application relates, or his personal representative, may object.

(3) In the case of an application under section 36, only the person shown in the register as the beneficiary of the notice to which the application relates may object.

(4) The right to object under this section is subject to rules.

(5) Where an objection is made under this section, the registrar:

(a) must give notice of the objection to the applicant, and

(b) may not determine the application until the objection has been disposed of.

(6) Subsection (5) does not apply if the objection is one which the registrar is satisfied is groundless.

(7) If it is not possible to dispose by agreement of an objection to which subsection (5) applies, the registrar must refer the matter to the adjudicator.

(8) Rules may make provision about references under subsection (7).

74 Effective date of registration

An entry made in the register in pursuance of:

(a) an application for registration of an unregistered legal estate, or

(b) an application for registration in relation to a disposition required to be completed by registration, has effect from the time of the making of the application.

Proceedings before the registrar

75 Production of documents

(1) The registrar may require a person to produce a document for the purposes of proceedings before him.

(2) The power under subsection (1) is subject to rules.

(3) A requirement under subsection (1) shall be enforceable as an order of the court. (4) A person aggrieved by a requirement under subsection (1) may appeal to a county court, which may make any order which appears appropriate.

76 Costs

(1) The registrar may make orders about costs in relation to proceedings before him.

(2) The power under subsection (1) is subject to rules which may, in particular, make provision about:

(a) who may be required to pay costs,

(b) whose costs a person may be required to pay,

(c) the kind of costs which a person may be required to pay, and

(d) the assessment of costs.

(3) Without prejudice to the generality of subsection (2), rules under that subsection may include provision about:

(a) costs of the registrar, and

(b) liability for costs thrown away as the result of neglect or delay by a legal representative of a party to proceedings.

(4) An order under subsection (1) shall be enforceable as an order of the court.

(5) A person aggrieved by an order under subsection (1) may appeal to a county court, which may make any order which appears appropriate.

Miscellaneous

77 Duty to act reasonably

(1) A person must not exercise any of the following rights without reasonable cause:

(a) the right to lodge a caution under section 15,

(b) the right to apply for the entry of a notice or restriction, and

(c) the right to object to an application to the registrar.

(2) The duty under this section is owed to any person who suffers damage in consequence of its breach.

78 Notice of trust not to affect registrar

The registrar shall not be affected with notice of a trust.

PART 7

SPECIAL CASES The Crown

79 Voluntary registration of demesne land

(1) Her Majesty may grant an estate in fee simple absolute in possession out of demesne land to Herself.

(2) The grant of an estate under subsection (1) is to be regarded as not having been made unless an application under section 3 is made in respect of the estate before the end of the period for registration.

(3) The period for registration is two months beginning with the date of the grant, or such longer period as the registrar may provide under subsection (4).

(4) If on the application of Her Majesty the registrar is satisfied that there is a good reason for doing so, he may by order provide that the period for registration ends on such later date as he may specify in the order.

(5) If an order under subsection (4) is made in a case where subsection (2) has already applied, that application of the subsection is to be treated as not having occurred.

80 Compulsory registration of grants out of demesne land

(1) Section 4(1) shall apply as if the following were included among the events listed:

(a) the grant by Her Majesty out of demesne land of an estate in fee simple absolute in possession, otherwise than under section 79;

(b) the grant by Her Majesty out of demesne land of an estate in land:

(i) for a term of years absolute of more than seven years from the date of the grant, and

(ii) for valuable or other consideration, by way of gift or in pursuance of an order of any court.

(2) In subsection (1)(b)(ii), the reference to grant by way of gift includes grant for the purpose of constituting a trust under which Her Majesty does not retain the whole of the beneficial interest.

(3) Subsection (1) does not apply to the grant of an estate in mines and minerals held apart from the surface.

(4) The Lord Chancellor may by order:

(a) amend this section so as to add to the events in subsection (1) such events relating to demesne land as he may specify in the order, and

(b) make such consequential amendments of any provision of, or having effect under, any Act as he thinks appropriate.

(5) In its application by virtue of subsection (1), section 7 has effect with the substitution for subsection (2) of

"(2) On the application of subsection (1), the grant has effect as a contract made for valuable consideration to grant the legal estate concerned"

81 Demesne land: cautions against first registration

(1) Section 15 shall apply as if demesne land were held by Her Majesty for an unregistered estate in fee simple absolute in possession.

(2) The provisions of this Act relating to cautions against first registration shall, in relation to cautions lodged by virtue of subsection (1), have effect subject to such modifications as rules may provide.

82 Escheat etc

(1) Rules may make provision about:

(a) the determination of a registered freehold estate in land, and

(b) the registration of an unregistered freehold legal estate in land in respect of land to which a former registered freehold estate in land related.

(2) Rules under this section may, in particular:

(a) make provision for the effect of determination to be dependent on the meeting of such registration requirements as the rules may specify;

(b) make provision for entries relating to a freehold estate in land to continue in the register, notwithstanding determination, for such time as the rules may provide;

(c) make provision for the making in the register in relation to a former freehold estate in land of such entries as the rules may provide;

(d) make provision imposing requirements to be met in connection with an application for the registration of such an unregistered estate as is mentioned in subsection (1)(b).

83 Crown and Duchy land: representation

(1) With respect to a Crown or Duchy interest, the appropriate authority

(a) may represent the owner of the interest for all purposes of this Act,

(b) is entitled to receive such notice as that person is entitled to receive under this Act, and

(c) may make such applications and do such other acts as that person is entitled to make or do under this Act.

(2) In this section "the appropriate authority" means:

(a) in relation to an interest belonging to Her Majesty in right of the Crown and forming part of the Crown Estate, the Crown Estate Commissioners;

(b) in relation to any other interest belonging to Her Majesty in right of the Crown, the government department having the management of the interest or, if there is no such department, such person as Her Majesty may appoint in writing under the Royal Sign Manual;

(c) in relation to an interest belonging to Her Majesty in right of the Duchy of Lancaster, the Chancellor of the Duchy;

(d) in relation to an interest belonging to the Duchy of Cornwall, such person as the Duke of Cornwall, or the possessor for the time being of the Duchy of Cornwall, appoints;

(e) in relation to an interest belonging to a government department, or held in trust for Her Majesty for the purposes of a government department, that department; "Crown interest" means an interest belonging to Her Majesty in right of the Crown, or belonging to a government department, or held in trust for Her Majesty for the purposes of a government department; "Duchy interest" means an interest belonging to Her Majesty in right of the Duchy of Lancaster, or belonging to the Duchy of Cornwall; "interest" means any estate, interest or charge in or over land and any right or claim in relation to land.

84 Disapplication of requirements relating to Duchy land

Nothing in any enactment relating to the Duchy of Lancaster or the Duchy of Cornwall shall have effect to impose any requirement with respect to formalities or enrolment in relation to a disposition by a registered proprietor.

85 Bona vacantia

Rules may make provision about how the passing of a registered estate or charge as bona vacantia is to be dealt with for the purposes of this Act.

Pending actions etc.

86 Bankruptcy

(1) In this Act, references to an interest affecting an estate or charge do not include a petition in bankruptcy or bankruptcy order.

(2) As soon as practicable after registration of a petition in bankruptcy as a pending action under the Land Charges Act 1972 (c. 61), the registrar must enter in the register in relation to any registered estate or charge which appears to him to be affected a notice in respect of the pending action.

(3) Unless cancelled by the registrar in such manner as rules may provide, a notice entered under subsection (2) continues in force until:

(a) a restriction is entered in the register under subsection (4), or

(b) the trustee in bankruptcy is registered as proprietor.

(4) As soon as practicable after registration of a bankruptcy order under the Land Charges Act 1972, the registrar must, in relation to any registered estate or charge which appears to him to be affected by the order, enter in the register a restriction reflecting the limitation under section 284 of the Insolvency Act 1986 (c. 45) (disposition by bankrupt void unless made with the consent of, or subsequently ratified by, the court).

(5) Where the proprietor of a registered estate or charge is adjudged bankrupt, the title of his trustee in bankruptcy is void as against a person to whom a registrable disposition of the estate or charge is made if:

(a) the disposition is made for valuable consideration,

(b) the person to whom the disposition is made acts in good faith, and

(c) at the time of the disposition:

(i) no notice or restriction is entered under this section in relation to the registered estate or charge, and

(ii) the person to whom the disposition is made has no notice of the bankruptcy petition or the adjudication.

(6) Subsection (5) only applies if the relevant registration requirements are met in relation to the disposition, but, when they are met, has effect as from the date of the disposition.

(7) Nothing in this section requires a person to whom a registrable disposition is made to make any search under the Land Charges Act 1972 (c. 61).

87 Pending land actions, writs, orders and deeds of arrangement

(1) Subject to the following provisions, references in this Act to an interest affecting an estate or charge include:

(a) a pending land action within the meaning of the Land Charges Act 1972,

(b) a writ or order of the kind mentioned in section 6(1)(a) of that Act (writ or order affecting land issued or made by any court for the purposes of enforcing a judgment or recognisance),

(c) an order appointing a receiver or sequestrator, and

(d) a deed of arrangement.

(2) No notice may be entered in the register in respect of:

(a) an order appointing a receiver or sequestrator, or

(b) a deed of arrangement.

(3) None of the matters mentioned in subsection (1) shall be capable of falling within paragraph 2 of Schedule 1 or 3.

(4) In its application to any of the matters mentioned in subsection (1), this Act shall have effect subject to such modifications as rules may provide.

(5) In this section, "deed of arrangement" has the same meaning as in the Deeds of Arrangement Act 1914 (c. 47).

Miscellaneous

88 Incorporeal hereditaments

In its application to:

(a) rentcharges,

(b) franchises,

(c) profits a prendre in gross, or

(d) manors, this Act shall have effect subject to such modification as rules may provide.

89 Settlements

(1) Rules may make provision for the purposes of this Act in relation to the application to registered land of the enactments relating to settlements under the Settled Land Act 1925 (c. 18).

(2) Rules under this section may include provision modifying any of those enactments in its application to registered land.

(3) In this section, .registered land. means an interest the title to which is, or is required to be, registered.

90 PPP leases relating to transport in London

(1) No application for registration under section 3 may be made in respect of a leasehold estate in land under a PPP lease.

(2) The requirement of registration does not apply on the grant or transfer of a leasehold estate in land under a PPP lease.

(3) For the purposes of section 27, the following are not dispositions requiring to be completed by registration:

(a) the grant of a term of years absolute under a PPP lease;

(b) the express grant of an interest falling within section 1(2) of the Law of Property Act 1925 (c. 20), where the interest is created for the benefit of a leasehold estate in land under a PPP lease.

(4) No notice may be entered in the register in respect of an interest under a PPP lease.

(5) Schedules 1 and 3 have effect as if they included a paragraph referring to a PPP lease.

(6) In this section, "PPP lease" has the meaning given by section 218 of the Greater London Authority Act 1999 (c. 29) (which makes provision about leases created for public-private partnerships relating to transport in London).

PART 8

ELECTRONIC CONVEYANCING

91 Electronic dispositions: formalities

(1) This section applies to a document in electronic form where:

(a) the document purports to effect a disposition which falls within subsection (2), and

(b) the conditions in subsection (3) are met.

(2) A disposition falls within this subsection if it is

(a) a disposition of a registered estate or charge,

(b) a disposition of an interest which is the subject of a notice in the register, or

(c) a disposition which triggers the requirement of registration, which is of a kind specified by rules.

(3) The conditions referred to above are that

(a) the document makes provision for the time and date when it takes effect,

(b) the document has the electronic signature of each person by whom it purports to be authenticated,

(c) each electronic signature is certified, and

(d) such other conditions as rules may provide are met.

(4) A document to which this section applies is to be regarded as

(a) in writing, and

(b) signed by each individual, and sealed by each corporation, whose electronic signature it has.

(5) A document to which this section applies is to be regarded for the purposes of any enactment as a deed.

(6) If a document to which this section applies is authenticated by an individual as agent, it is to be regarded for the purposes of any enactment as authenticated by him under the written authority of his principal.

(7) If notice of an assignment made by means of a document to which this section applies is given in electronic form in accordance with rules, it is to be regarded for the purposes of any enactment as given in writing.

(8) The right conferred by section 75 of the Law of Property Act 1925 (c. 20) (purchaser's right to have the execution of a conveyance attested) does not apply to a document to which this section applies.

(9) If subsection (4) of section 36A of the Companies Act 1985 (c. 6) (execution of documents) applies to a document because of subsection (4) above, subsection (6) of that section (presumption of due execution) shall have effect in relation to the document with the substitution of "authenticated" for "signed".

(10) In this section, references to an electronic signature and to the certification of such a signature are to be read in accordance with section 7(2) and (3) of the Electronic Communications Act 2000 (c. 7).

92 Land registry network

(1) The registrar may provide, or arrange for the provision of, an electronic communications network for use for such purposes as he thinks fit relating to registration or the carrying on of transactions which:

(a) involve registration, and

(b) are capable of being effected electronically.

(2) Schedule 5 (which makes provision in connection with a network provided under subsection (1) and transactions carried on by means of such a network) has effect.

93 Power to require simultaneous registration

(1) This section applies to a disposition of

(a) a registered estate or charge, or

(b) an interest which is the subject of a notice in the register, where the disposition is of a description specified by rules.

(2) A disposition to which this section applies, or a contract to make such a disposition, only has effect if it is made by means of a document in electronic form and if, when the document purports to take effect:

(a) it is electronically communicated to the registrar, and

(b) the relevant registration requirements are met.

(3) For the purposes of subsection (2)(b), the relevant registration requirements are:

(a) in the case of a registrable disposition, the requirements under Schedule 2, and

(b) in the case of any other disposition, or a contract, such requirements as rules may provide.

(4) Section 27(1) does not apply to a disposition to which this section applies.

(5) Before making rules under this section the Lord Chancellor must consult such persons as he considers appropriate.

(6) In this section, "disposition", in relation to a registered charge, includes postponement.

94 Supplementary

Rules may

(a) make provision about the communication of documents in electronic form to the registrar;

(b) make provision about the electronic storage of documents communicated to the registrar in electronic form.

PART 9

ADVERSE POSSESSION

95 Disapplication of periods of limitation

(1) No period of limitation under section 15 of the Limitation Act 1980 (c. 58) (time limits in relation to recovery of land) shall run against any person, other than a chargee, in relation to an estate in land or rentcharge the title to which is registered.

(2) No period of limitation under section 16 of that Act (time limits in relation to redemption of land) shall run against any person in relation to such an estate in land or rentcharge.

(3) Accordingly, section 17 of that Act (extinction of title on expiry of time limit) does not operate to extinguish the title of any person where, by virtue of this section, a period of limitation does not run against him.

96 Registration of adverse possessor

Schedule 6 (which makes provision about the registration of an adverse possessor of an estate in land or rentcharge) has effect.

97 Defences

(1) A person has a defence to an action for possession of land if:

(a) on the day immediately preceding that on which the action was brought he was entitled to make an application under paragraph 1 of Schedule 6 to be registered as the proprietor of an estate in the land, and

(b) had he made such an application on that day, the condition in paragraph 5(4) of that Schedule would have been satisfied.

(2) A judgment for possession of land ceases to be enforceable at the end of the period of two years beginning with the date of the judgment if the proceedings in which the judgment is given were commenced against a person who was at that time entitled to make an application under paragraph 1 of Schedule 6.

(3) A person has a defence to an action for possession of land if on the day immediately preceding that on which the action was brought he was entitled to make an application under paragraph 6 of Schedule 6 to be registered as the proprietor of an estate in the land.

(4) A judgment for possession of land ceases to be enforceable at the end of the period of two years beginning with the date of the judgment if, at the end of that period, the person against whom the judgment was given is entitled to make an application under paragraph 6 of Schedule 6 to be registered as the proprietor of an estate in the land.

(5) Where in any proceedings a court determines that:

(a) a person is entitled to a defence under this section, or

(b) a judgment for possession has ceased to be enforceable against a person by virtue of subsection (4), the court must order the registrar to register him as the proprietor of the estate in relation to which he is entitled to make an application under Schedule 6.

(6) The defences under this section are additional to any other defences a person may have.

(7) Rules may make provision to prohibit the recovery of rent due under a rentcharge from a person who has been in adverse possession of the rentcharge.

PART 10

LAND REGISTRY Administration

98 The land registry

(1) There is to continue to be an office called Her Majesty's Land Registry which is to deal with the business of registration under this Act.

(2) The land registry is to consist of:

(a) the Chief Land Registrar, who is its head, and

(b) the staff appointed by him; and references in this Act to a member of the land registry are to be read accordingly.

(3) The Lord Chancellor shall appoint a person to be the Chief Land Registrar. (4) Schedule 7 (which makes further provision about the land registry) has effect.

99 Conduct of business

(1) Any function of the registrar may be carried out by any member of the land registry who is authorised for the purpose by the registrar.

(2) The Lord Chancellor may by regulations make provision about the carrying out of functions during any vacancy in the office of registrar.

(3) The Lord Chancellor may by order designate a particular office of the land registry as the proper office for the receipt of applications or a specified description of application.

(4) The registrar may prepare and publish such forms and directions as he considers necessary or desirable for facilitating the conduct of the business of registration under this Act.

100 Annual report (1) The registrar must make an annual report on the business of the land registry to the Lord Chancellor. (2) The registrar must publish every report under this section in such manner as he thinks fit. (3) The Lord Chancellor must lay copies of every report under this section before Parliament.

Fees and indemnities

101 Fee orders

The Lord Chancellor may with the advice and assistance of the body referred to in section 124(2) (the Rule Committee), and the consent of the Treasury, by order. (a) prescribe fees to be paid in respect of dealings with the land registry, except under section 104; (b) make provision about the payment of prescribed fees.

102 Indemnities

Schedule 8 (which makes provision for the payment of indemnities by the registrar) has effect.

Miscellaneous

103 General information about land

The registrar may publish information about land in England and Wales if it appears to him to be information in which there is legitimate public interest.

104 Consultancy and advisory services

(1) The registrar may provide consultancy or advisory services about the registration of land in England and Wales or elsewhere.

(2) The terms on which services are provided under this section, in particular terms as to payment, shall be such as the registrar thinks fit.

PART 11

ADJUDICATION

105 The adjudicator

(1) The Lord Chancellor shall appoint a person to be the Adjudicator to Her Majesty.s Land Registry.

(2) To be qualified for appointment under subsection (1), a person must have a 10 year general qualification (within the meaning of section 71 of the Courts and Legal Services Act 1990 (c. 41)).

(3) Schedule 9 (which makes further provision about the adjudicator) has effect.

106 Jurisdiction

(1) The adjudicator has the following functions:

(a) determining matters referred to him under section 73(7), and

(b) determining appeals under paragraph 4 of Schedule 5.

(2) Also, the adjudicator may, on application, make any order which the High Court could make for the rectification or setting aside of a document which:

(a) effects a qualifying disposition of a registered estate or charge,

(b) is a contract to make such a disposition, or

(c) effects a transfer of an interest which is the subject of a notice in the register.

(3) For the purposes of subsection (2)(a), a qualifying disposition is:

(a) a registrable disposition, or

(b) a disposition which creates an interest which may be the subject of a notice in the register.

(4) The general law about the effect of an order of the High Court for the rectification or setting aside of a document shall apply to an order under this section.

107 Procedure

(1) Hearings before the adjudicator shall be held in public, except where he is satisfied that exclusion of the public is just and reasonable.

(2) Subject to that, rules may regulate the practice and procedure to be followed with respect to proceedings before the adjudicator and matters incidental to or consequential on such proceedings.

(3) Rules under subsection (2) may, in particular, make provision about:

(a) when hearings are to be held,

(b) requiring persons to attend hearings to give evidence or to produce documents,

(c) the form in which any decision of the adjudicator is to be given,

(d) payment of costs of a party to proceedings by another party to the proceedings, and

(e) liability for costs thrown away as the result of neglect or delay by a legal representative of a party to proceedings.

108 Functions in relation to disputes

(1) In proceedings on a reference under section 73(7), the adjudicator may, instead of deciding a matter himself, direct a party to the proceedings to commence proceedings within a specified time in the court for the purpose of obtaining the court.s decision on the matter.

(2) Rules may make provision about the reference under subsection (1) of matters to the court and may, in particular, make provision about:

(a) adjournment of the proceedings before the adjudicator pending the outcome of the proceedings before the court, and

(b) the powers of the adjudicator in the event of failure to comply with a direction under subsection (1).

(3) Rules may make provision about the functions of the adjudicator in consequence of a decision on a reference under section 73(7) and may, in particular, make provision enabling the adjudicator to determine, or give directions about the determination of

(a) the application to which the reference relates, or

(b) such other present or future application to the registrar as the rules may provide.

(4) If, in the case of a reference under section 73(7) relating to an application under paragraph 1 of Schedule 6, the adjudicator determines that it would be unconscionable for the registered proprietor to seek to dispossess the applicant, but that the circumstances are not such that the applicant ought to be registered as proprietor, the adjudicator:

(a) must determine how the equity due to the applicant is to be satisfied, and

(b) may for that purpose make any order that the High Court could make in the exercise of its equitable jurisdiction.

109 Appeals

(1) Subject to subsection (2), a person aggrieved by a decision of the adjudicator may appeal to the High Court.

(2) In the case of a decision on an appeal under paragraph 4 of Schedule 5, only appeal on a point of law is possible.

(3) If on an appeal under this section relating to an application under paragraph 1 of Schedule 6 the court determines that it would be unconscionable for the registered proprietor to seek to dispossess the applicant, but that the circumstances are not such that the applicant ought to be registered as proprietor, the court must determine how the equity due to the applicant is to be satisfied.

110 Enforcement of orders etc

A requirement of the adjudicator shall be enforceable as an order of the court.

111 Fees

The Lord Chancellor may by order.

(a) prescribe fees to be paid in respect of proceedings before the adjudicator;

(b) make provision about the payment of prescribed fees.

112 Supplementary

Power to make rules under this Part is exercisable by the Lord Chancellor.

PART 12

MISCELLANEOUS AND GENERAL

Miscellaneous

113 Rights of pre-emption

(1) A right of pre-emption in relation to registered land has effect from the time of creation as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

(2) This section has effect in relation to rights of pre-emption created on or after the day on which this section comes into force.

114 Proprietary estoppel and mere equities

It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following:

(a) an equity by estoppel, and

(b) a mere equity, has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

115 Reduction in unregistered interests with automatic protection

(1) Paragraphs 10 to 14 of Schedules 1 and 3 shall cease to have effect at the end of the period of ten years beginning with the day on which those Schedules come into force.

(2) If made before the end of the period mentioned in subsection (1), no fee may be charged for:

(a) an application to lodge a caution against first registration by virtue of an interest falling within any of paragraphs 10 to 14 of Schedule 1, or

(b) an application for the entry in the register of a notice in respect of an interest falling within any of paragraphs 10 to 14 of Schedule 3.

116 Power to reduce qualifying term

(1) The Lord Chancellor may by order substitute for the term specified in any of the following provisions:

(a) section 3(3),

(b) section 4(1)(c)(i) and (2)(b),

(c) section 15(3)(a)(ii),

(d) section 27(2)(b)(i),

(e) section 80(1)(b)(i),

(f) paragraph 1 of Schedule 1,

(g) paragraphs 4(1), 5(1) and 6(1) of Schedule 2, and

(h) paragraph 1 of Schedule 3, such shorter term as he thinks fit.

(2) An order under this section may contain such transitional provision as the Lord Chancellor thinks fit.

(3) Before making an order under this section, the Lord Chancellor must consult such persons as he considers appropriate.

117 Power to deregister manors

On the application of the proprietor of a registered manor, the registrar may remove the title to the manor from the register.

118 Conclusiveness of filed copies etc

(1) This section applies where:

(a) a disposition relates to land to which a registered estate relates, and

(b) an entry in the register relating to the registered estate refers to a document kept by the registrar which is not an original.

(2) As between the parties to the disposition, the document kept by the registrar is to be taken:

(a) to be correct, and

(b) to contain all the material parts of the original document.

(3) No party to the disposition may require production of the original document.

(4) No party to the disposition is to be affected by any provision of the original document which is not contained in the document kept by the registrar.

119 Forwarding of applications to registrar of companies

The Lord Chancellor may by rules make provision about the transmission by the registrar to the registrar of companies (within the meaning of the Companies Act 1985 (c. 6)) of applications under.

(a) Part 12 of that Act (registration of charges), or

(b) Chapter 3 of Part 23 of that Act (corresponding provision for oversea companies).

Offences etc.

120 Suppression of information

(1) A person commits an offence if in the course of proceedings relating to registration under this Act he suppresses information with the intention of:

(a) concealing a person.s right or claim, or

(b) substantiating a false claim.

(2) A person guilty of an offence under this section is liable.

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine;

(b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or to both.

121 Improper alteration of the registers

(1) A person commits an offence if he dishonestly induces another:

(a) to change the register of title or cautions register, or

(b) to authorise the making of such a change.

(2) A person commits an offence if he intentionally or recklessly makes an unauthorised change in the register of title or cautions register.

(3) A person guilty of an offence under this section is liable:

(a) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine;

(b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or to both.

(4) In this section, references to changing the register of title include changing a document referred to in it.

122 Privilege against self-incrimination

(1) The privilege against self-incrimination, so far as relating to offences under this Act, shall not entitle a person to refuse to answer any question or produce any document or thing in any legal proceedings other than criminal proceedings.

(2) No evidence obtained under subsection (1) shall be admissible in any criminal proceedings under this Act against the person from whom it was obtained or that person.s spouse.

Land registration rules

123 Miscellaneous and general powers

Schedule 10 (which contains miscellaneous and general land registration rule- making powers) has effect.

124 Exercise of powers

(1) Power to make land registration rules is exercisable by the Lord Chancellor with the advice and assistance of the Rule Committee.

(2) The Rule Committee is a body consisting of:

(a) a judge of the Chancery Division of the High Court nominated by the Lord Chancellor,

(b) the registrar,

(c) a person nominated by the General Council of the Bar,

(d) a person nominated by the Council of the Law Society,

(e) a person nominated by the Council of Mortgage Lenders,

(f) a person nominated by the Council of Licensed Conveyancers, and

(g) any person nominated under subsection (3).

(3) The Lord Chancellor may nominate to be a member of the Rule Committee any person who appears to him to have qualifications or experience which would be of value to the committee in considering any matter with which it is concerned.

Supplementary

125 Rules, regulations and orders

(1) Any power of the Lord Chancellor to make rules, regulations or orders under this Act includes power to make different provision for different cases.

(2) Any power of the Lord Chancellor to make rules, regulations or orders under this Act is exercisable by statutory instrument.

(3) A statutory instrument containing:

(a) land registration rules,

(b) rules under Part 11 or section 119,

(c) regulations under this Act, or

(d) an order under section 99, is to be laid before Parliament after being made.

(4) A statutory instrument containing:

(a) rules under section 93 or paragraph 1, 2 or 3 of Schedule 5, or

(b) an order under any provision of this Act other than section 99, 101, 111, 131 or 133, is subject to annulment in pursuance of a resolution of either House of Parliament.

126 Crown application

This Act binds the Crown.

127 Application to internal waters

This Act applies to land covered by internal waters of the United Kingdom which are

(a) within England or Wales, or

(b) adjacent to England or Wales and specified for the purposes of this section by order made by the Lord Chancellor.

128 .Proprietor in possession.

(1) For the purposes of this Act, land is in the possession of the proprietor of a registered estate in land if it is physically in his possession, or in that of a person who is entitled to be registered as the proprietor of the registered estate.

(2) In the case of the following relationships, land which is (or is treated as being) in the possession of the second-mentioned person is to be treated for the purposes of subsection (1) as in the possession of the first-mentioned person

(a) landlord and tenant;

(b) mortgagor and mortgagee;

(c) licensor and licensee;

(d) trustee and beneficiary.

(3) In subsection (1), the reference to entitlement does not include entitlement under Schedule 6.

129 General interpretation

(1) In this Act

"adjudicator" means the Adjudicator to Her Majesty's Land Registry;

"caution against first registration" means a caution lodged under section 15;

"cautions register" means the register kept under section 19(1);

"charge" means any mortgage, charge or lien for securing money or money's worth;

"demesne land" means land belonging to Her Majesty in right of the Crown which is not held for an estate in fee simple absolute in possession;

"land" includes:

(a) buildings and other structures,

(b) land covered with water, and

(c) mines and minerals, whether or not held with the surface;

"land registration rules" means any rules under this Act, other than rules under section 93, Part 11, section 119 or paragraph 1, 2 or 3 of Schedule 5;

"legal estate" has the same meaning as in the Law of Property Act 1925 (c. 20);

"legal mortgage" has the same meaning as in the Law of Property Act 1925;

"mines and minerals" includes any strata or seam of minerals or substances in or under any land, and powers of working and getting any such minerals or substances;

"registrar" means the Chief Land Registrar;

"register" means the register of title, except in the context of cautions against first registration;

"registered" means entered in the register;

"registered charge" means a charge the title to which is entered in the register;

"registered estate" means a legal estate the title to which is entered in the register, other than a registered charge;

"registered land" means a registered estate or registered charge;

"registrable disposition" means a disposition which is required to be completed by registration under section 27;

"requirement of registration" means the requirement of registration under section 4;

"sub-charge" means a charge under section 23(2)(b);

"term of years absolute" has the same meaning as in the Law of Property Act 1925;

"valuable consideration" does not include marriage consideration or a nominal consideration in money.

(2) In subsection (1), in the definition of "demesne land", the reference to land belonging to Her Majesty does not include land in relation to which a freehold estate in land has determined, but in relation to which there has been no act of entry or management by the Crown.

(3) In this Act

(a) references to the court are to the High Court or a county court,

(b) references to an interest affecting an estate or charge are to an adverse right affecting the title to the estate or charge, and

(c) references to the right to object to an application to the registrar are to the right under section 73.

Final provisions

130 Minor and consequential amendments

Schedule 11 (which makes minor and consequential amendments) has effect.

131 Transition

(1) The Lord Chancellor may by order make such transitional provisions and savings as he thinks fit in connection with the coming into force of any of the provisions of this Act.

(2) Schedule 12 (which makes transitional provisions and savings) has effect.

(3) Nothing in Schedule 12 affects the power to make transitional provisions and savings under subsection (1); and an order under that subsection may modify any provision made by that Schedule.

132 Repeals

The enactments specified in Schedule 13 (which include certain provisions which are already spent) are hereby repealed to the extent specified there.

133 Short title, commencement and extent

(1) This Act may be cited as the Land Registration Act 2001.

(2) This Act shall come into force on such day as the Lord Chancellor may by order appoint, and different days may be so appointed for different purposes.

(3) Subject to subsection (4), this Act extends to England and Wales only.

(4) Any amendment or repeal by this Act of an existing enactment, other than

(a) section 37 of the Requisitioned Land and War Works Act 1945 (c. 43), and

(b) Schedule 2A to the Building Societies Act 1986 (c. 53), has the same extent as the enactment amended or repealed.

SCHEDULES

SCHEDULE 1

Sections 11 and 12.

UNREGISTERED INTERESTS WHICH OVERRIDE FIRST REGISTRATION

Leasehold estates in land

1. A leasehold estate in land granted for a term not exceeding seven years from the date of the grant, except for a lease the grant of which falls within section 4(1) (d), (e) or (f).

Interests of persons in actual occupation

2. (1) An interest belonging to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for an interest under a settlement under the Settled Land Act 1925 (c. 18).

(2) For the purposes of this paragraph, a person is only to be regarded as in actual occupation of land if he, or his agent or employee, is physically present there.

Easements and profits a prendre

3. A legal easement or profit a prendre.

Customary and public rights

4. A customary right.

5. A public right.

Local land charges

6. A local land charge.

Mines and minerals

7. An interest in any coal or coal mine, the rights attached to any such interest and the rights of any person under section 38, 49 or 51 of the Coal Industry Act 1994 (c. 21).

8. In the case of land to which title was registered before 1898, rights to mines and minerals (and incidental rights) created before 1898.

9. In the case of land to which title was registered between 1898 and 1925 inclusive, rights to mines and minerals (and incidental rights) created before the date of registration of the title.

Miscellaneous

10. A franchise.

11. A manorial right.

12. A right to rent which was reserved to the Crown on the granting of any freehold estate (whether or not the right is still vested in the Crown).

13. A non-statutory right in respect of an embankment or sea or river wall.

14. A right to payment in lieu of tithe.

SCHEDULE 2

Section 27.

REGISTRABLE DISPOSITIONS: REGISTRATION REQUIREMENTS

PART 1

REGISTERED ESTATES

Introductory

1. This Part deals with the registration requirements relating to those dispositions of registered estates which are required to be completed by registration.

Transfer

2. (1) In the case of a transfer of whole or part, the transferee, or his successor in title, must be entered in the register as the proprietor.

(2) In the case of a transfer of part, such details of the transfer as rules may provide must be entered in the register in relation to the registered estate out of which the transfer is made.

Lease of estate in land

3. (1) This paragraph applies to a disposition consisting of the grant out of an estate in land of a term of years absolute.

(2) In the case of a disposition to which this paragraph applies:

(a) the grantee, or his successor in title, must be entered in the register as the proprietor of the lease, and

(b) a notice in respect of the lease must be entered in the register.

Lease of franchise or manor

4. (1) This paragraph applies to a disposition consisting of the grant out of a franchise or manor of a lease for a term of more than seven years from the date of the grant.

(2) In the case of a disposition to which this paragraph applies:

(a) the grantee, or his successor in title, must be entered in the register as the proprietor of the lease, and

(b) a notice in respect of the lease must be entered in the register.

5. (1) This paragraph applies to a disposition consisting of the grant out of a franchise or manor of a lease for a term not exceeding seven years from the date of the grant.

(2) In the case of a disposition to which this paragraph applies, a notice in respect of the lease must be entered in the register.

Creation of independently registrable legal interest

6. (1) This paragraph applies to a disposition consisting of the creation of a legal rentcharge or profit a prendre in gross, other than one created for, or for an interest equivalent to, a term of years absolute not exceeding seven years from the date of creation.

(2) In the case of a disposition to which this paragraph applies:

(a) the grantee, or his successor in title, must be entered in the register as the proprietor of the interest created, and

(b) a notice in respect of the interest created must be entered in the register.

(3) In sub-paragraph (1), the reference to a legal rentcharge or profit a prendre in gross is to one falling within section 1(2) of the Law of Property Act 1925 (c. 20).

Creation of other legal interest

7. (1) This paragraph applies to a disposition which:

(a) consists of the creation of an interest of a kind falling within section 1(2)(a), (b) or (e) of the Law of Property Act 1925, and

(b) is not a disposition to which paragraph 4, 5 or 6 applies.

(2) In the case of a disposition to which this paragraph applies:

(a) a notice in respect of the interest created must be entered in the register, and

(b) if the interest is created for the benefit of a registered estate, the proprietor of the registered estate must be entered in the register as its proprietor.

(3) Rules may provide for sub-paragraph (2) to have effect with modifications in relation to a right of entry over or in respect of a term of years absolute.

Creation of legal charge

8. In the case of the creation of a charge, the chargee, or his successor in title, must be entered in the register as the proprietor of the charge.

PART 2

REGISTERED CHARGES

Introductory

9. This Part deals with the registration requirements relating to those dispositions of registered charges which are required to be completed by registration.

Transfer

10. In the case of a transfer, the transferee, or his successor in title, must be entered in the register as the proprietor.

Creation of sub-charge

11. In the case of the creation of a sub-charge, the sub-chargee, or his successor in title, must be entered in the register as the proprietor of the sub-charge.

SCHEDULE 3

Sections 29 and 30.

UNREGISTERED INTERESTS WHICH OVERRIDE REGISTERED DISPOSITIONS

Leasehold estates in land

1. A leasehold estate in land granted for a term not exceeding seven years from the date of the grant, except for:

(a) a lease the grant of which falls within section 4(1)(d), (e) or (f);

(b) a lease the grant of which constitutes a registrable disposition.

Interests of persons in actual occupation

2 (1) An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for:

(a) an interest under a settlement under the Settled Land Act 1925 (c. 18);

(b) an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;

(c) an interest:

(i) which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and

(ii) of which the person to whom the disposition is made does not have actual knowledge at that time;

(d) a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition.

(2) For the purposes of this paragraph, a person is only to be regarded as in actual occupation of land if he, or his agent or employee, is physically present there.

Easements and profits a prendre

3. (1) A legal easement or profit a prendre, except for an easement, or a profit a prendre which is not registered under the Commons Registration Act 1965 (c. 64), which at the time of the disposition:

(a) is not within the actual knowledge of the person to whom the disposition is made, and

(b) would not have been obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable.

(2) The exception in sub-paragraph (1) does not apply if the person entitled to the easement of profit proves that it has been exercised in the period of one year ending with the day of the disposition.

Customary and public rights

4. A customary right.

5. A public right.

Local land charges

6. A local land charge.

Mines and minerals

7. An interest in any coal or coal mine, the rights attached to any such interest and the rights of any person under section 38, 49 or 51 of the Coal Industry Act 1994 (c. 21).

8. In the case of land to which title was registered before 1898, rights to mines and minerals (and incidental rights) created before 1898.

9. In the case of land to which title was registered between 1898 and 1925 inclusive, rights to mines and minerals (and incidental rights) created before the date of registration of the title.

Miscellaneous

10. A franchise.

11. A manorial right.

12. A right to rent which was reserved to the Crown on the granting of any freehold estate (whether or not the right is still vested in the Crown).

13. A non-statutory right in respect of an embankment or sea or river wall.

14. A right to payment in lieu of tithe.

SCHEDULE 4

Section 65.

ALTERATION OF THE REGISTER

Introductory

1. In this Schedule, references to rectification, in relation to alteration of the register, are to alteration which:

(a) involves the correction of a mistake, and

(b) prejudicially affects the title of a registered proprietor.

Alteration pursuant to a court order

2. (1) The court may make an order for alteration of the register for the purpose of:

(a) correcting a mistake,

(b) bringing the register up to date, or

(c) giving effect to any estate, right or interest excepted from the effect of registration.

(2) An order under this paragraph has effect when served on the registrar to impose a duty on him to give effect to it.

3. (1) This paragraph applies to the power under paragraph 2, so far as relating to rectification.

(2) If alteration affects the title of the proprietor of a registered estate in land, no order may be made under paragraph 2 without the proprietor's consent in relation to land in his possession unless:

(a) he has by fraud or lack of proper care caused or substantially contributed to the mistake, or

(b) it would for any other reason be unjust for the alteration not to be made.

(3) If in any proceedings the court has power to make an order under paragraph 2, it must do so, unless there are exceptional circumstances which justify its not doing so.

(4) In sub-paragraph (2), the reference to the title of the proprietor of a registered estate in land includes his title to any registered estate which subsists for the benefit of the estate in land.

4. Rules may:

(a) make provision about the circumstances in which there is a duty to exercise the power under paragraph 2, so far as not relating to rectification;

(b) make provision about the form of an order under paragraph 2;

(c) make provision about service of such an order.

Alteration otherwise than pursuant to a court order

5. The registrar may alter the register for the purpose of:

(a) correcting a mistake,

(b) bringing the register up to date,

(c) giving effect to any estate, right or interest excepted from the effect of registration, or

(d) removing a superfluous entry.

6. (1) This paragraph applies to the power under paragraph 5, so far as relating to rectification.

(2) No alteration affecting the title of the proprietor of a registered estate in land may be made under paragraph 5 without the proprietor's consent in relation to land in his possession unless:

(a) he has by fraud or lack of proper care caused or substantially contributed to the mistake, or

(b) it would for any other reason be unjust for the alteration not to be made.

(3) If on an application for alteration under paragraph 5 the registrar has power to make the alteration, the application must be approved, unless there are exceptional circumstances which justify not making the alteration.

(4) In sub-paragraph (2), the reference to the title of the proprietor of a registered estate in land includes his title to any registered estate which subsists for the benefit of the estate in land.

7. Rules may:

(a) make provision about the circumstances in which there is a duty to exercise the power under paragraph 5, so far as not relating to rectification;

(b) make provision about how the register is to be altered in exercise of that power;

(c) make provision about applications for alteration under that paragraph, including provision requiring the making of such applications;

(d) make provision about procedure in relation to the exercise of that power, whether on application or otherwise.

Rectification and derivative interests

8. The powers under this Schedule to alter the register, so far as relating to rectification, extend to changing for the future the priority of any interest affecting the registered estate or charge concerned.

Costs in non-rectification cases

9. (1) If the register is altered under this Schedule in a case not involving rectification, the registrar may pay such amount as he thinks fit in respect of any costs or expenses reasonably incurred by a person in connection with the alteration which have been incurred with the consent of the registrar.

(2) The registrar may make a payment under sub-paragraph (1) notwithstanding the absence of consent if:

(a) it appears to him:

(i) that the costs or expenses had to be incurred urgently, and

(ii) that it was not reasonably practicable to apply for his consent, or

(b) he has subsequently approved the incurring of the costs or expenses.

SCHEDULE 5

Section 92.

LAND REGISTRY NETWORK

Access to network

1. (1) A person who is not a member of the land registry may only have access to a land registry network under authority conferred by means of an agreement with the registrar.

(2) An agreement for the purposes of sub-paragraph (1) ("network access agreement") may authorise access for:

(a) the communication, posting or retrieval of information,

(b) the making of changes to the register of title or cautions register,

(c) the issue of official search certificates,

(d) the issue of official copies, or

(e) such other conveyancing purposes as the registrar thinks fit.

(3) Rules may regulate the use of network access agreements to confer authority to carry out functions of the registrar.

(4) The registrar must, on application, enter into a network access agreement with the applicant if the applicant meets such criteria as rules may provide.

Terms of access

2. (1) The terms on which access to a land registry network is authorised shall be such as the registrar thinks fit, subject to sub-paragraphs (3) and (4), and may, in particular, include charges for access.

(2) The power under sub-paragraph (1) may be used, not only for the purpose of regulating the use of the network, but also for:

(a) securing that the person granted access uses the network to carry on such qualifying transactions as may be specified in, or under, the agreement,

(b) such other purpose relating to the carrying on of qualifying transactions as rules may provide, or

(c) enabling network transactions to be monitored.

(3) It shall be a condition of a network access agreement which enables the person granted access to use the network to carry on qualifying transactions that he must comply with any rules for the time being in force under paragraph 5.

(4) Rules may regulate the terms on which access to a land registry network is authorised.

Termination of access

3. (1) The person granted access by a network access agreement may terminate the agreement at any time by notice to the registrar.

(2) Rules may make provision about the termination of a network access agreement by the registrar and may, in particular, make provision about:

(a) the grounds of termination,

(b) the procedure to be followed in relation to termination, and

(c) the suspension of termination pending appeal.

(3) Without prejudice to the generality of sub-paragraph (2)(a), rules under that provision may authorise the registrar to terminate a network access agreement if the person granted access:

(a) fails to comply with the terms of the agreement,

(b) ceases to be a person with whom the registrar would be required to enter into a network access agreement conferring the authority which the agreement confers, or

(c) does not meet such conditions as the rules may provide.

Appeals

4. (1) A person who is aggrieved by a decision of the registrar with respect to entry into, or termination of, a network access agreement may appeal against the decision to the adjudicator.

(2) On determining an appeal under this paragraph, the adjudicator may give such directions as he considers appropriate to give effect to his determination.

(3) Rules may make provision about appeals under this paragraph.

Network transaction rules

5. (1) Rules may make provision about how to go about network transactions.

(2) Rules under sub-paragraph (1) may, in particular, make provision about dealings with the land registry, including provision about:

(a) the procedure to be followed, and

(b) the supply of information (including information about unregistered interests).

Overriding nature of network access obligations

6. To the extent that an obligation not owed under a network access agreement conflicts with an obligation owed under such an agreement by the person granted access, the obligation not owed under the agreement is discharged.

Do-it-yourself conveyancing

7. (1) If there is a land registry network, the registrar has a duty to provide such assistance as he thinks appropriate for the purpose of enabling persons engaged in qualifying transactions who wish to do their own conveyancing to do so by means of the network.

(2) The duty under sub-paragraph (1) does not extend to the provision of legal advice.

Presumption of authority

8. Where:

(a) a person who is authorised under a network access agreement to do so uses the network for the making of a disposition or contract, and

(b) the document which purports to effect the disposition or to be the contract:

(i) purports to be authenticated by him as agent, and

(ii) contains a statement to the effect that he is acting under the authority of his principal, he shall be deemed, in favour of any other party, to be so acting.

Management of network transactions

9. (1) The registrar may use monitoring information for the purpose of managing network transactions and may, in particular, disclose such information to persons authorised to use the network, and authorise the further disclosure of information so disclosed, if he considers it is necessary or desirable to do so.

(2) The registrar may delegate his functions under sub-paragraph (1), subject to such conditions as he thinks fit.

(3) In sub-paragraph (1), "monitoring information" means information provided in pursuance of provision in a network access agreement included under paragraph 2(2)(c).

Supplementary

10. The registrar may provide education and training in relation to the use of a land registry network.

11. (1) Power to make rules under paragraph 1, 2 or 3 is exercisable by the Lord Chancellor.

(2) Before making such rules, the Lord Chancellor must consult such persons as he considers appropriate.

(3) In making rules under paragraph 1 or 3(2)(a), the Lord Chancellor must have regard, in particular, to the need to secure:

(a) the confidentiality of private information kept on the network,

(b) competence in relation to the use of the network (in particular for the purpose of making changes), and

(c) the adequate insurance of potential liabilities in connection with use of the network. 12 In this Schedule:

"land registry network" means a network provided under section 92(1);

"network access agreement" has the meaning given by paragraph 1(2);

"network transaction" means a transaction carried on by means of a land registry network;

"qualifying transaction" means a transaction which:

(a) involves registration, and

(b) is capable of being effected electronically.

SCHEDULE 6

Section 96.

REGISTRATION OF ADVERSE POSSESSOR

Right to apply for registration

1. (1) A person may apply to be registered as the proprietor of a registered estate in land if he has been in adverse possession of the estate for the period of ten years ending on the date of the application.

(2) A person may also apply to be registered as the proprietor of a registered estate in land if:

(a) he has in the period of six months ending on the date of the application ceased to be in adverse possession of the estate because of eviction by the registered proprietor, or a person claiming under the registered proprietor,

(b) on the day before his eviction he was entitled to make an application under sub-paragraph (1), and

(c) the eviction was not pursuant to a judgment for possession.

(3) However, a person may not make an application under this paragraph if:

(a) he is a defendant in proceedings which involve asserting a right to possession of the land, or

(b) judgment for possession of the land has been given against him in the last two years.

(4) For the purposes of sub-paragraph (1), the estate need not have been registered throughout the period of adverse possession.

Notification of application

2. (1) The registrar must give notice of an application under paragraph 1 to:

(a) the proprietor of the estate to which the application relates,

(b) the proprietor of any registered charge on the estate,

(c) where the estate is leasehold, the proprietor of any superior registered estate,

(d) any person who is registered in accordance with rules as a person to be notified under this paragraph, and

(e) such other persons as rules may provide.

(2) Notice under this paragraph shall include notice of the effect of paragraph 4.

Treatment of application

3. (1) A person given notice under paragraph 2 may require that the application to which the notice relates be dealt with under paragraph 5.

(2) The right under this paragraph is exercisable by notice to the registrar given before the end of such period as rules may provide.

4. If an application under paragraph 1 is not required to be dealt with under paragraph 5, the applicant is entitled to be entered in the register as the new proprietor of the estate.

5. (1) If an application under paragraph 1 is required to be dealt with under this paragraph, the applicant is only entitled to be registered as the new proprietor of the estate if any of the following conditions is met.

(2) The first condition is that:

(a) it would be unconscionable for the registered proprietor to seek to dispossess the applicant, and

(b) the circumstances are such that the applicant ought to be registered as the proprietor.

(3) The second condition is that the applicant is for some other reason entitled to be registered as the proprietor of the estate.

(4) The third condition is that:

(a) the land to which the application relates is adjacent to land belonging to the applicant,

(b) the exact line of the boundary between the two has not been determined under rules under section 60,

(c) for at least ten years of the period of adverse possession ending on the date of the application, the applicant (or any predecessor in title) reasonably believed that the land to which the application relates belonged to him, and

(d) the estate to which the application relates was registered more than one year prior to the date of the application.

(5) In relation to an application under paragraph 1(2), this paragraph has effect as if the reference in sub-paragraph (4)(c) to the date of the application were to the day before the date of the applicant.s eviction.

Right to make further application for registration

6. (1) Where a person.s application under paragraph 1 is rejected, he may make a further application to be registered as the proprietor of the estate if he is in adverse possession of the estate from the date of the application until the last day of the period of two years beginning with the date of its rejection.

(2) However, a person may not make an application under this paragraph if:

(a) he is a defendant in proceedings which involve asserting a right to possession of the land,

(b) judgment for possession of the land has been given against him in the last two years, or

(c) he has been evicted from the land pursuance to a judgement for possession.

7. If a person makes an application under paragraph 6, he is entitled to be entered in the register as the new proprietor of the estate.

Restriction on applications

8. (1) No one may apply under this Schedule to be registered as the proprietor of an estate in land during, or before the end of twelve months after the end of, any period in which the existing registered proprietor is for the purposes of the Limitation (Enemies and War Prisoners) Act 1945 (8 & 9 Geo. 6 c. 16):

(a) an enemy, or

(b) detained in enemy territory.

(2) No-one may apply under this Schedule to be registered as the proprietor of an estate in land during any period in which the existing registered proprietor is:

(a) unable because of mental disability to make decisions about issues of the kind to which such an application would give rise, or

(b) unable to communicate such decisions because of mental disability or physical impairment.

(3) For the purposes of sub-paragraph (2), "mental disability" means a disability or disorder of the mind or brain, whether permanent or temporary, which results in an impairment or disturbance of mental functioning.

(4) Where it appears to the registrar that sub-paragraph (1) or (2) applies in relation to an estate in land, he may include a note to that effect in the register.

Effect of registration

9. (1) Where a person is registered as the proprietor of an estate in land in pursuance of an application under this Schedule, the title by virtue of adverse possession which he had at the time of the application is extinguished.

(2) Subject to sub-paragraph (3), the registration of a person under this Schedule as the proprietor of an estate in land does not affect the priority of any interest affecting the estate.

(3) Subject to sub-paragraph (4), where a person is registered under this Schedule as the proprietor of an estate, the estate is vested in him free of any registered charge affecting the estate immediately before his registration.

(4) Sub-paragraph (3) does not apply where registration as proprietor is in pursuance of an application determined by reference to whether any of the conditions in paragraph 5 applies.

Apportionment and discharge of charges

10. (1) Where:

(a) a registered estate continues to be subject to a charge notwithstanding the registration of a person under this Schedule as the proprietor, and

(b) the charge affects property other than the estate, the proprietor of the estate may require the chargee to apportion the amount secured by the charge at that time between the estate and the other property on the basis of their respective values.

(2) The person requiring the apportionment is entitled to a discharge of his estate from the charge on payment of:

(a) the amount apportioned to the estate, and

(b) the costs incurred by the chargee as a result of the apportionment.

(3) On a discharge under this paragraph, the liability of the chargor to the chargee is reduced by the amount apportioned to the estate.

(4) Rules may make provision about apportionment under this paragraph, in particular, provision about:

(a) procedure,

(b) valuation,

(c) calculation of costs payable under sub-paragraph (2)(b), and

(d) payment of the costs of the chargor.

Meaning of .adverse possession.

11. (1) A person is in adverse possession of an estate in land for the purposes of this Schedule if, but for section 95, a period of limitation under section 15 of the Limitation Act 1980 (c. 58) would run in his favour in relation to the estate.

(2) A person is also to be regarded for those purposes as having been in adverse possession of an estate in land:

(a) where he is the successor in title to an estate in the land, during any period of adverse possession by a predecessor in title to that estate, or

(b) during any period of adverse possession by another person which comes between, and is continuous with, periods of adverse possession of his own.

(3) In determining whether for the purposes of this paragraph a period of limitation would run under section 15 of the Limitation Act 1980, there are to be disregarded:

(a) the commencement of any legal proceedings, and

(b) paragraph 6 of Schedule 1 to that Act.

Trusts

12. A person is not to be regarded as being in adverse possession of an estate for the purposes of this Schedule at any time when the estate is subject to a trust, unless the interest of each of the beneficiaries in the estate is an interest in possession.

Crown foreshore

13. (1) Where:

(a) a person is in adverse possession of an estate in land,

(b) the estate belongs to Her Majesty in right of the Crown or the Duchy of Lancaster or to the Duchy of Cornwall, and

(c) the land consists of foreshore, paragraph 1(1) is to have effect as if the reference to ten years were to sixty years.

(2) For the purposes of sub-paragraph (1), land is to be treated as foreshore if it has been foreshore at any time in the previous ten years.

(3) In this paragraph, .foreshore. means the shore and bed of the sea and of any tidal water, below the line of the medium high tide between the spring and neap tides.

Rentcharges

14. Rules must make provision to apply the preceding provisions of this Schedule to registered rentcharges, subject to such modifications and exceptions as the rules may provide.

Procedure

15. Rules may make provision about the procedure to be followed pursuant to an application under this Schedule.

SCHEDULE 7

Section 98.

THE LAND REGISTRY

Holding of office by Chief Land Registrar

1. (1) The registrar may at any time resign his office by written notice to the Lord Chancellor.

(2) The Lord Chancellor may remove the registrar from office if he is unable or unfit to discharge the functions of office.

(3) Subject to the above, a person appointed to be the registrar is to hold and vacate office in accordance with the terms of his appointment and, on ceasing to hold office, is eligible for reappointment.

Remuneration etc. of Chief Land Registrar

2. (1) The Lord Chancellor shall pay the registrar such remuneration, and such travelling and other allowances, as the Lord Chancellor may determine.

(2) The Lord Chancellor shall:

(a) pay such pension, allowances or gratuities as he may determine to or in respect of a person who is or has been the registrar, or

(b) make such payments as he may determine towards provision for the payment of a pension, allowances or gratuities to or in respect of such a person.

(3) If, when a person ceases to be the registrar, the Lord Chancellor determines that there are special circumstances which make it right that the person should receive compensation, the Lord Chancellor may pay to the person by way of compensation a sum of such amount as he may determine.

Staff

3. (1) The registrar may appoint such staff as he thinks fit.

(2) The terms and conditions of appointments under this paragraph shall be such as the registrar, with the approval of the Minister for the Civil Service, thinks fit.

Indemnity for members

4. No member of the land registry is to be liable in damages for anything done or omitted in the discharge or purported discharge of any function relating to land registration, unless it is shown that the act or omission was in bad faith.

Seal

5. The land registry is to continue to have a seal and any document purporting to be sealed with it is to be admissible in evidence without any further or other proof.

Documentary evidence

6. The Documentary Evidence Act 1868 (c. 37) has effect as if:

(a) the registrar were included in the first column of the Schedule to that Act,

(b) the registrar and any person authorised to act on his behalf were mentioned in the second column of that Schedule, and

(c) the regulations referred to in that Act included any form or direction issued by the registrar or by any such person.

Parliamentary disqualification

7. In Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975 (c. 24) (other disqualifying offices), there is inserted at the appropriate place.

"Chief Land Registrar";

and a corresponding amendment is made in Part 3 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (c. 25).

SCHEDULE 8

Section 102.

INDEMNITIES

Entitlement

1. (1) A person is entitled to be indemnified by the registrar if he suffers loss by reason of:

(a) rectification of the register,

(b) a mistake whose correction would involve rectification of the register,

(c) a mistake in an official search,

(d) a mistake in an official copy,

(e) a mistake in a document kept by the registrar which is not an original and is referred to in the register,

(f) the loss or destruction of a document lodged at the registry for inspection or safe custody,

(g) a mistake in the cautions register, or

(h) failure by the registrar to perform his duty under section 50.

(2) For the purposes of sub-paragraph (1)(a):

(a) any person who suffers loss by reason of the change of title under section 62 is to be regarded as having suffered loss by reason of rectification of the register, and

(b) the proprietor of a registered estate or charge claiming in good faith under a forged disposition is, where the register is rectified, to be regarded as having suffered loss by reason of such rectification as if the disposition had not been forged.

(3) No indemnity under sub-paragraph (1)(b) is payable until a decision has been made about whether to alter the register for the purpose of correcting the mistake; and the loss suffered by reason of the mistake is to be determined in the light of that decision.

Mines and minerals

2. No indemnity is payable under this Schedule on account of:

(a) any mines or minerals, or

(b) the existence of any right to work or get mines or minerals, unless it is noted in the register that the title to the registered estate concerned includes the mines or minerals.

Costs

3. (1) In respect of loss consisting of costs or expenses incurred by the claimant in relation to the matter, an indemnity under this Schedule is payable only on account of costs or expenses reasonably incurred by the claimant with the consent of the registrar.

(2) The requirement of consent does not apply where:

(a) the costs or expenses must be incurred by the claimant urgently, and

(b) it is not reasonably practicable to apply for the registrar's consent.

(3) If the registrar approves the incurring of costs or expenses after they have been incurred, they shall be treated for the purposes of this paragraph as having been incurred with his consent.

4. (1) If no indemnity is payable to a claimant under this Schedule, the registrar may pay such amount as he thinks fit in respect of any costs or expenses reasonably incurred by the claimant in connection with the claim which have been incurred with the consent of the registrar.

(2) The registrar may make a payment under sub-paragraph (1) notwithstanding the absence of consent if:

(a) it appears to him:

(i) that the costs or expenses had to be incurred urgently, and

(ii) that it was not reasonably practicable to apply for his consent, or

(b) he has subsequently approved the incurring of the costs or expenses.

Claimant.s fraud or lack of care

5. (1) No indemnity is payable under this Schedule on account of any loss suffered by a claimant:

(a) wholly or partly as a result of his own fraud, or

(b) wholly as a result of his own lack of proper care.

(2) Where any loss is suffered by a claimant partly as a result of his own lack of proper care, any indemnity payable to him is to be reduced to such extent as is fair having regard to his share in the responsibility for the loss.

(3) For the purposes of this paragraph any fraud or lack of care on the part of a person from whom the claimant derives title (otherwise than under a disposition for valuable consideration which is registered or protected by an entry in the register) is to be treated as if it were fraud or lack of care on the part of the claimant.

Valuation of estates etc.

6. Where an indemnity is payable in respect of the loss of an estate, interest or charge, the value of the estate, interest or charge for the purposes of the indemnity is to be regarded as not exceeding:

(a) in the case of an indemnity under paragraph 1(1)(a), its value immediately before rectification of the register (but as if there were to be no rectification), and

(b) in the case of an indemnity under paragraph 1(1)(b), its value at the time when the mistake which caused the loss was made.

Determination of indemnity by court

7. (1) A person may apply to the court for the determination of any question as to:

(a) whether he is entitled to an indemnity under this Schedule, or

(b) the amount of such an indemnity.

(2) Paragraph 3(1) does not apply to the costs of an application to the court under this paragraph or of any legal proceedings arising out of such an application.

Time limits

8. For the purposes of the Limitation Act 1980 (c. 58):

(a) a liability to pay an indemnity under this Schedule is a simple contract debt, and

(b) the cause of action arises at the time when the claimant knows, or but for his own default might have known, of the existence of his claim.

Interest

9. Rules may make provision about the payment of interest on an indemnity under this Schedule, including:

(a) the circumstances in which interest is payable, and

(b) the periods for and rates at which it is payable.

Recovery of indemnity by registrar

10. (1) Where an indemnity under this Schedule is paid to a claimant in respect of any loss, the registrar is entitled (without prejudice to any other rights he may have):

(a) to recover the amount paid from any person who caused or substantially contributed to the loss by his fraud, or

(b) for the purpose of recovering the amount paid, to enforce the rights of action referred to in sub-paragraph (2).

(2) Those rights of action are:

(a) any right of action (of whatever nature and however arising) which the claimant would have been entitled to enforce had the indemnity not been paid, and

(b) where the register has been rectified, any right of action (of whatever nature and however arising) which the person in whose favour the register has been rectified would have been entitled to enforce had it not been rectified.

(3) References in this paragraph to an indemnity include interest paid on an indemnity under rules under paragraph 9.

Interpretation

11. (1) For the purposes of this Schedule, references to a mistake in something include anything mistakenly omitted from it as well as anything mistakenly included in it.

(2) In this Schedule, references to rectification of the register are to alteration of the register which:

(a) involves the correction of a mistake, and

(b) prejudicially affects the title of a registered proprietor.

SCHEDULE 9

Section 105.

THE ADJUDICATOR

Holding of office

1. (1) The adjudicator may at any time resign his office by written notice to the Lord Chancellor.

(2) The Lord Chancellor may remove the adjudicator from office on the ground of incapacity or misbehaviour.

(3) Section 26 of the Judicial Pensions and Retirement Act 1993 (c. 8) (compulsory retirement at 70, subject to the possibility of annual extension up to 75) applies to the adjudicator.

(4) Subject to the above, a person appointed to be the adjudicator is to hold and vacate office in accordance with the terms of his appointment and, on ceasing to hold office, is eligible for reappointment.

Remuneration

2. (1) The Lord Chancellor shall pay the adjudicator such remuneration, and such other allowances, as the Lord Chancellor may determine.

(2) The Lord Chancellor shall:

(a) pay such pension, allowances or gratuities as he may determine to or in respect of a person who is or has been the adjudicator, or

(b) make such payments as he may determine towards provision for the payment of a pension, allowances or gratuities to or in respect of such a person.

(3) Sub-paragraph (2) does not apply if the office of adjudicator is a qualifying judicial office within the meaning of the Judicial Pensions and Retirement Act 1993 (c. 8).

(4) If, when a person ceases to be the adjudicator, the Lord Chancellor determines that there are special circumstances which make it right that the person should receive compensation, the Lord Chancellor may pay to the person by way of compensation a sum of such amount as he may determine.

Staff

3. (1) The adjudicator may appoint such staff as he thinks fit.

(2) The terms and conditions of appointments under this paragraph shall be such as the adjudicator, with the approval of the Minister for the Civil Service, thinks fit.

Conduct of business

4. (1) Subject to sub-paragraph (2), any function of the adjudicator may be carried out by any member of his staff who is authorised by him for the purpose.

(2) In the case of functions which are not of an administrative character, sub- paragraph (1) only applies if the member of staff has a 10 year general qualification (within the meaning of section 71 of the Courts and Legal Services Act 1990 (c. 41)).

5. The Lord Chancellor may by regulations make provision about the carrying out of functions during any vacancy in the office of adjudicator.

Finances

6. The Lord Chancellor shall be liable to reimburse expenditure incurred by the adjudicator in the discharge of his functions.

7. The Lord Chancellor may require the registrar to make payments towards expenses of the Lord Chancellor under this Schedule.

Application of Tribunals and Inquiries Act 1992

8. In Schedule 1 to the Tribunal and Inquiries Act 1992 (c. 53) (tribunals under the supervision of the Council on Tribunals), after paragraph 27 there is inserted.

Parliamentary disqualification

9. In Part 1 of Schedule 1 to the House of Commons Disqualification Act 1975 (c. 24) (judicial offices), there is inserted at the end. "Adjudicator to Her Majesty's Land Registry"; and a corresponding amendment is made in Part 1 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (c. 25). .Land Registration 27B. The Adjudicator to Her Majesty.s Land Registry

SCHEDULE 10

Section 123.

MISCELLANEOUS AND GENERAL POWERS

PART 1

MISCELLANEOUS

Dealings with estates subject to compulsory first registration

1. (1) Rules may make provision:

(a) applying this Act to a pre-registration dealing with a registrable legal estate as if the dealing had taken place after the date of first registration of the estate, and

(b) about the date on which registration of the dealing is effective.

(2) For the purposes of sub-paragraph (1):

(a) a legal estate is registrable if a person is subject to a duty under section 6 to make an application to be registered as the proprietor of it, and

(b) a pre-registration dealing is one which takes place before the making of such an application.

Regulation of title matters between sellers and buyers

2. (1) Rules may make provision about the obligations with respect to:

(a) proof of title, or

(b) perfection of title, of the seller under a contract for the transfer, or other disposition, for valuable consideration of a registered estate or charge.

(2) Rules under this paragraph may be expressed to have effect notwithstanding any stipulation to the contrary.

Implied covenants

3. Rules may:

(a) make provision about the form of provisions extending or limiting any covenant implied by virtue of Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 (c. 36) (implied covenants for title) on a registrable disposition;

(b) make provision about the application of section 77 of the Law of Property Act 1925 (c. 20) (implied covenants in conveyance subject to rents) to transfers of registered estates;

(c) make provision about reference in the register to implied covenants, including provision for the state of the register to be conclusive in relation to whether covenants have been implied.

Land certificates

4. Rules may make provision about:

(a) when a certificate of registration of title to a legal estate may be issued,

(b) the form and content of such a certificate, and

(c) when such a certificate must be produced or surrendered to the registrar.

PART 2 GENERAL

Notice

5. (1) Rules may make provision about the form, content and service of notice under this Act.

(2) Rules under this paragraph about the service of notice may, in particular:

(a) make provision requiring the supply of an address for service and about the entry of addresses for service in the register;

(b) make provision about:

(i) the time for service,

(ii) the mode of service, and

(iii) when service is to be regarded as having taken place.

Applications

6. Rules may:

(a) make provision about the form and content of applications under this Act;

(b) make provision requiring applications under this Act to be supported by such evidence as the rules may provide;

(c) make provision about when an application under this Act is to be taken as made;

(d) make provision about the order in which competing applications are to be taken to rank;

(e) may make provision for an alteration made by the registrar for the purpose of correcting a mistake in an application or accompanying document to have effect in such circumstances as the rules may provide as if made by the applicant or other interested party or parties.

Statutory statements

7. Rules may make provision about the form of any statement required under an enactment to be included in an instrument effecting a registrable disposition or a disposition which triggers the requirement of registration.

Residual power

8. Rules may make any other provision which it is expedient to make for the purposes of carrying this Act into effect, whether similar or not to any provision which may be made under the other powers to make land registration rules.

SCHEDULE 11

Section 130.

MINOR AND CONSEQUENTIAL AMENDMENTS

Settled Land Act 1925 (c. 18)

1. Section 119(3) of the Settled Land Act 1925 ceases to have effect.

Law of Property Act 1925 (c. 20)

2. (1) The Law of Property Act 1925 is amended as follows.

(2) In section 44, after subsection (4) there is inserted

" (4A) Subsections (2) and (4) of this section do not apply to a contract to grant a term of years if the grant will be an event within section 4(1) of the Land Registration Act 2001 (events which trigger compulsory first registration of title) ".

(3) In that section, in subsection (5), for "the last three preceding subsections" there is substituted "subsections (2) to (4) of this section".

(4) In that section, at the end there is inserted

" (12) Nothing in this section applies in relation to registered land or to a term of years to be derived out of registered land".

(5) In section 84(8), the words from ", but" to the end are omitted.

(6) In section 85(3), for the words from the beginning to the second "or" there is substituted "Subsection (2) does not apply to registered land, but, subject to that, this section applies whether or not the land is registered land and whether or not".

(7) In section 86(3), for the words from the beginning to the second "or" there is substituted "Subsection (2) does not apply to registered land, but, subject to that, this section applies whether or not the land is registered land and whether or not".

(8) In section 94(4), for the words from "registered" to the end there is substituted "on registered land".

(9) In section 97, for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(10) In section 115(10), for the words from "charge" to the end there is substituted "registered charge (within the meaning of the Land Registration Act 2001) ".

(11) In section 125(2), for the words from " (not being" to "1925) " there is substituted " (not being registered land) ".

(12) In section 205(1)(xxii):

(a) for "Land Registration Act 1925" there is substituted "Land Registration Act 2001; ", and

(b) the words from ", and" to the end are omitted.

Administration of Estates Act 1925 (c. 23)

3. In section 43(2) of the Administration of Estates Act 1925, for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Land and War Works Act 1945 (c. 43)

4. (1) Section 37 of the Requisitioned Land and War Works Act 1945 is amended as follows.

(2) In subsection (2), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) Subsection (3) ceases to have effect.

Law of Property (Joint Tenants) Act 1964 (c. 63)

5. In section 3 of the Law of Property (Joint Tenants) Act 1964, for the words from "any land" to the end there is substituted "registered land".

Gas Act 1965 (c. 36)

6. (1) The Gas Act 1965 is amended as follows.

(2) In section 12(3), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) In sections 12(4) and 13(6), for the words from "be deemed" to the end there is substituted:

(a) for the purposes of the Land Charges Act 1925, be deemed to be a charge affecting land falling within Class D(iii), and

(b) for the purposes of the Land Registration Act 2001, be deemed to be an equitable easement".

Commons Registration Act 1965 (c. 64)

7. (1) The Commons Registration Act 1965 is amended as follows.

(2) In sections 1(1), (2) and (3), 4(3) and 8(1), for "under the Land Registration Acts 1925 and 1936" there is substituted "in the register of title".

(3) In section 9, for "the Land Registration Acts 1925 and 1936" there is substituted "in the register of title".

(4) In section 12 (in both places), for "under the Land Registration Acts 1925 and 1936" there is substituted "in the register of title".

(5) In section 22, in subsection (1), there is inserted at the appropriate place

""register of title" means the register kept under section 1 of the Land Registration Act 2001; ""

(6) In that section, in subsection (2), for "under the Land Registration Acts 1925 and 1936" there is substituted "in the register of title".

Leasehold Reform Act 1967 (c. 88)

8. (1) The Leasehold Reform Act 1967 is amended as follows.

(2) In section 5(5):

(a) for "an overriding interest within the meaning of the Land Registration Act 1925" there is substituted "regarded for the purposes of the Land Registration Act 2001 as an interest falling within any of the paragraphs of Schedule 1 or 3 to that Act", and

(b) for "or caution under the Land Registration Act 1925" there is substituted "under the Land Registration Act 2001".

(3) In Schedule 4, in paragraph 1(3):

(a) for paragraph (a) there is substituted:

" (a) the covenant may be the subject of a notice in the register of title kept under the Land Registration Act 2001, if apart from this subsection it would not be capable of being the subject of such a notice; and", and

(b) in paragraph (b), for "notice of the covenant has been so registered, the covenant" there is substituted "a notice in respect of the covenant has been entered in that register, it".

Law of Property Act 1969 (c. 59)

9. In section 24(1) of the Law of Property Act 1969, for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Land Charges Act 1972 (c. 61)

10. (1) The Land Charges Act 1972 is amended as follows.

(2) In section 14(1), for the words from "Land Registration" to the end there is substituted "Land Registration Act 2001".

(3) In section 14(3):

(a) for the words from "section 123A" to "register) " there is substituted "section 7 of the Land Registration Act 2001 (effect of failure to comply with requirement of registration) ", and

(b) for "that section" there is substituted "section 6 of that Act".

(4) In section 17(1), in the definition of "registered land", for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Consumer Credit Act 1974 (c. 39)

11. In section 177(1) and (6) of the Consumer Credit Act 1974, for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Solicitors Act 1974 (c. 47)

12. (1) The Solicitors Act 1974 is amended as follows.

(2) In sections 22(1) and 56(1)(f), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) Section 75(b) ceases to have effect.

Local Land Charges Act 1975 (c. 76)

13. In section 10(3)(b)(ii) of the Local Land Charges Act 1975, for "under the Land Registration Act 1925" there is substituted "in the register of title kept under the Land Registration Act 2001".

Rent Act 1977 (c. 42)

14. In section 136(b) of the Rent Act 1977, for the words from "charge" to the end there is substituted "registered charge (within the meaning of the Land Registration Act 2001) ".

Charging Orders Act 1979 (c. 53)

15. In section 3(2) and (6) of the Charging Orders Act 1979, for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Highways Act 1980 (c. 66)

16. Section 251(5) of the Highways Act 1980 ceases to have effect.

Inheritance Tax Act 1984 (c. 51)

17 In section 238(3) of the Inheritance Tax Act 1984, for paragraph (a) there is substituted:

" (a) in relation to registered land

(i) if the disposition is required to be completed by registration, the time of registration, and

(ii) otherwise, the time of completion,"

Housing Act 1985 (c. 68)

18. (1) The Housing Act 1985 is amended as follows.

(2) In section 37(5), for the words from "and" to the end there is substituted:

"(5A) Where the Chief Land Registrar approves an application for registration of"

(a) a disposition of registered land, or

(b) the disponee's title under a disposition of unregistered land, and the instrument effecting the disposition contains a covenant of the kind mentioned in subsection (1), he must enter in the register a restriction reflecting the limitation imposed by the covenant".

(3) In section 154(5), for "Land Registration Acts 1925 to 1971" there is substituted "Land Registration Act 2001".

(4) In section 157(7), for the words from "the appropriate" to the end there is substituted "a restriction in the register of title reflecting the limitation".

(5) In section 165(6), for "section 83 of the Land Registration Act 1925" there is substituted "Schedule 8 of the Land Registration Act 2001".

(6) In Schedule 9A, in paragraph 2(2), for the words from the beginning to "the disponor" there is substituted "Where on a qualifying disposal the dishonor's title to the dwelling-house is not registered, the disponor".

(7) In that Schedule, for paragraph 4 there is substituted:

"4 (1) This paragraph applies where the Chief Land Registrar approves an application for registration of

(a) a disposition of registered land, or

(b) the disponee's title under a disposition of unregistered land, and the instrument effecting the disposition contains the statement required by paragraph 1.

(2) The Chief Land Registrar must enter in the register:

(a) a notice in respect of the rights of qualifying persons under this Part in relation to dwelling-houses comprised in the disposal, and

(b) a restriction reflecting the limitation under section 171D(2) on subsequent disposal".

(8) In that Schedule, for paragraph 5(2) there is substituted:

" (2) If the landlord.s title is registered, the landlord shall apply for the entry in the register of:

(a) a notice in respect of the rights of the qualifying person or persons under the provisions of this Part, and

(b) a restriction reflecting the limitation under section 171D(2) on subsequent disposal".

(9) In that Schedule, paragraph 5(3) ceases to have effect.

(10) In that Schedule, in paragraph 6, for sub-paragraph (1) there is substituted:

"(1) The rights of a qualifying person under this Part in relation to the qualifying dwelling house shall not be regarded as falling within Schedule 3 to the Land Registration Act 2001 (and so are liable to be postponed under section 29 of that Act, unless protected by means of a notice in the register) ".

(11) In that Schedule, in paragraph 9(2), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001".

(12) In Schedule 17, in paragraph 2(2), for "Land Registration Acts 1925 to 1971" there is substituted "Land Registration Act 2001".

(13) In Schedule 20, in paragraph 17(2), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001".

Building Societies Act 1986 (c. 53)

19. (1) In Schedule 2A to the Building Societies Act 1986, paragraph 1 is amended as follows.

(2) In sub-paragraph (2), for "charge or incumbrance registered under the Land Registration Act 1925" there is substituted "registered charge (within the meaning of the Land Registration Act 2001) ".

(3) Sub-paragraph (4) ceases to have effect.

(4) In sub-paragraph (5), the definition of "registered land" and the preceding "and" cease to have effect.

Landlord and Tenant Act 1987 (c. 31)

20. In sections 24(8) and (9), 28(5), 30(6) and 34(9) of the Landlord and Tenant Act 1987, for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Diplomatic and Consular Premises Act 1987 (c. 46)

21. (1) The Diplomatic and Consular Premises Act 1987 is amended as follows.

(2) In section 5, after the definition of the expression "diplomatic premises" there is inserted

""land" includes buildings and other structure, land covered with water and any estate, interest, easement, servitude or right in or over land, ".

(3) In Schedule 1, in paragraph 1:

(a) before the definition of the expression "the registrar" there is inserted

""registered land" has the same meaning as in the Land Registration Act 2001; ", and

(b) the words from "and expressions" to the end are omitted.

Criminal Justice Act 1988 (c. 33)

22. (1) The Criminal Justice Act 1988 is amended as follows.

(2) In section 77(12), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) In section 79(1) and (4), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Housing Act 1988 (c. 50)

23. (1) The Housing Act 1988 is amended as follows.

(2) In section 81, in subsection (9)(c), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001".

(3) In that section, for subsection (10) there is substituted:

"(10) Where the Chief Land Registrar approves an application for registration of:

(a) a disposition of registered land, or

(b) the approved person's title under a disposition of unregistered land, and the instrument effecting the disposition contains the statement required by subsection (1) above, he shall enter in the register a restriction reflecting the limitation under this section on subsequent disposal".

(4) In section 90(4), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(5) In section 133, in subsection (8):

(a) for the words "conveyance, grant or assignment" there is substituted "transfer or grant",

(b) for the words "section 123 of the Land Registration Act 1925" there is substituted "section 4 of the Land Registration Act 2001", and

(c) in paragraph (c), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001".

(6) In that section, for subsection (9) there is substituted:

" (9) Where the Chief Land Registrar approves an application for registration of:

(a) a disposition of registered land, or

(b) a person's title under a disposition of unregistered land, and the instrument effecting the original disposal contains the statement required by subsection (3)(d) above, he shall enter in the register a restriction reflecting the limitation under this section on subsequent disposal".

Local Government and Housing Act 1989 (c. 42)

24. (1) Section 173 of the Local Government and Housing Act 1989 is amended as follows.

(2) In subsection (8):

(a) for the words "conveyance, grant or assignment" there is substituted "transfer or grant",

(b) for the words "section 123 of the Land Registration Act 1925" there is substituted "section 4 of the Land Registration Act 2001", and

(c) in paragraph (c), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001".

(3) For subsection (9) there is substituted:

"(9) Where the Chief Land Registrar approves an application for registration of:

(a) a disposition of registered land, or

(b) a person's title under a disposition of unregistered land, and the instrument effecting the initial transfer contains the statement required by subsection (3) above, he shall enter in the register a restriction reflecting the limitation under this section on subsequent disposal".

Water Resources Act 1991 (c. 57)

25. (1) Section 158 of the Water Resources Act 1991 is amended as follows

(2) In subsection (5):

(a) for paragraphs (a) and (b) there is substituted:

" (a) the agreement may be the subject of a notice in the register of title under the Land Registration Act 2001 as if it were an interest affecting the registered land;

(b) the provisions of sections 28 to 30 of that Act (effect of dispositions of registered land on priority of adverse interests) shall apply as if the agreement were such an interest;., and

(b) in paragraph (c), for "where notice of the agreement has been so registered, " there is substituted "subject to the provisions of those sections,".

(3) In subsection (6), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Access to Neighbouring Land Act 1992 (c. 4)

26. (1) The Access to Neighbouring Land Act 1992 is amended as follows.

(2) In section 4(1), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) In section 5, in subsection (4):

(a) in paragraph (b), for "notice or caution under the Land Registration Act 1925" there is substituted "notice under the Land Registration Act 2001", and

(b) for "entry, notice or caution" there is substituted "entry or notice".

(4) In that section, for subsection (5) there is substituted.

"(5) The rights conferred on a person by or under an access order shall not be capable of falling within paragraph 2 of Schedule 1 or 3 to the Land Registration Act 2001 (overriding status of interest of person in actual occupation) ".

(5) In that section, in subsection (6), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Further and Higher Education Act 1992 (c. 13)

27. In Schedule 5 to the Further and Higher Education Act 1992, in paragraph 6(1):

(a) for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001", and

(b) for "those Acts" there is substituted "that Act".

Judicial Pensions and Retirement Act 1993 (c. 8)

28. In Schedule 5 to the Judicial Pensions and Retirement Act 1993, there is inserted at the end:

"Adjudicator to Her Majesty's Land Registry"

Charities Act 1993 (c. 10)

29. (1) The Charities Act 1993 is amended as follows

(2) In section 37, for subsections (7) and (8) there is substituted:

" (7) Where the disposition to be effected by any such instrument as is mentioned in subsection (1)(b) or (5)(b) above will be:

(a) a registrable disposition, or

(b) a disposition which triggers the requirement of registration, the statement which, by virtue of subsection (1) or (5) above, is to be contained in the instrument shall be in such form as may be prescribed by land registration rules.

(8) Where the registrar approves an application for registration of:

(a) a disposition of registered land, or

(b) a person's title under a disposition of unregistered land, and the instrument effecting the disposition contains a statement complying with subsections (5) and (7) above, he shall enter in the register a restriction reflecting the limitation under section 36 above on subsequent disposal".

(3) In that section, in subsection (9):

(a) for "the restriction to be withdrawn" there is substituted "the removal of the entry", and

(b) for "withdraw the restriction" there is substituted "remove the entry".

(4) In that section, in subsection (11), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(5) In section 39, in subsection (1), at the end there is inserted "by land registration rules".

(6) In that section, for subsections (1A) and (1B) there is substituted:

" (1A) Where any such mortgage will be one to which section 4(1)(g) of the Land Registration Act 2001 applies:

(a) the statement required by subsection (1) above shall be in such form as may be prescribed by land registration rules; and

(b) if the charity is not an exempt charity, the mortgage shall also contain a statement, in such form as may be prescribed by land registration rules, that the restrictions on disposition imposed by section 36 above apply to the land (subject to subsection (9) of that section).

(1B) Where:

(a) the registrar approves an application for registration of a person.s title to land in connection with such a mortgage as is mentioned in subsection (1A) above,

(b) the mortgage contains statements complying with subsections (1) and (1A) above, and

(c) the charity is not an exempt charity, the registrar shall enter in the register a restriction reflecting the limitation under section 36 above on subsequent disposal.

(1C) Section 37(9) above shall apply in relation to any restriction entered under subsection (1B) as it applies in relation to any restriction entered under section 37(8) ".

(7) In that section, in subsection (6), for the words from "and subsections" to the end there is substituted "and subsections (1) to (1B) above shall be construed as one with the Land Registration Act 2001".

Leasehold Reform, Housing and Urban Development Act 1993 (c. 28)

30. (1) The Leasehold Reform, Housing and Urban Development Act 1993 is amended as follows.

(2) In sections 34(10) and 57(11), for the words from "rules" to the end there is substituted "land registration rules under the Land Registration Act 2001".

(3) In section 97, in subsection (1):

(a) for "an overriding interest within the meaning of the Land Registration Act 1925" there is substituted "capable of falling within paragraph 2 of Schedule 1 or 3 to the Land Registration Act 2001", and

(b) for "or caution under the Land Registration Act 1925" there is substituted "under the Land Registration Act 2001".

(4) In that section, in subsection (2), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Law of Property (Miscellaneous Provisions) Act 1994 (c. 36)

31. (1) The Law of Property (Miscellaneous Provisions) Act 1994 is amended as follows:

(2) In section 6 (cases in which there is no liability under covenants implied by virtue of Part 1 of that Act), at the end there is inserted:

"(4) Moreover, where the disposition is of an interest the title to which is registered under the Land Registration Act 2001, that person is not liable under any of those covenants for anything (not falling within subsection (1) or (2)) which at the time of the disposition was entered in relation to that interest in the register of title under that Act".

(3) In section 17(3):

(a) in paragraph (c), for the words from "any" to the end there is substituted "the Adjudicator to Her Majesty's Land Registry", and

(b) for "section 144 of the Land Registration Act 1925" there is substituted "the Land Registration Act 2001".

Drug Trafficking Act 1994 (c. 37)

32. (1) The Drug Trafficking Act 1994 is amended as follows:

(2) In section 26(12), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) In section 28(1) and (4), for "Land Registration Act 1925" there is substituted .Land Registration Act 2001".

Landlord and Tenant (Covenants) Act 1995 (c. 30)

33. (1) The Landlord and Tenant (Covenants) Act 1995 is amended as follows:

(2) In sections 3(6) and 15(5)(b), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

(3) In section 20, in subsection (2), for the words from "rules" to the end there is substituted "land registration rules under the Land Registration Act 2001".

(4) In that section, in subsection (6):

(a) for "an overriding interest within the meaning of the Land Registration Act 1925" there is substituted "capable of falling within paragraph 2 of Schedule 1 or 3 to the Land Registration Act 2001", and

(b) for "or caution under the Land Registration Act 1925" there is substituted "under the Land Registration Act 2001".

Family Law Act 1996 (c. 27)

34. (1) The Family Law Act 1996 is amended as follows.

(2) In section 31(10):

(a) for "Land Registration Act 1925" there is substituted "Land Registration Act 2001", and

(b) for paragraph (b) there is substituted:

"(b) a spouse's matrimonial home rights are not to be capable of falling within paragraph 2 of Schedule 1 or 3 to that Act".

(3) In Schedule 4, in paragraph 4(6), for "section 144 of the Land Registration Act 1925" there is substituted "by land registration rules under the Land Registration Act 2001".

Housing Act 1996 (c. 52)

35. In section 13(5) of the Housing Act 1996, for the words from "if" to the end there is substituted "if the first disposal involves registration under the Land Registration Act 2001, the Chief Land Registrar shall enter in the register of title a restriction reflecting the limitation".

Education Act 1996 (c. 56)

36. In Schedule 7 to the Education Act 1996, in paragraph 11:

(a) in sub-paragraph (a), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001", and

(b) in sub-paragraphs (b) and (c), for "those Acts" there is substituted "that Act".

School Standards and Framework Act 1998 (c. 31)

37. In Schedule 22 to the School Standards and Framework Act 1998, in paragraph 9(1):

(a) in paragraph (a), for "Land Registration Acts 1925 to 1986" there is substituted "Land Registration Act 2001", and

(b) in paragraphs (b) and (c), for "those Acts" there is substituted "that Act".

Terrorism Act 2000 (c. 11)

38. In Schedule 4 to the Terrorism Act 2000, in paragraph 8(1), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

Finance Act 2000 (c. 17)

39. In section 128 of the Finance Act 2000:

(a) in subsection (2), for the words from "rule" to the end there is substituted "land registration rules under the Land Registration Act 2001", and

(b) in subsection (8)(a), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

International Criminal Court Act 2001 (c. 17)

40. In Schedule 6 to the International Criminal Court Act 2001, in paragraph 7(1), for "Land Registration Act 1925" there is substituted "Land Registration Act 2001".

SCHEDULE 12

Section 131.

TRANSITION

Existing entries in the register

1. Nothing in the repeals made by this Act affects the validity of any entry in the register.

2. (1) This Act applies to notices entered under the Land Registration Act 1925 (c. 21) as it applies to notices entered in pursuance of an application under section 34(2)(a).

(2) This Act applies to restrictions and inhibitions entered under the Land Registration Act 1925 as it applies to restrictions entered under this Act.

(3) Notwithstanding their repeal by this Act, sections 55 and 56 of the Land Registration Act 1925 shall continue to have effect so far as relating to cautions lodged under section 54 of that Act (cautions against dealings).

(4) Rules may make provision about cautions entered in the register under section 54 of the Land Registration Act 1925.

(5) In this paragraph, references to the Land Registration Act 1925 include a reference to any enactment replaced (directly or indirectly) by that Act.

3. An entry in the register which, immediately before the repeal of section 144(1)(xi) of the Land Registration Act 1925, operated by virtue of rule 239 of the Land Registration Rules (S.I. 1925/1093) as a caution under section 54 of that Act shall continue to operate as such a caution.

Existing cautions against first registration

4. (1) Notwithstanding the repeal of section 56(3) of the Land Registration Act 1925, that provision shall continue to have effect in relation to cautions lodged under section 53 of that Act (cautions against first registration).

(2) In this paragraph, the reference to the Land Registration Act 1925 includes a reference to any enactment replaced (directly or indirectly) by that Act.

Pending applications

5. Notwithstanding the repeal of the Land Registration Act 1925, that Act shall continue to have effect in relation to an application for the entry in the register of a notice, restriction, inhibition or caution against dealings which is pending immediately before the repeal of the provision under which the application is made.

6. Notwithstanding the repeal of section 53 of the Land Registration Act 1925, subsections (1) and (2) of that section shall continue to have effect in relation to an application to lodge a caution against first registration which is pending immediately before the repeal of those provisions.

Former overriding interests

7. For the period of three years beginning with the day on which Schedule 1 comes into force, it has effect with the insertion after paragraph 14 of:

"15. A right acquired under the Limitation Act 1980 before the coming into force of this Schedule".

8. Schedule 3 has effect with the insertion after paragraph 2 of:

"2A (1) An interest which, immediately before the coming into force of this Schedule, was an overriding interest under section 70(1)(g) of the Land Registration Act 1925 (c. 21) by virtue of a person's receipt of rents and profits, except for an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so.

(2) Sub-paragraph (1) does not apply to an interest if at any time since the coming into force of this Schedule it has been an interest which, had the Land Registration Act 1925 continued in force, would not have been an overriding interest under section 70(1)(g) of that Act by virtue of a person's receipt of rents and profits".

9. (1) This paragraph applies to an easement or profit a prendre which was an overriding interest in relation to a registered estate immediately before the coming into force of Schedule 3, but which would not fall within paragraph 3 of that Schedule if created after the coming into force of that Schedule.

(2) In relation to an interest to which this paragraph applies, Schedule 3 has effect as if the interest were not excluded from paragraph 3.

10. For the period of three years beginning with the day on which Schedule 3 comes into force, paragraph 3 of the Schedule has effect with the omission of the exception.

11. For the period of three years beginning with the day on which Schedule 3 comes into force, it has effect with the insertion after paragraph 14 of:

"15. A right under paragraph 18(1) of Schedule 12".

12. Paragraph 1 of each of Schedules 1 and 3 shall be taken to include an interest which immediately before the coming into force of the Schedule was an overriding interest under section 70(1)(k) of the Land Registration Act 1925.

13. Paragraph 6 of each of Schedules 1 and 3 shall be taken to include an interest which immediately before the coming into force of the Schedule was an overriding interest under section 70(1)(i) of the Land Registration Act 1925 and whose status as such was preserved by section 19(3) of the Local Land Charges Act 1975 (c. 76) (transitional provision in relation to change in definition of .local land charge.).

Cautions against first registration

14. (1) For the period of two years beginning with the day on which section 15 comes into force, it has effect with the following omissions:

(a) in subsection (1), the words "Subject to subsection (3), ", and

(b) subsection (3)

(2) Any caution lodged by virtue of sub-paragraph (1) which is in force immediately before the end of the period mentioned in that sub-paragraph shall cease to have effect at the end of that period, except in relation to applications for registration made before the end of that period.

(3) This paragraph does not apply to section 15 as applied by section 81.

15. (1) As applied by section 81, section 15 has effect for the period of ten years beginning with the day on which it comes into force, or such longer period as rules may provide, with the omission of subsection (3)(a)(i).

(2) Any caution lodged by virtue of sub-paragraph (1) which is in force immediately before the end of the period mentioned in that sub-paragraph shall cease to have effect at the end of that period, except in relation to applications for registration made before the end of that period.

16. This Act shall apply as if the definition of "caution against first registration" in section 129 included cautions lodged under section 53 of the Land Registration Act 1925 (c. 21).

Applications under section 34 or 43 by cautioners

17. Where a caution under section 54 of the Land Registration Act 1925 is lodged in respect of a person's estate, right, interest or claim, he may only make an application under section 34 or 43 above in respect of that estate, right, interest or claim if he also applies to the registrar for the withdrawal of the caution.

Adverse possession

18. (1) Where a registered estate in land is held in trust for a person by virtue of section 75(1) of the Land Registration Act 1925 immediately before the coming into force of section 96, he is entitled to be registered as the proprietor of the estate.

(2) A person has a defence to any action for the possession of land (in addition to any other defence he may have) if he is entitled under this paragraph to be registered as the proprietor of an estate in the land.

(3) Where in an action for possession of land a court determines that a person is entitled to a defence under this section, the court must order the registrar to register him as the proprietor of the estate in relation to which he is entitled under this paragraph to be registered.

(4) Entitlement under this paragraph shall be disregarded for the purposes of section 128(1).

(5) Rules may make transitional provision for cases where a rentcharge is held in trust under section 75(1) of the Land Registration Act 1925 immediately before the coming into force of section 96.

Indemnities

19. (1) Schedule 8 applies in relation to claims made before the commencement of this section which have not been settled by agreement or finally determined by that time (as well as to claims for indemnity made after the commencement of that Schedule).

(2) But paragraph 3(1) of that Schedule does not apply in relation to costs and expenses incurred in respect of proceedings, negotiations or other matters begun before 27 April 1997.

Implied indemnity covenants on transfers of pre-1996 leases

20. (1) On a disposition of a registered leasehold estate by way of transfer, the following covenants are implied in the instrument effecting the disposition, unless the contrary intention is expressed:

(a) in the case of a transfer of the whole of the land comprised in the registered lease, the covenant in sub-paragraph (2), and

(b) in the case of a transfer of part of the land comprised in the lease:

(i) the covenant in sub-paragraph (3), and

(ii) where the transferor continues to hold land under the lease, the covenant in sub-paragraph (4).

(2) The transferee covenants with the transferor that during the residue of the term granted by the registered lease the transferee and the persons deriving title under him will:

(a) pay the rent reserved by the lease,

(b) comply with the covenants and conditions contained in the lease, and

(c) keep the transferor and the persons deriving title under him indemnified against all actions, expenses and claims on account of any failure to comply with paragraphs (a) and (b).

(3) The transferee covenants with the transferor that during the residue of the term granted by the registered lease the transferee and the persons deriving title under him will:

(a) where the rent reserved by the lease is apportioned, pay the rent apportioned to the part transferred,

(b) comply with the covenants and conditions contained in the lease so far as affecting the part transferred, and

(c) keep the transferor and the persons deriving title under him indemnified against all actions, expenses and claims on account of any failure to comply with paragraphs (a) and (b).

(4) The transferor covenants with the transferee that during the residue of the term granted by the registered lease the transferor and the persons deriving title under him will:

(a) where the rent reserved by the lease is apportioned, pay the rent apportioned to the part retained,

(b) comply with the covenants and conditions contained in the lease so far as affecting the part retained, and

(c) keep the transferee and the persons deriving title under him indemnified against all actions, expenses and claims on account of any failure to comply with paragraphs (a) and (b).

(5) This paragraph does not apply to a lease which is a new tenancy for the purposes of section 1 of the Landlord and Tenant (Covenants) Act 1995 (c. 30).

Land Registration Bill
Schedule 13 - Repeals

SCHEDULE 13

Section 132.

REPEALS

Short title and chapter	Extent of repeal
The Settled Land Act 1925 c. 18.	Section 119(3).
The Law of Property Act 1925 c. 20.	In section 84(8), the words from ", but" to the end.
	In section 205(1)(xxii), the words from ", and" to the end.
The Land Registration Act 1925 c.2I.	The whole Act.
The Law of Property (Amendment) Act 1926 c. II.	Section 5.
The Land Registration Act 1936 c.26.	The whole Act.
The Requisitioned Land and War Works Act 1945 c. 43.	Section 37(3).
The Mental Health Act 1959 c. 72.	In Schedule 7, the entry relating to the Land Registration Act 1925.
The Charities Act 1960 c. 58.	In Schedule 6, the entry relating to the Land Registration Act 1925.
The Civil Evidence Act 1968 c. 64.	In the Schedule, the entry relating to the Land Registration Act 1925.
The Post Office Act 1969 c. 48.	In Schedule 4, paragraph 27.
The Law of Property Act 1969 c. 59.	Section 28(7).
The Land Registration and Land Charges Act 1971 c. 54.	The whole Act.
The Superannuation Act 1972 c. 11.	In Schedule 6, paragraph 16.
The Local Government Act 1972 c.70.	In Schedule 29, paragraph 26.
The Solicitors Act 1974 c. 47.	Section 75(b).
The Finance Act 1975 c. 7.	In Schedule 12, paragraph 5.
The Local Land Charges Act 1975 c. 76.	Section 19(3). In Schedule I, the entry relating to the Land Registration Act 1925.
The Endowments and Glebe Measure 1976 No.4.	In Schedule 5, paragraph 1.
The Administration of Justice Act 1977 c. 38.	Sections 24 and 26.
The Charging Orders Act 1979 c.53.	Section 3(3). Section 7 4 .
The Limitation Act 1980 c. 58.	In section 17, paragraph (b) and the preceding "and" .
The Highways Act 1980 c. 66.	Section 251(5).
The Matrimonial Homes and Property Act 1981 c. 24.	Section 4.
The Administration of Justice Act 1982 c. 53.	Sections 66 and 67 and Schedule 5.
The Mental Health Act 1983 c. 20.	In Schedule 4, paragraph 6.
The Capital Transfer Tax Act 1984 c. 51.	In Schedule 8, paragraph 1.
The Administration of Justice Act 1985 c. 61.	In section 34, in subsection (I), paragraph (b) and the preceding "and" and, in subsection (2), paragraph (b). In Schedule 2, paragraph 37(b).
The Insolvency Act 1985 c. 65.	In Schedule 8, paragraph 5.
The Housing Act 1985 c. 68.	Section 36(3). Section 154(1), (6) and (7). Section 156 3 . Section 1685 . In Schedule 9A, paragraphs 2(1), 3 and 5(3).
The Land Registration Act 1986 c.26.	Sections 1 to 4.
The Insolvency Act 1986 c. 45.	In Schedule 14, the entry relating to the Land Registration Act 1925.
The Building Societies Act 1986 c.53.	In Schedule 2A, in paragraph I, sub-paragraph (4) and, in sub-paragraph (5), the definition of "registered land" and the preceding "and". In Scnedule 18, paragraph 2. In Schedule 21, paragraph 9(b).
The Patronage (Benefices) Measure 1986 No.3.	Section 6.
The Landlord and Tenant Act 1987 c. 31.	Section 28(6). In Schedule 4, paragraphs 1 and 2.
The Diplomatic and Consular Premises Act 1987 c. 46.	In Schedule I, in paragraph I, the words from "and expressions" to the end.
The Land Registration Act 1988 c.3.	The whole Act.
The Criminal Justice Act 1988 c. 33.	Section 77(13). In Schedule IS, paragraphs 6 and 7.
The Housing Act 1988 c. 50.	In Schedule 11, paragraph 2(3).
The Finance Act 1989 c. 26.	Sections 178(2)(e) and 179(1)(a)(iv).
The Courts and Legal Services Act 1990 c. 41.	In Schedule 10, paragraph 3. In Schedule 17, paragraph 2.
The Access to Neighbouring Land Act 1992 c. 23.	Section 5(2) and (3).
The Leasehold Reform, Housing and Urban Development Act 1993 c. 28.	Section 97(3). In Schedule 21, paragraph I.
The Coal Industry Act 1994 c. 21.	In Schedule 9, paragraph 1.
The Law of Property (Miscellaneous Provisions) Act 1994 c. 36.	In Schedule I, paragraph 2.
The Drug Trafficking Act 1994 c.37.	Section 26(13). In Schedule I, paragraph 1.
The Family Law Act 1996 c. 27.	Section 31(11). In Schedule 8, paragraph 45.
The Trusts of Land and Appointment of Trustees Act 1996 c. 47.	In Schedule 3, paragraph 5.
The Housing Act 1996 c. 52.	Section 11(4).
The Housing Grants, Construction and Regeneration Act 1996 c. 53.	Section 138(3).
The Land Registration Act 1997 c.2.	Sections 1 to 3 and 5(4) and (5). In Schedule I, paragraphs 1 to 6.
The Greater London Authority Act 1999 c. 29.	Section 219.
The Terrorism Act 2000 c. II.	In Schedule 4, paragraph 8(2) and (3).
The Trustee Act 2000 c. 29.	In Schedule 2, paragraph 26.
The International Criminal Court Act 2001 c. 17.	In Schedule 6, paragraph 7(2).

EXPLANATORY NOTES ON DRAFT LAND REGISTRATION BILL

PART 1:

PRELIMINARY

1. Part 1 of the Bill is concerned with two preliminary matters, namely the register of title and the scope of title registration.

CLAUSE 1 - REGISTER OF TITLE

2. This clause provides for the continuation of the register of title. This replicates section 1(1) of the Land Registration Act 1925. There is a power to make rules about how the register is to be kept. This replicates the power in section 144(1)(i) of the Land Registration Act 1925.

CLAUSE 2 - SCOPE OF TITLE REGISTRATION

3. This provision is descriptive and it explains in relation to which matters the Bill makes provision for registration of title. Clause 2(a) is concerned with the unregistered estates which are capable of being registered. These are dealt with in Part 2, Chapter 1 of the Bill. Clause 2(b) is concerned with those legal interests created by a disposition of land the title to which is registered. These are addressed in Part 3 of the Bill.

PART 2: FIRST REGISTRATION OF TITLE

Chapter 1: First registration

4. Chapter 1 of Part 2 of the Bill is concerned with the circumstances in which an unregistered estate may or must be registered.

Voluntary registration

CLAUSE 3 - WHEN TITLE MAY BE REGISTERED

5. Clause 3 makes provision for the voluntary first registration of title and sets out which unregistered legal estates may be registered with their own titles.

Subsection (1)

6. Subsection (1) specifies the unregistered legal estates that may be registered with their own titles under subsection (2).

7. The first legal estate that may be registered with its own title, is a legal estate in land. As now, it will therefore be possible to register—

(i) A fee simple absolute in possession.

(ii) A term of years absolute. However, the right to apply for first registration in respect of a term of years absolute is subject to certain important exceptions: see Clauses 3(3)-(5), 90(1); below, paragraphs 14-19, 394, respectively.

8. The second legal estate that may be registered is a rentcharge. A rentcharge will be legal if it is perpetual or granted for a term of years: Law of Property Act 1925, section 1(2)(b). Subject to certain exceptions, the Rentcharges Act 1977 prevents the creation of new rentcharges after 21 August 1977, and provides for the abolition of most existing rentcharges in 2037. Of the exceptions exempted from the effect of the Act, the most important are "estate rentcharges", created to enable the enforcement of positive covenants and to secure the payment of service charges.

9. The third legal estate that may be registered with its own title is a franchise. A franchise is a royal privilege or branch of the Crown's prerogative, subsisting in the hands of a subject, either by royal grant or prescription. It is an incorporeal hereditament. Examples of franchises still encountered today include those to hold a market or fair, or to take tolls. At present a franchise cannot be registered with its own title. Instead, it has to be protected by means of a notice or caution. However, this is only possible where the encumbered land is itself registered. In view of the potential value of franchises, the Bill enables them to be registered with their own titles.

10. The fourth legal estate that may be registered is a profit à prendre in gross. A profit à prendre is also an incorporeal hereditament. A profit exists in gross where it has an independent existence and does not exist for the benefit of another piece of land. Examples of profits that can exist in gross include profits of pasture, piscary (fishing) and of hunting and shooting game. At present, a profit in gross cannot be registered with its own title, but can only be protected on the register by an appropriate entry against the title of the land burdened if that land is registered. Profits are often sold and leased and they can be very valuable. The Bill therefore makes provision for them to be registered with their own titles.

Subsection (2)

11. Subsection (2) provides that a person may apply to the registrar to be registered as first registered proprietor of a legal estate in two situations.

12. The first is where the legal estate is vested in him or her. The second is where he or she is entitled to have the legal estate vested in him or her. An example would be where the applicant was absolutely entitled as the sole beneficiary under a trust of land. However, Clause 3(6) provides that a person may not apply to be registered if he or she is a person who has contracted to buy land. This is because the contract will be completed by a conveyance, and that conveyance will be subject to the requirements of compulsory registration under Clause 4. As now, the fees payable on voluntary first registration are likely to be lower than they are on compulsory first registration.

13. First registration involves an application to the registrar. For the general right to object to an application to the registrar and the manner in which such an objection will be disposed of, see Clause 73.

Subsection (3)

14. Subsection (3) forms an important exception to the right to apply for first registration of a lease. Subject to subsection (4), an application in respect of a leasehold estate may only be made if the estate was granted for a term of which more than 7 years remain unexpired. This provision changes significantly the present law. At present only leases with more than 21 years to run may be registered voluntarily: Land Registration Act 1925, section 8(1). The change is in furtherance of the objective that the title to all land in England and Wales should be registered.

15. It should be noted that subsection (3) will apply to all leasehold estates. It will therefore apply to the lease of a rentcharge, franchise or profit, as well as to a leasehold estate in land.

16. It sometimes happens that a person holds under one lease but has been granted another lease to take effect on or shortly after the first. Subsection (7) provides that where the reversionary lease is to take effect in possession on, or within one month of, the end of the lease in possession, the terms may be added together. If, taken together, the terms exceed seven years, the lease will be registrable.

17. The Bill confers a power on the Lord Chancellor by order to reduce the length of leases that are capable of being registered: see Clause 116(1) and paragraph 519 below. Before making such an order, the Lord Chancellor must consult such persons as he considers appropriate: see Clause 116(3). It is anticipated that when electronic conveyancing is fully operative, the length of leases that are registrable is likely to be reduced to those granted for a term of which more than three years remain unexpired.

Subsection (4)

18. The effect of subsection (4) is that even where a lease has 7 years or less to run, it may nevertheless be registered if the right to possession is discontinuous. This provision is new. Discontinuous leases are not very common, but they are sometimes used for time-share arrangements under which (for example) the tenant is entitled to occupy premises for a specified number of weeks every year for a certain number of years. Cf Cottage Holiday Associates Ltd v Customs and Excise Commissioners [1983] QB 735.

Subsection (5)

19. Subsection (5) provides where there is a subsisting right of redemption, a mortgage term created by demise or sub-demise is never registrable. Subsection (5) replicates the present law except that it applies not only to legal estates in land, but also to rentcharges, franchises, and profits à prendre in gross: see Land Registration Act 1925, section 8(1).

Compulsory registration

CLAUSE 4 - WHEN TITLE MUST BE REGISTERED

20. Subsection (1) specifies the events that trigger the requirement of compulsory registration under the Bill. They are as follows.

21. First, compulsory registration is triggered by certain types of transfer of a qualifying estate. The term "qualifying estate" is defined as either a legal freehold estate in land or a legal lease which has more than 7 years to run: see Clause 4(2). The requirement of compulsory registration will apply to the transfer of a qualifying estate made-

(i) For valuable or other consideration. An estate is to be regarded as being transferred for valuable or other consideration even if it has a negative value: see Clause 4(6).

(ii) By way of gift. The Bill provides the following guidance as to what constitutes a gift. First, a transfer by way of gift includes a transfer for the purpose of constituting a trust under which the settlor does not retain the whole of the beneficial interest: Clause 4(7)(a). Thus if S transfers an unregistered estate in land to TI and T2, to hold on trust of land for S and U in equal shares, that transfer will trigger compulsory registration. However, a transfer by S to T1 and T2 to hold on trust for her as nominee will not trigger compulsory registration. Secondly, a transfer by way of gift includes a transfer for the purpose of uniting the legal title and the beneficial interest in property held under a trust under which the settlor did not, on constitution, retain the whole of the beneficial interest: see Clause 4(7)(b). Thus, if T1 and T2 hold an unregistered estate in land on trust for A for life, thereafter to B absolutely, and A dies, so that the trustees hold the land on trust for B absolutely, a transfer of that land by T1 and T2 to B will trigger compulsory registration. However, where T1 and T2 hold on trust for the settlor absolutely, and the land is transferred either to him or to the person entitled to the interest (as for example, under the settlor's will or intestacy), this will not trigger compulsory registration.

(iii) In pursuance of an order of any court.

(iv) By means of an assent (including a vesting assent). Clause 4(9) makes it clear that "vesting assent" has the same meaning as in the Settled Land Act 1925. For the definition of "vesting assent" in that Act, see section 117(1)(xxxi).

22. A transfer for these purposes does not include a transfer by operation of law: see Clause 4(3). Thus, for example, it would not include the situation where a deceased's property vests in his or her personal representatives. Moreover, the following transfers will not be subject to the requirement of compulsory registration, even if they otherwise would be-

(i) the assignment of a mortgage term (in other words where there is a mortgage by demise or by sub-demise, and the mortgagee assigns the mortgage by transferring the mortgage term): see Clause 4(4)(a); and

(ii) the assignment or surrender of a lease to the owner of the immediate reversion where the term is to merge in that reversion (because the estate transferred disappears): see Clause 4(4)(b).

23. Secondly, the requirement of compulsory registration will apply where there is a transfer of an unregistered legal estate in land in circumstances where section 171A of the Housing Act 1985 applies. Section 171A applies where a person ceases to be a secure tenant because his or her landlord disposes of an interest in a house to a private sector landlord. This replicates the present law: see Housing Act 1985, Schedule 9A, paragraph 2(1).

24. Thirdly, the grant of a legal lease out of a qualifying estate will in some circumstances be subject to compulsory registration. The term "qualifying estate" refers to an unregistered legal estate which is either a legal freehold estate in land or a leasehold estate in land which has more than 7 years to run: see Clause 4(2). The grant out of a qualifying estate of a legal lease for a term of more than seven years from the date of grant will be subject to compulsory registration if it is made-

(i) For valuable or other consideration. If the estate transferred has a negative value it is still to be regarded as transferred for valuable or other consideration: see Clause 4(6).

(ii) By way of a gift. For these purposes, the same considerations apply as in relation to when a transfer will be regarded as a gift: see above, paragraph 21(ii). (iii) In pursuance of an order of any court.

25. There are two exceptions to this provision. A lease will not be subject to compulsory registration if it is the grant of a mortgage term (that is, where there is a mortgage by demise or sub-demise) or if it is a PPP lease: see Clauses 4(5) and 90(2), respectively. For PPP leases, see below, paragraphs 393 and following.

26. Fourthly, compulsory registration will apply where a lease is granted out of a qualifying estate to take effect in possession after a period of more than three months beginning with the date of the grant. Once again, a "qualifying estate" is an unregistered legal estate which is either a legal freehold estate in land or a leasehold estate in land which has more than 7 years to run: see Clause 4(2). This provision is new and is designed to avoid the conveyancing trap that such reversionary leases may create under the present law. At present, a lease granted for a term of 21 years or less, which has not yet taken effect in possession, cannot be registered with its own title nor protected by the entry of a notice on the title of the reversion: see Land Registration Act 1925, sections 19(2), 22(2) and 48(1). Such leases take effect as overriding interests under section 70(1)(k) of the Land Registration Act 1925. A buyer of the land affected may not be able to discover the existence of the lease because the tenant will not be in possession. The Bill remedies this difficulty by requiring such leases to be registered.

27. Fifthly, compulsory registration applies to the grant of a lease out of an unregistered legal estate under the right to buy provisions of Part 5 of the Housing Act 1985. This provision replicates the present law: see Housing Act 1985, section 154(1).

28. Sixthly, compulsory registration will apply to the grant of a lease out of an unregistered legal estate in land in circumstances where section 171A of the Housing Act 1985 applies. Again, this replicates the effect of the present law: Housing Act 1985, Schedule 9A, paragraph 2(1).

29. Seventhly, the creation of a protected first legal mortgage out of a qualifying estate is subject to compulsory registration. The term "qualifying estate" again refers to an unregistered legal estate which is either a legal freehold estate in land or a leasehold estate in land which has more than 7 years to run: see Clause 4(2). A mortgage is protected, if it takes effect on its creation as a mortgage to be protected by the deposit of documents relating to the mortgaged estate: Clause 4(8)(a). A first legal mortgage is one which, on its creation, ranks in priority ahead of other mortgages affecting the mortgaged estate: Clause 4(8)(b).

CLAUSE 5 - POWER TO EXTEND SECTION 4

Subsection (1)

30. Subsection (1) enables the Lord Chancellor, by order, to add new events to those that trigger compulsory registration. He may also make such consequential amendments of any legislation as he thinks appropriate. This power is exercisable by statutory instrument to be laid before Parliament: see Clause 125(2), (3). A similar power may be found in the existing legislation: see Land Registration Act 1925, section 123(4), (5).

Subsection (2)

31. If an event is to be added to the list of those that trigger compulsory registration, it must relate to an unregistered legal estate which is of a kind specified in subsection (2). It may be noted that these correspond to the legal estates that are capable of registration with their own titles under Clause 3(1).

Subsection (3)

32. Subsection (3) expressly provides that the power conferred by subsection (1) may not be exercised to require the compulsory registration of an estate granted to a mortgagee. This is because no benefit would be derived from requiring a charge over land to be registered, if the title to the estate affected remained unregistered.

Subsection (4)

33. Subsection (4) provides that the Lord Chancellor may only exercise the power to add to the list of events that trigger compulsory registration following consultation of such persons as he considers appropriate.

CLAUSE 6 - DUTY TO APPLY FOR REGISTRATION OF TITLE

Subsections (1), (2) and (3)

34. Subsection (1) imposes a duty on the responsible estate owner to apply for registration of a registrable estate within the period of registration if the registration requirement applies.

35. Subsection (2) makes further provision in relation to the situation where compulsory registration is triggered by the creation of a protected legal mortgage under Clause 4(1)(g). Where compulsory registration is triggered by the creation of a protected legal mortgage, the mortgagor must apply for the registration of the estate charged by the mortgage. As now, there is a power by rules to make provision to enable the mortgagee to require the registration of the estate charged by the mortgage to be registered, whether or not the mortgagor consents: see Clause 6(6). Such rules will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125(3).

36. Subsection (3) makes further provision where compulsory registration is triggered by any event other than the creation of a protected legal mortgage under Clause 4(1)(g). In such cases, it is the transferee or grantee who must apply for registration of the estate transferred or granted.

Subsections (4) and (5)

37. Subsection (4) provides that where compulsory registration applies, the period for registration is 2 months beginning with the date on which the relevant event occurs. For the effect of non-compliance, see Clause 7.

38. Subsection (5) enables the registrar, on application by an interested person, to specify a longer period for registration if he is satisfied that there is a good reason for doing so. It should be noted that the registrar may extend the period for registration whether or not the initial period has elapsed. This is apparent from Clause 7(3).

CLAUSE 7 - EFFECT OF NON-COMPLIANCE WITH SECTION 6

Subsections (1) and (2)

39. Subsection (1) provides that where the requirement of registration is not met, the disposition becomes void as regards the transfer, grant or creation of a legal estate.

40. Subsection (2) explains the effect of an event becoming void under subsection (1). (i) Where the event is a transfer, the effect of the transfer becoming void is that the transferor holds the legal estate on a bare trust for the transferee. (ii) Where the event is the grant of a lease or the creation of a protected mortgage, the effect of the grant or creation becoming void is that it takes effect instead as a contract made for valuable consideration to grant or create the estate or mortgage concerned.

Subsection (3)

41. Subsection (3) makes provision for the situation where a transfer, the grant of a lease or the creation of a mortgage has become void and the registrar then makes an order extending the period in which an application for registration can be made under Clause 6(5). In such situations, the disposition is treated as never having become void.

Subsection (4)

42. Subsection (4) makes it clear that where there is a transfer of a fee simple, the possibility of reverter to which Clause 7(1) gives rise is disregarded for the purposes of determining whether a fee simple is a fee simple absolute. This provision avoids the possibility that Clause 7(1) might have the unintended effect of converting an unregistered fee simple into a determinable fee, which is not a fee simple absolute and so not a legal estate: see Law of Property Act 1925, section 1.

CLAUSE 8 - LIABILITY FOR MAKING GOOD VOID TRANSFERS &C.

43. Where a disposition has become void because a person has failed to meet the registration requirements, it may be necessary to repeat the disposition. Clause 8 therefore provides that where a disposition has to be repeated-

(i) the transferee, grantee or mortgagor is liable to the transferor, grantor or mortgagee for all proper costs of and incidental to the repeated disposition; and

(ii) he or she is liable to indemnify the transferor, grantor or mortgagee in respect of any other liability reasonably incurred by him or her because of the failure to comply with the requirement of registration.

Classes of title

CLAUSE 9 - TITLES TO FREEHOLD ESTATES

Subsection (1)

44. Subsection (1) sets out the classes of freehold title with which an applicant may be registered on first registration. The classes of freehold title which are available under the Bill are the same as those that are available under the Land Registration Act 1925.

45. For the effect of registration with the different classes of freehold title, see Clause 11. For the circumstances in which a title may or must be upgraded, see Clause 62.

Subsections (2) and (3)

46. Subsection (2) provides that a person may be registered with absolute title if the registrar considers that his or her title is such as a willing buyer could properly be advised by a competent professional legal adviser to accept. Even if the title is defective in some way, subsection (3) provides that the registrar may still register it as absolute if he considers that the defect will not cause the holding under the title to be disturbed. In practice, almost all freehold titles are absolute.

Subsection (4)

47. Subsection (4) provides that a person may be registered with qualified title, if the registrar considers that the person's title to the estate has been established only for a limited period or subject to certain reservations that are such that the title is not a good holding title. A qualified title might, for example, be appropriate where the transfer to the applicant had been in breach of trust. Qualified title is extremely rare in practice.

Subsection (5)

48. Subsection (5) provides that a person may be registered with possessory title where he or she is in actual possession of the land, or in receipt of the rents and profits, and there is no other class of title with which he or she may be registered.

49. In practice the circumstances in which the registrar is most likely to enter a title as possessory are where-

(i) the applicant has been in adverse possession of land for 12 years; or

(ii) the applicant is unable to prove his or her title because (for example) the documents of title have been lost or destroyed.

CLAUSE 10 - TITLES TO LEASEHOLD ESTATES

Subsection (1)

50. Subsection (1) sets out the classes of leasehold title with which an applicant may be registered on first registration. The classes of leasehold title which are available under the Bill are the same as those that are available under the Land Registration Act 1925.

51. For the effect of registration with the different classes of leasehold title, see Clause 12. For the circumstances in which a title may or must be upgraded, see Clause 62.

Subsection (2)

52. Subsection (2) provides that a person may be registered with absolute title if the registrar considers that his or her title is such as a willing buyer could properly be advised by a competent professional adviser to accept and he approves the lessor's title to grant the lease. A leasehold estate will only be registered with an absolute title therefore where the superior title is either registered with absolute title or, if unregistered, has been deduced to the registrar's satisfaction. Even if the applicant's title is defective, subsection (4) provides that the registrar may register it as absolute if he considers that the defect will not cause the holding under it to be disturbed.

Subsection (3)

53. Subsection (3) provides that a person may be registered with good leasehold title if the registrar considers that his or her title is such as a willing buyer could properly be advised by a competent adviser to accept. Good leasehold title is therefore appropriate where the superior title is neither registered nor deduced. Again, the registrar may register the applicant's title as good leasehold even if it is open to objection, provided that he considers that the defect will not cause the holding under it to be challenged: see Clause 10(4).

Subsection (5)

54. Subsection (5) provides that a person may be registered with qualified title, if the registrar considers that either the applicant's title or the lessor's title to the reversion can only be established for a limited period, or subject to certain reservations that are such that the title is not a good holding title. Cf above, paragraph 47.

Subsection (6)

55. Subsection (6) provides that a person may be registered with possessory title if the registrar considers that he or she is in actual possession, or in receipt of rents and profits of the land and there is no other class of title with which he or she may be registered. Cf above, paragraphs 48 and 49.

Effect of first registration

CLAUSE 11 - FREEHOLD ESTATES

56. Clause 11 makes provision for the effect of first registration of a person as the proprietor of a freehold estate. For the circumstances in which a person will be registered with the different classes of freehold title, see Clause 9; above, paragraphs 44 and following.

Subsections (2), (3), (4) and (5)

57. Subsections (2), (3), (4) and (5) prescribe the effect of registration of a freehold with absolute title.

58. Where a person is first registered as proprietor of a freehold estate, subsection (3) provides that the legal estate is vested in him or her together with all interests subsisting for the benefit of the estate. The legal estate will therefore vest in the first registered proprietor together with such interests as (for example) the benefit of any easement and profit à prendre that is appurtenant to the estate.

59. Subsection (4) provides that on first registration with absolute title, the estate is vested in the proprietor subject only to the following interests affecting the estate at the time of registration-

(i) Interests which are the subject of an entry in the register in relation to the estate. As this provision only applies to first registration under the Bill (as opposed to the Land Registration Act 1925), the interests which may be subject to an entry in the register will be registered charges, notices and restrictions.

(ii) Unregistered interests which fall within any of the paragraphs of Schedule 1 (that is, those that override first registration).

(iii) Interests acquired under the Limitation Act 1980 of which the proprietor has notice. This provision is new and is designed to meet the following situation. A takes adverse possession of unregistered land belonging to B. After 12 years' adverse possession, B's title is extinguished and A becomes owner of the land. A then abandons the land and B resumes possession of it. Before B has been back in possession of the land for 12 years he sells it to C. B sells as paper owner in accordance with the title deeds, but A is in fact the true owner. The sale triggers compulsory registration and C applies to be first registered proprietor. Subject to the transitional provisions contained in Schedule 12, paragraph 7, the rights of a squatter will not constitute an overriding interest under the Bill as they presently do. By virtue of Clause 11(4)(c), C will take free of A's rights unless, at the time of registration, he had notice of them. It should be noted that if C is registered as proprietor even though he has notice of A's rights, A will be able to seek alteration of the register. C is bound by her rights and so alteration of the register will not involve rectification. As the register is inaccurate it may be altered to give effect to her rights by registering her as proprietor in place of C: see Schedule 4, paragraphs 2 and 5.

60. Subsection (5) deals with the situation where the first registered proprietor is not entitled to the estate solely for his or her own benefit. The effect of subsection (5) is that where the first registered proprietor holds the land on trust, the estate will be vested in him or her subject to the rights of the beneficiaries under that trust. Subsection (6)

61. Subsection (6) prescribes the effect of first registration with a qualified freehold title.

Subsection (7)

62. Subsection (7) governs the effect of first registration with a possessory freehold title.

CLAUSE 12 - LEASEHOLD ESTATES

63. Clause 12 makes provision for the effect of first registration of a person as the proprietor of a leasehold estate. For the circumstances in which a person will be registered with the different classes of leasehold title, see Clause 10, above, paragraphs 50 and following.

Subsections (2), (3), (4) and (5)

64. Subsections (2), (3), (4) and (5) prescribe the effect of registration of a lease with absolute title.

65. In most respects, the registration of a leaseholder with absolute title has the same effect as registration of a freeholder with absolute title: see above, paragraphs 57 and following. The only difference is that where a leasehold estate is registered with absolute title, it is vested in the leaseholder subject to implied and express covenants, obligations and liabilities incident to the estate: see Clause 12(4)(a). Thus the first registered proprietor of a lease will take subject to such proprietary interests as restrictive covenants relating to the premises leased.

Subsections (6), (7) and (8)

66. Subsections (6), (7) and (8) prescribe the effect of the registration of a lease with good leasehold title, qualified title and possessory title respectively.

Dependent estates

CLAUSE 13 - APPURTENANT RIGHTS AND CHARGES

67. Clause 13 empowers the Lord Chancellor to make rules in relation to the registration of dependent legal estates.

68. First, rules may make provision for the entry in the register of a registered proprietor as the proprietor of an unregistered legal estate which subsists for the benefit of his or her registered estate. For the definition of a legal estate, see section 1 of the Law of Property Act 1925. Rules made under this provision are meant to cover the situation where, on or subsequent to first registration, a registered proprietor has, or is granted, the benefit of a legal estate, such as an easement or a profit à prendre, over unregistered land. Rules will enable the benefit of such an estate to be entered on the register.

69. Secondly, rules may make provision for the registration of a person as the proprietor of an unregistered legal estate which is a charge on a registered estate. Rules under this provision are intended to cover the situation where-

(i) on first registration, the land is already subject to a legal mortgage; or

(ii) subsequent to first registration, a charge is created that does not have to be registered to have effect at law, as in relation to certain local land charges (cf Clause 55 below). In such circumstances, rules may enable the registration of the mortgagee as the proprietor of a registered charge.

Supplementary

CLAUSE 14 - RULES ABOUT FIRST REGISTRATION

70. Clause 14 confers a power to make rules in relation to various matters concerning first registration. Rules made under this provision will be land registration rules and will be laid before Parliament only: see Clauses 129(1) and 125(3).

CHAPTER 2: CAUTIONS AGAINST FIRST REGISTRATION

71. Chapter 2 of Part 2 of the Bill is concerned with cautions against first registration. Cautions against first registration provide a means by which a person with an interest in unregistered land can be informed of an application for first registration of the title to an estate in that land. Under the present law, as it has been interpreted by the registrar, any person having or claiming to have an interest in unregistered land may apply to lodge a caution with the registrar: cf Land Registration Act 1925, section 53(1). Once a caution against first registration has been entered, no registration of the estate affected will be made until notice has been served on the cautioner and he or she has had an opportunity to appear before the registrar and oppose the application for first registration. Under the Bill it will continue to be possible to lodge cautions against first registration, though the circumstances in which this may be done will be both clarified and simplified. The Bill makes certain amendments as to the interests in respect of which a caution may be lodged. It also creates a register of cautions to replace the present system of caution titles that are used to record details about cautions. Cautions against first registration should be distinguished from cautions against dealings, which are a means of protecting interests in registered land under the Land Registration Act 1925. Cautions against dealings are prospectively abolished under the Bill: see below, paragraph 161.

CLAUSE 15 - RIGHT TO LODGE

Subsections (1) and (2)

72. Subsection (1) sets out who may lodge a caution against first registration. The effect of lodging a caution against first registration is explained in Clause 16.

73. Subject to the significant qualification set out in subsection (3), the following persons have a right to lodge a caution against first registration-

(i) A person who claims to be the owner of a qualifying estate.

(ii) A person entitled to an interest affecting a qualifying estate. For these purposes, an interest is defined as an adverse right affecting the title to the estate or charge: see Clause 129(3)(b).

74. "Qualifying estate" is defined in subsection (2) as a legal estate which relates to land to which the caution relates and which is an interest of any of the following kinds-

(i) An estate in land, which means a fee simple absolute in possession or a term of years absolute: see Law of Property Act 1925, section 1(1).

(ii) A rentcharge.

(iii) A franchise.

(iv) A profit à prendre in gross.

75. It should be noted that the Bill makes special provision in relation to cautions against the first registration of the Crown's demesne land: see Clause 81 and Schedule 12, paragraph 15.

Subsection (3)

76. Subsection (3) sets out certain exceptions to the right to lodge a caution against first registration. The effect of subsection (3) is that a caution against first registration may not be lodged by either-

(i) the owner of a freehold estate in land, in respect of that estate;

(ii) the owner of a leasehold estate in land where it was granted for a term of which more than seven years remain unexpired, in respect of that estate. As regards (ii), the owner of such a leasehold estate cannot lodge a caution against its first registration, either as the owner of a qualifying estate under Clause 15(1)(a), or by virtue of his or her interest affecting a qualifying estate under Clause 15(1)(b).

77. These restrictions are new. However, the Bill provides that they will not take effect for the period of two years beginning with the day on which Clause 15 is brought into force: see Schedule 12, paragraph 14(1).

78. The reason behind subsection (3) is that cautions against first registration should not be an alternative to first registration. Where a legal estate is registrable, the owner of it should apply for first registration rather than for a caution against first registration. This is part of the ultimate aim to achieve total registration.

Subsection (4)

79. Subsection (4) provides that the right to lodge a caution against first registration is exercisable by application to the registrar. For the general power to make rules concerning the form, content and making of applications under the Bill, see Schedule 10, paragraph 6.

80. There is a general right for anyone to object to an application under the Bill: see Clause 73. Where such an objection cannot be disposed of by agreement and is not groundless, the registrar must refer the matter to the Adjudicator: Clause 73(6) and (7). The general right to object is additional to the right contained in Clause 18, which makes specific provision for certain categories of person to apply for cancellation of a caution against first registration.

CLAUSE 16 - EFFECT

81. Clause 16 sets out the effect of lodging a caution against first registration.

Subsections (1) and (2)

82. Subsection (1) provides that where a person has lodged a caution against first registration in relation to a legal estate, the registrar must give the cautioner notice of any application for first registration and of his or her right to object. For these purposes, "cautioner" includes not only the person who lodged the caution, but also his or her personal representative: see Clause 22.

83. Subsection (2) provides that where there has been an application for first registration of an estate, the registrar may not determine that application until the end of such period as rules may provide, unless the cautioner has either-

(i) exercised his or her right to object to the application; or

(ii) given the registrar notice that he or she does not intend to object.

84. Rules under subsection (2) will be land registration rules and will be required to be laid before Parliament only: see Clauses 125 and 129(1).

Subsection (3)

85. Subsection (3) makes it clear that (as now) the lodging of a caution against first registration has no effect on the validity or priority of any interest that the cautioner may have in the legal estate to which the caution relates. A caution against first registration has the limited effect of giving the cautioner a right to be notified of an application for registration so that he or she can object to it. Such notification will give the cautioner the opportunity to take appropriate steps to protect his or her interest.

Subsection (4)

86. Subsection (4) makes provision by which an agent acting for the applicant for first registration may give notice to the cautioner and for this notice to be regarded as having been given by the registrar. To take advantage of this provision, notice must be given by a person who is of such a description as rules may provide and the notice must be given in such circumstances as rules may provide. Such rules will be land registration rules and will be required to be laid before Parliament only: see Clauses 125 and 129(1).

87. Rules made under subsection (4) are likely to enable persons such as solicitors or licensed conveyancers who are acting for the applicant for first registration to give notice to the cautioner at the time at which the application is made. This should expedite the conveyancing process because it will no longer be necessary to wait for the registrar to give notice to the cautioner.

CLAUSE 17 - WITHDRAWAL

88. This clause enables a cautioner to withdraw a caution against first registration by application to the registrar. By virtue of Clause 22 not only the person who lodged the caution, but also his or her personal representative will be able to apply for it to be withdrawn.

CLAUSE 18 - CANCELLATION

Subsection (1)

89. Subsection (1) gives the owner of a legal estate to which a caution relates and persons of such other description as rules may provide, the right to apply for the cancellation of a caution against first registration. Rules under subsection (1) are likely to enable certain additional categories of persons with an interest in the estate affected, such as mortgagors or receivers, to apply for the cancellation of a caution.

Subsection (2)

90. Subsection (2) provides that, subject to rules, no application may be made to cancel a caution against first registration by the owner of a legal estate who-

(i) consented in such manner as rules may provide to the lodging of the caution; or

(ii) derived title by operation of law from a person who consented to the lodging of a caution (such as his or her trustee in bankruptcy or personal representative).

91. Even where the caution has been lodged with consent, there may be circumstances where it would be appropriate for the owner to seek its cancellation. The sort of case for which rules might make provision would be where the interest protected by the caution has been terminated. For example, the owner of unregistered land might grant an option to purchase her land, valid for 5 years. If she agreed that the grantee might lodge a caution against first registration in respect of that option, she would still be able to seek the cancellation of that caution after 5 years if the option had not been exercised in that time.

Subsections (3) and (4)

92. Subsection (3) provides that where an application is made to cancel a caution against first registration, the cautioner must be given notice of the application and of the effect of subsection (4).

93. Subsection (4) provides that if the cautioner does not exercise his or her right to object to the application before the end of such period as rules may provide, the registrar must cancel the caution. The right to object to an application for cancellation arises by virtue of Clause 73. Clause 73(2) provides that only the person who lodged the caution to which the application relates, or his or her personal representative, may object to an application for its cancellation.

94. If the cautioner does object to the application, the matter must be referred to the Adjudicator for determination, unless it can be disposed of by agreement or the registrar is satisfied that the objection is groundless: see Clause 73(6) and (7).

CLAUSE 19 - CAUTIONS REGISTER

Subsection (1)

95. Subsection (1) imposes a duty on the registrar to keep a register of cautions against first registration. The formal establishment of a cautions register is new. However, cautions against first registration will continue to be recorded on the index as they are now: see Clause 68. At present, details of cautions against first registration are kept in paper form on a "caution title". This records certain essential information relating to the caution, such as the name and the address for service of the cautioner, details of the solicitor or licensed conveyancer who lodged the caution, and the estate against which the caution has been registered. It is anticipated that the cautions register will contain similar information. It is intended that it will be kept in dematerialised form, though this may not be the case initially.

Subsection (2)

96. Subsection (2) confers a power to make rules about how the cautions register is to be kept. Such rules will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125(3).

CLAUSE 20 - ALTERATION OF REGISTER BY COURT

97. Clauses 20 and 21 contain provisions relating to alteration of the register of cautions against first registration by the court and registrar respectively. These provisions are new and are a necessary concomitant to the formal establishment of a register of cautions against first registration under Clause

9. Cf Schedule 4, which sets out the circumstances in which the court and the registrar can alter the register of title.

98. Subsection (1) enables a court to make an order for alteration of the register of cautions in two situations.

99. First, alteration may be ordered for the purpose of correcting a mistake. An example would be where a caution against first registration is lodged to protect a right of way claimed by prescription over the cautioned land and it can be established that the right of way does not exist.

100. Secondly, alteration may be ordered for the purpose of bringing the register up to date. An example would be where a mortgagee had entered a caution against first registration and the mortgage has since been redeemed.

101. Subsection (3)(a) empowers the Lord Chancellor to make rules specifying the circumstances in which the court will have a duty to exercise the power to make an order for alteration of the register of cautions.

102. Where the court makes an order for alteration, the registrar has a duty to give effect to it when it is served on him: subsection (2). Rules may prescribe the form that such an order should take and how it should be served: subsection (3)(b), (c).

CLAUSE 21 - ALTERATION OF REGISTER BY REGISTRAR

103. The circumstances in which the registrar may alter the register of cautions against first registration are set out in Clause 21(1). These are the same as the grounds upon which the court may order alteration.

104. Where the register of cautions against first registration is altered by the registrar, subsection (3) gives him the power to pay costs. The only restriction on the exercise of this power is that the costs must have been reasonably incurred by a person in connection with the alteration.

CLAUSE 22 - SUPPLEMENTARY

105. This clause explains the meaning of "cautioner" in this Chapter. See above, paragraph 82.

PART 3: DISPOSITIONS OF REGISTERED LAND

106. Part 3 of the Bill is concerned with three matters. First, it defines the powers that a proprietor of a registered estate or charge is to be taken to have in the absence of any entry to the contrary in the register and for what purposes. Secondly, it makes provision by which certain dispositions that convey or create a legal estate have to be registered. Thirdly, it sets out the effect that dispositions of registered land have on the priority of interests in such land.

Powers of disposition

CLAUSE 23 - OWNER'S POWERS

107. Clause 23 sets out "owner's powers" of disposition in relation to a registered estate or charge. By Clause 24 these powers are exercisable by the registered proprietor of an estate or charge or, subject to rules, any person who is entitled to be registered as the proprietor.

Subsection (1)

108. In relation to a registered estate, the owner's powers consist of power to-

(i) make a disposition of any kind permitted by the general law in relation to the interest which the person has, other than a mortgage by demise or sub–demise: Clause 23(1)(a); and

(ii) charge the estate with the payment of money: Clause 23(1)(b).

There are two points to be noted about these provisions.

109. First, mortgages by demise or sub-demise are in practice obsolete. The effect of Clause 23(1)(a) is that it will no longer be possible to create a legal mortgage over registered land by these means. In future a registered proprietor will only be able to create a legal mortgage by-

(i) a charge expressed to be by way of legal mortgage; or

(ii) a charge to secure the payment of money.

110. For the necessary consequential amendments to sections 85 and 86 of the Law of Property Act 1925, see Schedule 11, paragraph 2(6) and (7).

111. Secondly, the power to charge the estate with the payment of money is one that is unique to registered land (cf Land Registration Act 1925, section 25(1)), and it dates back to the Land Transfer Act 1875. There is no equivalent in relation to unregistered land.

Subsection (2)

112. In relation to a registered charge, the owner's powers consist of power to-

(i) make a disposition of any kind permitted by the general law in relation to the interest which the person has, other than a legal submortgage: Clause 23(2)(a); and

(ii) charge at law with the payment of money indebtedness secured by the registered charge: Clause 23(2)(b).

113. The exception in relation to legal sub-mortgages, which are defined for these purposes by Clause 23(3), simplifies the present law. In future there will only be one way in which a registered chargee can create a legal sub-charge, namely that specified in Clause 23(2)(b). This method of creating a legal sub-charge is modelled on existing provisions found in the Land Registration Rules 1925: see rule 163(1).

CLAUSE 24 - RIGHT TO EXERCISE OWNER'S POWERS

114. Clause 24 sets out who may exercise owner's powers of disposition under Clause 23, namely either the registered proprietor or a person who is entitled to be registered as proprietor (such as the executor of a deceased registered proprietor, or a disponee who has not yet been registered as proprietor). Cf Land Registration Act 1925, section 37 (powers of persons entitled to be registered).

115. Subsection (2) provides that a person's right to exercise owner's powers by reason of an entitlement to be registered as the proprietor of an estate or charge is subject to rules. Such rules are likely to explain how owner's powers are to be exercised in such a case. Rules under subsection (2) will be land registration rules and will be laid before Parliament only: Clauses 129(1) and 125.

CLAUSE 25 - MODE OF EXERCISE

Subsection (1)

116. Subsection (1) provides that a registrable disposition of a registered estate or charge only has effect if it complies with such requirements as to form and content as rules may provide. For registrable dispositions, see Clause 27. This provision will enable rules to prescribe the form and content that any registrable disposition must take. At present it is not possible to prescribe the form of a registered charge: see Land Registration Act 1925, section 25(2). Nor has any form ever been prescribed for a lease, though it could be: see Land Registration Act 1925, sections 18(1) and 21(1).

117. Rules under this provision will be land registration rules and will be laid before Parliament only: Clauses 129(1) and 125(3).

Subsection (2)

118. Subsection (2) provides that rules may apply Clause 25(1) to any other kind of disposition which depends for its effect on registration. This provision is likely to be particularly important when electronic conveyancing is introduced: see Cl 93.

CLAUSE 26 - PROTECTION OF DISPONEES

Subsections (1) and (2)

119. Subsection (1) sets out the general principle that a person's right to exercise owner's powers in relation to a registered estate or charge is taken to be free from any limitation affecting the validity of the disposition. This general principle is subject to subsection (2), which provides that it does not apply to a limitation reflected by an entry in the register, or imposed by or under the Bill. It may be noted that in future, the only way to limit owner's powers will be to enter a restriction on the register, because both cautions and inhibitions are prospectively abolished by the Bill. See below, paragraph 161.

Subsection (3)

120. Subsection (3) makes it clear that the principle that a person's right to exercise owner's powers is unlimited unless there is some entry in the register or limitation imposed by, or under, the Bill, has effect for one specific purpose only. That is to prevent the title of a disponee being questioned. However, this will not affect the lawfulness of the disposition.

121. The fact that a disponee's title cannot be called into question, may be illustrated by the following example.

(i) W and X held on a bare trust as nominee for Y, on terms that they could not make any disposition of the land without Y's written consent;

(ii) Y, who was in actual occupation of the land held in trust, did not protect her interest by the entry of a restriction;

(iii) W and X fraudulently charge the land to Z without Y's consent in breach of trust.

Z's charge would be valid and could not be questioned by Y. The fact that Y was in actual occupation at the time of the charge would not change this, because W and X's right to exercise owner's powers is taken to be free of limitation. It follows that Y cannot claim that her beneficial interest under the trust was an overriding interest under Schedule 3, paragraph 2, because her prior consent to the charge was not obtained.

122. Even if a disponee's title cannot be questioned, this does not prevent an action being pursued on the basis that the disposition was unlawful provided that this does not call into question the validity of the disponee's title. This may be illustrated by the following example. Trustees of land, A and B, have limited powers of disposition but no restriction is entered on the register to record this fact. If they transfer land to a buyer, C, in circumstances that are prohibited under the trust, they would commit a breach of trust. Although C's title cannot be called into question, the protection given by Clause 26 does not extend to any independent forms of liability to which she might be subject. Thus if C knew of the trustees' breach of trust when the transfer was made, she might be personally accountable in equity for the knowing receipt of trust property transferred in breach of trust.

Registrable dispositions

CLAUSE 27 - DISPOSITIONS REQUIRED TO BE REGISTERED

Subsection (1)

123. Subsection (1) states the general principle that where a disposition of a registered estate or charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met. For the effect of registered dispositions on priority, see Clauses 28-31.

124. With the introduction of electronic conveyancing, the general principle set out in subsection (1) is likely, in time, to be superseded. This is because it is disapplied in relation to dispositions which are required to be communicated electronically to the registrar and which are required to be simultaneously registered under Clause 93: see Clause 93(4). The reason why the general principle is disapplied in this context is that a disposition under Clause 93 has no effect, whether at law or in equity, until the relevant registration requirements are met: see Clause 93(2).

Subsection (2)

125. Subsection (2) lists the dispositions of a registered estate which are required to be completed by registration. The registration requirements which apply in relation to each of them are set out in Schedule 2.

126. First, a transfer of a registered estate must be completed by registration. "Registered estate" means a legal estate the title to which is entered in the register, other than a registered charge: see Clause 129(1). For the definition of legal estate, see section 1 of the Law of Property Act 1925. Therefore, where one of the following estates is a registered estate, any transfer of it must be completed by registration-

(i) a fee simple absolute in possession;

(ii) a leasehold estate;

(iii) a rentcharge;

(iv) a franchise;

(v) a profit à prendre in gross; and

(vi) a manor.

127. The registration requirements in relation to a transfer are as follows. The transferee (or his or her successor in title) must be entered in the register as proprietor: Schedule 2, paragraph 2(1). Where there is a transfer of part of a registered estate, such details as may be provided for by rules, must be entered in the register in relation to the registered estate out of which the transfer is made: Schedule 2, paragraph 2(2). Where the registered proprietor disposes of a part of his or her estate, the Registry currently makes certain entries on the register for example, in relation to rights reserved or granted. It is likely that rules will make provision for this practice to continue.

128. There are three exceptions to the principle that the transfer of a registered estate is a registrable disposition. They all concern dispositions by operation of law.

(i) The first is a transfer on the death of a sole individual proprietor: see Clause 27(5)(a). A deceased's estate vests by operation of law in his or her executors (if any) or in the Public Trustee until such time as there is a grant of administration. Once the legal title is vested in the personal representatives, they may apply to the registrar to alter the register to bring it up to date, by registering the applicant as proprietor: see Schedule 4, paragraphs 5 and 7.

(ii) The second is a transfer on bankruptcy of a sole individual proprietor: see Clause 27(5)(a). Where a registered proprietor becomes insolvent, his or her estate will vest by operation of law in his or her trustee in bankruptcy, immediately on his or her appointment (or in the Official Receiver in default of any such appointment): see Insolvency Act 1986, section 306. As in (i), the trustee in bankruptcy may then apply to the registrar to alter the register to bring it up to date, by registering the applicant as proprietor: see Schedule 4, paragraphs 5 and 7.

(iii) The third is a transfer on the dissolution of a corporate proprietor: see Clause 27(5)(b). When a company is dissolved, its property is deemed to be bona vacantia and therefore vests in the Crown (or one of the Royal Duchies): see Companies Act 1985, section 654. Again, the Crown (or Duchy) will apply to the registrar to alter the register to bring it up to date, by registering the applicant as proprietor: see Schedule 4, paragraphs 5 and 7.

129. Secondly, the grant of most leases out of a registered estate in land must be completed by registration. The categories of leases which, if granted out of a registered estate, must be completed by registration, are the same as those which, if granted out of unregistered land may or must be registered and they have been discussed in that context: see above paragraphs 24-28. In respect of two categories of lease granted out of a registered estate, registration is not required-

(i) a lease granted for seven years or less that does not fall within one of the classes specified in Clause 27(2)(b)(ii)-(v); and

(ii) a PPP lease granted under the Greater London Authority Act 1999: see Clause 90(3)(a).

Also, in these two cases, the priority of the lease is protected in relation to subsequent registered dispositions without registration: see Clauses 29(2)(a)(ii) and 30(2)(a)(ii); Schedule 3, paragraph 1 and Clause 90(5).

130. The registration requirements in relation to the grant of a lease which is a registrable disposition are as follows. The grantee of the lease (or his or her successor in title) must be entered in the register as the proprietor of the lease, and a notice in respect of the lease must be entered in the register of the title out of which it is granted: Schedule 2, paragraph 3.

131. Thirdly, the grant of any lease out of a registered franchise or manor is required to be completed by registration. The grant of such a lease will be registrable regardless of its length. The registration requirements for the lease of a franchise or manor are as follows. If the lease is for a term of more than seven years, the grantee of the lease (or his or her successor in title) must be entered in the register as the proprietor of the lease, and a notice in respect of the lease must be entered: Schedule 2, paragraph 4. If the lease is for seven years or less, a notice in respect of the lease must be entered in the register: Schedule 2, paragraph 5.

132. Fourthly, the express grant or reservation of an interest of a kind falling within section 1(2)(a) of the Law of Property Act 1925, other than one which is capable of being registered under the Commons Registration Act 1965, is a registrable disposition. In practice the interests that are most likely to be registrable under this provision are easements and profit à prendre, whether those are in gross or are appurtenant to an estate. There are two qualifications to this.

(i) The first is that rights of common which are capable of being registered under the Commons Registration Act 1965 are excluded. This is because section 1(1) of the Commons Registration Act 1965 prohibits the registration under the Land Registration Act 1925 of rights of common that are registrable under the 1965 Act. The Bill therefore replicates this prohibition.

(ii) The second is that where an easement, right or privilege is granted as a result of the operation of section 62 of the Law of Property Act 1925, that grant is not regarded as an express grant for these purposes so as to require registration: see Clause 27(7). Section 62 has the effect of implying certain words of grant into a conveyance of land unless its effect is expressly excluded. The current qualification is necessary because for some purposes rights implied by section 62 of the Law of Property Act 1925 are treated as a form of express grant: see, for example, Quicke v Chapman [1903] 1 Ch 659.

133. The registration requirements in relation to the fourth category of registrable disposition, depend upon the nature of the grant or reservation.

(i) Where the disposition involves the creation of a legal profit à prendre in gross, other than one created by a lease of 7 years or less, the grantee (or his or her successor in title) must be entered in the register as the proprietor of the interest created, and a notice in respect of the interest must be entered: see Schedule 2, paragraph 6.

(ii) Where the disposition involves the creation of any other interest, a notice in respect of the interest must be entered in the register: see Schedule 2, paragraph 7(2)(a). Moreover, where the interest is created for the benefit of a registered estate, the registered proprietor must be entered in the register as the proprietor of the interest: Schedule 2, paragraph 7(2)(b).

134. Fifthly, the express grant or reservation of an interest of a kind falling within section 1(2)(b) or (e) of the Law of Property Act 1925 is required to be completed by registration. This will therefore cover the grant or reservation of the following types of interest-

(i) a rentcharge in possession issuing out of or charge on land being either perpetual or for a term of years absolute; and

(ii) a right of entry exercisable over or in respect of a legal term of years absolute, or annexed, for any purpose to a legal rentcharge.

135. The registration requirements in relation to this category of registrable disposition are as follows-

(i) Where the disposition involves the creation of a legal rentcharge with its own title, and that grant is for an interest equivalent to an estate in fee simple or for a term of more than seven years, the grantee (or his or her successor in title) must be entered in the register as the proprietor of the interest created, and a notice in respect of the interest must be entered: see Schedule 2, paragraph 6.

(ii) In every other case -that is, where a rentcharge is granted or reserved for a term not exceeding seven years, or in the case where a right of re-entry is reserved -a notice in respect of the interest must be entered on the register of the title subject to it: see Schedule 2, paragraph 7(2)(a). Where the interest is for the benefit of a registered estate, the proprietor must also be entered in the register as the proprietor of the interest created: see Schedule 2, paragraph 7(2)(b).

There is, however, a power to modify (ii) in relation to a right of entry over or in respect of a lease: Schedule 2, paragraph 7(3). HM Land Registry does not currently record the benefit of a right of entry on the title of a reversion to a lease. This means that the present practice can continue, but that it would be open to change it at some future date.

136. Finally, the grant of a legal charge is normally a registrable disposition. However, the creation of a legal charge that is also a local land charge is an exception to this principle and does not require registration: see Clause 27(5)(c). For policy reasons, a local land charge is an interest that is binding on a disponee of registered land without registration: see Schedule 3, paragraph 6. It should, however, be noted that a local land charge that secures the payment of money cannot be realised until it is registered as a registered charge: Clause 55.

137. Where the grant of a charge must be completed by registration, the chargee (or his or her successor in title) must be entered in the register as the proprietor of the charge: Schedule 2, paragraph 8.

Subsection (3)

138. Subsection (3) sets out the types of disposition of a registered charge that must be completed by registration.

139. First, a transfer of a charge must be completed by registration. There are certain exceptions in relation to transfers by operation of law: see Clause 27(5). These have already been considered above in relation to the transfer of registered estates: see above, paragraph 128. The registration requirement for the transfer of a charge is that the transferee (or his or her successor in title) must be entered in the register as proprietor: Schedule 2, paragraph 10.

140. Secondly, the creation of a sub-charge must be completed by registration. In this case, the sub-chargee (or his or her successor in title) must be registered as the proprietor of the sub-charge: Schedule 2, paragraph 11.

Subsection (4)

141. Subsection (4) provides that Schedule 2 has effect. Schedule 2 specifies the registration requirements in relation to registrable dispositions.

Subsection (5)

142. This has already been explained: see above, paragraphs 128 and 136.

Subsection (6)

143. Subsection (6) confers power for rules to make provision about applications to the registrar for the purpose of meeting registration requirements under Clause 27. Such rules will be land registration rules, and will be laid before Parliament only: Clauses 129(1) and 125(3).

Subsection (7)

144. This has already been explained: see above, paragraph 132.

Effect of dispositions on priority

145. The Bill states the effect of dispositions of a registered estate or charge on priority. Under the Land Registration Act 1925, the equivalent rules are partly statutory and have in part been supplied by decisions of the courts. Some aspects of the present law are uncertain. Although the provisions of the Bill are similar to the present law, they are not identical. The rules in the Bill are simpler and are intended to avoid some of the difficulties that have arisen under the present law.

CLAUSE 28 - BASIC RULE

Subsection (1)

146. Subsection (1) sets out the general principle that the priority of an interest affecting a registered estate or charge is not affected by a disposition of the estate or charge. The general principle will not apply in two situations-

(i) where there is a registered disposition for valuable consideration: see Clauses 29 and 30; and

(ii) in relation to Inland Revenue charges: see Clause 31. References in the Bill to an interest affecting an estate or charge are to an adverse right affecting the title to the estate or charge: Clause 129(3)(b). For these purposes, an interest does not include a petition in bankruptcy or bankruptcy order: see Clause 86(1).

147. It follows from subsection (1) that where the general principle applies, the priority of any interest in registered land will be determined according to the date of its creation. The statutory code laid down by the Bill is absolute: except where the Bill provides otherwise, priority will always fall to be determined in accordance with the general priority principle contained in Clause 28. In particular, it should be noted that the Bill leaves no scope for introduction of the doctrine of notice. Knowledge or notice is only relevant to an issue where the Bill expressly so provides. For those situations, see Clauses 11(4)(c), 12(4)(d), 31 and 86(5); Schedule 3, paragraphs 2(1)(c) and 3(1).

Subsection (2)

148. The general principle in Clause 28(1) applies, whether or not the interest or disposition is registered. This is in fact the case under the present law.

CLAUSE 29 - EFFECT OF REGISTERED DISPOSITIONS: ESTATES

Subsection (1)

149. Subsection (1) makes express provision for the effect of a registrable disposition of a registered estate. It forms a significant exception to the general principle of priority under Clause 28.

150. Subsection (1) applies to the registrable disposition of a registered estate for valuable consideration. It provides that completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration. There are a number of elements of this principle that require explanation.

151. First, it applies only to a registrable disposition of a registered estate. A registrable disposition of a registered estate is one which is required to be completed by registration under Clause 27: see Clause 129(1).

152. Secondly it applies only to registrable dispositions made for valuable consideration. Where a registrable disposition is made otherwise than for valuable consideration, the general rule of priority under Clause 28 will apply. "Valuable consideration" does not include marriage consideration or a nominal consideration in money: see Clause 129. In relation to marriage consideration, the Bill changes the present law: cf Land Registration Act 1925, section 3(xxxi). Because a transfer of land in consideration of marriage is usually a wedding gift there is no longer any justification for it to be treated differently from other gifts of land.

153. Thirdly, where Clause 29(1) applies it gives the disposition priority over any interest-

(i) that affects the estate immediately prior to the disposition; and

(ii) whose priority is not protected at the time of registration.

One effect of this is that, if a disponee creates an interest in favour of a third party before the disposition is registered, he or she will not be able to claim priority over it. The general principle as to priority contained in Clause 28 will apply. In other words, the disponee will not be able to create an interest and then take free of it because it was not protected before he or she happened to be registered as proprietor of the estate. There is one particular interest which requires specific comment in this context because of its unusual character, namely an unpaid vendor's lien. An unpaid vendor's lien arises as soon as a binding contract for the sale of land is made, and not when the transfer is executed. In consequence, the priority of an unpaid vendor's lien in relation to the registered estate will be determined by Clause 28(1). This means that, on registration, the buyer of a registered estate will take free of an unpaid vendor's lien, unless the seller has protected the lien by the entry of a notice against his or her own title before the transfer is made.

Subsection (2)

154. Subsection (2) explains when the priority of an interest will be protected. Such interests are not postponed to the disposition of a registered estate under subsection (1). The interests in question are as follows-

(i) Registered charges.

(ii) Interests which are the subject of a notice on the register.

(iii) Unregistered interests that override registered dispositions by virtue of Schedule 3. Clause 29(3) provides that if an interest has been the subject of a notice in the register at any time since the coming into force of the Bill, it will not be protected under this category. The effect of this provision is that if a notice were entered on the register in respect of an interest that fell within Schedule 3, it could never again be an overriding interest, even if the notice were, by mistake, removed from the register. Where, as a result of such a mistake, a person suffers loss (whether because the register is rectified by restoring the notice or because it is not rectified), they will be entitled to indemnity: see Schedule 8, paragraph 1(1)(b).

(iv) Interests that appear from the register to be excepted from the effect of registration. This will be the case where there is a disposition of an estate which is registered with a title other than an absolute one. For registration with different classes of title, see Clauses 11 and 12.

Subsection (4)

155. The effect of subsection (4) is that the priority principle set out in subsection (1) will apply equally to the grant of a leasehold estate which is not a registrable disposition. This replicates the present law: see Land Registration Act 1925, sections 19(2) and 22(2). For those leases which are registrable dispositions, see Clause 27(2)(b) and (c). The priority of other dispositions which are not registrable, will fall to be determined in accordance with the general principle set out in Clause 28.

CLAUSE 30 - EFFECT OF REGISTERED DISPOSITIONS: CHARGES

156. Clause 30 makes express provision for the effect of a registrable disposition of a registered charge. It mirrors subsections (1), (2) and (3) of Clause 29, which govern the registrable disposition of registered estates. The same considerations apply: see above, paragraphs 149-154.

157. For the priority of registered charges inter se, see Clause 48.

CLAUSE 31 - INLAND REVENUE CHARGES

158. Clause 31 preserves the existing law as to priorities in relation to Inland Revenue charges under the Inheritance Tax Act 1984.

159. In certain situations an Inland Revenue charge is imposed on specified property in respect of unpaid inheritance tax: see Inheritance Tax Act 1984, section 237. Sections 37(6) and 38 of the Inheritance Tax Act 1984 make express provision for the priority of such charges on the disposal of the property. Those principles of priority are presently applied to registered land by section 73 of the Land Registration Act 1925. Clause 31 similarly provides that, on the disposition of a registered estate or charge, the priority of an Inland Revenue charge in respect of unpaid inheritance tax is to be determined by the provisions of the Inheritance Tax Act 1984, rather than in accordance with Clauses 29 and 30 of the Bill.

PART 4: NOTICES AND RESTRICTIONS

160. Part 4 of the Bill contains provisions on notices and restrictions. It is concerned primarily with the protection of third party rights over or in relation to a registered estate or charge.

161. The Bill introduces a new system of notices and restrictions in relation to third party rights. The main features of the scheme are as follows-

(i) Cautions against dealings are prospectively abolished. Existing cautions will, however, remain in the register by virtue of the transitional provisions contained in Schedule 12, paragraphs 1 and 2(3).

(ii) Notices are retained in an extended form: see Clauses 32-39. Under the Bill there are two types of notice, those that are entered consensually, and those that are entered unilaterally. In relation to the latter, the registered proprietor will be informed of the registration and will be able to apply for its cancellation.

(iii) Inhibitions are abolished because they are not needed: they are, in reality, just one form of restriction. Under the Bill the only method of restricting the power of the registered proprietor will, therefore, be by the entry of a restriction. (iv) Restrictions are retained, but in an altered form: see Clauses 40-47.

Notices

CLAUSE 32 - NATURE AND EFFECT

Subsections (1) and (2)

162. This clause explains the nature and effect of a notice. The form and content of notices in the register is to be governed by rules: see Clause 39.

Subsection (3)

163. Subsection (3) provides that the entry of a notice does not necessarily mean that the interest which it is intended to protect is valid. For the equivalent provision in relation to notices under the Land Registration Act 1925, see section 52(1). Where, for example, parties enter into an agreement that is not in fact a valid contract, the entry of a notice in respect of that agreement will not validate it. However, where an interest is valid, the entry of a notice will protect its priority as against a registered disposition of an estate or charge: see Clauses 29(2)(a)(i) and 30(2)(a)(i) respectively.

CLAUSE 33 - EXCLUDED INTERESTS

164. This clause sets out a number of interests which cannot be protected by the entry of a notice.

165. First, it is not possible to enter a notice in respect of any interest under a trust of land or a settlement under the Settled Land Act 1925: Clause 33(a). This replicates part of the effect of section 49(2) of the Land Registration Act 1925. Beneficial interests under trusts and settlements should be overreached on a sale or other disposition for valuable consideration. They are not intended to be binding on any buyer of the land. The appropriate form of entry for such interests is therefore a restriction.

166. Secondly, a notice cannot be entered in respect of leases which are granted for 3 years or less and are not required to be registered: Clause 33(b). At present a notice cannot be entered in respect of a lease granted for 21 years or less, unless it falls within certain statutory exceptions: Land Registration Act 1925, section 48(1). This is because under the 1925 Act such leases take effect as overriding interests: section 70(1)(k). The Bill reduces the length of leases that are required to be registered to those granted for more than 7 years: see Clause 27(2)(b)(i). While it would have been possible to provide that a notice could have been entered in respect of a lease granted for 7 years or less, it has been decided to make the period 3 years or less. First, it is likely that once electronic conveyancing is fully operative, leases granted for more than 3 years will be required to be registered and that only leases of 3 years or less will be overriding. This change will be made by an order under the power conferred by Clause 116. Clause 33(b) anticipates this likely reduction in the length of registrable leases. Secondly, when leases are granted, it is commonly necessary to grant or reserve easements in respect of them. Under the Bill, all easements that are expressly granted or reserved are registrable dispositions, regardless of the length of the period for which they are granted: see above, paragraph 132. The burden of such easements must be noted in the register. If an easement relating to a lease has to be protected by a notice, the parties to that lease may think it sensible to enter a notice in respect of the lease as well. But there is little point in noting leases granted for three years or less, given that they are readily discoverable.

167. Even if a lease is granted for a term of 3 years or less, a notice may still be entered in the register if the lease is one that is required to be registered. For the registration requirements in relation to leases, see Clauses 4(1)(c)-(f) (compulsory registration) and 27(2)(b) (registrable dispositions).

168. Thirdly, a notice cannot be entered in respect of restrictive covenants made between a lessor and lessee, so far as relating to the property leased: Clause 33(c). Such covenants are normally apparent from the lease, so it is unnecessary for them to be noted in the register. Consequently, the Bill provides that a person to whom a disposition of a registered leasehold estate or of a registered charge in relation to such an estate is made, takes it subject to the burden of any interest that is incident to the estate: see Clauses 29(2)(b) and 30(2)(b) respectively. A restrictive covenant is clearly an interest that is incident to the leasehold estate. There is therefore no reason to enter a notice in respect of one in the register.

169. It should be noted that the third exception is confined to restrictive covenants "so far as relating to the demised premises". This avoids a difficulty that exists under the present law. At present it is not possible to protect any restrictive covenant "made between a lessor and lessee" by the entry of a notice: see Land Registration Act 1925, section 50(1). This means that no notice can be entered in respect of a restrictive covenant made between lessor and lessee that relates to land that is not comprised in the lease, such as other adjacent property owned by the landlord: see Oceanic Village Ltd v United Attractions Ltd [2000] Ch 234. The Bill reverses this position.

170. Fourthly, it is not possible to enter a notice in respect of an interest which is capable of being registered under the Commons Registration Act 1965: Clause 33(d). This provision is the necessary concomitant of the principle that such rights of common cannot be registered under the Bill: see Clause 27(2)(d).

171. Fifthly, no notice may be entered in respect of an interest in any coal or mine, the rights attached to such interest or the rights of any person under section 38, 49, or 51 of the Coal Industry Act 1994: Clause 33(e). This exception replicates the effect of section 70(4) of the Land Registration Act 1925. Under the Bill these interests override first registration and registered dispositions even though they are not entered in the register: see Schedules 1, paragraph 7; and 3, paragraph 7.

172. The Bill also provides that no notice may be entered in the register in respect of an interest under a PPP lease. For this exception, see Clause 90(4).

CLAUSE 34 - ENTRY ON APPLICATION

Subsection (1)

173. This subsection provides that a person who claims to be entitled to the benefit of an interest in relation to a registered estate or charge that can be registered as a notice may apply to the registrar for its entry.

Subsection (2)

174. Subsection (2) provides that subject to rules, an application may be for either an agreed notice or a unilateral notice. The main distinguishing features of a unilateral notice are that the registered proprietor will be informed of the registration and will be able to apply for its cancellation: see Clauses 35 and 36. Rules may prescribe that in relation to some types of interest, only certain forms of notice are to be available. One example of the sort of situation to which such rules might relate is considered below in paragraph 177.

Subsection (3)

175. Subsection (3) sets out the circumstances in which the registrar may approve an application for an agreed notice. The first two cases are ones where the registered proprietor consents to the entry of the notice.

176. The third situation in which the registrar may approve an application for an agreed notice will arise where the registered proprietor does not consent to the entry of a notice: see subsection (3)(c). The registrar is able to enter an agreed notice where he is satisfied as to the validity of the applicant's claim. An example would be where the applicant could establish to the registrar's satisfaction that the registered proprietor had granted him or her an easement.

177. This third situation is important for other reasons. Where the registrar enters an agreed notice he is not required to notify the registered proprietor of the entry as he is when he enters a unilateral notice. There are currently certain types of interest that can be protected by the entry of a notice without the consent of the registered proprietor: see Land Registration Act 1925, section 64(1)(c), (5)-(7). One example is a spouse's charge in respect of his or her matrimonial home rights under section 31(10) of the Family Law Act 1996. It is likely that rules will prescribe that in such cases, the interests in question should be protected by the entry of an agreed notice rather than by a unilateral notice.

CLAUSE 35 - UNILATERAL NOTICES

Subsection (1)

178. Subsection (1) provides that where a unilateral notice is entered in the register, notice of this will be served on the proprietor of the registered charge or estate to which it relates and such other persons as rules may provide. This provision is necessary because a unilateral notice may be entered without the consent of the registered proprietor.

179. It is anticipated that rules may provide (for example) that notice be served on the liquidator of a company which was the registered proprietor.

Subsection (2)

180. Subsection (2) provides that a unilateral notice must indicate that it is such a notice and identify who is the beneficiary of it. It is unlikely that anything else will appear in the register. At present, in relation to transactions of a commercially sensitive character, cautions are often entered in preference to notices because the entry of a caution in the register gives no indication as to the matter that lies behind it. The Bill does not replicate the system of cautions. It is, however, anticipated that it will be possible to achieve the same commercial confidentiality by means of a unilateral notice. Subsection (3)

181. This provision makes it clear that the person who appears in the register as the beneficiary of a unilateral notice may apply for its removal from the register.

CLAUSE 36 - CANCELLATION OF UNILATERAL NOTICES

182. Unilateral notices may be entered without the registered proprietor's consent. In order to protect registered proprietors, Clause 36 makes provision for the cancellation of such notices.

183. Where a registered proprietor applies under subsection (1) for the cancellation of a unilateral notice, the beneficiary of the notice will be entitled to object under the general right conferred by the Bill to object to an application to the registrar: see Clause 73. If the matter cannot be disposed of by agreement, it must be referred to the Adjudicator: see Clauses 73(7) and 106(1).

CLAUSE 37 - UNREGISTERED INTERESTS

184. This clause gives the registrar power to enter a notice in respect of an unregistered interest which falls within Schedule 1, provided that it is not excluded by Clause 33, above. This is part of the strategy of the Bill to ensure that whenever practicable such interests are entered in the register. Clause 37 is similar to, but goes further than, section 70(3) of the Land Registration Act 1925.

CLAUSE 38 - REGISTRABLE DISPOSITIONS

185. In order to register certain registrable dispositions, it is necessary to enter a notice in respect of that interest on the title of a registered estate that is burdened by it: cf Schedule 2, paragraphs 3-7. Clause 38 therefore provides that, where a person is registered as the proprietor of an interest under a disposition falling within Clause 27(2)(b) -(e) the registrar must enter a notice in the register in respect of it.

Restrictions

CLAUSE 40 - NATURE

Subsection (1)

186. Subsection (1) defines the nature of a restriction. It is an entry to regulate the circumstances in which a disposition of a registered estate or charge may be the subject of an entry in the register.

187. Because a restriction can only apply to dealings with a registered estate or charge, no restriction can be entered in respect of dealings with interests the title to which is not registered. Thus, for example, it would not be possible to enter a restriction against the assignment of a lease granted for a term of 7 years or less, which takes effect without registration.

188. A restriction, by its nature, operates to restrict the circumstances in which an entry may be made in the register. It follows that the registrar will not make any entry in the register in respect of any disposition except in accordance with the restriction. Since a restriction is only operative in relation to the making of entries in the register, it does not affect the creation of interests whose effect and priority does not depend upon registration. However, if the person having the benefit of such an interest sought to enter a notice in respect of his or her interest, the registrar would have to refuse the application if it were contrary to the terms of a restriction.

Subsections (2) and (3)

189. Subsection (2) gives particular examples of the form that a restriction might take. These examples are non-exhaustive.

190. First, a restriction may prohibit the making of an entry in respect of any disposition or of a disposition of a kind specified in the restriction: Clause 40(2)(a). An example of the kind of case where a restriction might be employed to prohibit any disposition whatsoever would be where a court has granted a freezing injunction over a registered property. An example of the kind of case where a restriction might be employed to prohibit a disposition of a specified kind would be where a registered proprietor (typically a corporation or statutory body) had limited powers of disposition. In this case a restriction would prevent the registration of any disposition that was outside those powers. A further example would be where, under a registered charge, the chargor agrees with the chargee to the exclusion of his or her statutory power of leasing under Law of Property Act 1925, section 99.

191. Secondly, a restriction may prohibit the making of an entry-

(i) Indefinitely. This would be appropriate where the registered proprietor has limited powers.

(ii) For a period specified in the restriction. This might be appropriate, for example, where the proprietor had contracted not to make a disposition of the property for that period.

(iii) Until the occurrence of some specified event. This should be read in conjunction with subsection (3). Subsection (3) provides some examples of the sort of events that might be specified, namely the giving of a notice, the obtaining of consent and the making of an order by the court or registrar.

CLAUSE 41 - EFFECT

Subsection (1)

192. Subsection (1) sets out the general principle that, where a restriction is entered in the register, no entry in respect of a disposition to which the restriction applies may be made in the register, except in accordance with the terms of the restriction. This is subject to the exception set out in subsection (2).

Subsections (2) and (3)

193. The effect of these subsections is that on the application of a person who appears to the registrar to have a sufficient interest in the restriction, the registrar has power by order to disapply or modify a restriction in relation to either-

(i) a disposition; or

(ii) dispositions of a kind; specified in the order.

194. This exception codifies the present practice whereby all restrictions are prefaced by the words "Except under an order of the registrar….".

195. The sort of situation where it might be appropriate for the registrar to exercise his power would be where a disposition of a registered estate could only be made with the consent of a named individual who has disappeared.

CLAUSE 42 - POWER OF THE REGISTRAR TO ENTER

Subsection (1)

196. Subsection (1) provides that the registrar has a power to enter a restriction if it appears to him that it is necessary or desirable to do so for any one of three purposes.

197. The first is to prevent invalidity or unlawfulness in relation to dispositions of a registered estate or charge: Clause 42(1)(a). The following examples illustrate the sort of situations in which such an entry might be made-

(i) Where the registered proprietor of an estate or charge is a corporation or statutory body that has limited powers of dealing. If a restriction were not entered to record that limitation, the proprietor's powers of disposition would, in favour of any disponee, be taken to be unfettered, notwithstanding that the disposition is unlawful: see Clauses 26 and 52.

(ii) Where the registered proprietor has contracted with some third party that he or she will not make a disposition of land or will only do so with their consent. One example of this would be where the third party has been granted a right of pre-emption. The unlawfulness which the restriction prevents is a breach of contract.

(iii) Where trustees of land are required to obtain the consent of some person to a disposition. The unlawfulness which the restriction prevents is a breach of trust.

198. The second purpose for which a restriction may be entered is to secure that interests which are capable of being overreached on a disposition of a registered estate or charge are overreached: Clause 42(1)(b). This is directed primarily at trusts of land and settlements under the Settled Land Act 1925. Where the interest of a beneficiary is overreached, it is transferred into the proceeds of sale. On the disposition of a trust of land or settlement, the interests of the beneficiaries will only be overreached if any capital moneys that arise are paid to the trustees or to the trustees of the settlement, of which there must be at least two or a trust corporation. If the beneficial interests are not overreached, normal rules of priority will apply to determine whether the disponee is or is not bound by them: see Clauses 28-30. To ensure that overreaching does take place, the registrar may enter a restriction to the effect that the proceeds of any registered disposition must be paid to at least two trustees or to a trust corporation.

199. The third purpose is to protect a right or claim in relation to a registered estate or charge: Clause 42(1)(c). A restriction might, for example, be entered to protect the claim by a person that he or she had a beneficial interest in a property under a resulting or constructive trust because he or she had contributed to the cost of its acquisition. Although a restriction under this heading must be for the purpose of protecting a right or claim in relation to the estate or charge, it need not be proprietary. For example, a restriction might be entered in respect of an order appointing a receiver or sequestrator.

Subsection (2)

200. Subsection (2) limits the registrar's power under Clause 42(1)(c) to enter a restriction for the purposes of protecting a right or claim in relation to a registered estate or charge. In exercising it, no restriction may be entered for the purpose of protecting the priority of an interest which is, or could be, the subject of a notice. This subsection emphasises the nature and purpose of a restriction. A restriction is simply a means of preventing some entry in the register except to the extent (if any) that is permitted by the terms of the restriction. It is not intended to confer priority.

201. Subsection (2) does not, however, prevent a notice and a restriction being entered in respect of the same interest provided that each serves its proper function. A notice might be entered to protect the priority of an interest against any supervening third party rights while a restriction is entered to ensure the compliance with certain conditions or requirements in relation to any disposition of the property by the registered proprietor. For example the priority of a right of pre-emption might be protected by a notice while a restriction might be entered to ensure that the registered proprietor first offers to sell the land to the grantee of the right before he or she contracts to sell it to anybody else.

Subsection (4)

202. Subsection (4) specifically provides that a person who is entitled to the benefit of a charging order relating to an interest under a trust is, for these purposes, to be treated as a person having a right or claim in relation to the trust property. This means that a restriction can be entered in relation to that order. If it were not for this provision, it would not be possible to make any entry in the register to protect such a charging order. This is because to enter a restriction under Clause 42(1)(c) it has to be necessary or desirable to do so for the purpose of protecting a right or claim in relation to a registered estate. Formerly such interests were protected by entry of a caution against dealings, but this means of protection is not replicated under the Bill.

CLAUSE 43 - APPLICATIONS

Subsection (1)

203. This subsection sets out who may apply to the registrar for the entry of a restriction.

Subsection (2)

204. Subsection (2)(a) creates a power to make rules that will require that an application be made in such circumstances and by such persons as rules may prescribe. There are currently certain circumstances in which a person has a duty to apply for a restriction. It is likely that in these and perhaps other cases, rules made under the Bill will require an application for a restriction. Examples include the following-

(i) Where the powers of trustees of land are limited by virtue of section 8 of the Trusts of Land and Appointment of Trustees Act 1996, the trustees must at present apply for a restriction: see Land Registration Rules 1925, rules 59A and 106A(1).

(ii) Where registered land is held by or in trust for a corporation and the corporation becomes a non-exempt charity, the trustees must presently apply for a restriction: Land Registration Rules 1925, rule 124(1).

205. Subsection (2)(c) enables rules to prescribe classes of person who are to be regarded as having a sufficient interest in the making of an entry to apply to the registrar under subsection (1)(c). Such rules will operate without prejudice to the generality of those who may apply under that category. The sort of persons that such rules might cover include-

(i) a person having an interest in land that is capable of being protected by the entry of a restriction, such as a beneficiary under a trust of land;

(ii) the donee of a special power of appointment in relation to registered land;

(iii) the Charity Commission in relation to registered land held upon charitable trusts;

(iv) the Church Commissioners in respect of any registered land administered by them under any statute;

(v) a receiver (whether or not appointed by the court), administrative receiver, or an administrator or a sequestrator appointed in respect of registered land or a registered charge.

Subsection (3)

206. Subsection (3) provides that if an application for the entry of a restriction is not in one of the forms prescribed by rules under subsection (2)(d), the registrar may only approve it if it meets certain requirements. Subsection (3) replicates an effect of section 58(2) of the Land Registration Act 1925.

CLAUSE 44 - OBLIGATORY RESTRICTIONS

207. If the registrar enters two or more persons in the register as the proprietor of a registered estate, he is required by subsection (1) to enter such restrictions as rules may provide for the purpose of securing that interests which are capable of being overreached on a disposition are overreached. For example, if two registered proprietors were to hold an estate on trust for a number of beneficiaries, a restriction might be entered to ensure that the proceeds of any registered dispositions are paid to at least two trustees or to a trust corporation. If one of the trustees were to die, this would ensure that no disposition could be made until another trustee had been appointed.

208. For another provision of the Bill which imposes a duty on the registrar to enter a restriction, see Clause 86(4) (bankruptcy petitions).

CLAUSE 45 – NOTIFIABLE APPLICATIONS

209. The purpose of this clause is to protect a registered proprietor against the unjustified entry of a restriction against his or her title. The effect of the clause is that where a person applies for a restriction to be entered in the register then, if it is notifiable, the registrar will be under an obligation to serve notice on the registered proprietor and such other persons as rules may prescribe. Clause 45(3) sets out when an application is notifiable, which is, in essence, in any case in which a restriction might be improperly entered. Rules under Clause 45(1)(b) are likely to prescribe that notice be served on registered chargees and other persons who may have a direct interest in any disposition of the property.

210. Where a person receives a notice of an application, he or she may object to it under the general provisions of the Bill that relate to objections: see Clauses 73 and 106. If the objection cannot be resolved by agreement of the parties, it will be referred to the Adjudicator for his decision: Clause 73(7).

CLAUSE 46 - POWER OF COURT TO ORDER ENTRY

Subsection (1)

211. Under this subsection, if it appears to the court that it is necessary or desirable to do so for the purpose of protecting a right or claim in relation to a registered estate or charge, it may make an order requiring the registrar to enter a restriction in the register.

212. The court is most likely to order the entry of a restriction in cases where, under the present law, it would order the entry of an inhibition. However, whereas inhibitions prevent the entry of any dealing in the register, the entry of a restriction under the Bill might be more limited in its effect. For example, if the court determined that a person was entitled to a beneficial interest under a resulting or constructive trust, it might also order the entry of a restriction to ensure that there was no disposition of the registered estate without the prior consent of the beneficiary. An example of the sort of case in which the court might order a restriction on any dealing in the register would be where it grants a "freezing injunction".

Subsection (2)

213. By virtue of subsection (2) the court will not be able to make an order for the purpose of protecting the priority of an interest which is, or could be, the subject of a notice. The reason for this limitation has already been explained in relation to Clause 42(2): see paragraph 200 above.

Subsections (3), (4) and (5)

214. Subsection (3) enables the court to include in an order a direction that a restriction is to have overriding priority.

215. Under the Bill, there are certain situations in which an application for an entry in the register is protected against later entries if it is made within a priority period. This will be the case where there is an official search or a notice is entered in the register in respect of an estate contract: see Clause 72.

216. In the absence of any direction by the court, the priority protection given to an official search or the entry of a notice in respect of an estate contract will prevail over any order of the court that a restriction should be entered in the register. Subsection (3) enables the court to reverse this position by directing that a restriction is to have overriding priority.

217. Subsection (4) provides that where the court directs that a restriction has overriding priority, the registrar will be under a duty to make such entry in the register as rules may provide. This will ensure that it is apparent from the register that the restriction has overriding priority.

218. The effect of subsection (5) is that in exercising its power, the court may impose such terms and conditions as it thinks fit. For example, it might require an undertaking from the applicant that he or she should indemnify any person acting in good faith who had suffered loss as a result of the court's directions. The court might also impose such conditions as requiring the applicant to give security, pay money into court, pay costs, or to withdraw some entry in the register.

CLAUSE 47 – WITHDRAWAL

219. This clause makes provision for the withdrawal of a restriction. The persons who may apply for withdrawal and the circumstances in which such an application may be made will be prescribed by rules.

220. This power is most likely to apply in relation to restrictions that were entered pursuant to a voluntary application rather than those which were entered because there was a duty to do so, or because they were entered on the order of the court or by the registrar. However, even in respect of some restrictions that were entered otherwise than on application, it may be appropriate for an interested person to apply for withdrawal of a restriction, such as where it is spent.

PART 5: CHARGES

Relative priority

221. Part 5 of the Bill contains provisions that relate to charges over registered land. It addresses the following issues-

(i) the relative priority of registered charges, including the tacking of further advances;

(ii) the powers of chargees;

(iii) the realisation of security; and

(iv) certain miscellaneous matters.

CLAUSE 48 - REGISTERED CHARGES

Subsection (1)

222. Clause 48 provides that charges on the same registered estate or the same registered charge are to be taken to rank as between themselves in the order shown in the register.

223. For rules concerning the priority of a registered charge relative to prior charges which are registered or the subject of a notice in the register see Clauses 29, 30.

Subsection (2)

224. How such priority should be shown in the register and the manner in which applications for registration of priority of registered charges as between themselves should be made are left for rules.

CLAUSE 49 - TACKING AND FURTHER ADVANCES

225. Clause 49 sets out four circumstances in which the proprietor of a registered charge may make further advances on a security so that they have priority over a subsequent charge. No further means are permitted: Clause 49(6).

Subsections (1) and (2)

226. First, the proprietor of a registered charge may make further advances on the security of its charge that will rank in priority to a subsequent charge if it has not received from the subsequent chargee a notice about the creation of that subsequent charge: Clause 49(1). A notice of this kind is treated as received at the time when, in accordance with rules, it ought to have been received: Clause 49(2). Schedule 10, paragraph 5, confers a general power to make rules concerning the form, content and service of notices to be given under the Bill.

227. These provisions on further advances serve a similar purpose to, but are significantly different from, section 30(1) of the Land Registration Act 1925. Under section 30(1), the registrar serves notice of the second charge on the first lender. This can lead to practical difficulties because the second chargee has no control over the date on which the notice is issued by the registrar. In practice HM Land Registry can only send the notice when it has approved the entry of the second charge in the register. There are cases where, for one reason or another, approval cannot be given for some considerable time. Any further advances made by the first lender in the interim period take priority over the security of the second lender. Lenders do not in fact rely on service of a notice of a further advance by the registrar. The second lender serves the notice itself as it is entitled to do under the common law principles of tacking further advances that still apply to registered land. In accordance with the wishes of the lending industry, the Bill acknowledges and gives effect to the present practice. The registrar will no longer have any responsibility for serving notice of a further advance. It will be a matter for the second lender.

Subsection (3)

228. Secondly, the proprietor of a registered charge may make further advances on the security of its charge that will rank in priority to a subsequent charge if the advance was made in pursuance of an obligation and that obligation was entered in the register in accordance with rules at the time of creation of the subsequent charge. This will be the case where, for example, a lender is contractually obliged to lend further money to a borrower and this is entered in the register.

229. Except that this applies in respect of any subsequent charge and not merely a registered charge, this provision replicates the effect of section 30(3) of the Land Registration Act 1925.

Subsections (4) and (5)

230. Thirdly, the proprietor of a registered charge may make further advances on the security of its charge that will rank in priority to a subsequent charge if the parties to the charge have agreed a maximum amount for which the charge is security and the agreement was entered in the register in accordance with rules at the time of the creation of the subsequent charge: Clause 49(4). This provision is a new one and is intended to offer another means of making further advances.

231. The operation of this third method may be illustrated as follows. X charges land to Y to secure an overdraft to a maximum of £100,000. This is entered in the register. At a time when X is indebted to Y for £50,000, X creates a second charge in favour of Z for the sum of £50,000. X then borrows a further £20,000 from Y. As regards the sum of £20,000 borrowed by X from Y, Y's charge takes priority over Z's because it is within the maximum amount for which it is security. Once, however, advances made by the first lender to the chargor reach the maximum ceiling, any further advances made by it would have to be made under a new charge or the maximum sum for which the charge was security would have to be increased. If a second charge had been created in the interim it would necessarily take priority over the new charge of the first lender or any additional sums secured under its original charge.

232. The maximum sum must necessarily include all principal, interests and costs due under the mortgage, but will not include the costs of enforcing the security, which is additional to the mortgage.

233. The Bill enables rules to be made to provide that in relation to specified types of registered charge this new form of secured charge will not be available at all, or only subject to certain specified conditions: Clause 49(5).

Subsection (6)

234. Fourthly, the proprietor of a registered charge may make further advances on the security of its charge that will rank in priority to subsequent charges if the subsequent chargees agree. This reflects the general principle that the priority of charges can always be adjusted by agreement between the parties. It involves no change in the law.

CLAUSE 50 - OVERRIDING STATUTORY CHARGES: DUTY OF NOTIFICATION

235. This clause means that on registration of a statutory charge that overrides an existing charge that is registered or is protected by a caution, the registrar is under a duty to give notice of the creation of that charge to such persons as rules prescribe. The persons to be notified are likely to be those who have some form of charge or sub-charge over the registered land. The creation of a statutory charge, other than a local land charge, is a registrable disposition by virtue of Clause 27(5).

236. This provision gives better protection to existing chargees. For example, it would enable a chargee to make an informed decision as to whether or not it should make further advances to a chargor on the security of an existing charge where its security had been eroded because of a statutory charge. In the absence of such a provision the chargee might make further advances ignorant that his security had been diminished.

237. For the registrar's obligation to pay indemnity payable in respect of any loss suffered as a result of any failure by him to perform his duty under this Clause, see Schedule 8, paragraph 1(1)(h).

Powers as chargee

CLAUSE 51 - EFFECT OF COMPLETION BY REGISTRATION

238. Under the Bill, a registered charge may be created either as a charge expressed to be by way of legal mortgage or simply as a charge for the payment of money: see Clause 23(1). By Clause 51, whichever of these two methods is used, the charge takes effect as a charge by deed by way of legal mortgage for the purposes of section 87 of the Law of Property Act 1925, and the chargee has the rights and remedies accordingly.

CLAUSE 52 - PROTECTION OF DISPONEES

239. Subject to any entry in the register to the contrary, Clause 52(1) provides that the registered proprietor of a charge is to be taken to have, in relation to the property subject to the charge, the powers of disposition conferred on a legal mortgagee. For the powers of a legal mortgagee, see Part III of the Law of Property Act 1925.

240. This clause corresponds to Clause 26 (which applies to a disposition of a registered estate). Like Clause 26, its sole purpose is to protect a disponee in a case where the disponor -here the chargee -did not have power to make the disposition, but where there was nothing in the register to indicate this. This could arise, for example, where a chargee purported to exercise a power of sale that had not yet arisen. In the absence of an entry in the register to the contrary, the disponee's title cannot be questioned: Clause 52(2). As the Clause only protects the disponee's title, it will not prevent a chargor from pursuing any other remedies he or she may have, such as bringing an action for damages against the chargee.

241. This clause serves a similar purpose to, but extends the scope of, corresponding provisions found in the Law of Property Act 1925: section 104(2) and (3).

CLAUSE 53 - POWERS AS SUB-CHARGEE

242. Clause 53 is based upon but extends the effect of rule 163(2) of the Land Registration Rules 1925. Whereas rule 163(2) applies only in relation to property subject to the principal charge, Clause 53 also applies to property subject to any intermediate charge.

Realisation of security

CLAUSE 54 - PROCEEDS OF SALE: CHARGEE'S DUTY

243. Clause 54 makes it clear that, for the purposes of a mortgagee's duties in relation to application of proceeds of sale of registered land, "a person shall be taken to have notice of anything in the register".

244. This provision is new. It deals with the following issue. Where a mortgagee exercises its power of sale the proceeds are held in trust. After satisfying certain payments, any surplus is held on trust for "the person entitled to the mortgaged property": Law of Property Act 1925, section 105. The effect is that a mortgagee will hold the surplus on trust for any subsequent mortgagee of whose mortgage it has notice, actual, constructive or imputed. Where the mortgage relates to unregistered land, the mortgagee should search the Land Charges Register to discover the existence of any subsequent mortgages because registration constitutes actual notice. Under the Land Registration Act 1925 registration does not confer notice. Therefore, under the present law, a chargee should pay any surplus to the chargor unless he has been notified of the existence of a subsequent charge. Clause 54 changes the law. As a result of the provision, the chargee will have to consult the register to determine who is entitled to the surplus. Given the ease with which it is possible to search the register, this is not an onerous requirement.

CLAUSE 55 - LOCAL LAND CHARGES

245. This clause governs the enforceability of any local land charge which is a charge over registered land. Such a charge can only be realised if the title to it is registered. "Charge" is defined by the Bill to mean any mortgage, charge or lien for securing money or money's worth: Clause 129(1). For local land charges generally see the Local Land Charges Act 1975.

246. Although a local land charge to secure the payment of money in respect of registered land cannot be enforced until it is registered, prior to registration it will bind any disponee of the registered estate as an overriding interest: see Schedule 3, paragraph 6.

247. Clause 55 does not alter the present law: see Land Registration Act 1925, proviso to section 59(2).

Miscellaneous

CLAUSE 56 - RECEIPT IN CASE OF JOINT PROPRIETORS

248. Clause 56 is concerned with the power to give a valid receipt for the money secured by a charge where that charge is registered in the names of two or more proprietors. It replicates in rather simpler terms the effect of section 32 of the Land Registration Act 1925.

CLAUSE 57 - ENTRY OF RIGHT OF CONSOLIDATION

249. Consolidation is the right of a person who holds two or more mortgages granted by the same mortgagor to refuse to permit one mortgage to be redeemed unless the other or others are also redeemed.

250. Clause 57 enables rules to make provision about entry in the register of a right of consolidation in relation to a registered charge. Consolidation is presently regulated by rule 154 of the Land Registration Rules 1925.

PART 6: REGISTRATION: GENERAL

Registration as proprietor

CLAUSE 58 - CONCLUSIVENESS

Subsection (1)

251. Subsection (1) preserves the fundamental principle that the register is conclusive as to the proprietor of a registered legal estate. In other words, a registered legal estate is deemed to be vested in the registered proprietor. This principle is currently found in section 69(1) of the Land Registration Act 1925. "Legal estate" has the same meaning as in the Law of Property Act 1925: Clause 129(1) of the Bill.

252. If, for example, a person is registered as proprietor on the strength of a forged transfer, the legal estate will vest in that transferee even though the transfer is a nullity. Clearly this does not prejudice the right of any person interested to apply for the register to be altered if this is appropriate: see Clause 65 and Schedule 4.

Subsection (2)

253. Subsection (2) creates an exception to the principle set out in subsection (1) where-

(i) there is a registrable disposition; and

(ii) some further entry is required to meet the registration requirements set out in Schedule 2.

In such circumstances a legal estate is not deemed to be vested in the registered proprietor by virtue of Clause 58(1).

254. Clause 58(2) compliments Schedule 2 by ensuring that the registration requirements set out in that Schedule really are requirements.

255. The operation of Clause 58(2) may be illustrated as follows. X applies to be registered as the grantee of a 99-year lease. The lease is registered with its own title. However, the registrar fails to enter a notice of the lease on the superior freehold title. In these circumstances, Clause 58(1) will not operate to vest the legal estate in X, though it will be effective in equity. X can of course apply to the registrar to have the mistake corrected: see Schedule 4, paragraph 5(a).

CLAUSE 59 - DEPENDENT ESTATES

256. This clause sets out where in the register a person should be entered as the proprietor of a dependent estate.

Subsection (1)

257. First, if a legal estate subsists for the benefit of a registered estate, the entry of a person in the register as proprietor must be made in relation to the registered estate. "Legal estate" has the same meaning as in the Law of Property Act 1925: see Clause 129(1). By way of example, where a person is registered as the proprietor of an easement or a profit à prendre appurtenant, he or she must be entered in relation to the registered estate to which the benefit is annexed.

Subsection (2)

258. Secondly, where a person is registered as the proprietor of a charge on a registered estate, that entry must be made in relation to the estate subject to the charge.

Subsection (3)

259. Thirdly, where a person is registered as proprietor of a sub-charge, that entry must be made in relation to the registered charge to which the subcharge relates.

Boundaries

CLAUSE 60 - BOUNDARIES

Subsections (1) and (2)

260. Subsections (1) and (2) preserve the general boundaries rule presently contained in rule 278 of the Land Registration Rules 1925. Its effect is that the register is not conclusive as to the exact line of boundaries. This is subject to one exception. It is possible to determine the boundaries to a registered estate: see Clause 60(3). Where a boundary is so determined the register will be conclusive.

Subsection (3)

261. Subsection (3) contains the power to make provision, by rules, which will enable or require the exact line of the boundary of a registered estate to be determined.

262. At present, the power to fix boundaries is rarely used. This is because the process is expensive and may create boundary disputes because of the need to investigate the titles of all the adjoining landowners.

263. There are two aspects of the rule-making power contained in Clause 60(3) which make it likely that fixed boundaries will become more common in future.

264. First, the rule-making power makes it possible to prescribe a less demanding means of fixing boundaries than is presently employed. The development of modern mapping techniques is likely to make this possible. It is hoped that this will encourage landowners to have boundaries fixed in appropriate cases, such as where a development is laid out.

265. Secondly, Clause 60(3) provides that rules may, in particular, prescribe the circumstances in which a boundary may or must be fixed. The power to require boundaries to be fixed is a new one. One example where this might arise is in relation to the new system of adverse possession introduced by the Bill. Under the Bill, a person who has been in adverse possession of a registered estate for a period of 10 years may usually apply to be registered as proprietor of it: Schedule 6, paragraph 1. If the proprietor (or certain other interested persons) serves a counter-notice, the application will be rejected: Schedule 6, paragraphs 2 and 3. There are certain exceptions to this: Schedule 6, paragraph 5. In particular, a person will be entitled to be registered where-

(i) he or she has been in adverse possession of land adjacent to his or her own; and

(ii) for at least 10 years of that period of adverse possession, the squatter or his or her predecessor in title reasonably believed that the land to which the application relates belonged to him or her: Schedule 6, paragraph 5(4).

The reason for this exception is that legal and physical boundaries do not always coincide, as where physical features marked on the plan, such as fences, are no longer there. Where this is the case, and a neighbour reasonably believed that he or she owned the land, his or her claim should succeed. The exception in Schedule 6, paragraph 5(4), does not, however, apply where the boundary has been determined in accordance with rules under Clause 60(3): Schedule 6, paragraph 5(4)(b). Rules under Clause 60(3) are likely to require that where an applicant comes within the exception and acquires title to the land, the boundaries be fixed. This will ensure that he or she (or any successor in title) can never invoke this exception in relation to that registered estate again.

CLAUSE 61 - ACCRETION AND DILUVION

Subsection (1)

266. Subsection (1) makes it clear that the fact that a registered estate is shown in the register as having a particular boundary does not affect the operation of accretion or diluvion.

267. The principles of accretion and diluvion may be explained as follows. Where land is adjacent to water, erosion and other natural processes are likely to cause changes to the boundary between the land and the water. If land is added or lost by a gradual and imperceptible process of change, the legal boundary will shift in accordance with the physical boundary between the land and the water: see Southern Centre of Theosophy Inc v State of South Australia [1982] AC 706. Where an owner gains land in this manner it is called accretion. Where an owner loses land this is called diluvion.

268. It follows from Clause 61 that the doctrines of accretion and diluvion will apply whether the general boundaries rule applies or whether the exact line of the boundary has been determined in accordance with Clause 60.

Subsection (2)

269. Subsection (2) provides that an agreement about the operation of the doctrine of accretion and diluvion in relation to a registered estate has effect only if registered in accordance with rules. This subsection recognises the possibility that parties may, by agreement, exclude the operation of the doctrines of accretion and diluvion. For example, if the boundary between two registered estates is a stream, and the respective owners agree that the boundary should be in a particular place notwithstanding changes that might otherwise be made by movement of the stream, that arrangement will only be effective if it is recorded on the register in accordance with rules.

Quality of title

CLAUSE 62 - POWER TO UPGRADE TITLE

270. Clause 62 confers on the registrar power to upgrade the quality of any title that is not absolute. This is currently governed by section 77 of the Land Registration Act 1925 (substituted by the Land Registration Act 1986, section 1(1)). The Bill replicates the effect of the current provisions with some amendments.

Subsection (1)

271. Where a freehold estate is registered with a possessory or qualified title, subsection (1) enables the registrar to enter it as absolute if he is satisfied as to the title to the estate. For the different classes of freehold title that may be entered on first registration, see Clause 9. In determining whether he is satisfied as to the title, the registrar must apply the same standards as those which apply under Clause 9: see Clause 62(8).

272. The following example illustrates the type of situation in which a possessory title might be upgraded under Clause 62(1). On first registration X is registered with a possessory title because he is unable to prove title for the statutory period of at least 15 years: see Law of Property Act 1925, section 44(1). This may happen because X has lost the documents of title or believes them to have been destroyed. If they subsequently come to light, the registrar may enter X's title as absolute if he is satisfied as to the title to the estate.

273. Registration with a qualified title is rare and will only occur when the registrar considers that title can only be established for a limited period or subject to certain reservations that may disturb the holder under that title: see Clause 9(4). Before he could upgrade a qualified title to an absolute one under Clause 62(1), the registrar would therefore have to be satisfied that the cause of the original objections no longer threatened the holding under that title.

Subsection (2)

274. Subsection (2) gives the registrar the power to upgrade a leasehold title which has been registered as good leasehold. A leasehold title will be registered as such if the registrar is unable to satisfy himself as to the superior title. Subsection (2) therefore enables the registrar to upgrade a good leasehold title if he subsequently becomes satisfied as to the superior title. This might, for example, happen where the reversion expectant on a lease is registered for the first time. In determining whether he is satisfied as to the title, the registrar will have to apply the same standards as those which apply under Clauses 9 and 10: see Clause 62(8).

Subsection (3)

275. Subsection (3) provides that where the title to a leasehold estate is possessory or qualified, the registrar may upgrade it to-

(i) good leasehold, if he is satisfied as to the title to the estate; or

(ii) absolute, if he is satisfied both as to the title to the estate and as to the superior title.

276. When determining whether he is satisfied as to the title, the registrar will again have to apply the same standards as those which apply under Clauses 9 and 10: see Clause 62(8).

Subsection (4)

277. Where a freehold estate is registered with possessory title, subsection (4) confers a power on the registrar to enter it as absolute if-

(i) it has been registered as possessory for at least 12 years; and

(ii) he is satisfied that the proprietor is in possession of the land

278. A proprietor is in possession for these purposes in the circumstances set out in Clause 128. See below, paragraphs 559.

279. The reason for this provision is as follows. If a proprietor has been in possession for 12 years after first registration, the likelihood that any adverse rights could be successfully asserted is significantly reduced. Even if they were not barred by adverse possession at the time of first registration, it is probable that they will be 12 years later. This is because most (though not all) estates in unregistered land are extinguished by 12 years' adverse possession: see Limitation Act 1980, sections 15, 17. (Any rights adverse to the proprietor of the possessory title will necessarily be unregistered because possessory title is only given on first registration. The Bill creates a new system for dealing with adverse possession of registered land: see Clauses 95-97; and Schedule 6). The Lord Chancellor is given the power by order to change the period of 12 years to some other period: see Clause 62(9). This rule-making power will enable the period of 12 years to be kept in line with any changes that may be made to the 12 year period of limitation that currently applies in relation to unregistered land.

Subsection (5)

280. Where a leasehold estate is possessory, subsection (5) confers a power on the registrar to enter it as good leasehold if-

(i) it has been registered as possessory for at least 12 years; and

(ii) he is satisfied that the proprietor is in possession of the land.

281. Once again, the circumstances in which a proprietor is in possession for these purposes as explained in Clause 128. See below, paragraphs 559 and following.

282. The Lord Chancellor is again given the power by order to change the period of 12 years to some other period: see Clause 62(9). This is explained above: see paragraph 279.

Subsection (6)

283. Subsection (6) replicates the effect of section 77(4) of the Land Registration Act 1925. It operates to ensure that any such adverse claims which are outstanding are resolved before any application to upgrade the title is made.

Subsection (7)

284. Subsection (7) sets out the categories of persons who may apply to the registrar to have a title upgraded. It includes a wider class of persons than fall within section 77 of the Land Registration Act 1925. The following persons may apply-

(i) The proprietor of the estate to which the application relates.

(ii) A person entitled to be registered as the proprietor of that estate. The executor of a deceased registered proprietor would, for example, be able apply for the deceased's title to be upgraded.

(iii) The proprietor of a registered charge affecting that estate. For example, a mortgagee in possession could apply to have the title upgraded before exercising its power of sale.

(iv) A person interested in a registered estate which derives from that estate. For example, a tenant would be able to apply for the landlord's freehold title to be upgraded. This might be desirable where, say, the tenant wishes to have his or her own title upgraded from good leasehold to absolute: see Clause 62(2).

As now, a person who is interested in some other way in a registered estate will be able to request the registrar to exercise his power to upgrade title. This is so, even though that person may have no right to apply to him to do so and he would, therefore, be under no obligation to consider his or her request.

CLAUSE 63 - EFFECT OF UPGRADING TITLE

285. Clause 63 explains the effect of upgrading title (it is left to be inferred under the Land Registration Act 1925). If a person suffers loss when a title is upgraded, he or she will be regarded as having suffered loss by reason of the rectification of the register and will therefore be entitled to indemnity: see Schedule 8, paragraph 1(1)(a) and 1(2)(a). See below, paragraphs 731 and 732.

Subsection (1)

286. Subsection (1) sets out the effect of upgrading a registered freehold or leasehold title to absolute title. On such an upgrading, the proprietor will cease to hold the estate subject to any estate, right or interest whose enforceability was preserved by virtue of the previous entry about the class of title. For the estates, rights and interests, the enforceability of which is preserved under the different classes of title, see Clauses 11 and 12.

Subsection (2)

287. Subsection (2) sets out the effect of upgrading a leasehold title from possessory or qualified to a good leasehold title. Once again, the proprietor ceases to hold the estate subject to any estate, right or interest whose enforceability was preserved by virtue of the previous entry about class of title. For the estates, rights and interests whose enforceability is preserved under the various classes of leasehold title, see Clause 12. However, the upgrading of a title to good leasehold does not affect or prejudice the enforcement of any estate, right or interest affecting, or in derogation of, the title of the lessor to grant the lease.

CLAUSE 64 - USE OF REGISTER TO RECORD DEFECTS IN TITLE

Subsection (1)

288. Subsection (1) provides that, if it appears to the registrar that the right to determine a registered estate in land has become exercisable, he may enter the fact on the register. This power is new and is one of the provisions of the Bill that is intended to make the register as complete a source of information about title as possible.

Subsection (2)

289. Subsection (2) contains a rule-making power in relation to entries made under subsection (1). It specifies certain particular matters for which rules may make provision. The first of these -the circumstances in which there is a duty to exercise the power conferred by that subsection -requires further explanation. In most of the limited number of cases in which an estate may determine on the occurrence of an event, there are already simple and well-developed practices for protecting buyers of the land affected. In such cases there is no need to record the defect in title in the register, as there are already satisfactory solutions. One example is on an assignment of a lease. There is a risk that the assignor is in breach of covenant and that the landlord will, therefore, be able to exercise his or her right to re-enter and determine the lease. However, where a landlord accepts rent from a tenant whom he or she knows to be in breach of covenant, he or she will be taken to have waived the breach of covenant. Conveyancers take advantage of this principle and require the assignor of a lease to produce the last receipt for rent prior to the assignment. This creates a rebuttable presumption that all the covenants and provisions of the lease have been fully performed: Law of Property Act 1925, section 45(2) and (3). Because there is already a procedure for dealing with this situation, there is little point in empowering the registrar to enter on the register the fact that the lease might be determined.

290. Rules are likely to confine the exercise of the power under subsection (1) to those cases where there is presently no established procedure for dealing with the problem, and in particular to cases concerning rentcharges. An example might be where X purchases a registered freehold estate from Y which is subject to a rentcharge in favour of Z. Z has a right of re-entry in the event of the non-payment of the rentcharge. In the course of undertaking the conveyancing work, X's solicitor discovers that the rentcharge has not been paid by Y for some years. X is prepared to take the risk of acquiring the land nonetheless. X's title is, in law, a bad one. If X decides to sell the land, an intending buyer may not enquire as to whether the rentcharge has been paid until after he or she has expended money in relation to the purchase, as by making local searches or engaging a surveyor. Under the present law, there will be nothing on the register to indicate the defect in title. Clause 64 of the Bill is intended to meet this shortcoming.

291. Rules made under subsection (2) will be land registration rules such that they will be laid before Parliament only: see Clauses 129(1) and 125(3).

Alteration of register

CLAUSE 65 - ALTERATION OF REGISTER

292. Under this provision, Schedule 4 to the Bill, which contains the provisions on the alteration of the register, has effect. The provisions of the Bill on alteration and rectification are discussed in the notes to Schedule 4.

Information etc.

CLAUSE 66 - INSPECTION OF THE REGISTERS ETC

293. Clause 66 is one of the most important provisions in the Bill. It replaces, and extends the scope of, section 112 of the Land Registration Act 1925 (as substituted by the Land Registration Act 1988), which first made provision for an open register. The open register is an essential element in the move to a system of electronic conveyancing under which virtually all enquiries can be made on-line.

Subsection (1)

294. Subsection (1) provides that a person may inspect and make copies of, or of any part of, the following—

(i) The register of title. This replicates the effect of section 112(1)(a) of the Land Registration Act 1925.

(ii) Any document kept by the registrar which is referred to in the register of title. The Bill does not replicate the present exception in relation to leases or charges (or copies of leases or charges): cf Land Registration Act 1925, section 112(1)(b). However, it is anticipated that rules made under Clause 66(2) will restrict this right of access to protect private information in a manner that is similar to the Freedom of Information Act 2000.

(iii) Any document kept by the registrar which relates to an application to him. At present, such documents can usually only be inspected at the discretion of the registrar: Land Registration Act 1925, section 112(2)(b). Once again, rules under Clause 66(2) are likely to qualify this right.

(iv) The register of cautions against first registration. The formal establishment of a register of cautions against first registration is new: see Clause 19. The register is to be open. Although new in form, this is not in fact a novelty. Currently, cautions against first registration are recorded in the Index Map and there is a right to search the Index Map and also to obtain copies of a caution title: see Land Registration (Open Register) Rules 1991, rules 8 and 9.

Subsection (2)

295. Subsection (2) provides that the right to inspect and copy in Clause 66(1) is subject to rules. These rules may, in particular, provide for exceptions to the right and impose conditions including conditions requiring the payment of fees. It is likely that rules made under Clause 66(2) will restrict access to documents which are of a private nature or which contain commercially sensitive information to those who have a good reason to see them.

296. Rules made under subsection (2) will be land registration rules such that they will be laid before Parliament only: see Clauses 129(1) and 125(3).

CLAUSE 67 - OFFICIAL COPIES OF THE REGISTERS ETC

Subsection (1)

297. Subsection (1) provides that an official copy is admissible in evidence to the same extent as the original. It replicates part of the effect of section 113 of the Land Registration Act 1925, which provides that "office copies" are admissible in evidence to the same extent as the original. In practice, "office copies" are copies made by the land registry which take a particular form and which are certified, by statute, to be accurate. The Bill replaces the old terminology of "office copy" with the more descriptive term "official copy".

298. The matters in respect of which an official copy may be obtained under Clause 67(1) mirror those listed in Clause 66. The things of which copies are admissible under Clause 67 are the things of which copies may be taken under Clause 66.

Subsection (2)

299. Subsection (2) makes it clear that a person who relies on an official copy in which there is a mistake is not liable for loss suffered by another by reason of that mistake. However, where a person suffers loss by reason of a mistake in an official copy he or she will be entitled to indemnity under Schedule 8, paragraph 1(1)(d).

Subsection (3)

300. Subsection (3) contains the power to make rules concerning the issue of official copies. Rules may, in particular, make provision about who may issue them: Clause 67(3)(b). In this respect, it may be noted that, following the introduction of electronic conveyancing, there will be a power to authorise persons such as solicitors and licensed conveyancers to issue official copies pursuant to a network access agreement: Schedule 5, paragraph 1(2)(d).

301. Rules made pursuant to subsection (3) will be land registration rules: Clause 129(1). As such, they will be laid before Parliament only: see Clause 125(3).

CLAUSE 68 - INDEX

Subsection (1)

302. This subsection imposes a duty on the registrar to keep an index for the purpose of enabling the matters mentioned in the subsection to be ascertained in relation to any parcel of land. Under the present law, this duty is found in rule 8 of the Land Registration Rules 1925. It more properly belongs in primary legislation which is why it is included in the Bill. Clause 68 does not require the index to be specifically tied to a map as such. It suffices that the information is ascertainable from the index. This will mean that the index can be kept in dematerialised form.

Subsection (2)

303. Subsection (2) enables rules to be made about various matters in relation to the index. In particular, rules may make provision as to how the index is to be kept, including the following matters-

(i) The information to be included in it. This might be wider than it is at present and might, for example, include land use.

(ii) The form in which such information is to be kept. This power would enable the index to be kept in electronic form.

(iii) The arrangement of information.

304. Secondly, rules may make provision about official searches of the index. Official searches of the Index Map can already be made electronically through Direct Access: see Direction of the Chief Land Registrar, 12 May 1997.

305. Rules made under subsection (2) will be land registration rules and will be laid before Parliament only: Clauses 125(3) and 129(1).

CLAUSE 69 - HISTORICAL INFORMATION

Subsection (1)

306. Subsection (1) provides that the registrar may on application provide information about the history of a registered title.

307. The power contained in Clause 69(1) is a new one. The reason for this provision may be explained as follows. The register of title only provides details of the title as it stands at any given time. It is a snapshot, not a chronology of the title. It does not provide any details as to the historical devolution of that title. There may, however, be occasions when a person has a reason for wishing to know the historical devolution of a registered title, as for example where-

(i) an issue has arisen as to whether a former proprietor is liable on the covenants for title which were implied on an earlier transfer (the benefit of such covenants is annexed to the land benefited and runs with it);

(ii) it is necessary to discover more about the ownership of land at the time when a restrictive covenant was entered into in order to determine the extent of the land that it was intended to benefit; or

(iii) there is an issue as to whether certain freeholds had at some stage been in common ownership so as to extinguish certain easements or covenants.

308. HM Land Registry does in fact keep a computerised record of the history of registered titles for its own purposes, although it is not necessarily complete. Although there is at present no right to inspect that record, the registrar does sometimes provide information as to the devolution of a registered title if the applicant can show a good reason for wishing to see it. Clause 69 places this practice on a statutory footing.

309. It should be noted that Clause 69(1) does not impose any obligation on the registrar to compile or keep an historical record of titles. The record that the registrar may disclose is such as the Registry may happen to have.

Subsection (2)

310. Subsection (2) provides that rules may make provision about applications for the exercise of the registrar's power to provide historical information.

311. It is likely that rules will restrict the categories of persons who may apply for the registrar to exercise his power. An investigation of the history of a title will necessarily add time and expense to the conveyancing process and it should only be carried out where there is a sound reason for doing so. Moreover, it should never become a routine inquiry that a buyer's solicitor or licensed conveyancer feels that he or she is bound to make.

312. Rules under subsection (2) will be land registration rules and will be laid before Parliament only: Clauses 125(3) and 129(1).

CLAUSE 70 - OFFICIAL SEARCHES

313. This clause confers a rule-making power to make provision for official searches of the register, including searches of pending applications for first registration. Where an applicant makes an official search he or she will obtain an official copy of the register of title and of any documents abstracted in it. There are certain specific matters for which rules may, in particular, be made. These are-

(i) The form of applications for searches.

(ii) The manner in which such applications may be made. Under the present law, an application for an official search can already be made electronically by means of the Direct Access system: see Notice of the Chief Land Registrar, 12 May 1997.

(iii) The form of official search certificates.

(iv) The manner in which such certificates may be issued. With the introduction of electronic conveyancing, persons such as solicitors and licensed conveyancers may be authorised to issue official search certificates pursuant to a network access agreement: see Schedule 5, paragraph 1(2)(c).

314. For the provisions of the Bill relating to official searches with priority protection, see Clause 72, below paragraphs 317 and following.

Applications

CLAUSE 71 - DUTY TO DISCLOSE UNREGISTERED INTERESTS

315. The purpose of this provision is to ensure that an applicant for registration -whether for first registration or in respect of a registrable disposition -discloses to the registrar any unregistered interests which fall within Schedule 1 or 3 affecting the property, so that they can be entered on the register. As such, it forms part of the machinery to ensure that the register becomes as complete a record of title as is reasonably practicable. The registrar will only wish to enter in the register such rights as are clear and undisputed. Rules will therefore provide guidance as to when an applicant for registration is obliged to provide information and in respect of which unregistered interests. The rules will be land registration rules and will be laid before Parliament only: Clauses 125(3) and 129(1). For unregistered interests that override first registration and registered dispositions respectively, see below Schedules 1 and 3.

316. There will be no direct sanction for breach of an obligation to disclose information under rules made pursuant to Clause 71. However, when electronic conveyancing becomes operative, compliance with such rules is likely to be a condition of any network access agreement. For network access agreements and the sanctions for breaching their terms, see Schedule 5, below, paragraphs 645 and following.

CLAUSE 72 - PRIORITY PROTECTION

317. This clause makes provision for priority protection in relation to official searches and the noting in the register of certain types of contract.

318. At present, priority protection can only be obtained in relation to official searches. Priority protection is a matter of considerable importance in relation to registered conveyancing. Where a purchaser obtains an official copy of the register, this will be a statement of the title on the date on which the search is made. Between the date on which that copy is made and completion, third party rights might supervene. But for priority protection, the buyer might-

(i) complete and find him or herself bound by such rights; or

(ii) conduct a search just before completion, discover the existence of such rights and refuse to complete at all or until the defect in title has been removed.

However, where an official search is made with priority protection, this enables a purchaser to obtain an official copy of the register and to ensure that his or her interest takes priority over any other entry made during the priority period. Official searches with priority protection are currently governed by the Land Registration (Official Searches) Rules 1993. Given its importance, the main principles governing priority protection are included in the Bill leaving matters of technical detail only to rules.

Subsection (1)

319. Subsection (1) makes provision as to when an application for an entry in the register will be protected. It should be read with subsection (6)(a), which, by means of a rule-making power indicates the two situations under the Bill in which priority protection will be available, namely on an official search (as now) and when an estate contract is noted in the register. The latter is new and is linked to the introduction of electronic conveyancing. With the introduction of electronic conveyancing, it is likely that-

(i) any disposition of a registered estate or charge or a contract to make such a disposition will take effect only when it is registered; but

(ii) the making and registration of a contract or disposition will occur simultaneously.

It follows that it will become necessary to enter a notice in the register in respect of any estate contract. At present it is unusual to enter a notice in respect of estate contracts. Because it will become necessary to enter a notice for any contract to be valid, it is reasonable that this should confer the additional advantage of priority protection.

Subsection (2)

320. This subsection sets out the effect of priority protection. Where an application for an entry in the register is protected, any entry made in the register during the period relating to the application, is postponed to any entry that is made in pursuance of the application. There are two exceptions to this protection. These are set out in subsections (3) and (4), explained below.

321. The following example may be taken to illustrate the manner in which priority protection operates-

(i) X is the registered proprietor of a parcel of land.

(ii) On 1 March Z obtains a charging order over X's land.

(iii) On 1 April, X contracts to sell his land to Y. Y's estate contract is protected by a notice and the entry of that notice also confers priority for the priority period which is, say, 30 days.

(iv) On 7 April, Z applied for the entry of a notice in the register in respect of her charging order: see Clause 87(1)(b). (v) On 21 April, X executes a transfer on sale of the land to Y. Within the 30-day priority period, Y applies to register that transfer and is then registered.

In these circumstances, Y takes free of Z's charging order. Even though Z's charging order had priority over Y's estate contract (because it predated it), Y will take free of it because it was not protected on the register at the time of transfer. If it were not for the priority protection that was conferred when Y entered a notice of the estate contract, Z's application for a notice would have been effective and her charging order would have bound Y on registration. In other words, the protection given to Y's estate contract will prevent an entry on the register of Z's prior interest which, if it were entered on the register prior to the registration of the disposition to Y, would otherwise have priority.

Subsection (3)

322. Subsection (3) forms an exception to the principle that where an entry in the register is made in pursuance of an application to which a priority period relates, any entry made in the register during the priority period relating to the application is postponed to any entry that is made in pursuance of the application. If A had made an official search with priority on 1 April, and B then made an official search with priority on 10 April, A's application to register a transfer in her favour would not be postponed to, but would take priority over, B's application.

Subsection (4)

323. Subsection (4) forms a further exception to the principle of priority protection. This exception applies where the court makes a direction pursuant to Clause 46(3) that a restriction be entered with overriding priority: see above, paragraph 214. This overrides the priority that the application would otherwise have.

Subsection (5)

324. This subsection enables the registrar to wait until the end of the priority period to determine whether in fact it is necessary for him to make any entry at all, or, if it is, in what form. Where subsection (2) applies, it may have the effect that the interest in respect of which registration is sought may have been defeated by the disposition that has priority protection whether in whole or in part. Thus, for example, if the priority period related to a leasehold estate, and an application was made to enter a notice of a restrictive covenant during that period, the notice of the covenant would affect the title of the reversion, but not of the lease.

Subsection (6)

325. Subsection (6)(a) was considered above in relation to the explanatory notes on subsection (1): see above, paragraph 319. Subsection (6)(b) enables rules to be made that make provision for the keeping of records in relation to priority periods and the inspection of such records. This will make it possible for a person to discover whether there is any priority period in place in respect of another application.

Subsection (7)

326. It was explained above that subsection 6(a) confers the power to make rules concerning the two cases in which priority protection may be given: see above, paragraph 319. Subsection (7) specifies four particular matters in relation to which rules may be made under that power. Two of these require some explanation. First, as regards subsection (7)(b) (the applications for registration to which such a period relates), a purchaser will commonly be buying land with the aid of a mortgage so that both the transfer and the charge will require protection. Secondly, subsection (7)(d) (the application of subsections (2) and (3) in cases where more than one priority period relates to the same application), is intended to meet the following situation. In some cases a person might, for example, make an official search with priority before contracting to buy certain land. When a second search is made with priority or the estate contract is noted on the register, this will result in a further period of priority. Subsections (6)(a) and (7) will enable rules to be made about how the two periods interrelate and what happens where a third party makes a priority search in between the two events.

CLAUSE 73 - OBJECTIONS

Subsection (1)

327. Subsection (1) lays down the principle that, subject to subsections (2) and (3), anyone may object to an application to the registrar under the Bill.

328. The Bill makes provision for the making of applications in many circumstances. Clause 73 sets out the means by which an application may be challenged. The right to challenge applications under Clause 73 is referred to in the Bill as the "right to object": Clause 129(3)(c).

329. It should be noted that where a person exercises his or her right to object to an application to the registrar without reasonable cause, he or she will be in breach of statutory duty under Clause 77.

Subsections (2), (3) and (4)

330. The principle that anyone may object to an application to the registrar, is subject to two exceptions which are set out in subsections (2) and (3).

(i) In relation to an application for the cancellation of a caution against first registration under Clause 18, only the person who lodged the caution or his or her personal representative may object: Clause 73(2).

(ii) Where an application is made for the cancellation of a unilateral notice under Clause 36, only the person shown on the register as the beneficiary of it may object: Clause 73(3).

Furthermore, the right to object is subject to any rules that may be made under subsection (4). Such rules will be land registration rules and are required to be laid before Parliament only: Clauses 125 and 129(1).

Subsections (5) and (6)

331. As a result of subsection (5), where an objection is made, the registrar must give notice of it to the applicant and may not determine the application until the objection is disposed of. Paragraph 5 of Schedule 10 contains a general rule-making power concerning the form, content and procedure to be adopted in relation to notices under the Bill. Such rules will be land registration rules and are required to be laid before Parliament only: Clauses 125 and 129(1).

332. Subsection (5) will not apply where the registrar is satisfied that the objection is groundless: see Clause 73(6). If a person wishes to challenge the registrar's decision, he or she must seek judicial review of it.

Subsections (7) and (8)

333. Where an objection is made to an application and this cannot be disposed of by agreement, subsection (7) requires the registrar to refer the matter to the Adjudicator to HM Land Registry. For the main provisions of the Bill that govern adjudication and the Adjudicator, see Part 11 and Schedule 9.

334. Subsection (8) enables rules to make provision about references to the Adjudicator under subsection (7). Such rules are land registration rules and are therefore required to be laid before Parliament: see Clauses 125(3) and 129(1).

CLAUSE 74 - EFFECTIVE DATE OF REGISTRATION

335. This clause makes provision for the effective date of registration. At present, registration is deemed to occur when an application is delivered to the Registry: see Land Registration Rules 1925, rules 24, 42 and 83.

336. Clause 74 provides that an entry made in the register pursuant to an application for first registration or an application to register a registrable disposition has effect from the time of the making of the application. Rules may make provision about when an application under the Act is to be taken as made: see Schedule 10, paragraph 6(c).

337. With the development of electronic conveyancing, Clause 74 may become obsolete in the fairly near future. This is because, under the system of electronic conveyancing, it is likely that a disposition and its registration will occur simultaneously: see Clause 93 and paragraphs 421 and following, below.

Proceedings before the registrar

CLAUSE 75 - PRODUCTION OF DOCUMENTS

Subsections (1) and (2)

338. Subsection (1) gives the registrar the power to require a person to produce a document for the purposes of proceedings before him. He might (for example) exercise it in the following circumstances. X, the registered proprietor of a property applies for the cancellation of a consensual notice in respect of an option which he claims is spent. The option was entered into by X's predecessor in title. Neither X nor the registrar has a copy of the option agreement. Y, having the benefit of the option, has a copy but is unwilling to produce it. In this situation the registrar might require Y to produce the document.

339. Subsection (2) provides that the power to require the production of documents is subject to rules. Rules made under subsection (2) will be land registration rules and are required to be laid before Parliament only: see Clauses 125(3) and 129(1).

Subsection (3)

340. Subsection (3) provides that where the registrar requires a person to produce a document, this will be enforceable as an order of the court. It follows that non-compliance will be enforceable as contempt. Under the Bill references to the court are to the High Court or a county court: see Clause 129(3)(a).

Subsection (4)

341. Subsection (4) enables a person who is aggrieved by a requirement to produce a document to appeal to a county court, which may make any order which appears appropriate.

CLAUSE 76 - COSTS

Subsections (1) and (2)

342. Subsection (1) gives the registrar the power to make orders about costs in relation to proceedings before him, as for example in connection with such matters as applications and procedures before the registrar.

343. Subsection (2) provides that the power to make orders about costs is subject to rules. Such rules will be land registration rules and are required to be laid before Parliament only: see Clauses 125(3) and 129(1).

Subsection (3)

344. Subsection (3) makes it clear that rules made under subsection (2) may include provision about costs incurred by the registrar and liability for costs thrown away as the result of neglect or delay by a legal representative of a party to proceedings. This will serve the same purpose as a "wasted costs order" does in court proceedings.

Subsection (4)

345. Subsection (4) provides that where the registrar makes an order about costs, the order will be enforceable as an order of the court. It follows that noncompliance will be enforceable as contempt. Under the Bill references to the court are to the High Court or a county court: see Clause 129(3)(a).

Subsection (5)

346. Subsection (5) enables a person who is aggrieved by a costs order to appeal to a county court, which may make any order which appears appropriate.

Miscellaneous

CLAUSE 77 - DUTY TO ACT REASONABLY

347. Under section 56(3) of the Land Registration Act 1925, a person who, without reasonable cause, lodges a caution, whether against first registration or dealings, is liable to compensate any person who suffers damage in consequence. Cautions against dealings are prospectively abolished under the Bill: see above, paragraph 161. However, it is possible to enter both notices and restrictions unilaterally. It is therefore necessary to have some equivalent to section 56(3) to discourage improper entries, particularly given their potential to disrupt conveyancing transactions. This is found in Clause 77.

348. Subsection (1) creates a statutory duty not to exercise any of the following rights without reasonable cause-

(i) The right to lodge a caution against first registration under Clause 15.

(ii) The right to apply for the entry of a notice or a restriction. For the provisions of the Bill that govern notices and restrictions, see Part 4.

(iii) The right to object to an application to the registrar. For this right, see Clause 73.

It will be apparent from this that Clause 77 extends the present law. Not only does it apply to applications to enter notices and restrictions without reasonable cause (for the reasons mentioned in paragraph 347), but it also applies to those who abuse the right to object in Clause 73.

349. Subsection (2) means that where a person is in breach of this statutory duty he or she will be liable in damages to any person who suffers loss in consequence.

CLAUSE 78 - NOTICE OF TRUST NOT TO AFFECT REGISTRAR

350. Clause 78 replicates the principle, presently found in Land Registration Act 1925, section 74, that the registrar shall not be affected with notice of any trust.

PART 7: SPECIAL CASES

The Crown

CLAUSE 79 - VOLUNTARY REGISTRATION OF DEMESNE LAND

Subsection (1)

351. This clause addresses an anomaly that arises from the survival of certain ancient feudal principles. Most land in England and Wales is held by a landowner for a legal estate in fee simple. The only exception is the land held by the Crown in demesne. Demesne lands are those held by the Crown as sovereign or lord paramount in which it has no estate. The Crown has substantial holdings of demesne land which include-

(i) the foreshore around England and Wales except where it has been granted away or is in some other way vested in a private owner;

(ii) land which has escheated to the Crown (for an explanation of escheat, see below paragraph 366); and

(iii) the ancient lands of the Crown which it has never granted away.

352. At present it is not possible for the Crown to register its title to land held in demesne. This is because section 2(1) of the Land Registration Act 1925 provides that "estates capable of subsisting as legal estates shall be the only interests in land in respect of which a proprietor can be registered". As the Crown has no estate in its demesne land, it cannot register the title: see Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793, 798. Moreover, it is doubtful whether the Crown could ever make an infeudatory grant of an estate to itself out of its paramount lordship. The Crown is one and indivisible and it cannot, therefore, hold land directly of itself as feudal lord. The Bill makes provision to overcome this difficulty.

353. Subsection (1) provides that Her Majesty may grant an estate in fee simple absolute in possession out of demesne land to Herself. For the purposes of the Bill, demesne land means land belonging to Her Majesty in right of the Crown which is not held for an estate in fee simple absolute in possession: see Clause 129(1). It does not include land which has escheated unless there has been an act of entry or management by the Crown: see Clause 129(2). It should be noted that the only purpose for which Her Majesty may grant Herself a fee simple is so that the estate can be registered: see below, paragraph 354. In this way the Crown will be able to obtain the substantial benefits that registration under the Bill offers. In particular, it will give the Crown better protection from encroachment by squatters because of the provisions of the Bill on adverse possession: see below, Part 9 and Schedule

6. It also accords with one of the aims of the Bill which is to seek to encourage total registration. Subsections (2), (3), (4) and (5)

354. Subsection (2) provides that where Her Majesty grants Herself a fee simple under subsection (1), that grant will not be treated as having been made unless an application for voluntary first registration under Clause 3 is made before the end of the period for registration. The basic period for registration is 2 months from the date of grant: see Clause 79(3). The registrar may on application by Her Majesty extend that period by order if he is satisfied that there is a good reason for doing so: see Clause 79(4).

355. If the registrar makes an order extending the period for registration after the initial period has elapsed, the grant will not be treated as having been invalidated by the failure to register within the initial period: Clause 79(5).

356. Although Clause 79 is concerned with voluntary registration of land held in demesne, the effect of a failure to register the grant of a fee simple is to invalidate it. The position is analogous to the situation where a disposition of unregistered land that is subject to compulsory registration is not registered within the period of registration: cf Clauses 6 and 7, above. As indicated in paragraph 353 above, these provisions are intended to ensure that the power to grant a fee simple can only be employed to secure the registration of title to the land.

CLAUSE 80 - COMPULSORY REGISTRATION OF GRANTS OUT OF DEMESNE LAND

357. This clause makes special provision for compulsory first registration where the Crown grants an estate out of demesne land (other than to itself under the power under Clause 79). At present, such grants are subject to compulsory registration under section 123 of the Land Registration Act 1925. However, they do not fall within the wording of Clause 4, which only applies to-

(i) the transfer of; or

(ii) the grant of certain leases out of;

an estate in fee simple or of a leasehold estate which has more than seven years to run: see Clause 4(1) and (2).

Subsections (1) and (2)

358. In addition to the list of events that trigger compulsory first registration under Clause 4, subsection (1) adds the following grants by Her Majesty out of demesne land-

(i) The grant of an estate in fee simple absolute in possession, other than a voluntary grant to Herself under Clause 79.

(ii) The grant of a term of years absolute of more than seven years from the date of grant that is made for valuable or other consideration, by way of gift or in pursuance of an order of the court. A grant by way of gift includes a grant for the purpose of constituting a trust under which Her Majesty does not retain the whole of the beneficial interest: see Clause 80(2).

For the meaning of demesne land, see Clause 129(1) and (2).

Subsection (3)

359. Subsection (3) excepts from the requirement of compulsory registration the grant by the Crown of mines and minerals held apart from the surface. It corresponds to Clause 4(9), and is associated with the difficulties that, for historical reasons, apply to the registration of mineral rights.

Subsection (4)

360. Subsection (4) confers a power on the Lord Chancellor, by order, to add to the events relating to demesne land that trigger compulsory registration and to make such consequential amendments as he thinks fit. This power is exercisable by statutory instrument that is subject to annulment in pursuance of a resolution of either House of Parliament: see Clause 125(2) and (4). Cf Clause 5.

Subsection (5)

361. The effect of subsection (5) is that if a grant is required to be registered within the period for registration stipulated by Clause 6, but is not, it takes effect as a contract made for valuable consideration to grant the legal estate concerned.

CLAUSE 81 - DEMESNE LAND: CAUTIONS AGAINST FIRST REGISTRATION

362. Under Clause 15, a caution against first registration can only be lodged against the registration of a title to an unregistered estate. As the Crown holds no estate in its demesne land, it would not be possible to lodge a caution against the first registration of demesne land in the absence of some express provision. To meet this difficulty, subsection (1) provides that Clause 15, which concerns the right to lodge a caution against first registration, shall apply as if demesne land were held by Her Majesty for an unregistered estate in fee simple absolute in possession. For the definition of demesne land, see Clause 129(1) and (2).

363. It has been explained in relation to Clause 15 that two years after that clause is brought into force, it will cease to be possible for a person who holds either a freehold or leasehold estate that is capable of being registered with its own title, to lodge a caution against first registration of that title: see above, paragraphs 72 and following. This is because cautions against first registration are not intended to be a substitute for first registration. In relation to the Crown, the Bill makes special provision. The Crown has not hitherto been able to register the title of land that it holds in demesne. Given the extent of the Crown's demesne land, it will take some time to register it using the procedure set out in Clause 79. In the interim the Crown may wish to protect such land by lodging a caution against first registration. Paragraph 15 of Schedule 12 therefore permits it to lodge cautions against the first registration of any demesne land for 10 years after Clause 15 comes into force, or such longer period as may be provided for by rules. Such rules will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125. It is anticipated that an extension of the 10-year period is likely to be necessary. The reason for specifying a 10-year period is to ensure that the process of registration is kept under review. After 10 years it will be possible to make a better estimate as to how long it will take to register the Crown's demesne land and to extend the period accordingly.

364. It should be noted that, under Clause 81, it will be possible for cautions against first registration in respect of demesne land to be lodged not only by the Crown, but also by other persons having an interest in demesne land.

Subsection (2)

365. Subsection (2) enables modifications to be made to the provisions on cautions against first registration should this be necessary to adapt them to demesne land. Rules made under this subsection will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125.

CLAUSE 82 - ESCHEAT ETC

366. Clause 82 is intended to solve a specific problem that currently arises in relation to escheat. Escheat occurs on the determination of a freehold estate. The owner's estate having determined, the feudal lord of whom he or she held the land -which will in practice be the Crown or one of the Royal Duchies (Cornwall and Lancaster) -becomes entitled to the land, but freed from the estate that previously encumbered it. However, the lord takes the land subject to subsisting charges or other incumbrances created by any former owner of the defunct fee simple. Although escheat occurs automatically on the determination of a freehold estate, it is only completed when the lord to whom the land reverts takes possession or control of it, or takes proceedings for its recovery. Until that time, the lord will not be subject to liabilities that affect the land, such as the burden of a landlord's covenants where the land is subject to a subsisting tenancy.

367. Escheat can occur whenever, and for whatever reason, a legal estate in fee simple determines. The most common circumstances involve the disclaimer of such an estate. In particular, when a company is dissolved, its property vests in the Crown as bona vacantia. By section 656 of the Companies Act 1985, the Crown is permitted to disclaim such property. In practice, where the property is onerous (as it often is), the Treasury Solicitor will disclaim it. The effect of disclaimer is that the freehold determines and the land escheats to the Crown or one of the Royal Duchies. For other situations in which escheat occurs on disclaimer, see sections 178 and 315 of the Insolvency Act 1986. Although the land will automatically vest in the Crown Estate or one of the Royal Duchies, they will not be subject to liabilities attaching to the property unless and until there is some act of entry or management.

368. At present, where a registered estate escheats, its title will be removed from the register. This is because the estate no longer exists. Where the land escheats to the Crown, it will be held in demesne and (as the law now stands) cannot be registered. If it passes to one of the Royal Duchies, that Duchy will hold the land by virtue of its own unregistered fee simple estate. Under the Bill it would in theory be possible for land that has escheated to be registered voluntarily under Clause 3 (where the lord by escheat holds a freehold estate) or Clause 79 (where the land escheats to the Crown and forms part of its demesne). However, in practice it is unlikely that the land would be registered voluntarily, because to do so would constitute an act of management. The Crown or Royal Duchy would then become subject to the liabilities attaching to the property.

369. Consistently with the ultimate goal of total registration, the Bill therefore provides a mechanism for keeping on the register a registered freehold estate that has escheated. The rule-making power contained in Clause 82 is intended to ensure that such an estate may remain on the register until such time as there is a disposition of the land by the Crown or Duchy, or by order of the court.

370. It is envisaged that rules under this provision might operate in the following way. Where a registered freehold escheats, its title will not be closed. Instead, either the Treasury Solicitor (if he or she disclaims) or the Crown Estate or Royal Duchy (in other cases) will apply for the entry of a restriction in the register. Such a restriction is likely to prohibit the entry of a disposition in the register unless it is made by order of the court or by or on the direction of the Crown Estate. When such a disposition is made, it will necessarily create a new fee simple and it will be registered with a new title number. The old title will then be closed. Any encumbrances to which the former title was subject and which still subsist in relation to the new estate will be entered in the register of the new title.

371. Rules under Clause 82 will be land registration rules and will be required to be laid before Parliament only: Clauses 129(1) and 125.

372. Subsection (2) provides that rules may, in particular, make provision about various matters. An example of what is likely to be required under (a) is that the appropriate restrictions are entered in the register when a disclaimer occurs. As regards (b), the rules will ensure that encumbrances on the former title will subsist in relation to the new estate when it is entered in the register. The rules made under (c) are likely to provide that the fact of escheat is recorded on the register. This will ensure that as and when a new freehold estate is granted, the subsisting encumbrances are transferred and that the old title is closed. The sort of requirements that may be required under (d), are that it should be necessary to refer to the number of the former title in the application to register the new estate.

CLAUSE 83 - CROWN AND DUCHY LAND: REPRESENTATION

373. Clause 83 sets out which bodies or persons may represent the owner of Crown or Duchy interests for the purposes of the Bill. It also sets which bodies or persons are entitled to receive notices and make applications under the Bill in respect of such interests. Clause 83 performs the same function as section 96 of the Land Registration Act 1925 does under the present law.

CLAUSE 84 - DISAPPLICATION OF REQUIREMENTS RELATING TO DUCHY LAND

374. The law governing sale and acquisition of land by the Royal Duchies of Cornwall and Lancaster is based upon a series of complex mid-19th century Acts of Parliament that reflect the uncertainties of conveyancing at that time. Dispositions to and by the Duchies have to comply with certain requirements that are incompatible with registered conveyancing. In particular, deeds or instruments relating to a disposition either to a Duchy, or of Duchy land, are required to be enrolled in the relevant Duchy office within six months if they are to be valid. The certainty that this was originally designed to achieve is now much more effectively attained by registration of title under the Land Registration Act 1925. Clause 84 is intended to provide some alleviation of the position. Its effect is that a disposition of a registered estate or charge by or to either the Duchy of Cornwall or the Duchy of Lancaster can be made in the usual way, regardless of the requirements that would otherwise apply under the legislation governing the Duchies.

CLAUSE 85 - BONA VACANTIA

375. The Bill does not affect the operation of bona vacantia. The rule-making power contained in Clause 85 is included so that specific provision may be made, should it be necessary, as to how the passing of a registered estate or charge is to be dealt with for the purposes of the Bill. Rules under Clause 85 will be land registration rules and will be required to be laid before Parliament only: Clauses 129(1) and 125.

Pending actions etc.

CLAUSE 86 - BANKRUPTCY

376. Clause 86 makes special provision for the effect of bankruptcy. This is necessary to reflect the provisions of the Insolvency Act 1986.

Subsection (1)

377. Because of the special rules of priority that apply in relation to dispositions of a bankrupt's property (explained below, at paragraph 381), subsection (1) has the effect of isolating the general rules of priority found in Clauses 28-30 of the Bill.

Subsections (2) and (3)

378. Subsection (2) sets out the procedure to be followed in relation to bankruptcy petitions. When a petition in bankruptcy is filed against a debtor, the relevant court official must apply to register the petition as a land charge in the register of pending actions: see Insolvency Rules 1986. If the debtor is proprietor of any registered land, this can have no direct effect, for a person to whom a registrable disposition is made is not required to make a search under the Land Charges Act 1972: see Clause 86(7). However, the registration of such a land charge will trigger a procedure for ensuring that an appropriate entry is made in the register of title. The registrar, who maintains both the register of land charges and the register of title, will search the index of proprietors' names in an attempt to ascertain whether the debtor is the registered proprietor of any land or charge in the register of title. If it appears to him that any registered estate or charge is affected he must register notice against that title. This procedure is similar, but not identical, to that which presently applies under section 61(1) of the Land Registration Act 1925.

379. Subsection (3) provides that, unless cancelled in accordance with rules, a notice which is entered in respect of a bankruptcy petition must remain in the register until either a restriction is entered under Clause 86(4) or the trustee in bankruptcy is registered as proprietor. The rules in question will be land registration rules and will be required to be laid before Parliament only: Clauses 129(1) and 125.

Subsection (4)

380. Subsection (4) sets out the procedure to be followed in relation to bankruptcy orders: cf Land Registration Act 1925, section 61(3). It is intended to ensure the entry in the register of a restriction that reflects the limitation under section 284 of the Insolvency Act 1986, by which a disposition by a bankrupt is void unless made with the consent of the court, or is subsequently ratified by the court. The way in which this procedure will operate is analogous to the procedure that was explained above in relation to bankruptcy petitions: see above, paragraph 378.

Subsection (5)

381. Subsection (5) explains the circumstances in which the title of a trustee in bankruptcy will be defeated by a registrable disposition of the bankrupt's registered estate or charge. As explained above, the normal rules of priority contained in the Bill do not apply: see above, paragraph 377. Subsection (5) follows the rule laid down in section 284(4) of the Insolvency Act 1986.

Subsection (6)

382. Subsection (6) provides that subsection (5) will only apply if the relevant registration requirements are met in relation to the disposition, but, when they are met, has effect as from the date of the disposition. For those registration requirements, see Clause 27 and Schedule 2.

CLAUSE 87 - PENDING LAND ACTIONS, WRITS, ORDERS AND DEEDS OF ARRANGEMENT

383. Amongst other matters, section 59 of the Land Registration Act 1925 presently makes provision for the protection of certain writs, orders, deeds of arrangement and pending actions by means of lodging a caution against dealings. Cautions against dealings are prospectively abolished under the Bill: see above, paragraph 161. It is therefore necessary for the Bill to make other provisions for the protection of these matters.

Subsection (1)

384. Subsection (1) makes it clear that the matters that it lists are all to be regarded as interests for the purposes of the Bill. This is relevant to the effect of registered dispositions on their priority and to the application of the provisions about notices and restrictions. Pending land actions and the relevant writs and orders are defined by reference to the meaning given to them in the Land Charges Act 1972: see respectively sections 5(1)(a), 17(1) (pending land actions) and 6(1)(a) (writs and orders). The words "an order appointing a receiver or sequestrator" in Clause 87(1)(c) echo those in section 6(1)(b) of the 1972 Act. A deed of arrangement is defined by reference to the Deeds of Arrangement Act 1914, section 1: see Clause 87(5).

Subsection (2)

385. The effect of this subsection is that an order appointing a receiver or sequestrator and a deed of arrangement can only be protected by the entry of a restriction. Some orders appointing a receiver or sequestrator will be regarded as a proprietary right and some will not: see Clayhope Properties Ltd v Evans [1986] 1 WLR 1223, 1228. It was felt better to avoid difficult questions as to which side of the line a particular order fell, and whether or not it could, therefore, be protected by the entry of a notice. The Bill therefore treats all such orders as interests for the purposes of the Bill, but they can only be protected by the entry of a restriction. A deed of arrangement protects creditors in the period before the debtor's assignment of his or her property to a trustee for his or her creditors. It is therefore analogous to a bankruptcy order, and like such orders, is to be protected by the entry of a restriction.

386. A pending land action (under Clause 87(1)(a)) and a writ or order (under Clause 87(1)(b)) may be protected by the entry (as appropriate) of a notice, a restriction or both.

Subsection (3)

387. The effect of this subsection is that the four matters listed in subsection (1) can only be protected by the appropriate entry in the register and cannot override first registration or a registered disposition under Schedule 1 or 3. In practical effect, this means that they could not be protected merely because the person having the benefit of any of them was in actual occupation of the land affected for the purposes of paragraph 2 of either Schedule 1 or 3.

Subsection (4)

388. The power by rules to modify its application to any of the matters listed in Clause 87(1) is included because there may be cases where such matters may not readily fall within the wording of the provisions of the Bill without some modification to accommodate them. The rules in question will be land registration rules and will be required to be laid before Parliament only: Clauses 129(1) and 125.

Miscellaneous

CLAUSE 88 - INCORPOREAL HEREDITAMENTS

389. Each of the interests listed in this clause may be registered with its own title. At present, only rentcharges and manors can be so registered. Under the Bill, franchises and profits à prendre in gross will be registrable with their own titles. However, as regards manors, it will not be possible to register with their own titles any that have not hitherto been registered. Cf Clauses 3, 4. The reason for the power in Clause 88 is that, in applying the provisions about interests that may be registered with their own titles, it may be necessary to make modifications to take account of the incorporeal nature of the interests listed in the clause.

390. Any such rules will be land registration rules and will be required to be laid before Parliament only: Clauses 129(1) and 125.

CLAUSE 89 - SETTLEMENTS

391. Clause 89 contains a rule-making power to make provision for the purposes of the Bill in relation to the application to registered land of the various enactments relating to settlements under the Settled Land Act 1925 (such as the Trustee Act 1925 and the Administration of Estates Act 1925). The Land Registration Act 1925 contains detailed provisions relating to its application to settlements under the Settled Land Act 1925. It ceased to be possible to create new settlements under the Settled Land Act 1925 after 1996: see Trusts of Land and Appointment of Trustees Act 1996, section 2. Even before 1997 settlements had become uncommon and they will eventually disappear. It is for this reason that the Bill enables settlements to be dealt with by rules rather than making detailed statutory provision.

392. Rules under Clause 89 will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125.

CLAUSE 90 - PPP LEASES RELATING TO TRANSPORT IN LONDON

393. Clause 90 makes special provision in relation to various matters concerning PPP leases. For these purposes, a "PPP lease" has the meaning given by section 218 of the Greater London Authority Act 1999: Clause 90(6). In future, it is intended that arrangements for the operation and development of the London underground railway network will be made by means of public-private partnership agreements. PPP leases will be employed as part of that strategy. They will be leases of underground railways and other ancillary properties. The 1999 Act makes special provisions in relation to land registration and PPP leases: see Greater London Authority Act 1999, section 219 (amending the Land Registration Act 1925). Clause 90 replicates the effect of those provisions.

394. The effect of these provisions is that PPP leases-

(i) may not be registered with their own titles voluntarily: Clause 90(1);

(ii) do not trigger the requirement of registration when granted or transferred: Clause 90(2);

(iii) are not registrable dispositions: Clause 90(3); but take effect as if they were: Clause 29(4);

(iv) cannot be protected by means of the entry of a notice: Clause 90(4); and

(v) override both first registration and registered dispositions: Clause 90(5).

Furthermore, the grant of a sublease under a PPP lease is not registrable, nor is the grant for the benefit of a PPP lease of any right falling within section 1(2) of the Law of Property Act 1925 (such as a legal easement): Clause 90(3).

395. The reason for taking PPP leases outside the registered system in this way is as follows. Such leases are likely to be granted for a comparatively short period, namely 30 years. They will be virtually inalienable. Although it would no doubt be possible to produce accurate plans for such leases, it is thought that the costs would be enormous and disproportionate to the benefits that would accrue from so doing. There are similarities with the treatment of rights of coal in the Bill: cf paragraph 7 of Schedules 1 and 3.

PART 8: ELECTRONIC CONVEYANCING

396. Part 8 and Schedule 5 of the Bill contain the provisions that govern electronic conveyancing. These are of the greatest importance in the scheme of the Bill. Electronic conveyancing is the process whereby the transfer of land and the creation of interests in or over land will be effected electronically rather than, as at present, in paper form. Electronic conveyancing will necessarily be confined to dealings with registered land or with unregistered land that trigger the requirement of compulsory registration under Clauses 4 and 80 of the Bill. In the system of registered land that exists in England and Wales, there are two stages in the making of a transfer, grant or reservation. The first is the instrument which effects the transfer, grant or reservation. The second is the registration by the registrar of that transfer, grant or reservation after it has been submitted to him for registration. It is the process of registration that confers legal title in the case of registrable dispositions.

397. The aim of the Bill is to ensure not only that dispositions can be effected electronically where presently a written instrument of some kind is required, but also to bring about the situation in which the making of the disposition and its registration occur simultaneously. It is intended that it will, in time, be impossible to create or transfer many interests in or over registered land, whether legal or equitable, except by the simultaneous registration of the electronic instrument that effects the transfer, grant or reservation. This reflects an essential part of the strategy of the Bill, which is to make the register as conclusive as to title as it can be. (It can never be wholly conclusive because interests in registered land can be created informally, as by proprietary estoppel or prescription.)

CLAUSE 91 - ELECTRONIC DISPOSITIONS: FORMALITIES

398. This clause sets out the formal requirements which, if met, will enable certain dispositions of registered land to be effected electronically when they would otherwise have to be made in writing or by deed. It is derived (with modifications) from section 144A of the Land Registration Act 1925 proposed to be inserted by the draft Law of Property (Electronic Communications) Order.

399. Clause 91 sets out a uniform requirement for making any electronic document, whether that document does the work of a deed or of signed writing. In this respect it greatly simplifies the present law. At the same time, the requirements are such that they will continue to fulfil the cautionary and evidential functions that the existing requirements of signed writing or of a deed are intended to achieve.

Subsections (1), (2) and (3)

400. The effect of subsection (1) is that Clause 91 will only apply where the following requirements are met.

401. First, there must be a document made in electronic form that purports to effect a disposition: Clause 91(1)(a).

402. Secondly, that disposition must fall within subsection (2), that is to say it must be-

(i) a disposition of a registered estate or charge;

(ii) a disposition of an interest which is the subject of a notice in the register such as an equitable charge or an option; or

(iii) a disposition which triggers the requirement of compulsory registration under Clause 4 of the Bill;

which is of a kind specified by rules: Clause 91(2). It is likely that, in due course, there will be a prescribed form of electronic disposition for all dispositions that could be made in electronic form under the clause. These forms are likely to be similar to those that have been successfully employed in paper form since 1997 in relation to applications for registration: see Land Registration Rules 1925, Schedule 1.

403. Thirdly, the document in electronic form must meet the four conditions that are set out in Clause 91(3), namely-

(i) The document must make provision for the time and date when it takes effect: Clause 91(3)(a). At present it is usual practice for conveyancing documents to be signed and otherwise executed by the parties to them, but not actually dated. Documents are usually dated by the conveyancers shortly before they are intended to take effect. With a deed, this will be signified by delivery. An electronic document is not a deed, but merely regarded as one for the purposes of any enactment: see Clause 91(5). The concept of delivery is therefore inapplicable to electronic documents. The requirement that an electronic document must make provision for the time and date when it takes effect provides the necessary means of determining the date on which an instrument is to take effect. It will also enable the continuation of the present practice of completing when all parties are ready to do so.

(ii) The document must have the electronic signature of each person by whom it purports to be authenticated: Clause 91(3)(b). References to an electronic signature are to be read in accordance with section 7(2) of the Electronic Communications Act 2000: see Clause 91(10). An electronic signature is a means by which an electronic document can be authenticated as that of the party making it. Normally it will only be the disponor whose electronic signature will be required. However, Clause 91(3)(b) specifies that the electronic signature is needed "of each person by whom it purports to be authenticated". This is because a disponee may sometimes need to be a party to the document, as where there is a disposition of registered land and the disponees are to be joint proprietors. In this case, both the disponor and the disponees will execute the transfer or application, because it will set out the trusts on which the land is to be held. A declaration of trust must be manifested and proved in writing and signed "by some person who is able to declare such trust": section 53(1)(b) of the Law of Property Act 1925.

(iii) Each electronic signature must be certified: Clause 91(3)(c). Certification is the means by which an electronic signature can be linked to a particular individual. For these purposes certification has the meaning given to it in section 7(3) of the Electronic Communications Act 2000: Clause 91(10). (iv) There must be compliance with such other conditions as rules may provide: Clause 91(3)(d). This requirement provides some flexibility in relation to the creation of dispositions in electronic form. In light of experience with electronic documents, it might be thought advisable to impose further requirements. For example, there are various levels of assurance that can be achieved in relation to the security of electronic signatures, and it might be appropriate to require compliance with a specified standard. Any such rules will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125.

Subsection (4)

404. Subsection (4) is the operative part of Clause 91. It provides that an electronic document which satisfies the requirements in subsections (1), (2) and (3) is to be regarded as-

(i) in writing; and

(ii) signed by each individual, and sealed by each corporation, whose electronic signature it has.

405. This provision is not subject to the constraints imposed by the Electronic Communications Act 2000 (which only permits alterations to statutory requirements and not to rules of common law). It is therefore able to go further than its equivalent in the draft Law of Property (Electronic Communications) Order: see the proposed Land Registration Act 1925, section 144A(4). Clause 91(4) not only deems the document to comply with any statutory requirements of formality, but also with those that apply at common law. This is important in the context of those corporations that have no statutory powers of execution: see below paragraph 407.

406. Subsection (4) will enable corporations (whether corporate or sole) to execute documents in electronic form.

407. Where a corporation is able to execute a document by affixing its common seal, an electronic document which complies with Clause 91 will take effect as though it were sealed. This will apply in respect of the following types of corporation-

(i) A corporation that is governed by the Companies Act 1985: see Companies Act 1985, section 36A(2). For corporations to which the Companies Act 1985 applies, see sections 735(1), 718 and Schedule 22 and the Foreign Companies (Execution of Documents) Regulations 1994: SI 1994 No 950 (as amended).

(ii) A corporation that has an express statutory power to execute documents by affixing its common seal: see, for example, Charities Act 1993, section 62(2) and Friendly Societies Act 1992, Schedule 6, paragraph 2(2).

(iii) A corporation that has no express statutory powers of execution, but to which the common law rules apply. At common law any instrument that effects a disposition of property by a corporation must be executed under that corporation's seal. In this respect the Bill goes further than the draft Law of Property (Electronic Communications) Order which does not alter the common law: see above, paragraph 405.

408. Where a corporation does not have a common seal, it must execute instruments in some other way. Some corporations have express statutory powers that enable them to execute a document where it is signed by certain specified persons. For example, in respect of corporations governed by the Companies Act 1985, section 36A(4) of that Act provides that "a document signed by a director and the secretary of a company, or by two directors of a company, and expressed (in whatever form) to be executed by the company has the same effect as if it were executed under the common seal of the company". Equivalent provisions are found (for example) in the Charities Act 1993, section 62(3) and Friendly Societies Act 1992, Schedule 6, paragraph 2(4). Where a document is in electronic form and is signed electronically by the specified persons, Clause 91 has the effect that it will be regarded as being signed by each of those individuals.

409. In any event, any corporation can appoint an individual to sign a document in electronic form as its agent.

Subsection (5)

410. This subsection provides that any document to which Clause 91 applies is to be regarded as a deed for the purposes of any enactment. It should be stressed that the effect of subsection (5) is that the document is regarded as a deed, not that it is a deed. Thus the rule at common law, that an agent can execute a deed on behalf of his or her principal only if authorised to do so by deed, has no application.

411. It should be noted that where a document is signed electronically by joint disponees or by their agent, it will necessarily satisfy the requirements for a valid declaration of trust under section 53(1)(b) of the Law of Property Act 1925.

Subsection (6)

412. Certain statutory provisions require a disposition by an agent acting by or on behalf of his or her principal to be authorised in writing: see, for example, Law of Property Act 1925, section 53(1)(a) in relation to the creation or disposition of interests in land. The effect of subsection (6) is that where an agent makes an electronic disposition, it will not be possible to question whether the agent did in fact have written authority to make it. Cf Schedule 5, paragraph 8.

Subsection (7)

413. Under the Bill it will be possible to assign electronically certain legal and equitable interests in registered land that are not registered estates but are merely protected by the entry of a notice: see Clause 91(2)(b). Such assignment will be completed by a change in the terms of the notice. This is new. At present only the transfer of registered estates and charges is required to be completed by registration. In relation to an interest which is a debt or legal chose in action -such as the benefit of an option or other estate contract -it is necessary to give "express notice in writing" of the assignment to the debtor or other contracting party: Law of Property Act 1925, section 136. Clause 91(7) therefore enables such notices to be served in an electronic form in accordance with rules.

Subsection (8)

414. Subsection (8) disapplies section 75(1) of the Law of Property Act 1925 in relation to electronic dispositions under Clause 91. Section 75(1) of the Law of Property Act 1925 provides that a purchaser is "entitled to have, at his own cost, the execution of a conveyance [to him] attested by some person appointed by him, who may, if he thinks fit, be his solicitor". This provision is not thought to be widely (if ever) employed nowadays. In any event, attestation is not appropriate to forms of electronic disposition.

Subsection (9)

415. Where an electronic document has apparently been executed in accordance with section 36A(4) of the Companies Act 1985 (see above, paragraph 408), section 36A(6) of the Companies Act may be relevant. Section 36A(6) provides that "in favour of a purchaser a document shall be deemed to have been duly executed by a company if it purports to be signed by a director and the secretary of the company, or by two directors of the company…". Clause 91(9) makes it clear that if section 36A(4) of the Companies Act 1985 applies to a document because of Clause 91(4), section 36A(6) shall have effect in relation to the document with the substitution of "authenticated" for "signed". This reflects the requirement contained in Clause 91(3)(b) that an electronic document must have the electronic signature of each person by whom it purports to be authenticated.

Subsection (10)

416. Subsection (10) defines the terms "electronic signature" and "certification of an electronic signature" by reference to section 7(2) and (3) of the Electronic Communications Act 2000. Section 7(2) provides that for the purposes of that section, an electronic signature "is so much of anything in electronic form as-

(i) is incorporated into or logically associated with any electronic communication or electronic data; and

(ii) purports to be incorporated or associated for the purpose of being used in establishing the authenticity of the communication or data, the integrity of the communication or data, or both".

417. Section 7(3) of the Electronic Communications Act 2000 provides that "an electronic signature incorporated into or associated with a particular electronic communication or particular electronic data is certified by any person if that person (whether before or after the making of the communication) has made a statement confirming that-

(i) the signature,

(ii) a means of producing, communicating or verifying the signature, or

(iii) a procedure applied to the signature,

is (either alone or in combination with other factors) a valid means of establishing the authenticity of the communication or data, the integrity of the communication or data, or both".

CLAUSE 92 - LAND REGISTRY NETWORK

Subsection (1)

418. Subsection (1) enables the registrar to provide an electronic communications network or to arrange for its provision (the provision of the network may, therefore, be contracted out). The land registry network will facilitate the transfer and creation of rights and interests in registered land by electronic conveyancing. The land registry network is to be used for such purposes as the registrar thinks fit relating to registration or the carrying on of transactions which involve registration and are capable of being effected electronically.

419. As such, the purposes will include-

(i) the provision of information to the registrar or to any party to a transaction or proposed transaction that will involve-

(a) a disposition of registered land or of an interest in registered land; or

(b) a disposition of unregistered land that will trigger compulsory first registration;

(ii) the preparation of conveyancing documents in electronic form in relation to (i)(a) or (b); and

(iii) the registration of any disposition.

Subsection (2)

420. Subsection 2 provides that Schedule 5 has effect. Schedule 5 makes detailed provision for the working of the land registry network, and is explained below, at paragraphs 645 and following. That Schedule is central to the provision of electronic conveyancing.

CLAUSE 93 - POWER TO REQUIRE SIMULTANEOUS REGISTRATION

421. Clause 93 contains the power -that will not be exercised lightly -to make electronic conveyancing compulsory and to require that electronic dispositions should be simultaneously registered. It will be noted that there are two elements that can be made compulsory -the use of electronic conveyancing and the requirement that dispositions should be made and registered simultaneously. The reasons why such a power is necessary are as follows.

422. Requiring dispositions to be effected electronically. It is inevitable that the move from a paper-based to an all-electronic system of conveyancing will take some years and that the two systems will have to exist side by side during that time. However, that period of transition needs to be kept to a minimum. Not only will it be very difficult for practitioners and the land registry to operate the two systems in tandem, but also, if electronic conveyancing is to achieve its true potential and deliver the savings and benefits that it promises, it must be the only system. For example, it will be possible under a system of electronic conveyancing to manage the typical chain of domestic sales. However, if just one link in that chain is conducted in the conventional paper-based manner, the advantages of electronic chain management are likely to be lost. A chain moves at the speed of the slowest link. A paper-based link is in its nature likely to be slower than an electronic one and will not be subject to the scrutiny and controls of those links in the chain that are electronic and therefore managed. It is anticipated that the exercise of this power to require transactions to be conducted in electronic form will be merely a formality. Solicitors and licensed conveyancers are likely to choose to conduct conveyancing electronically in view of the advantages that it has to offer.

423. Simultaneous registration of dispositions. When solicitors and licensed conveyancers enter into network access agreements with the Registry, they will be required to conduct electronic conveyancing in accordance with network transaction rules: see Schedule 5, paragraphs 2 and 5. Those transaction rules are likely to ensure that electronic dispositions are simultaneously registered, which is the single most important technical objective of the Bill. However, it is necessary to go beyond that and make an inextricable link as a matter of law between the making of a transaction and its registration. Network transaction rules made under Schedule 5, paragraph 5 can be used to ensure that a transaction and its registration coincide. But it is conceivable that, due to some mischance in a particular case, this might not happen. The transaction might then still have some effect between the parties (as it would now) though not registered. There is a risk that the mere fact that this could happen might undermine one of the goals of ensuring simultaneity of transaction and registration, namely that a person could rely on the register as being conclusive as to priority. It is therefore necessary to have statutory provision that will ensure a transaction can have no effect unless simultaneously registered.

Subsection (1)

424. By virtue of subsection (1), compulsory electronic conveyancing and simultaneous registration will only apply in respect of a disposition of-

(i) a registered estate or charge; or

(ii) an interest which is the subject of a notice in the register;

where the disposition is of a description specified by rules. This means that compulsory electronic conveyancing can be brought in gradually. As the use of electronic conveyancing becomes the norm in relation to particular transactions, the power to require them to be made electronically and simultaneously registered could then be exercised.

425. Rules under this subsection must be made by the Lord Chancellor by statutory instrument and will be subject to annulment in pursuance of a resolution of either House of Parliament: see Clause 125(2) and (4). Given the considerable importance of this power, the Lord Chancellor is required to consult such persons as he thinks appropriate before he exercises it: Clause 93(5). There will, therefore, be wide consultation before this step is taken.

426. For the purposes of Clause 93, "disposition", in relation to a registered charge, includes postponement: Clause 93(6). Under the Bill, registered charges are to be taken to rank, as between themselves, in the order shown in the register: Clause 48. However, chargees may by agreement alter the priority of their relative charges. For example, they may agree that charge A is to be postponed to charge B, over which it would otherwise have priority. The effect of Clause 93(1) and (6) is that rules may require the postponement of a charge to be made and registered electronically.

427. Clause 93(1) also makes it possible to require a disposition of an interest protected by a notice to be made and registered electronically. This is something new under the Bill: see above, paragraph 413. It is not at present possible to register transfers of such interests. The types of interest to which this power is likely to be applied include-

(i) a profit à prendre in gross that has not been registered with its own title;

(ii) a franchise that has not been registered with its own title;

(iii) an equitable charge;

(iv) the benefit of an option or a right of pre-emption.

Subsections (2) and (3)

428. The effect of subsections (2) is that not only will a disposition (or contract to make a disposition) be required to be made electronically, but it will also only have effect when it is entered in the register in the appropriate way (ie the relevant registration requirements are met). These events will occur simultaneously with the result that-

(i) There will no longer be the possibility of any period of time between a transaction and its registration (the so-called "registration gap"). It will no longer be possible to create or dispose of rights and interests off the register (as it is at present). The absence of the registration gap eliminates any risk of the creation of third party interests in the interim. It also means that there is no risk that the transferor may destroy the interest after its transfer but before its registration, as where X Plc assigns its lease to Y Ltd and X Plc then surrenders the lease to its landlord after assigning it but before the assignment is registered. Cf Brown & Root Technology Ltd v Sun Alliance and London Assurance Co [2000] 2 WLR 566.

(ii) The register will become conclusive as to the priority of many interests in registered land. The Bill provides that the priority of an interest in registered land, other than a registrable disposition that has been registered, depends upon the date of its creation, not the date that it is entered on the register: see Clause 28. However, if the power under Clause 93 is exercised, any transaction will be made and registered simultaneously. As the register will reflect the date of the transaction, for all practical purposes it will be conclusive as to the priority of competing interests that are expressly created.

Subsection (4)

429. In relation to any disposition to which Clause 93 applies, subsection (4) disapplies Clause 27(1) (which provides that a registrable disposition does not operate at law until the registration requirements are met). Clause 27(1) does not apply because under Clause 93 a disposition has no effect, whether at law or in equity, until the registration requirements are met.

CLAUSE 94 - SUPPLEMENTARY

430. The rule-making power contained in Clause 94 relating to both the communication and storage of electronic documents ensures the necessary flexibility in relation to both these matters. Not only are such rules likely to be technical in character, but also it can reasonably be anticipated that they will change from time to time to reflect developments in information technology.

431. The rules made under Clause 94 will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125.

PART 9: ADVERSE POSSESSION

432. The Bill establishes a new scheme of adverse possession in relation to registered land. Under this new scheme, adverse possession of an estate in land will never of itself bar the registered proprietor's title. Instead, adverse possession for a period of 10 years will entitle a squatter to apply to be registered as proprietor. The Bill sets out the circumstances in which such an application will succeed.

433. The effect of the new scheme is that it will be considerably more difficult for a squatter to obtain title by adverse possession to land with registered title. The doctrine of adverse possession in English law rests on the principle that title to land is relative and ultimately rests on possession. That is true in relation to land with unregistered title. The fact that a squatter can usually extinguish a landowner's title by 12 years' adverse possession undoubtedly assists in the deduction of title to unregistered land and shortens the period for which such title has to be investigated (presently at least 15 years). However, the basis of title to registered land is not possession but the fact of registration. The register alone proves ownership. In many Commonwealth countries where there is a system of title registration, doctrines of adverse possession have therefore either been completely abandoned or modified. However, there is a danger of jettisoning the doctrine completely. Sometimes a registered proprietor dies and nobody administers his or her estate. In other cases, he or she simply disappears and cannot be traced. It is important that land should be kept in commerce. In such circumstances, if a squatter takes over the property and is able to acquire title to it by his or her adverse possession, that aim may be secured. The Bill recognises these competing policies. It creates what is, in essence, a system by which the registered proprietor will normally be given the opportunity to object to the squatter's claim to be registered and will have two years in which to put an end to his or her adverse possession. If the registered proprietor does not object or fails to take steps to put an end to the squatter's adverse possession, the squatter will be entitled to be registered as proprietor of the land affected instead.

434. The following is a summary of the main provisions of the Bill that deal with adverse possession:

(i) Clause 95 disapplies various provisions contained in the Limitation Act 1980 in so far as they relate to registered land.

(ii) Schedule 6 explains the circumstances in which a squatter may apply to be registered as proprietor and the circumstances in which such an application will succeed.

(iii) Clause 97 deals with defences based on adverse possession in relation to possession proceedings.

(iv) Schedule 12, paragraph 18 contains transitional provisions.

CLAUSE 95 - DISAPPLICATION OF PERIODS OF LIMITATION

Subsection (1)

435. The effect of this subsection is that where the title to an estate in land or rentcharge is registered, no period of limitation shall run in relation to an action for the recovery of land other than against a chargee. For the meaning of "estate in land", see Law of Property Act 1925, section 1(1).

436. The disapplication of limitation periods for actions to recover land is confined to estates in land or rentcharges the title to which is registered. The Limitation Act 1980 will therefore continue to apply to the following situations concerning registered land.

(i) Where a squatter has been in adverse possession against a tenant and the lease was granted for a term of 21 years or less prior to the Bill coming into force. Subsection (1) will not apply to such leases because they will not be registered estates, unless voluntarily registered after the Bill comes into force. This is because under the Bill only leases granted for a term seven years or less will be overriding interests: Schedules 1, paragraph 1 and 3, paragraph 1. The title to such leases clearly cannot be barred by adverse possession (since the period of adverse possession required under the Limitation Act 1980 is 12 years). The title to a lease granted for a term of more than seven years will have to be registered: Clauses 3(3) and 4(1). As such, it will fall within Clause 95(1).

(ii) Where a licensee or tenant at will brings a claim to recover the possession of land. As such persons are not registered proprietors, the Limitation Act 1980 will continue to apply to them.

(iii) Where a lease becomes liable to forfeiture for breach of some covenant or condition in the lease, or a right of re-entry becomes exercisable in respect of a fee simple for breach of condition or on the occurrence of some event. An example of the latter would be where the owner of a rentcharge is entitled to exercise a right of reentry because the registered proprietor of a fee simple has failed to pay rent which is due. The Limitation Act 1980 will continue to apply to rights of re-entry. The Bill achieves this effect by providing that no period of limitation under section 15 of the Limitation Act 1980 shall run against any person "in relation to an estate in land". A right of re-entry is not an estate in land: see section 1(1) of the Law of Property Act 1925. Consequently, section 15 of the Limitation Act 1980 will continue to apply to such rights.

(iv) Where a squatter is dispossessed by a second squatter. In this situation, time will run against Squatter 1 for the purposes of section 15 of the Limitation Act 1980. After 12 years have elapsed, Squatter 1 will not be able to bring an action to recover the land from Squatter 2. The Limitation Act 1980 applies in this situation because Squatter 1 relies on his or her own freehold estate, which arose by adverse possession: this is clearly not registered.

437. Subsection (1) makes it clear that where a chargor is in possession, the rights of the chargee to recover possession or to foreclose remain subject to the provisions of the Limitation Act 1980. As such, a 12-year limitation period will continue to apply to the chargee's right to recover moneys due under the charge, to possession and to foreclosure. For the relevant provisions of the Limitation Act 1980, see sections 15, 20 and 29, and Schedule 1.

Subsection (2)

438. Subsection (2) has the effect that, in relation to a registered estate in land or registered rentcharge, no period of limitation will run in relation to an action for redemption.

439. This subsection makes a significant change to the law. Under section 16 of the Limitation Act 1980, where a mortgagee has been in possession of land for 12 years or more, the mortgagor loses his or her right to redeem the mortgage. This is anomalous and, given the remedies available to the mortgagee, unnecessary. The Bill disapplies section 16 in relation to a registered estate in land or registered rentcharge.

440. A mortgagee in possession will not be able to rely on his possession as mortgagee to found an application under the Bill to be registered as the proprietor of an estate. This is because to make such an application a claimant must be in adverse possession: see Schedule 6, paragraph 1. A mortgagee will never be in adverse possession because he will either-

(i) be the tenant under a lease, if the mortgage was made by demise or sub-demise prior to the Bill coming into force: Law of Property Act 1925, sections 85 and 86; or

(ii) have the same rights as if he were such a person, if the mortgage was a charge by way of legal mortgage: Law of Property Act 1925, section 87.

Possession by a mortgagee is clearly not adverse, for it is attributable to the legal relationship between mortgagor and mortgagee.

Subsection (3)

441. This subsection is a necessary concomitant to subsections (1) and (2). Its effect is that section 17 of the Limitation Act 1980 will not operate to extinguish the title of a person against whom, under Clause 95, a period of limitation does not run.

CLAUSE 96 - REGISTRATION OF ADVERSE POSSESSOR

442. Clause 96 provides that Schedule 6 has effect. Schedule 6 sets out in detail the working of the new system of adverse possession applicable to registered estates in a case where the squatter applies to be registered.

CLAUSE 97 - DEFENCES

443. This clause ensures that, in relation to proceedings for the possession of land, the position of a squatter mirrors that which applies in relation to an application for registration under Schedule 6. The clause sets out a number of defences in relation to proceedings for the possession of registered land. Like the provisions of Schedule 6, Clause 97 is designed to ensure that the issue of entitlement to the registered estate will be resolved one way or the other, and within a comparatively short period. Once a registered proprietor commences proceedings against a person who has been in adverse possession for 10 years or more, that step will necessarily lead to a result.

Subsection (1)

444. Under this subsection, it is a defence to an action for the possession of land if the squatter has been in adverse possession of land adjacent to his or her own for 10 years under the mistaken but reasonable belief that he or she was the proprietor of it and could have satisfied the condition set out in Schedule 6, paragraph 5(4).

Subsection (2)

445. This subsection has the effect that where a judgment for the possession of land is obtained against a squatter who has been in adverse possession of land for 10 years (and could, therefore, have applied to be registered as proprietor under Schedule 6, paragraph 1), it will cease to be enforceable at the end of a further two-year period. But for this provision, the registered proprietor or chargee who had obtained the judgment would have six years within which either to bring an action on the judgment for possession (Limitation Act 1980, section 24(1)) or to execute the judgment without the leave of the court (CPR, Schedule 1, R46.2(a); Schedule 2, C26.5(1)(a)).

Subsection (3)

446. Under this subsection, a squatter also has a defence to an action for the possession of land if he or she-

(i) has been in adverse possession of land for at least 10 years;

(ii) has made an application for registration which was rejected; and

(iii) would have been entitled to re-apply to be registered under paragraph 6 of Schedule 6.

447. The requirement in paragraph 446(iii) will be satisfied where-

(i) no steps were taken to terminate the squatter's adverse possession within two years of that rejection and during that period he or she remained in adverse possession;

(ii) a judgment was obtained against the squatter but it was not enforced within two years; or

(iii) although possession proceedings were brought against the squatter they were discharged or struck out within two years of the rejection of the squatter's application.

Subsection (4)

448. Under this subsection a judgment for possession will cease to be enforceable against a squatter where-

(i) he or she has been in adverse possession of land for at least 10 years;

(ii) he or she has made an application for registration which was rejected;

(iii) the judgment was obtained in possession proceedings against the squatter within two years of that rejection; and

(iv) two years have elapsed since that judgment was obtained but no steps have been taken to enforce it.

Subsection (5)

449. The effect of this subsection is that, where the court determines either-

(i) that a squatter has a defence under Clause 97; or

(ii) that a judgment for possession has ceased to be enforceable against him or her under Clause 97(4);

it must order the registrar to register the squatter as proprietor. This ensures that the circumstances in which a squatter can be registered as proprietor are the same whether that squatter applies for registration under the provisions of Schedule 6 or the registered proprietor takes proceedings against him or her to recover possession.

Subsection (6)

450. Subsection (6) provides that the defences under Clause 97 are additional to any other defences a person may have. In other words, if the squatter has some independent right to possession of the land, he or she is entitled to raise it by way of defence. If, for example, X enters into possession under a contract to purchase the land from Y and he has paid the consideration, that would, as now, be a defence to possession proceedings brought by Y. Similarly, if A has an equity in her favour by proprietary estoppel, she can raise that equity as a defence in possession proceedings brought by B, the registered proprietor.

Subsection (7)

451. The application of the provisions of the Bill on adverse possession to rentcharges is likely to be rather technical and complex. It is considered that it would be more appropriate to make such provision in rules (see too Schedule 6, paragraph 14) for the following reasons. First, the necessary provisions are likely to be technical and of a length that is disproportionate to their importance. Secondly, the incidence of rentcharges tends to be rather localised (they are most common in Greater Manchester, Lancashire, Sunderland and Bristol). Thirdly, most rentcharges will terminate in 2037 (Rentcharges Act 1977, sections 2 and 3), which may occur within the lifetime of the present Bill. The rules under this subsection will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125.

PART 10: LAND REGISTRY

452. Part 10 of the Bill, together with Schedules 7 and 8, make provision for the administration of HM Land Registry, for the charging of fees and the payment of indemnities, and for other miscellaneous matters.

Administration

CLAUSE 98 - THE LAND REGISTRY

Subsection (1)

453. Subsection (1) makes provision for the continuance of HM Land Registry which is to deal with the business of registration under the Bill. Cf Land Registration Act 1925, section 1.

454. Paragraph 5 of Schedule 7 provides that the registry is also to continue to have a seal and any document purporting to be sealed with it is to be admissible in evidence without any further proof. This replicates the effect of the Land Registration Act 1925, section 126(7).

Subsection (2)

455. Subsection (2) provides that the land registry is to consist of the Chief Land Registrar and the staff of the registry who are to be appointed by him. Subsection (2) should be read in conjunction with paragraph 3 of Schedule 7 which provides that the registrar may appoint such staff as he thinks fit. The terms and conditions of such appointments require the approval of the Minister for the Civil Service.

456. By paragraph 4 of Schedule 7, any member of the land registry is protected from a claim in damages for any act or omission in the discharge or purported discharge of any function relating to land registration, unless it is shown that the act or omission was in bad faith. This provision substantially replicates the effect of the Land Registration Act 1925, section 131. Subsection (3)

457. Under this subsection, the Chief Land Registrar is to be appointed by the Lord Chancellor. Paragraphs 1 and 2 of Schedule 7 make provision for the Chief Land Registrar's resignation, removal, re-appointment and remuneration.

458. Under the Bill, the office of Chief Land Registrar will be a disqualifying office for the purpose of membership of the House of Commons and the Northern Ireland Assembly: see Schedule 7, paragraph 7, amending the House of Commons Disqualification Act 1975 and the Northern Ireland Assembly Disqualification Act 1975. At present the office of Chief Land Registrar is not a disqualifying office. The change reflects the view that it should be.

Subsection (4)

459. Subsection (4) provides that Schedule 7 has effect. That Schedule sets out in further detail matters relating to the Chief Land Registrar, the staff of HM Land Registry, and other matters.

CLAUSE 99 - CONDUCT OF BUSINESS

Subsections (1) and (2)

460. Subsection (1) permits the Chief Land Registrar to delegate any of his functions to any member of the land registry.

461. Subsection (2) replicates the effect of section 126(6) of the Land Registration Act 1925.

Subsection (3)

462. The land registry operates through a series of district registries. The effect of subsection (3) is that a particular district land registry can be designated by the Lord Chancellor to receive applications from particular areas of England and Wales (as happens now), or indeed a specific type of application. For example, as applications for first registration become increasingly rare, it might be desirable to designate one or more particular land registries to deal with all such applications.

463. An order under this subsection is required to be made by statutory instrument and is to be laid before Parliament only: see Clause 125(2) and (3).

Subsection (4)

464. Subsection (4) replicates the effect of section 127 of the Land Registration Act 1925. That provision has been used for a variety of matters, such as for the giving of guidance as to how to conduct official searches of the register by fax and telephone and prescribing conditions of use of the registry's direct access service.

465. The Bill provides that forms and directions issued by the registrar, or any person authorised to act on his behalf, are admissible in evidence under the Documentary Evidence Act 1868: see Schedule 7, paragraph 6.

CLAUSE 100 - ANNUAL REPORT

466. Subsection (1) imposes a duty on the registrar to make an annual report on the business of the land registry to the Lord Chancellor. This places the current practice on a statutory footing. He must also publish that report: Clause 100(2). The Bill also requires the Lord Chancellor to lay copies of every such report before Parliament: Clause 100(3).

Fees and indemnities

CLAUSE 101 - FEE ORDERS

467. Clause 101 makes provision for the power to charge fees. It simplifies the equivalent provisions found in section 145 of the Land Registration Act 1925 and section 7 of the Land Registration Act 1936.

468. Under the general provisions of the Bill, the power to make a fee order under Clause 101 includes the power to make different provision for different cases: see Clause 125(1).

469. The Bill does not prescribe the method for assessing fees as section 145 of the Land Registration Act 1925 presently does. It is in fact likely that the method of assessment will change from its present ad valorem basis to one based on the work involved in the particular transaction.

CLAUSE 102 - INDEMNITIES

470. Schedule 8 makes provision for the payment of indemnities by the registrar and other related matters.

Miscellaneous

CLAUSE 103 - GENERAL INFORMATION ABOUT LAND

471. Clause 103 gives the registrar the power to publish information about land in England and Wales if it appears to him to be information in which there is a legitimate public interest. The registrar does in fact already publish information about changes in residential property prices on a quarterly basis. These are widely used, owing to their accuracy. In future, it is likely to become possible to publish further information that can be ascertained either from the register itself or from applications for registration.

CLAUSE 104 - CONSULTANCY AND ADVISORY SERVICES

Subsection (1)

472. Subsection (1) empowers the registrar to provide consultancy and advisory services about the registration of land in England and Wales or elsewhere. It is likely that his expertise may be in demand in relation to the development of electronic registration systems in other countries.

Subsection (2)

473. Where the registrar provides such services they are to be provided on such terms, including terms as to payment, as he thinks fit. This means that the registrar will be free to negotiate the amount of such fees. They will not be constrained by the terms of any fee order made pursuant to Clause 101(a).

PART 11: ADJUDICATION

474. Part 11 contains provisions relating to adjudication and establishes a new office, that of Adjudicator to HM Land Registry. This office is independent of the Registry. It will be the Adjudicator's principal function to determine any contested applications to the registrar that cannot be determined by agreement between the parties to the dispute. At present this function is performed by the Solicitor to HM Land Registry, who is the land registry's senior lawyer. The Solicitor only deals with disputes between applicants and objectors, not with disputes between applicants and the registrar. However, issues can arise in such cases which concern the conduct of land registry officials. It is therefore appropriate that an independent office should be created for the purposes of adjudication.

CLAUSE 105 - THE ADJUDICATOR

Subsection (1)

475. Subsection (1) requires the Lord Chancellor to appoint a person to be the Adjudicator to HM Land Registry.

Subsection (2)

476. Subsection (2) stipulates the qualifications that a person must have to be appointed as Adjudicator. A person must have a 10 year general qualification within the meaning of section 71 of the Courts and Legal Services Act 1990. By section 71(3)(c) of that Act, a person has a "general qualification" if "he has a right of audience in relation to any class of proceedings in any part of the Supreme Court, or all proceedings in county courts or magistrates' courts."

Subsection (3)

477. Subsection (3) gives effect to Schedule 9 to the Bill, which makes further provision about the new office of Adjudicator.

478. Paragraphs 1 and 2 of Schedule 9 make provision for the resignation, removal, reappointment and remuneration of the Adjudicator. Paragraph 1(3) reflects the provision made by paragraph 28 of Schedule 11 which has the effect of attracting the retirement date provisions in section 26 of the Judicial Pensions and Retirement Act 1993.

479. Paragraph 3 of Schedule 9 gives the Adjudicator a power to appoint such staff and, subject to the approval of the Minister for the Civil Service, on such terms as he thinks fit.

480. In general, any function of the Adjudicator may be carried out by any member of his staff who is authorised by him for the purpose: see Schedule 9, paragraph 4(1). However, the Adjudicator may only delegate functions which are not of an administrative character to a member of staff who has a 10 year general qualification within the meaning of section 71 of the Courts and Legal Services Act 1990: see Schedule 9, paragraph 4(2). For the definition of a 10 year general qualification, see above, paragraph 476.

481. The Lord Chancellor has the power by regulations to make provision about the carrying out of functions during any vacancy in the office of Adjudicator: Schedule 9, paragraph 5. Such regulations are required to be made by statutory instrument and laid before Parliament only: see Clause 125(2) and (3)(c).

482. The Lord Chancellor is to meet costs incurred by the Adjudicator, but may require the registrar to contribute towards these expenses: Schedule 9, paragraphs 6 and 7.

483. Paragraph 8 of Schedule 9 places the Adjudicator under the supervision of the Council on Tribunals. The effect is to apply to the Adjudicator the various requirements which under the Tribunals and Inquiries Act 1992 apply to tribunals subject to the Council's supervision. For example, the Adjudicator will be subject to the duty under section 10 of that Act to give reasons for his decisions.

484. Paragraph 9 of Schedule 9 ensures that the office of Adjudicator is a disqualifying office for the purpose of membership of the House of Commons or the Northern Ireland Assembly.

CLAUSE 106 - JURISDICTION

Subsection (1)

485. Subsection (1) sets out the Adjudicator's two principal functions:

(i) The first is to determine matters referred to him under Clause 73(7). A matter will be referred to the Adjudicator under Clause 73(7) where an objection is made to an application to the registrar and this cannot be disposed of by agreement between the parties: see above, paragraph 333. This function is confined to disputes between a person who has made an application to the registrar and some other person.

(ii) The second is to determine appeals under paragraph 4 of Schedule 5. Paragraph 4 of Schedule 5 concerns the right to appeal from a decision of the registrar with respect to entry into, or termination of, a network access agreement: see below, paragraphs 665 and following.

Subsections (2) and (3)

486. Subsection (2) makes provision for the Adjudicator to rectify or set aside certain documents. On an application to him, the Adjudicator may exercise this power in relation to any document which:

(i) Effects a qualifying disposition of a registered estate or charge. "Qualifying disposition" is defined in subsection (3) as a registrable disposition or a disposition which creates an interest that may be the subject of a notice on the register. This will, therefore, include documents such as a transfer or grant of a legal estate or an instrument creating a restrictive covenant.

(ii) Is a contract to make a qualifying disposition of a registered estate or charge.

(iii) Effects a transfer of an interest which is the subject of a notice on the register. An example might be where there is an assignment of a profit à prendre that was noted on the register but not registered with its own title, and there was an error in that assignment. With the introduction of electronic conveyancing, the registrar will also be able to rectify or set aside documents in electronic form under this power. This will be of particular importance if, as anticipated, it becomes possible to transfer electronically certain interests that do not have their own titles, such as options and equitable charges, and to complete those transfers by an entry in the register: see Clause 93(1)(b).

487. At present, the registrar has no power to rectify or set aside documents. This has sometimes meant that he has had to refer a matter to the High Court that he could otherwise have dealt with himself. Clause 106 is intended to obviate the cost and delay that such a reference might entail. Thus the Adjudicator has a limited power to set aside the conveyancing documents listed above.

Subsection (4)

488. Subsection (4) makes it clear that the general law about the effect of an order of the High Court for the rectification or setting aside of a document applies to an order made by the Adjudicator. This means, for example, that:

(i) Rectification relates back to the time when the instrument was executed: see Earl of Malmsbury v Countess of Malmsbury (1862) 31 Beav 407; 54 ER 1196.

(ii) After rectification the instrument is to be read as if it had been drawn up in its rectified form: see Craddock Bros v Hunt [1923] 2 Ch 136.

CLAUSE 107 - PROCEDURE

Subsection (1)

489. Subsection (1) provides that hearings before the Adjudicator are to be held in public, except where he is satisfied that it is just and reasonable to exclude the public.

490. It should be noted that, although the Bill makes provision for hearings to be held in public, it is not intended that there should be any requirement for the Adjudicator to hold a hearing unless one or both of the parties wish to have one. When hearings are to be held will be the subject of rules under subsection (3). It is envisaged that he may, instead, determine a matter on the papers submitted to him by the parties. This is the case now when a matter is determined by the registrar.

Subsections (2) and (3)

491. Subsection (2) confers a power to make rules to regulate:

(i) the practice and procedure to be followed with respect to proceedings before the Adjudicator; and

(ii) matters that are incidental to or consequential on such proceedings.

492. Subsection (3) lists the matters in relation to which rules may, in particular, make provision.

493. The power to make rules under Clause 107 is exercisable by the Lord Chancellor: see Clause 112. Such rules are to be made by statutory instrument and will be laid before Parliament only: Clause 125(3). They will not be made with the advice and assistance of the Rule Committee under Clause 124. This is because they are not land registration rules: see Clause 129(1). But the Lord Chancellor must consult the Council on Tribunals before making such rules: see above, paragraph 483.

CLAUSE 108 - FUNCTIONS IN RELATION TO DISPUTES

Subsection (1)

494. Subsection (1) provides that in proceedings on a reference to the Adjudicator under Clause 73(7), he may, instead of deciding a matter himself, direct a party to the proceedings to commence proceedings within a specified time in the court to obtain the court's decision on the matter. A reference is made to the Adjudicator under Clause 73(7) where a person objects to an application to the registrar and that dispute cannot be disposed of by agreement between the parties. Under the Bill, references to "the court" are to the High Court or a county court: Clause 129(3)(a).

495. It may be appropriate for the Adjudicator to direct a reference to the court under this provision where, for example:

(i) the application raises an important or difficult point of law;

(ii) there are substantial or complex disputes of fact that are more appropriate for a court hearing;

(iii) there are other issues between the parties already before the court (such as matrimonial proceedings); or

(iv) the court has powers not available to the Adjudicator, as for example, the power to award damages for objecting to an application without reasonable cause: see Clause 77.

496. At present, the registrar has an equivalent power to refer matters to the court under rule 299(3) of the Land Registration Rules 1925.

Subsection (2)

497. Subsection (2) confers a rule-making power to make provision about references to the court. In particular, rules may make provision about:

(i) Adjournment of proceedings before the Adjudicator pending the outcome of proceedings before the court. For example, proceedings before the Adjudicator could be adjourned, pending the determination of a preliminary point of law which had been referred to the court.

(ii) The powers of the Adjudicator in the event that a party fails to comply with a direction to commence proceedings in the court. Rules might, for example, empower the Adjudicator to dismiss an application in whole or in part if the applicant has failed to comply with a direction to commence proceedings. Conversely, they might authorise the Adjudicator to give effect to an application in whole or in part if the person who objected to the application has failed to comply with a direction to commence proceedings.

498. The power to make rules under Clause 108(2) is exercisable by the Lord Chancellor: see Clause 112. Such rules are to be made by statutory instrument and will be laid before Parliament only: Clause 125(3). However, they will not be made with the advice and assistance of the Rule Committee under Clause 124. This is because they are not land registration rules: see Clause 129(1).

Subsection (3)

499. Subsection (3) confers the power to make rules about the functions of the Adjudicator in consequence of a decision on a reference under Clause 73(7). In particular, rules may make provision enabling the Adjudicator to determine or to make directions about the determination of:

(i) The application to which the reference relates.

(ii) Such other present or future applications as rules may provide. Rules may therefore enable the Adjudicator to give general directions in relation both to pending and future applications. This will, of course, obviate the need for further references to him on the same point and will provide guidance to the registrar.

500. Again, such rules must be made by the Lord Chancellor: see Clause 112. The procedure that must be followed is the same as that in respect of rules under subsection (2): see above, paragraph 498.

Subsection (4)

501. Subsection (4) deals with the case where an application by a squatter for registration under paragraph 1 of Schedule 6 falls to be dealt with under paragraph 5 of that Schedule and there is an unresolved dispute between the applicant and an objector to the application. It applies if the Adjudicator takes the view that it would be unconscionable for the registered proprietor to seek to dispossess the applicant, but that the circumstances are not such as to make it appropriate to register the applicant as proprietor. In those circumstances, the Adjudicator must decide what should be done to satisfy the equity in the applicant's favour and make the appropriate order.

CLAUSE 109 - APPEALS

Subsection (1)

502. Subsection (1) gives a person aggrieved by a decision of the Adjudicator the right to appeal to the High Court. Subject to subsection (2), the right to appeal is unqualified and is, therefore, a right to appeal on a point either of law or of fact. However, it is subject to the power contained in section 54 of the Access to Justice Act 1999, to provide by rules of court that any right of appeal may be exercised only with permission.

Subsection (2)

503. Subsection (2) qualifies the right to appeal from a decision of the Adjudicator on an appeal by a person who is aggrieved by a decision of the registrar with respect to entry into, or termination of, a network access agreement. In such cases there is a right to appeal on a point of law only. This is because it is a second appeal, and it is not considered to be appropriate to permit unlimited rights to make a second appeal.

Subsection (3)

504. Subsection (3) mirrors clause 108(4) and imposes on the court a duty corresponding to that imposed on the Adjudicator in relation to a disputed application by a squatter for registration under paragraph 1 of Schedule 6.

CLAUSE 110 - ENFORCEMENT OF ORDERS ETC

505. This clause provides that a requirement of the Adjudicator shall be enforceable as an order of the court. It follows that where a person fails to comply with a requirement of the Adjudicator he or she will be in contempt.

CLAUSE 111 - FEES

506. This clause gives the Lord Chancellor the power by order both to prescribe the amount of fees to be paid in respect of proceedings before the Adjudicator, and to make provision about their payment.

PART 12: MISCELLANEOUS AND GENERAL

Miscellaneous

CLAUSE 113 - RIGHTS OF PRE-EMPTION

Subsection (1)

507. Subsection (1) provides that a right of pre-emption in relation to registered land has effect from the time of creation as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority). In other words, it will take its priority from the date of creation. For the provisions of the Bill that govern priority, see Clauses 28-31.

508. A right of pre-emption is a right of first refusal. It imposes an obligation on the grantor not to sell the land without first offering it to the grantee. The precise status of a right of pre-emption is at present uncertain. In Pritchard v Briggs [1980] Ch 338 a majority of the Court of Appeal held (obiter) that a right of pre-emption did not of itself confer on the grantee any interest in land. However, when the grantor chose to sell the property the right of preemption became an option and, as such, an equitable interest in land. If correct this might lead to unfortunate results. For example, although the grantee of a right of pre-emption would be able to register it at the time of its creation, the right would not be effective for the purposes of priority until the grantor evinced a desire to sell the land. Similarly, if the grantee of the right of pre-emption is in actual occupation of the land to which it relates, the right of pre-emption presently takes effect as an overriding interest only when the grantor does something to indicate an intention to sell. The precise time when that occurs is uncertain. Clause 113 clarifies and simplifies the law by providing in relation to registered land that a right of pre-emption takes effect from the time of creation as an interest in land. On the basis that the dicta in Pritchard v Briggs represent the present law, the Bill changes it in relation to registered land.

Subsection (2)

509. Subsection (2) ensures that the principle in subsection (1) is prospective only. Therefore, it will not apply to rights of pre-emption created before Clause 113 is brought into force.

CLAUSE 114 - PROPRIETARY ESTOPPEL AND MERE EQUITIES

510. Clause 114 declares for the avoidance of doubt that, in relation to registered land, an equity by estoppel and a mere equity have effect from the time when the equity arises as an interest capable of binding successors in title (subject to rules about the effect of dispositions on priority). For the provisions of the Bill that govern priority, see Clauses 28-31.

511. In relation to equities arising by estoppel, Clause 114 removes present uncertainty as to the status of such rights. An equity by estoppel will arise in the following circumstances. A, the owner of land, encourages or allows the claimant, B, to believe that he or she has some right or interest over A's land. To A's knowledge, B acts to his or her detriment relying upon that belief. A then seeks to deny B the anticipated right or interest in circumstances that make this refusal unconscionable. In these circumstances B has an "equity" which gives him or her the right to go to court to seek relief. The court has a wide discretion in determining the minimum relief necessary to satisfy this equity. At present, there is uncertainty as to the precise status of B's "inchoate equity" after he or she has relied to his or her detriment but before the court has given effect to it. The weight of authority is probably in favour of the view that such an equity is proprietary and not merely personal. HM Land Registry already treats it as such, permitting the entry of a caution or notice in relation to such equities. Clause 114 removes the present uncertainty by confirming the proprietary status of an equity arising by estoppel in relation to registered land.

512. In relation to "mere equities" the Bill clarifies the present law. A "mere equity" is difficult to define with any clarity. The term is used to denote a claim to discretionary equitable relief in relation to property, such as a right to set aside a transfer for fraud or undue influence, a right to rectify an instrument for mistake, or a right to seek relief against the forfeiture of a lease after a landlord has peaceably re-entered.

513. For the avoidance of doubt, Clause 114 makes it clear that a mere equity has effect from the time when it arises as an interest capable of binding purchasers. Because a mere equity is an interest for the purposes of the Bill, it is brought within the general principles of priority applicable to registered land that are contained in Clauses 28-31. This means that a mere equity will not be defeated by the buyer of a later equitable interest in registered land without notice of that equity.

CLAUSE 115 - REDUCTION IN UNREGISTERED INTERESTS WITH AUTOMATIC PROTECTION

Subsection (1)

514. Under the Bill, as now, there are certain categories of unregistered interests which will nevertheless override first registration and registered dispositions. These are set out in Schedules 1 and 3, respectively: see below, paragraphs 570 and following and and following. In accordance with the aim of total registration, the Bill seeks to restrict such interests so far as possible.

515. Subsection (1) makes provision for the phasing out of certain categories of unregistered interest which override first registration and registered dispositions. The following interests will cease to be overriding 10 years after Schedules 1 and 3 are brought into force:

(i) franchises;

(ii) manorial rights;

(iii) crown rents;

(iv) certain rights in relation to embankments and sea walls; and

(v) what are commonly called corn rents.

516. The rights that are covered by these categories of interest are all linked in that:

(i) they are of ancient origin;

(ii) they are of an unusual character that a buyer would not normally expect to encounter;

(iii) they can be very difficult to discover; and

(iv) they may be exceptionally onerous.

Subsection (2)

517. Subsection (2)(a) means that where a person has the benefit of a right over unregistered land which is to be deprived of its status as an interest which overrides first registration 10 years after Schedule 1 comes into force, he or she will be able to lodge a caution against first registration by virtue of that interest during that 10 year-period without the payment of any fee.

518. Subsection (2)(b) means that where a person has the benefit of a right over registered land which is to be deprived of its status as an interest which overrides registered dispositions 10 years after Schedule 3 comes into force, he or she will be able to register a notice in respect of that right during that 10-year period without the payment of any fee.

CLAUSE 116 - POWER TO REDUCE QUALIFYING TERM

519. Subsection (1) confers a power on the Lord Chancellor by order to reduce the length of the term specified in any of the following provisions:

(i) Clause 3(3) (length of leases which may be registered): cf paragraphs 14 and following, above;

(ii) Clause 4(1)(c)(i) (length of leases the grant of which triggers compulsory first registration) and 2(b) (length of leases the transfer of which triggers compulsory first registration): cf paragraphs 24 and 21, above;

(iii) Clause 15(3)(a)(ii) (length of leases in respect of which the owner cannot lodge a caution against first registration): cf paragraphs 76 and following, above;

(iv) Clause 27(2)(b)(i) (length of leases granted out of registered estates in land which are required to be registered): cf paragraphs 125 and 129, above;

(v) Clause 80(1)(b)(i) (length of leases granted out of the Crown's demesne land which are required to be registered): cf paragraph 358, above;

(vi) Paragraph 1 of Schedule 1 (length of unregistered leases which override first registration): cf paragraphs 574 and following, below;

(vii) Paragraphs 4(1), 5(1) and 6(1) of Schedule 2 (registration requirements in respect of certain leases): cf paragraphs 131 and following, above;

(viii) Paragraph 1 of Schedule 3 (length of unregistered leases which override registered dispositions): cf paragraphs 603 and following, below.

520. Before making such an order, the Lord Chancellor must consult such persons as he considers appropriate: see Clause 116(3). The power to make an order under this clause is exercisable by statutory instrument which is subject to annulment in pursuance of a resolution either House of Parliament: Clause 125(2) and (4).

CLAUSE 117 - POWER TO DEREGISTER MANORS

521. Clause 117 confers a power on the registrar to remove the title to a manor from the register on the application of the registered proprietor of that manor.

522. At present a manor - that is, the lordship of a manor - is registrable with its own title: Land Registration Rules 1925, rules 50 and 51. The manorial rights of a lord are wholly incorporeal and are commonly owned separately from the land that was originally comprised in the manor. The registration of manors gives rise to many practical difficulties at HM Land Registry and offers few, if any, benefits in return. Therefore, the Bill does not replicate the present power to register a manor and Clause 117 makes it possible to deregister manors which are currently registered.

CLAUSE 118 - CONCLUSIVENESS OF FILED COPIES ETC

523. This clause creates a presumption as to the conclusiveness of certain documents kept by the registrar which are not originals. It is designed to prevent persons from going behind the register. Clause 118 replaces section 110(4) of the Land Registration Act 1925 and makes certain adjustments to take account of the open register.

Subsection (1)

524. Clause 118 will apply where:

(i) a disposition relates to land to which a registered estate relates; and

(ii) an entry in the register relating to the registered estate refers to a document kept by the registrar which is not an original.

525. A disposition may relate to land to which a registered estate relates not only where the disposition requires registration, but also in some cases where it does not. Because the register is open, it may be relied upon not only by those who are parties to a disposition of a registered estate that is capable of being protected on the register, but also by:

(i) those who are granted an interest out of a registered estate which is not registrable; and

(ii) those who are parties to any subsequent dealings with such an interest.

For example, where a freeholder grants a lease for seven years or less, the lease will not ordinarily be required to be registered, nor will its priority need to be protected by means of a notice in the register: see Schedule 3, paragraph 1. However, the grantee of the lease may search and rely upon copies of documents referred to in the register of the freehold title to ascertain what incumbrances (if any) affect it. Similarly, on an assignment of that lease, the intending assignee may search the register of the freehold title out of which the lease has been granted. The presumption of conclusiveness in Clause 118 will therefore apply to such dealings.

526. Where the register refers to an original document that is kept by the registrar, Clause 118 will not apply. Where the register refers to any document the original of which is kept by the registrar, any person may inspect and copy it, except to the extent that rules may provide otherwise: see Clause 66. As such, there is no need for any provision as to the conclusiveness of the document. Clause 118 is intended to meet the sort of cases where the registrar has retained a copy of (or parts of) a document, but has not retained the original.

Subsections (2), (3) and (4)

527. Where Clause 118 applies, the effect of subsection (2) is that the document concerned has to be taken to be accurate and complete. Subsection (3) accordingly prevents a party to the disposition requiring production of the original, while subsection (4) shields the parties to the disposition from any discrepancy between the original and the copy kept by the registrar.

528. It may be noted that a person who suffers loss by reason of a mistake in a document kept by the registrar which is not an original and which is referred to in the register will be entitled to indemnity: see Schedule 8, paragraph 1(1)(e). See below, paragraph 736.

CLAUSE 119 - FORWARDING OF APPLICATIONS TO REGISTRAR OF COMPANIES

529. This clause confers a power on the Lord Chancellor to make provision by rules about the transmission by the registrar to the registrar of companies of applications under: (i) Part 12 of the Companies Act 1985 (registration of charges); or (ii) Chapter 3 of Part 23 of that Act (corresponding provision for oversea companies).

530. This provision may be explained as follows. Where a company creates a registered charge over its property, that charge will not only be registrable under the Bill, but it will also be required to be registered under the Companies Act 1985. Registration under the Companies Act 1985 fulfils an entirely different function from registration of title. It does not affect the priority of competing charges. Instead, it is intended to protect actual or intended creditors by making it apparent on the face of the Companies Register what the liabilities of a company are. Notwithstanding the different functions of registration of title and registration in the Companies Register, it is highly desirable that it should be possible to make a combined application to the land registry to register the charge and for that application then to be forwarded to Companies House for registration in the Companies Register. Rules under paragraph 6(a) of Schedule 10 should make it possible to have a combined form of application for this purpose. Clause 119 will enable rules to make provision for the transmission of such applications from the registrar to the Companies Registrar.

531. Rules made under Clause 119 will be laid before Parliament only, but they will not be land registration rules: Clauses 125(3)and 129(1). This means that they will not be considered by the Rule Committee: cf Clause 124. There is no reason why rules concerning the transmission of information from one Government department to another should have to be considered by the Rule Committee.

Offences etc

CLAUSE 120 : SUPPRESSION OF INFORMATION

Subsection (1)

532. Clause 120 creates a new offence. A person commits an offence where, in the course of proceedings relating to registration under the Bill, he or she suppresses information with the intention of:

(i) concealing a person's right or claim; or

(ii) substantiating a false claim.

533. This offence applies in relation to any proceedings under the Bill. Thus it will include not only contentious proceedings before the court or the Adjudicator to HM Land Registry, but also any procedure under the Bill which may involve the making of some change in the register.

534. The offence under this subsection is similar, but not identical, to the offence presently found in section 115 of the Land Registration Act 1925.

Subsection (2)

535. Subsection (2) sets out the penalties for an offence committed under subsection (1).

CLAUSE 121 - IMPROPER ALTERATION OF THE REGISTERS

Subsection (1)

536. Subsection (1) creates a new offence in relation to improper alterations of the registers. A person will commit an offence if he or she dishonestly induces another:

(i) to change the register of title or the cautions register; or

(ii) to authorise the making of such a change.

537. Subsection (4) makes it clear that for these purposes a change to the register includes a change to a document referred to in it.

538. This offence is similar, but not identical, to the offence presently found in section 116 of the Land Registration Act 1925.

539. The sort of situation in which a person might (for example) commit an offence under this subsection would be where he or she deliberately makes a false statement in an application for registration.

540. With the introduction of electronic conveyancing, a person who enters into a network access agreement may be authorised to change the register: see Schedule 5, paragraph 1. However, it is likely that any changes to the register will have to be approved in advance by the registrar. The offence in subsection (1)(b) will therefore cover the case of a party to a network access agreement who dishonestly induces the land registry to agree to a particular change in the register that he or she then makes.

Subsection (2)

541. Subsection (2) creates a further offence in relation to improper alterations of the register. A person will commit an offence if he or she intentionally or recklessly makes an unauthorised change in the register of title or cautions register.

542. Again, for these purposes a change to the register includes a change to a document referred to in it: Clause 121(4).

543. The offence created by subsection (2) will in fact cover two distinct situations. (i) First, where a person who is not authorised to change the register does so, knowing that he or she is not authorised to do so, or being reckless as to that fact. (ii) Secondly, where a person who has authority to make a particular change to the register intentionally or recklessly makes some other change that he or she is not authorised to make.

Subsection (3)

544. Subsection (3) sets out the penalties for offences committed under Clause 121(1) or (2).

CLAUSE 122 - PRIVILEGE AGAINST SELF-INCRIMINATION

545. Clause 122 replicates the effect of section 119(2) of the Land Registration Act 1925. It provides that the privilege against self-incrimination, so far as relating to offences under the Bill, does not entitle a person to refuse to answer any question or produce any document or thing in any legal proceedings other than criminal proceedings.

546. However, subsection (2) provides that no evidence so obtained shall be admissible in any criminal proceedings under the Bill against either the person from whom it was obtained or his or her spouse.

Land registration rules

CLAUSE 123 - MISCELLANEOUS AND GENERAL POWERS

547. Clause 123 provides that Schedule 10 has effect. Schedule 10 contains a series of miscellaneous and general land registration rule-making powers. See below, paragraphs 759 and following.

CLAUSE 124 - EXERCISE OF POWERS

Subsection (1)

548. Subsection (1) provides that the power to make land registration rules is, as now, exercisable by the Lord Chancellor with the advice and assistance of a body called the Rule Committee. For the equivalent provision in the Land Registration Act 1925, see section 144. For the definition of land registration rules under the Bill, see Clause 129(1).

Subsections (2) and (3)

549. Subsections (2) and (3) deal with the composition of the Rule Committee. In this respect the Bill makes two changes.

(i) First, the Ministry of Agriculture Fisheries and Food will cease to be represented on the Rule Committee. In its place, the Council of Mortgage Lenders will nominate a member. This change takes account of the importance of secured lending on land which has developed since 1925.

(ii) Secondly, the Lord Chancellor may nominate to be a member of the Rule Committee any person who appears to him to have qualifications or experience which would be of value to the committee in considering any matter with which it is concerned.

Supplementary

CLAUSE 125 - RULES, REGULATIONS AND ORDERS

Subsection (1)

550. Subsection (1) provides that any power of the Lord Chancellor to make rules, regulations or orders under the Bill, includes power to make different provision for different cases. This power may be used, for example, in relation to fee orders: see above, paragraph 468.

Subsection (2)

551. Subsection (2) requires all rules, regulations or orders made under the Bill by the Lord Chancellor to be made by statutory instrument.

Subsection (3)

552. Subsection (3) provides that where a statutory instrument contains the following, it will be required to be laid before Parliament after being made:

(i) Land registration rules. For the definition of land registration rules, see Clause 129(1).

(ii) Rules relating to adjudication or to the forwarding of applications to the Registrar of Companies.

(iii) Regulations under the Bill.

(iv) An order designating a particular office of the land registry as the proper office for the receipt of applications or a specified kind of application.

Subsection (4)

553. Subsection (4) provides that where a statutory instrument contains the following, it will be subject to annulment in pursuance of a resolution of either House of Parliament:

(i) Rules requiring transactions to be made in electronic form and simultaneously registered and rules concerning network access agreements.

(ii) Any order made under the Bill other than:

(a) an order designating a particular office of the land registry as the proper office for the receipt of applications or a specified kind of application;

(b) a fee order prescribing fees to be paid in respect of dealings with the land registry;

(c) a fee order prescribing fees to be paid in respect of proceedings before the Adjudicator;

(d) an order making transitional provision in relation to the operation of the Bill;

(e) an order bringing any provisions of the Bill into force.

CLAUSE 126 - CROWN APPLICATION

554. Clause 126 provides that the Bill binds the Crown.

CLAUSE 127 - APPLICATION TO INTERNAL WATERS

555. This clause defines the application of the Bill to land covered by internal waters.

556. First, the Bill applies to land covered by internal waters which are within England or Wales: Clause 127(a). For the definition of "England" or "Wales" respectively, see Schedule 1 to the Interpretation Act 1978. As now, land registration will therefore apply to land covered by internal waters within local government administrative areas, ie the counties of England or Wales (as defined by Local Government Act 1972), Greater London and the Isles of Scilly. It may be noted that the seaward limit of a county (or other administrative area) is usually the low water mark. However, in some cases, other tidal waters are included within a county as (for example) where there is an estuary. In the case of an estuary, the county boundary is at the seaward limit of that estuary as determined by the Ordnance Survey.

557. Secondly, the Bill applies to land covered by internal waters of the United Kingdom that are adjacent to England or Wales and which are specified by order made by the Lord Chancellor for these purposes: Clause 127(b). An order made pursuant to this provision must be made by statutory instrument which will be subject to annulment by a resolution of either House of Parliament: Clause 125(2) and (4).

558. If exercised, the power contained in Clause 127(b) will enable the Crown Estate to register its submarine land out to the baselines which define the territorial limits of the United Kingdom: see Convention on the Territorial Sea of 1958, Article 4. This, in turn, will enable it to protect such land against encroachments by adverse possessors who might (for example) lay cables or pipelines within internal waters but outside the body of a county. For the provisions of the Bill on adverse possession see Part 9 and Schedule 6. At present, the land which can be registered under the Land Registration Act 1925 is, in practice, determined by reference to local government administrative areas. Although HM Land Registry could in theory resource the registration of submarine land within a county, it would be in difficulties if land became registrable as far out as the baselines. The fact that the extension of land registration beyond county boundaries is dependent on the exercise by the Lord Chancellor of an order-making power means that extension can be phased in. It will be necessary for extension to be phased in because of the effect of extension on land registry resources.

CLAUSE 128 - "PROPRIETOR IN POSSESSION"

559. Clause 128 sets out the circumstances in which a proprietor will be regarded as being a proprietor in possession for the purposes of the Bill. The Bill employs this term in Clause 62 (Power to upgrade title) and Schedule 4 (Alteration of the register).

Subsection (1)

560. The first situation where land is in the possession of the proprietor is where the land is physically in his or her possession.

561. The second situation where land is in the possession of the proprietor is where the land is physically in the possession of a person who is entitled to be registered as proprietor. An example would be where a beneficiary under a bare trust is in physical possession of land and the registered proprietor was his or her nomineee. For these purposes, Clause 128(3) makes it clear that a squatter who is entitled to apply to be registered under Schedule 6 is not regarded as a person who is entitled to be registered as proprietor.

Subsection (2)

562. The third situation in which land is in the possession of the proprietor is where the possession of a person other than the proprietor is attributed to the proprietor by virtue of one of the relationships specified in subsection (2). The effect of this provision is to attribute the possession of the secondnamed person to the first-named person not only where the second-named person is in physical possession, but also where he or she is treated as being in possession. This would, for example, cover the case where a tenant has sublet.

CLAUSE 129 - GENERAL INTERPRETATION

563. This clause sets out the definitions of those expressions which are defined generally for the purposes of the Bill.

Final provisions

CLAUSE 130 - MINOR AND CONSEQUENTIAL AMENDMENTS

564. Clause 130 provides that Schedule 11 has effect. Schedule 11 makes minor and consequential amendments. See below, paragraphs 779 and following.

CLAUSE 131 - TRANSITION

Subsection (1)

565. Subsection (1) empowers the Lord Chancellor by order to make such transitional provisions and savings as he thinks fit in connection with the coming into force of the Bill. Such an order will be made by statutory instrument and is not subject to any Parliamentary procedure: see Clause 125(2) and (4)(b).

Subsections (2) and (3)

566. Subsection (2) provides that Schedule 12 has effect. Schedule 12 contains transitional provisions and savings. See below, paragraphs 790 and following. However, subsection (3) makes it clear that nothing in Schedule 12 affects the Lord Chancellor's power by order to make transitional provisions and savings under subsection (1). Moreover, he may use that power to modify any provision of Schedule 12.

CLAUSE 132 - REPEALS

567. Clause 132 provides that Schedule 13 has effect. Schedule 13 lists repeals made to other Acts.

CLAUSE 133 - SHORT TITLE, COMMENCEMENT AND EXTENT

Subsection (2)

568. Subsection (2) provides that the Bill will come into force on such day as the Lord Chancellor may by order appoint, and different days may be appointed for different purposes. For an example of a provision which might be brought into force at a later stage, see below paragraph 702. An order made under this subsection must be made by statutory instrument, but is not subject to any Parliamentary procedure: Clause 125(2) and (4)(b).

Subsections (3) and (4)

569. Subsection (3) provides that, subject to subsection (4), the Bill applies to England and Wales only. Subsection (4) deals with the point that some of the amendments and repeals made by the Bill need to extend to other parts of the United Kingdom because the enactments amended or repealed do so (e.g. the amendments of the House of Commons Disqualification Act 1975).

SCHEDULE 1

UNREGISTERED INTERESTS WHICH OVERRIDE

FIRST REGISTRATION

570. Schedule 1 lists the interests which bind the first registered proprietor even though they are not entered on the register.

571. Where a person is registered as first registered proprietor, he or she takes the estate subject to certain interests, including "interests which are the subject of an entry in the register" and "unregistered interests which fall within any of the paragraphs of Schedule 1": see Clauses 11(4)(a) and (b); 12(4)(a) and (b). Schedule 1 lists fourteen such interests. A fifteenth (a PPP lease) is listed in Clause 90, which takes effect as if it were included in Schedule 1.

572. Under the present law, section 70 of the Land Registration Act 1925 lists, without differentiating between them, those interests that override-

(i) first registration; and

(ii) registered dispositions.

The Bill distinguishes between these two categories of interest. Interests that override registered dispositions are set out separately in Schedule 3.

573. The rights set out in paragraphs 10-14 will lose their overriding status 10 years after the date on which Schedule 1 is brought into force: see Clause 115. This is in accordance with one of the aims of the Bill, which is to eliminate overriding interests so far as possible. Clause 115 is one element of that strategy.

Paragraph 1

574. Under paragraph 1 a leasehold estate granted for a term not exceeding seven years from the date of grant overrides first registration.

575. The principle that short leases (which under the present legislation means leases granted for 21 years or less) should take effect as overriding interests is currently embodied in section 70(1)(k) of the Land Registration Act 1925.

576. Paragraph 1 lists three situations in which a lease cannot override first registration even if it is granted for a term of seven years or less. In each of these situations, the grant of a lease is required to be completed by registration: Clause 4(1)(d), (e) and (f), namely-

(i) A reversionary lease granted to take effect in possession more than three months after the date on which it was granted. The reason for this exception is that a reversionary lease can be very difficult to discover. Under the Bill, therefore, such a lease will be required to be registered substantively. There is no equivalent to this provision under the present law.

(ii) A lease granted out of an unregistered legal estate under the right to buy provisions of Part 5 of the Housing Act 1985. This exception replicates part of the effect of section 154(7) of the Housing Act 1985.

(iii) A lease granted by a private sector landlord out of an unregistered legal estate to a person who was formerly a secure tenant and has preserved a right to buy. This exception replicates part of the effect of section 171G of, and Schedule 9A, paragraph 3 to, the Housing Act 1985.

577. Under the transitional provisions of the Bill, all leases that had overriding status under section 70(1)(k) of the Land Registration Act 1925 before the coming into force of the Bill retain their overriding status: see Schedule 12, para 12.

Paragraph 2

578. This category of unregistered interest substantially replicates the effect of section 70(1)(g) of the Land Registration Act 1925 in relation to first registration but with some significant changes.

579. The effect of sub-paragraph (1) is that, subject to one exception, an interest belonging to a person in actual occupation, so far as relating to land of which he or she is in actual occupation, overrides first registration.

580. The exception is an interest under a settlement under the Settled Land Act 1925. This exception replicates the effect of section 86(2) of the Land Registration Act 1925 which provides that such interests take effect "as minor interests and not otherwise".

581. It should be noted that where a person is in actual occupation of part of the land, his or her rights will be protected only insofar as they relate to the land of which he or she is in actual occupation. This was thought to be the law until recently: see Ashburn Anstalt v Arnold [1989] Ch 1, 28. However, that decision was not followed by the Court of Appeal in Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355. The Bill reverses that latter decision: see further below, paragraph 612.

582. Sub-paragraph (2) provides some guidance as to what is meant by "actual occupation"-

(i) First, actual occupation requires physical presence. This reflects the way in which the concept of "actual occupation" under section 70(1)(g) of the Land Registration Act 1925 has been judicially interpreted. The requirement of physical presence means that a mere legal entitlement to occupy will not suffice. For example, a person who has merely contracted to take a lease or licence of the property, but has not yet entered into possession, will not be in actual occupation. Obviously, as under the present law, what constitutes physical presence will depend upon the nature and state of the property and does not require residence.

(ii) Secondly, the Bill confirms the view that a person will be regarded as being in actual occupation if his or her agent or employee is physically present there: cf Lloyds Bank Plc v Rosset [1989] Ch 350, 377, 405.

583. There are two aspects of section 70(1)(g) of the Land Registration Act 1925 which are not found in paragraph 2 of Schedule 1-

(i) First, it does not replicate the words "save where enquiry is made of such persons and the rights are not disclosed". Subject to one exception (in relation to interests acquired under the Limitation Act 1980 of which the first registered proprietor does not have notice: see Clauses 11(4)(c), 12(4)(d)), the process of first registration does not change existing priorities. Its function is to record the state of the title at the date of registration. There is, therefore, no occasion on which any inquiry of the occupier could be made and no issue of priority to which such an inquiry would be relevant.

(ii) Secondly, overriding status has been removed from the rights of persons who are not in actual occupation but who are in receipt of the rents and profits of the land.

Paragraph 3

584. The effect of paragraph 3 is that a legal easement or profit à prendre ranks as an overriding interest on first registration.

585. The overriding status of easements and profits à prendre is currently governed by section 70(1)(a) of the Land Registration Act 1925 and rule 258 of the Land Registration Rules 1925.

586. The effect of the Bill is that an equitable easement will no longer rank as an overriding interest. At present, an equitable easement which is openly exercised and enjoyed by the dominant owner as appurtenant to the land will take effect as an overriding interest: Celsteel Ltd v Alton House Holdings Ltd [1985] 1 WLR 204. That creates an anomaly, as the following examples illustrate. In each case unregistered land is subject to an equitable easement which is openly exercised and enjoyed by the dominant owner but which has not been registered as a Class D(iii) land charge under Land Charges Act 1972, section 2(5)(iii).

(i) In the first case, the owner voluntarily registers the land, and then makes a disposition of it to a buyer who is duly registered as proprietor. The buyer is, at present, bound by the equitable easement as an overriding interest.

(ii) In the second case, the unregistered land is sold to a buyer who takes it free of the easement because it was not registered as a land charge: see the Land Charges Act 1972, section 4(6).

The Bill removes this anomaly. Although, in (i), the first registered proprietor remains subject to the unprotected equitable easement, any buyer from him or her will take free of it.

Paragraphs 4 and 5

587. These paragraphs preserve the overriding status of customary and public rights. They replicate the effect of part of section 70(1)(a) of the Land Registration Act 1925.

588. The term "customary rights" refers to ancient rights enjoyed by members of a local community or a particular defined class of such persons.

589. The term "public rights" refers to present (not future) rights which can be exercised by any member of the public: see Overseas Investment Services Ltd v Simcobuild Construction Ltd (1995) 70 P & CR 322. "Public rights" include such rights as the right of passage along a highway or navigable waterway or the right to discharge into a public sewer.

Paragraph 6

590. The effect of paragraph 6 is that a local land charge will have the status of an interest which overrides first registration. This replicates the effect of section 70(1)(i) of the Land Registration Act 1925. It should, however, be noted that a local land charge that secures the payment of money cannot be realised until it is registered as a registered charge: see Clause 55. An interest which immediately before the coming into force of this Schedule is an overriding interest under section 70(1)(i) of the Land Registration Act 1925, and whose status was preserved by section 19(3) of the Local Land Charges Act 1975 (which is a transitional provision in relation to the change in the definition of "local land charge"), will override first registration under this Schedule: see Schedule 12, paragraph 13.

Paragraph 7

591. This paragraph replicates the effect of section 70(1)(m) of the Land Registration Act 1925 as inserted by the Coal Industry Act 1994.

Paragraphs 8 and 9

592. These paragraphs achieve the same effect as part of section 70(1)(l) of the Land Registration Act 1925.

Paragraphs 10 and 11

593. These paragraphs preserve the overriding status of franchises and manorial rights and replicate the effect of part of section 70(1)(j) of the Land Registration Act 1925.

594. The meaning of "manorial rights" is a precise one. The rights in question were listed in some detail in paragraphs 5 and 6 of Schedule 12 to the Law of Property Act 1922. Those provisions have since been repealed, but it may be taken that the list found in Schedule 12 to the 1922 Act was a comprehensive statement of these rights. The rights include-

(i) the lord's sporting rights;

(ii) the lord's or tenant's rights to mines and minerals;

(iii) the lord's right to fairs and markets;

(iv) the tenant's rights of common; and

(v) the lord's or tenant's liability for the construction, maintenance, and repair of dykes, ditches, canals and other works.

Paragraph 12

595. This paragraph replicates the effect of part of section 70(1)(b) of the Land Registration Act 1925.

Paragraph 13

596. This paragraph replicates the effect of section 70(1)(d) of the Land Registration Act 1925 in preserving the overriding status of non-statutory rights in respect of embankments and sea and river walls. This form of liability is one which falls on a person whose property fronts the sea or a river and which has arisen by prescription, grant, a covenant supported by a rentcharge, custom or tenure.

Paragraph 14

597. This paragraph replicates the effect of part of section 70(1)(e) of the Land Registration Act 1925. The other interests set out in section 70(1)(e) are not included in paragraph 14 because they are now obsolete.

SCHEDULE 2

REGISTRABLE DISPOSITIONS:

REGISTRATION REQUIREMENTS

598. Schedule 2 sets out the registration requirements for those cases where a disposition of a registered estate or charge has to be completed by registration. Schedule 2 has already been considered in the context of Clause 27 which sets out those dispositions which are required to be completed by registration: see above, paragraphs 125 and following.

SCHEDULE 3

UNREGISTERED INTERESTS WHICH

OVERRIDE REGISTERED DISPOSITIONS

599. Schedule 3 lists those interests which will bind the disponee of a registered estate or charge for valuable consideration, even though they are not protected by an entry on the register.

600. By virtue of Clauses 29(2)(a)(ii) and 30(2)(a)(ii), a registered disposition for valuable consideration of a registered estate or a registered charge takes subject to those interests affecting the estate or charge that are listed in Schedule 3. Schedule 3 lists fourteen such interests. A fifteenth (a PPP lease) is found in Clause 90, which takes effect as if it were included in Schedule 3.

601. As has been explained in paragraph 572, above-

(i) section 70 of the Land Registration Act 1925, which contains a list of those interests that are overriding under the present law, does not differentiate between interests that override first registration and those that override a registered disposition; but

(ii) the Bill distinguishes between these two categories of interest.

Interests that override first registration are set out separately in Schedule 1 and have already been explained.

602. The rights set out in paragraphs 10-14 will lose their overriding status 10 years after the date on which the Schedule is brought into force: see Clause 115.

Paragraph 1

603. Under this paragraph, a leasehold estate granted for a term not exceeding seven years from the date of grant, overrides a registered disposition.

604. The principle that short leases (which under the present legislation means leases granted for 21 years or less) should take effect as overriding interests is currently embodied in section 70(1)(k) of the Land Registration Act 1925.

605. There are two exceptions to the general principle that a short lease will override a registered disposition.

606. The first exception (paragraph 1(a)) covers three situations where a lease granted out of an unregistered legal estate is required to be completed by registration: see Clause 4(1)(d), (e) and(f), namely-

(i) A reversionary lease granted out of an unregistered legal estate to take effect in possession more than three months after the date on which it was granted. The reason for this exception is that a reversionary lease can be very difficult to discover. There is no equivalent to this provision under the current law.

(ii) A lease granted out of an unregistered legal estate under the right to buy provisions of Part 5 of the Housing Act 1985. This exception replicates part of the effect of section 154(7) of the Housing Act 1985.

(iii) A lease granted by a private sector landlord out of an unregistered legal estate to a person who was formerly a secure tenant and has preserved a right to buy. This exception replicates part of the effect of section 171G of, and Schedule 9A, paragraph 3 to, the Housing Act 1985.

607. The second exception covers five cases where a lease granted out of a registered legal estate or charge constitutes a registrable disposition that must be completed by registration: see Clause 27(1), (2)(b) and(c). They are as follows-

(i) A reversionary lease granted to take effect in possession more than three months after the date of the grant of the lease. There is no equivalent to this exception under the current law.

(ii) A lease under which the right to possession is discontinuous, such as a timeshare lease. There is no equivalent to this exception under the present law because there is no requirement to register such leases under the Land Registration Act 1925.

(iii) A lease granted in pursuance of the right to buy provisions of Part 5 of the Housing Act 1985. This exception replicates part of the effect of section 154(7) of the Housing Act 1985. (iv) A lease granted by a private sector landlord to a person who was formerly a secure tenant and has preserved a right to buy. This exception replicates part of the effect of section 171G of, and Schedule 9A, paragraph 3 to, the Housing Act 1985.

(v) A lease of a franchise or manor. Again, there is no equivalent to this exception under the present law because there is no requirement to register such leases under the Land Registration Act 1925.

608. Under the transitional provisions of the Bill, all leases that had overriding status under section 70(1)(k) of the Land Registration Act 1925 before the coming into force of the Bill retain their overriding status: see Schedule 12, paragraph 12.

Paragraph 3

609. This category of interest substantially replicates the effect of section 70(1)(g) of the Land Registration Act 1925 in relation to registered dispositions but with some significant changes.

610. The effect of sub-paragraph (1) is that, subject to four exceptions, an interest belonging to a person in actual occupation, so far as relating to land of which he or she is in actual occupation, overrides a registered disposition.

611. Sub-paragraph (2) makes it clear that a person is to be regarded as in actual occupation if he or she, or his or her agent or employee is physically present there. It has already been explained in relation to Schedule 1 that this restates the present law: see above, paragraph 582.

612. Under paragraph 2, where a person is in actual occupation of part of the land, his or her rights will be protected only insofar as they relate to the land of which he or she is in actual occupation. The effect of this provision is to reverse the effect of Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355. The provision will restrict the inquiries that a buyer of registered land will have to make. As a result of the Ferrishurst case they are, paradoxically, greater in relation to registered land than where the title is unregistered. This limitation of the scope of inquiries is in line with the general policy of the Bill, which is to bring about faster and simpler conveyancing. It will encourage those who have rights in land to register them.

613. There are four situations in which a person's rights will not override a registered disposition even if he or she is in actual occupation of the land to which the rights relate. They are as follows.

614. The first (paragraph 2(1)(a)) is an interest under a settlement under the Settled Land Act 1925. As explained above, this replicates the present law: see paragraph 580.

615. The second exception (paragraph 2(1)(b)) is a reformulation of one that presently applies under section 70(1)(g) of the Land Registration Act 1925. An interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he or she could reasonably have been expected to do so will not be protected as an overriding interest by virtue of his or her actual occupation.

616. The third exception (paragraph 2(1)(c)) is new. It is designed to protect buyers and other registered disponees for valuable consideration in cases where the fact of occupation is neither subjectively known to them nor readily ascertainable. Under this exception, the priority of an interest will not be protected by virtue of a person's actual occupation where-

(i) it belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition; and

(ii) the person to whom the disposition is made does not have actual knowledge of it at that time.

617. The following points should be noted about the third exception-

(i) For the purposes of the exception, it is not the interest that has to be apparent (as in relation to contracts for the sale of land), but the occupation of the person having the interest.

(ii) The test is not one of constructive notice of the occupation. It is the less demanding one (derived from the test as to which encumbrances a seller has to disclose to an intending buyer of land) that it should be obvious on a reasonably careful inspection of the land.

(iii) Even if a person's occupation is not apparent, the exception will not apply where a buyer has actual knowledge of that occupation.

618. The fourth exception (paragraph 2(1)(d)) is where a leasehold estate is granted to take effect in possession more than three months from the date of the grant and has not taken effect in possession at the time of the disposition. This exception is a corollary to the provision of the Bill that requires such leases to be registered: see Clause 4(1)(d). This exception is not likely to occur very often. It would only be relevant where-

(i) a reversionary lease had been granted to take effect in possession more than three months after the date of the grant but had not been registered; and

(ii) the grantee was in actual occupation of the land to which the lease related, but at a time when the lease has necessarily not taken effect in possession.

619. Paragraph 2 removes the overriding status of the rights of persons who are not in actual occupation but who are in receipt of the rents and profits of the land. The transitional provisions in relation to this change are as follows. Where a person is not in actual occupation, but in receipt of rents and profits, he or she will have the benefit of the transitional provision contained in Schedule 3, paragraph 2A(1) inserted by Schedule 12, paragraph 8. However, that interest will cease to be overriding for these purposes, if at any time thereafter the person having the interest ceases to be in receipt of the rents and profits: see Schedule 3, paragraph 2A(2).

Paragraph 3

620. The effect of paragraph 3 is that, subject to one exception, a legal easement or profit à prendre will override a registered disposition.

621. The overriding status of easements and profits à prendre is currently governed by section 70(1)(a) of the Land Registration Act 1925 and rule 258 of the Land Registration Rules 1925.

622. Under the Bill, only a legal easement or profit à prendre will override a registered disposition. It follows that where an easement or profit is expressly granted or reserved out of registered land it will never be an overriding interest. This is because the grant or reservation of such a right is a registrable disposition and will not take effect at law until so registered: Clause 27(1), (2)(d). Once a notice has been entered in the register in respect of an easement it cannot fall within Schedule 3: see Clauses 29(3), 30(3).

623. The exception operates to exclude certain categories of legal easements and profits from those that can be overriding. Its effect may be summarised as follows. Any person who acquires an interest for valuable consideration under a registered disposition will only be bound by a legal easement or profit if-

(i) it is registered under the Commons Registration Act 1965;

(ii) he or she actually knows of it;

(iii) it is patent: in other words, it is obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable, so that no seller of land would be obliged to disclose it; or

(iv) it has been exercised in the period of one year ending on the day of the disposition.

624. The fourth case is important and will cover, in particular, "invisible" easements such as rights of drainage or the right to run a water supply over a neighbour's land. These rights have often existed for many years, but because they were commonly not the subject of any express arrangement between the parties are not recorded on the register.

625. The exception is likely to encourage a straightforward system of standard inquiries in relation to easements and profits that will prompt sellers to disclose what they can reasonably be expected to know. This in turn will help to ensure that such rights are disclosed to the registrar by virtue of rules made pursuant to Clause 71. The rights will then be entered in the register.

626. For the transitional provisions in relation to this category of overriding interests, see Schedule 12, paragraphs 9 and 10. The effect of those two paragraphs is as follows-

(i) an easement or profit à prendre that was an overriding interest in relation to a registered estate immediately before the coming into force of Schedule 3 remains an overriding interest, even though it would not fall within paragraph 3 of Schedule 3; and

(ii) the exception in Schedule 3, paragraph 3(1) will not apply for three years after the coming into force of that Schedule.

Paragraphs 4-14

627. The interests set out in paragraphs 4-14 are identical to those that were considered in relation to paragraphs 4-14 of Schedule 1 and the same considerations apply: see above, paragraphs 587-597.

SCHEDULE 4

ALTERATION OF THE REGISTER

628. Schedule 4 makes provision for alteration of the register of title. It differs significantly in form from the present provisions found in section 82 of the Land Registration Act 1925. It is intended to achieve two objectives. The first is to make a number of changes to the present law in order to improve its working. The second is to recast the legislation so that it reflects the practice of rectification as it has developed under section 82.

Paragraph 1

629. The basic concept which the Bill employs is that of alteration of the register. Paragraph 1 defines "rectification" and makes it clear that it is just one form of alteration, namely one which involves the correction of a mistake and prejudicially affects the title of a registered proprietor. Where an alteration amounts to rectification special considerations apply under the Bill.

Paragraph 2

630. Paragraph 2(1) sets out the three circumstances in which a court may make an order for alteration of the register.

(i) The first is for the purposes of correcting a mistake. For example, if X has forged Y's signature on a certificate of transfer and has been registered as the proprietor of Whiteacre, the court could make an order for Y to be reinstated as registered proprietor.

(ii) The second is for the purpose of bringing the register up to date. For example, if a court ordered the forfeiture of a registered leasehold title for breach of covenant, it should also order that the title to the lease be deleted from the register.

(iii) The third is to give effect to any estate or interest excepted from the effect of registration: compare Clauses 11(6), (7), 12(6)-(8), 29(2)(a)(iii) and 30(2)(a)(iii). An example would be where Blackacre is registered with a possessory freehold title on the basis of the first registered proprietor's adverse possession. It subsequently transpires that the estate against which she adversely possessed was not in fact freehold but leasehold. The court may order that the registered title be altered from freehold to leasehold.

631. The Lord Chancellor has a power under paragraph 4 to make rules to specify circumstances in which the court will be required to exercise its power to make an order for the register to be altered in cases that do not involve rectification. Such rules are likely to impose a duty on the court to make an order for alteration where it has made a determination in proceedings. They are unlikely to require the court to make an order where it incidentally discovers in the course of proceedings that some entry on the register is incorrect.

632. The effect of paragraph 2(2) is that where a court makes an order for the register to be altered, the registrar will be under a duty to give effect to that order once it has been served on him. The Lord Chancellor has a power under paragraph 4 to make rules as to the form of the court's order and as to its service on the registrar.

Paragraph 3

633. Paragraph 3(2) restricts the circumstances in which it is possible for a court to make an order for alteration of the register that affects the title of a proprietor of a registered estate in land who is in possession. Paragraph 3(1) makes it clear that this restriction applies only where alteration of the register amounts to rectification. In the absence of the proprietor's consent, such alteration will only be possible in two cases. Those are-

(i) where the proprietor has by fraud or lack of proper care caused or substantially contributed to the mistake; or

(ii) where it would for any other reason be unjust for the alteration not to be made.

These two exceptions achieve the same effect as section 82(3)(a) and (c) of the Land Registration Act 1925 respectively. Paragraph 3(2) must be read in conjunction with Clause 128 which sets out the circumstances in which a proprietor will be regarded as being a "proprietor who is in possession" for the purposes of the Bill (compare Clause 62(4), (5)). The title to a registered estate in land includes the benefit of any registered estate, such as an easement, that subsists for the benefit of that title: paragraph 3(4).

634. Paragraph 3(3) requires the court to make an order for rectification of the register in all cases where it is able to so, "unless it considers that there are exceptional circumstances which justify its not doing so".

Paragraph 5

635. Paragraph 5(1) sets out circumstances in which the registrar may alter the register. The first three circumstances are identical to those in which the court may order alteration of the register under paragraph 2(1). The registrar will also be able to alter the register for the purpose of removing a superfluous entry. This would, for example, enable him to remove an entry on the register that protected an interest that was adequately protected by another entry. Where there is an application for an alteration to the register that would, if made, amount to rectification within paragraph 1 of Schedule 4, the registrar must refer that application to the Adjudicator to HM Land Registry if the proprietor objects to it. This reference is under the general provisions of the Bill about objections to applications: see Clauses 73 and

106. Rectification by the registrar other than with the consent of the proprietor will, therefore, always be a matter for the Adjudicator.

Paragraph 6

636. Paragraph 6(2) restricts the circumstances in which the register may be rectified against the proprietor of a registered estate who is in possession of land. The same considerations apply under this paragraph as apply under paragraph 3(2) in proceedings before the court: see above, paragraphs 633 and 634.

Paragraph 7

637. Paragraph 7 contains a power for the Lord Chancellor to make rules regulating alteration of the register.

638. Paragraph 7(a) gives the power to specify when the registrar is under a duty to alter the register other than in cases of rectification. It is likely that the registrar will be under a duty to alter the register in all cases where he discovers grounds for doing so regardless of the circumstances in which those grounds came to light.

639. Paragraph 7(b)-(d) enables rules to be made dealing with the manner in which the registrar should exercise the power of alteration, applications for alteration of the register and the procedure for exercising the power of alteration whether on application or otherwise.

Paragraph 8

640. Paragraph 8 makes it clear that rectification of the register can affect derivative interests but that any such changes are prospective only. This reflects the position under the current law: see Land Registration Act 1925, section 82(2).

Paragraph 9

641. Paragraph 9 contains provisions for the payment of costs where the register is altered and the case is not one of rectification.

642. Paragraph 9(1) enables the registrar to pay such amount as he thinks fit in respect of any costs or expenses reasonably incurred in connection with alteration. Where the costs or expenses were incurred with his consent the registrar may always exercise this power.

643. Even if the registrar did not give his prior consent, by virtue of paragraph 9(2), he may nevertheless pay costs and expenses where-

(i) it appears to him that they had to be incurred urgently or that it was not reasonably practicable to apply for his consent in advance; and

(ii) he has subsequently approved the incurring of them.

644. The power contained in paragraph 9 is new and remedies a deficiency in the present law. There is currently no power to pay a party's costs in relation to an alteration that does not amount to rectification of the register. The sort of case in which the power may be exercised is where it appears that there may be a reason to alter the register and an interested party incurs expenses in making investigations into the matter.

SCHEDULE 5

LAND REGISTRY NETWORK

645. Schedule 5 makes detailed provision in relation to the land registry network that may be provided under Clause 92. In particular, it makes provision for access to the land registry network by persons other than the registrar and land registry staff. This marks a fundamental change in the current practice of registered conveyancing. Instead of the registrar registering dispositions on application, with the introduction of electronic conveyancing, solicitors and licensed conveyancers will register dispositions at the same time as they are made. In this way it will be possible to ensure that when a transaction is made it is simultaneously registered: cf Clause 93

Paragraph 1

646. Paragraph 1(1) provides that a person who is not a member of the land registry will only have access to a land registry network if he or she is authorised by means of an agreement with the registrar. A network access agreement of this kind will normally be a contract and enforceable as one. The only such agreements that will not be contracts will be those where the other party to be given access is some other manifestation of the Crown, such as the Treasury Solicitor or the Crown Estate. This is because the Crown is one and indivisible and cannot, therefore, contract with itself.

647. Paragraph 1(2) sets out the purposes for which the agreement may authorise access. It permits the level of access to be varied according to the purposes for which it is required. For example, a solicitor or licensed conveyancer who is authorised to conduct electronic conveyancing might be granted access for all or most of the purposes listed in paragraph 1(2). In contrast an estate agent might only be authorised to have access for the first of them and a mortgage lender might have access for, say, the first three, and then only in relation to a charge in its favour.

648. Paragraph 1(3) provides that rules may regulate the use of network access agreements to confer authority to carry out functions of the registrar. Many of the purposes for which access is authorised under paragraph 1(2) will be functions of the registrar. Paragraph 1(3) makes it clear that a solicitor or licensed conveyancer who is appropriately authorised for one of the purposes listed in paragraph 1(2) will, within the limits of that authority, be able to carry out the functions that are conferred by the Bill on the registrar. For example, a solicitor or licensed conveyancer who has authority to do so will be able to perform the registrar's function of registering dispositions and making other entries in the register. Likewise, he or she will be able to carry out the registrar's function of issuing official search certificates or official copies.

649. Paragraph 1(4) provides that the registrar must, on application, enter into a network access agreement with an applicant if the applicant meets such criteria as rules may provide. For appeals by a person aggrieved by the registrar's decision with respect to entry into a network access agreement, see paragraph 4: below, paragraphs 665 and following.

650. The power to make rules under paragraph 1 will be exercisable by the Lord Chancellor: see paragraph 11(1). Before making such rules, he must consult such persons as he considers appropriate: see paragraph 11(2). Paragraph 11(3) specifies certain matters to which the Lord Chancellor must have regard in making such rules. Such rules will be made by statutory instrument which is subject to annulment in pursuance of a resolution of either House of Parliament: see Clause 125(4).

Paragraph 2

651. Paragraph 2(1) sets out the general principle that the terms on which access to the land registry network is authorised will be such as the registrar thinks fit, and may, in particular, include charges for access. That principle is, however, qualified by paragraph 2(3) and (4): see below, paragraphs 656 and 657.

652. By virtue of paragraph 2(2), the power to authorise access to the land registry network on terms may be used not only for regulating the use of that network, but also for three other purposes.

653. First, the terms may require that the person granted access should have to use the network to carry on such qualifying transactions as may be specified in the agreement: paragraph 2(2)(a). The term "qualifying transaction" is defined in paragraph 12 as meaning a transaction which involves registration and is capable of being effected electronically. By this means, the registrar can ensure that those who use the network carry out all (or all specified) registrable transactions electronically. This may be used to ensure the speedy transition from a paper-based system of conveyancing to an electronic one. As such, it complements Clause 93, which contains the power to require dispositions to be made electronically, but which is unlikely to be used until electronic conveyancing has become the norm.

654. Secondly, the terms on which a person is granted access may include such other purpose relating to the carrying on of qualifying transactions as rules may provide: paragraph 2(2)(b). For the meaning of a "qualifying transaction", see paragraph 12: above, paragraph 653. This power might be used for a variety of purposes, such as to require the person authorised to issue land certificates or official copies to do so when requested.

655. Thirdly, the terms may be used to enable network transactions to be monitored: paragraph 2(2)(c). This provision should be read in conjunction with paragraph 9 of the Schedule, which makes provision for the monitoring of network transactions: see below, paragraphs 678 and following. In relation to a transaction that was part of a chain, the terms of the network access agreement might, for example, require the solicitor or licensed conveyancer to provide the registrar with information, such as the following, as soon as it became available-

(i) that his or her client was proposing to enter into a transaction that appeared to be part of a chain;

(ii) that he or she had performed a specified conveyancing step, such as having completed local searches or that his or her client had received a mortgage offer.

656. Paragraph 2(3) provides that where a person is authorised by a network access agreement to carry on qualifying transactions it will be a condition of that agreement that he or she will comply with rules for the time being in force under paragraph 5. The term "qualifying transaction" is defined in paragraph 12: above, paragraph 653.

657. Paragraph 2(4) enables rules to regulate the terms on which access to a land registry network is authorised. It is likely that rules will specify terms that should be included in any network access agreement and that these will vary according to the level of access granted.

658. Rules made under paragraph 2 are required to be made by statutory instrument, which is subject to annulment in pursuance of a resolution of either House of Parliament: Clause 125(4). Before the Lord Chancellor makes such rules, he must consult such persons as he considers appropriate: see paragraph 11(2).

Paragraph 3

659. Paragraph 3 makes provision for the termination of network access agreements.

660. Paragraph 3(1) makes provision for the termination of a network access agreement on notice to the registrar by a person who has been granted access under such an agreement.

661. Paragraph 3(2) enables rules to be made governing the circumstances in which the registrar may terminate a network access agreement. These rules may, in particular make provision about three matters. As regards the first of these, the grounds of termination, the Lord Chancellor is required to have regard to the three matters listed in paragraph 11(3) in making any such rules. Furthermore, paragraph 3(3) provides that rules made under paragraph 3(2)(a) may, in particular, authorise the registrar to terminate a network access agreement in the circumstances there listed. One effect of paragraph 3(3) is that a person who has been granted access must comply with the conditions of access as they stand at any given time and not merely at the time when the network access agreement was first made. If he or she fails to do so, he or she is liable to have his or her access withdrawn.

662. To ensure both transparency and fairness, paragraph 3(2)(b) authorises rules to be made about the procedure to be followed in relation to termination by the registrar. By virtue of paragraph 3(2)(c), rules may also provide for the suspension of termination pending an appeal to the Adjudicator from the registrar's decision.

663. Rules made under paragraph 3 are required to be made by statutory instrument, which is subject to annulment in pursuance of a resolution of either House of Parliament: Clause 125(4). Before the Lord Chancellor makes such rules, he must consult such persons as he considers appropriate: see paragraph 11(2).

664. Termination of a network access agreement is likely to be a remedy of last resort. Because network access agreements will usually be contractual (see above, paragraph 646), the registrar may have contractual remedies short of termination available to him.

Paragraph 4

665. The termination of a network access agreement by the registrar or a refusal by him to enter into such an agreement has potentially very serious consequences. The Bill therefore provides for a right of appeal to the Adjudicator by any person aggrieved by a decision of the registrar either with respect to entry into, or termination of, a network access agreement: see paragraph 4(1).

666. This right of appeal is unique in the Bill, because it is the only matter on which there is a right of appeal to the Adjudicator from a decision of the registrar: see Clause 106(1). But for this right of appeal, the only way of challenging the registrar would have been by judicial review. An appeal to the Adjudicator will not only be much cheaper and less formal than proceedings for judicial review, but it will also be a full appeal from, and not merely a review of, the decision of the registrar. However, contrary to the general rule, an appeal will lie from the Adjudicator's decision to the High Court only on a point of law and not on a point of fact: see Clause 109(2).

667. There is a power under paragraph 4(2) for the Adjudicator to give directions as to how any determination which he makes is to be carried out.

668. Paragraph 4(3) enables rules to make provision about appeals. The rules that may be made under paragraph 4(3) will be land registration rules: see Clause 129(1). As such they will be required to be made by statutory instrument to be laid before Parliament only: Clause 125(2), (3).

Paragraph 5

669. Network transaction rules under paragraph 5 will be the technical rules which specify how electronic conveyancing is to be conducted. Paragraph 5(1) enables the Lord Chancellor to make provision by such rules "about how to go about network transactions". Paragraph 5(2) stipulates that these rules may, in particular, make provision about dealings with the registry, including provision about the procedure to be followed and the supply of information. The rules are likely to require an authorised solicitor or licensed conveyancer to provide specified information about any dealing and, in particular, about unregistered interests. Rules may also be used to ensure the disclosure of information that the registered proprietor would be reluctant to reveal, such as that a right to determine a registered estate in land has become exercisable: see Clause 64.

670. Rules under paragraph 5(1) may further require that, when a disposition or contract is made, it is simultaneously registered. Although Clause 93 contains the power to make simultaneous registration compulsory, the network transaction rules will be another means of achieving this aim in advance of the exercise of that power. It should be noted, however, that the effect of failure to observe a requirement about simultaneous disposition and registration imposed by rules under paragraph 5 is not the same as the effect of failure to observe such a requirement under Clause 93. Clause 93 prevents the disposition having any effect. If a solicitor or licensed conveyancer failed to observe rules under paragraph 5, he or she would be in breach of the terms of his or her network access agreement. However, that breach would not effect the validity of the disposition.

671. Rules made under paragraph 5 will be land registration rules: see Clause 129(1). As such they will be required to be made by statutory instrument and laid before Parliament only: Clause 125(2) and (3).

Paragraph 6

672. To the extent that an obligation owed by an authorised person conflicts with his or her obligations not owed under a network access agreement, paragraph 6 provides that the obligation not owed under the network agreement is discharged. This provision covers the kind of situation where, say, a solicitor or licensed conveyancer has entered into a network access agreement, and finds herself in a position where she is required to act contrary to the wishes of her client. For example-

(i) she might have to register an unregistered interest affecting the property that her client is purchasing which he would prefer to keep off the title; or

(ii) she might have to disclose under paragraph 2(2) of Schedule 5 that she is acting in a transaction which involves registration and is capable of being effected electronically notwithstanding the duty of confidentiality which she might otherwise owe to her client.

673. In such situations a solicitor or licensed conveyancer will have an overriding duty to fulfil his or her obligation under the network access agreement and will incur no liability to his or her client by so doing.

Paragraph 7

674. If there is a land registry network, paragraph 7(1) imposes a duty on the registrar to provide such assistance as he thinks appropriate for the purpose of enabling persons engaged in qualifying transactions who wish to do their own conveyancing to do so by means of the network. For the meaning of "qualifying transaction", see paragraph 12: above paragraph 653. This will enable persons who conduct their own conveyancing to take advantage of the new scheme. It is envisaged that the registrar will carry out the necessary transactions in electronic form on the instructions of the person who is undertaking his or her own conveyancing. That person will be required to pay an appropriate fee for this service.

675. Paragraph 7(2) makes it clear that the registrar's duty to provide assistance for "do-it-yourself" conveyancers does not extend to the provision of legal advice.

Paragraph 8

676. It is probable that, at least when electronic conveyancing is first introduced, solicitors and licensed conveyancers will authenticate documents electronically on behalf of their clients. If the requirements of paragraph 8(a) and (b) are met, an agent authorised under a network access agreement will, in favour of the other party, be deemed to be acting under the authority of his or her principal.

677. If it were not for paragraph 8, a solicitor or authorised conveyancer acting for one party would be entitled to see written authority from the other party to his or her solicitor or licensed conveyancer and vice versa. This is because a solicitor (and therefore, presumably, a licensed conveyancer) has no implied authority to sign a contract for the sale or purchase of an interest in land on behalf of his or her client: Smith v Webster (1876) 3 ChD 49; H Clark Doncaster Ltd v Wilkinson [1965] Ch 694, 702. He or she can only conclude such a contract if he or she has actual authority. By applying a presumption of authority, paragraph 8 ensures that paper-based written authorities do not have to be exchanged before contracts can be concluded electronically. However, it is intended that, under the network transaction rules made under paragraph 5, there will be a standard form of authority which a practitioner will be required to use to obtain his or her client's agreement where that practitioner is to execute an electronic instrument as agent for that client.

Paragraph 9

678. Paragraph 9 makes provision for the management of network transactions. It forms part of the machinery of the Bill that is particularly designed to expedite chains of domestic sales and to reduce the risk of any break in them.

679. Paragraph 9(1) provides that the registrar may use monitoring information for the purpose of managing network transactions. In particular, he may disclose such information to persons authorised to use the network, and authorise the further disclosure of that information if he considers it necessary or desirable to do so. By paragraph 9(2), the registrar may delegate these functions subject to such conditions as he thinks fit. The monitoring information referred to in this paragraph is the information provided in pursuance of provision in a network access agreement included under paragraph 2(2)(c) of Schedule 5 (above, paragraph 655): paragraph 9(3).

680. It is envisaged that the sort of information that paragraph 9 will enable the registrar (or his delegate as "chain manager") to disclose will be the state of progress of transactions in a chain to other parties in that chain. Although the "chain manager" will not have any direct coercive powers, he or she will be able to identify the link in the chain that is causing the delay. He or she will then be able to encourage that party to proceed with due despatch.

Paragraph 10

681. As a means of assisting those who have entered into network access agreements to continue to meet the requirements of such agreements, paragraph 10 empowers the registrar to provide education and training in relation to the use of a land registry network. It is likely that this will include on-line training and education programmes. Indeed, continued participation in such programmes is likely to be a condition of a network access agreement: cf paragraph 2(4).

Paragraph 11

682. Paragraph 11 relates to rules made under paragraphs 1-3. These rules are not land registration rules and they are subject to a higher level of scrutiny in that-

(i) before making the relevant rules, the Lord Chancellor must consult such persons as he considers appropriate: see paragraph 11(2); and

(ii) they are subject to annulment in pursuance of a resolution of either House of Parliament: Clause 125(4). In contrast, land registration rules merely have to be laid before Parliament: Clause 125(3).

SCHEDULE 6

REGISTRATION OF ADVERSE POSSESSOR

683. Schedule 6 contains provisions concerning the registration of adverse possessors. These provisions represent a major departure from the present law and the thinking behind them has already been explained: see above, paragraph 432.

Paragraph 1

684. Paragraph 1(1) sets out the basic principle that a person may apply to be registered as the proprietor of a registered estate in land if he or she has been in adverse possession of that estate for the period of ten years ending on the date of the application. There is a specific power to make rules about the procedure to be followed pursuant to an application under Schedule 6: see paragraph 15. Any such rules will be land registration rules: Clause 129(1). They will be made by statutory instrument to be laid before Parliament only: Clause 125(2) and (3).

685. Adverse possession is defined in paragraph 11 (see below, paragraph 717). In general, adverse possession has the same meaning as it does for the purposes of section 15 of the Limitation Act 1980: see paragraph 11(1). This means that, for example, neither a trustee nor a beneficiary will ever be able to apply to be registered as proprietor of trust land by reason of his possession of that land. A trustee of a trust of land cannot be in adverse possession against a beneficiary, nor can a beneficiary be in adverse possession against the trustee(s) or any other beneficiary.

686. Paragraph 1(2) deals with the situation where a person who has a right to apply to be registered as proprietor under paragraph 1(1) is then evicted, other than pursuant to a judgment for possession, by the registered proprietor or a person claiming under that proprietor (such as a registered chargee). In those circumstances, the ejected squatter may, notwithstanding his or her ejection, apply to be registered within six months. Were it not for this provision, it would be more advantageous for a registered proprietor (or registered chargee) to terminate a squatter's adverse possession by reentering rather than by seeking a court order for possession. The Bill seeks to ensure that, whether a squatter applies to be registered, is ejected at a time when he or she could have applied to be registered, or is a defendant to possession proceedings, the outcome is the same. See too paragraph 703 below.

687. Paragraph 1(3) precludes an application to register by a squatter who is a defendant in possession proceedings or against whom a judgment for possession has been given within the last two years. Cf Clause 97(2) and above paragraph 445.

688. Paragraph 1(4) provides that a person may apply to be registered as the proprietor of a registered estate even though the estate was not registered throughout the period of adverse possession. For example, if a squatter goes into adverse possession when the title to an estate is unregistered, but four years later the owner voluntarily registers it, the squatter may apply to be registered after a further six years of adverse possession. In one specific set of circumstances, however, an application will not be successful unless the estate to which it relates was registered for more than one year prior to the date of the application: see paragraph 5(4)(d). See below, paragraph 700.

Paragraph 2

689. Paragraph 2(1) provides that where a person makes an application to be registered under paragraph 1, the registrar must give notice of that application to the persons listed. As regards paragraph 2(1)(b), for the effect of the registration of an adverse possessor on chargees, see paragraph 9 (below, paragraph 710). Paragraph 2(1)(d) is likely to encompass those persons who can satisfy the registrar that they have some right or interest in land that would be prejudicially affected if the squatter's application were successful. Examples might include an equitable chargee or someone entitled to the benefit of a rentcharge. As regards paragraph 2(1)(e), there may be certain categories of body or other person who should be notified of the squatter's application to be registered as proprietor even though they have not registered any interest under the previous paragraph. This category might, for example, include the Charity Commission in relation to land held upon charitable trusts, or a trustee in bankruptcy in relation to a bankrupt.

690. Rules made under paragraph 2(1)(d) and (e) will be land registration rules: Clause 129(1). They will be made by statutory instrument to be laid before Parliament only: Clause 125(2) and (3).

691. The effect of paragraph 2(2) is that the notice served under sub-paragraph (1) must inform the recipient that if an application for registration is not required by him or her to be dealt with under paragraph 5, the applicant is entitled to be registered as proprietor.

Paragraph 3

692. Where a notice has been served on a person under paragraph 2, he or she may serve a counter-notice on the registrar requiring him to deal with the application under paragraph 5. The notice must be served within the time prescribed by rules. The period is likely to be three months initially. However, that period may be reviewed once there has been some experience of how the procedure works in practice. Rules made under paragraph 3(2) will be land registration rules: Clause 129(1). They will be made by statutory instrument to be laid before Parliament only: Clause 125(2) and (3).

Paragraph 4

693. Where notice is served by the registrar and no counter-notice is served on him within the time prescribed, paragraph 4 requires the registrar to approve the squatter's application and to register him or her in place of the existing proprietor.

Paragraph 5

694. If, but only if, a squatter can establish any one of the three conditions set out in paragraph 5, the registrar must approve his or her application and register the applicant as proprietor notwithstanding that he has received a counternotice from a person who was notified of the squatter's application: paragraph 5(1). If there is a dispute as to whether the squatter is entitled to be registered then, unless it can be disposed of by agreement, the matter will be referred by the registrar to the Adjudicator for resolution: see Clauses 73(1) and (7); 106(1)(a). It is anticipated that, in practice, most such cases will be referred to the Adjudicator.

695. The first condition is set out in paragraph 5(2). Its effect is to state in statutory form the equitable principle of proprietary estoppel. To succeed, the applicant will have to show that an equity has arisen in his or her favour, because-

(i) the registered proprietor encouraged or allowed him or her to believe that he or she owned the parcel of land in question;

(ii) in this belief, the applicant acted to his or her detriment to the knowledge of the registered proprietor; and

(iii) it would be unconscionable for the proprietor to deny him or her the rights which he or she believed that he or she had.

696. When granting relief on the basis of proprietary estoppel, a court will ascertain the minimum equity necessary to do justice to the claimant, and it has a wide discretion as to what order it should make. This principle is applied by the Bill. By Clause 108(4), where the Adjudicator determines that an equity has arisen but that the circumstances are not such that the applicant ought to be registered as proprietor, he must determine how effect should be given to it. For that purpose, he is empowered to make any order that could be made by the High Court in exercise of its equitable jurisdiction. He might, for example, order the registered proprietor to grant the applicant an easement over the land or to pay him monetary compensation. For analogous provision governing the situation where an appeal is made to the High Court from the Adjudicator's decision in such cases of proprietary estoppel, see Clause 109(3).

697. The following examples illustrate the type of case where the first condition may be in issue.

(i) X has built on a plot of land in the mistaken belief that she is the proprietor of it. Y, the registered proprietor, knowingly acquiesced in X's mistake. X finally discovers the true facts and after 10 years applies to be registered as proprietor.

(ii) A entered into an unenforceable oral agreement to sell a parcel of land to B for valuable consideration. A paid the price for the land and went into possession. A finally discovers that he has no title to the estate. If he has been in possession for 10 years he may apply to be registered as proprietor.

698. The second condition is set out in paragraph 5(3). This makes provision for the case where a squatter can establish some other right that would entitle him or her to be registered as proprietor irrespective of any adverse possession. This might be the case where, for example-

(i) The applicant is entitled to the land under the will or intestacy of the deceased registered proprietor but no assent was executed in his or her favour.

(ii) The applicant contracted to buy the land and paid the purchase price, but the legal estate was never transferred to him or her.

699. The third condition, which concerns disputed boundaries, is set out in paragraph 5(4). In practice, it is the most significant of the three cases, because it is the one situation in which a squatter may acquire title solely by virtue of his or her adverse possession and notwithstanding objection by the registered proprietor (or others on whom a notice is served under paragraph 2).

700. It will apply where all of the following requirements are met-

(i) The land to which the application relates is adjacent to land belonging to the applicant.

(ii) The exact line of the boundary has not been determined under rules made under Clause 60(3). Where a boundary has been determined under such rules, that fact will be apparent from the register, which will then be conclusive as to the boundary.

(iii) For a period of 10 years the squatter or his or her predecessor in title reasonably believed that the land to which the application relates belonged to him or her. In practice, where X has been in possession of a parcel of land for 10 years in circumstances where the physical boundaries of the land suggest that it belongs to X, this is likely to raise a rebuttable presumption that X had the reasonable belief. It will then be incumbent on the registered proprietor to show that X knew or ought to have known that the parcel of land did not belong to him or her.

(iv) The estate to which the application relates was registered more than one year prior to the date of the application. The reason for this requirement is as follows. Title to unregistered land is normally extinguished by 12 years' adverse possession. Under this third condition, title to registered land may be acquired after 10 years' adverse possession. A case might arise where-

(a) a squatter had been in adverse possession of a parcel of unregistered land for more than 10, but less than 12 years;

(b) the title to the land was then registered;

(c) the requirements of paragraph 5(4) were otherwise met.

But for this fourth requirement, the squatter would be able to apply to be registered as soon as the land was registered and the owner would have no opportunity to evict him or her.

701. This condition is likely to cover the following types of case.

(i) The first is where the boundaries as they appear on the ground and as they are according to the register do not coincide. This may happen because (for example)-

(a) the physical features (such as the position of trees and other landmarks) suggest that the boundary is in one place but where, according to the plan on the register, it is in another; or

(b) when an estate was laid down, the dividing fences or walls were erected in the wrong place and not in accordance with the plan lodged at the land registry.

(ii) The second is where the registered proprietor leads the squatter to believe that he or she is the owner of certain land on the boundary when in fact it belongs to the registered proprietor. In some cases there will be detrimental reliance in which case the squatter will be able to rely on the condition in paragraph 5(2), but where there is not, the applicant will have to rely on the condition in paragraph 5(4).

702. It is envisaged that paragraph 5(4) will be brought into force one year after the rest of Schedule 6. If this were not so, a squatter might find that he or she is entitled to be registered as proprietor of the estate under paragraph 5(4) on the day that the legislation is brought into force, even though he or she had only been in adverse possession for 10 years and, the day before, the registered proprietor could successfully have initiated possession proceedings. This would clearly be undesirable. The proposed course of action will give a registered proprietor one year to take proceedings against any squatter or to regularise his or her position. For the Lord Chancellor's power to appoint the dates on which the Bill is to come into force, see Clause 133(2).

703. Paragraph 5(5) applies in the case of a squatter who could have applied to be registered under paragraph 1 but is evicted before so doing. Cf paragraph 1(2) and above, paragraph 686. It ensures that the ten year period of adverse possession mentioned in paragraph 5(4)(c) is measured by reference to the day before the applicant was evicted rather than from the date of his or her application.

Paragraphs 6 and 7

704. Subject to the qualifications contained in paragraph 6(2), paragraph 6(1) permits a squatter, whose application under paragraph 1 has been rejected, to make a further application to be registered, provided that he or she has remained in adverse possession for two years following the date of the rejection of that application. For the meaning of "adverse possession", see paragraph 11, (below paragraph 717). If the squatter does make such an application, he or she is entitled to be registered as the new proprietor of the land: see paragraph 7.

705. The general principle is subject to certain important qualifications contained in paragraph 6(2). An application cannot be made under paragraph 6(1) in any of the three situations mentioned in that sub-paragraph. The reason for each of them is obvious. It would plainly be wrong to allow an application for registration to be made when proceedings to evict the squatter were pending, or where judgment had been given, but had not yet been enforced within the two year period that the Bill allows (see Clause 97(2)), or where the squatter has been evicted pursuant to a judgment for possession.

Paragraph 8

706. Paragraph 8 sets out two situations in which a squatter cannot make a valid application to be registered under paragraph 1 even though he or she may have been in adverse possession for 10 years. Where it appears that one of these two situations applies, the registrar may include a note on the register to that effect: paragraph 8(4).

707. First, no application can be made during, or before the end of twelve months after the end of, any period during which the existing registered proprietor is for the purposes of the Limitation (Enemies and War Prisoners) Act 1945 either an enemy or detained in enemy territory: paragraph 8(1). This provision ensures that the protection conferred by the 1945 Act is carried forward to the present Bill.

708. The second situation provides protection in some cases where a registered proprietor is suffering from mental disability or physical impairment: see paragraph 8(2) and (3). The purpose of these provisions is to guard against the danger that, where the registered proprietor is disabled, an application to be registered might be successful because no one responds when the registrar serves a notice under paragraph 2. The protection afforded by this provision goes beyond that which applies to a person under a disability under the Limitation Act 1980 in the following respects-

(i) Under the Limitation Act 1980, the time at which the person has to be subject to a disability is when the cause of action accrues, that is when adverse possession commences: Limitation Act 1980, section 28(1). Under the Bill, the time at which the registered proprietor has to be subject to a disability is when the squatter applies to be registered, which is when the registered proprietor therefore needs to be able to act to protect his or her position.

(ii) The Limitation Act 1980 offers protection only to those subject to a mental disability: Limitation Act 1980, section 38(2)-(4). The Bill goes further and protects also those who are so physically impaired that they cannot communicate their decisions.

709. If the registrar mistakenly registers a squatter in either of these two situations (if, for example, he is unaware of the registered proprietor's disability), the registered proprietor may be able to seek rectification of the register under the provisions of Schedule 4.

Paragraph 9

710. Where a squatter's application for registration is successful, the registrar will register him or her as the new proprietor of the estate which he or she had adversely possessed: see paragraphs 1(1), 4 and 7. Paragraph 9(1) is the concomitant of this. The fee simple absolute in possession which the squatter has hitherto had by virtue of his or her adverse possession is expressly extinguished.

711. The effect of paragraph 9(2) is that, as now, when a squatter is registered as proprietor, he or she takes the land subject to the same estates, rights and interests that bound the previous proprietor.

712. The basic principle that registration of a squatter as proprietor will not affect the priority of interests affecting the estate is subject to one significant exception. A squatter will take free of any charge which affected the registered estate immediately before his or her registration (see paragraph 9(3)) unless his or her application was determined by reference to one of the conditions set out in paragraph 5 (see paragraph 9(4)). The reason for this exception is that in those cases where a chargee has had the opportunity to prevent the registration of the squatter (by serving a counter-notice under paragraph 3 and, if necessary, evicting the squatter) but has failed to do so, the squatter should not be bound by the charge. If the proprietor of the registered estate loses his or her title, so too should the chargee. This will facilitate subsequent dealings with the land by the squatter and so promote one of the aims of the provisions of the Bill on adverse possession, which is to ensure that land remains in commerce. By contrast, in those cases where a chargee has objected to the squatter's application to be registered, but the squatter has, nonetheless, been registered because his or her case fell within paragraph 5, the squatter will not take free of the charge unless his or her case fell within paragraph 5(2) or (3) and his or her interest in the land had priority over the charge in accordance with the rules about the effect of dispositions on priority.

Paragraph 10

713. As explained above, a squatter whose application to be registered is successful will commonly take free of any registered charge. However, there will be cases where a squatter is bound by a registered charge or some other form of charge (such as a charging order). That charge may also affect property other than the estate of which the squatter has been registered as proprietor. Paragraph 10 reverses the current position whereby a squatter can only redeem the mortgage if he or she pays the full amount of the debt secured by it: see Caroll v Manek (1999) 79 P & CR 173. Once again, the object is to facilitate subsequent dealings with the land and to ensure that land is kept in commerce.

714. Paragraph 10(1) enables a squatter who is registered as proprietor of an estate which is subject to a charge that continues to be binding on him or her to require the chargee to apportion the charge. A charge means any mortgage, charge or lien for securing money or money's worth: see Clause 129(1). Apportionment is to be on the basis of-

(i) the respective values of the parcels of land subject to the charge; and

(ii) the amount secured by the charge at the time when the squatter requires the chargee to make the apportionment.

715. By paragraph 10(2), the person who requires the apportionment to be made is entitled to have his or her estate discharged from the charge if he or she pays the chargee the amount apportioned to that estate together with its costs in making the apportionment. The corollary of this is that the liability of the chargor to the chargee will be reduced accordingly: paragraph 10(3).

716. Paragraph 10(4) confers a power to make rules concerning apportionment. In particular, it should be noted that sub-paragraph (4)(d) envisages that rules may be made which will enable the chargor to recover from the squatter any costs that he or she incurs in the course of the making of the apportionment. Any such rules will be land registration rules: Clause 129(1). They will be made by statutory instrument to be laid before Parliament only: Clause 125(2) and (3).

Paragraph 11

717. Paragraph 11(1) lays down the general principle that for the purposes of Schedule 6 a person is in adverse possession if, but for Clause 95, a period of limitation would run in his or her favour under the Limitation Act 1980. However, this is qualified in three ways.

718. First, in certain circumstances a person can satisfy the requirement of adverse possession even though he or she has not personally been in adverse possession for the whole 10-year period. This will be the case where the applicant-

(i) Is the successor in title to an earlier squatter (as, for example, where the applicant purchased the land from him or her) and, taken together, the total period of adverse possession amounts to 10 years: see paragraph 11(2)(a).

(ii) Has been in adverse possession, has been dispossessed by a second squatter, and has then recovered the land from the second squatter. In this case the applicant can add the second squatter's period of adverse possession to his or her own to make up the necessary 10- year period: see paragraph 11(2)(b).

719. It should be noted that where a squatter is dispossessed, the second squatter will not be able to add the prior period of adverse possession to his or her own to make up the necessary 10-year period. Thus, for example, if X has been in adverse possession for 6 years and Y dispossesses her, Y will not be able to apply to be registered as proprietor until he has been in adverse possession for a further period of 10 years. He cannot add X's period of adverse possession to his own. This is because in this situation Y is not X's successor in title, but has a freehold estate of his own by virtue of his adverse possession. Nor did X's period of adverse possession come between two periods of adverse possession by Y.

720. The second qualification to the principle stated in paragraph 11(1) is that, in determining whether a period of limitation would run under section 15 of the Limitation Act 1980, the commencement of any legal proceedings is to be disregarded: paragraph 11(3)(a). The principle that would otherwise apply is that the commencement of proceedings against a squatter prevents time running against the squatter for the purposes of that action: see Markfield Investments Ltd v Evans [2001] 2 All ER 238.

721. The third qualification is the disapplication of a technical rule about the adverse possession of a reversion, that is not needed in the scheme created by Schedule 6: see paragraph 11(3)(b).

Paragraph 12

722. Paragraph 12 provides that where an estate is held in trust, a squatter will not be regarded as being in adverse possession unless the interest of each of the beneficiaries in the estate is an interest in possession. In other words, a squatter will not be regarded as being in adverse possession at any time when a registered estate is held in trust as long as there are successive interests in the land. This provision achieves the objective that where there are successive interests, adverse possession by a squatter should not prejudice the rights of beneficiaries who are not yet entitled in possession.

723. The effect of paragraph 12 may be illustrated as follows. Land is held on trust of land for A for life, thereafter for B for life, thereafter for C absolutely. S, a squatter, goes into possession of the land during A's lifetime and remains there. For as long as either A or B is alive, S is not regarded as being in adverse possession. It is only once C's interest has fallen into possession that S may be treated as being in adverse possession. Thereafter, S will have to remain in possession for a further 10 years before he or she can make an application to be registered as proprietor under paragraph 1.

Paragraph 13

724. Paragraph 13 contains special provisions dealing with adverse possession against foreshore belonging to the Crown. By virtue of paragraph 1 of Schedule 6, this provision will only apply where Crown foreshore is registered. For registration by the Crown of its demesne lands, see Part 7 of the Bill.

725. Under paragraph 13(1) a squatter must be in adverse possession for 60 years instead of 10 before he or she can apply to be registered in place of the Crown as the proprietor of any foreshore. The longer period has been chosen because of the difficulties that the Crown faces in monitoring the very substantial areas of foreshore which it holds to ensure that there are no persons in adverse possession of it. Foreshore is defined by paragraph 13(3).

726. The effect of paragraph 13(2) is that where land ceases to be foreshore, the squatter may apply to be registered after he or she has been in adverse possession for the shorter of -

(i) 60 years; or

(ii) 10 years from the time when the land ceased to be foreshore.

Paragraph 14

727. Paragraph 14 enables rules to be made which will apply to registered rentcharges the new scheme for adverse possession contained in the Bill, with such modifications and exceptions as may be prescribed in those rules. It should be noted that without such rules the scheme would not apply to rentcharges. This is because paragraph 1 only enables a squatter to apply to be registered as proprietor of an estate in land. A rentcharge is not an estate in land: see Law of Property Act 1925, section 1(1).

SCHEDULE 7

THE LAND REGISTRY

728. Schedule 7 makes further provision in relation to the land registry, the office of Chief Land Registrar and land registry staff. Schedule 7 has already been considered in the context of Clauses 98 and 99: see above, paragraphs 453 and following.

SCHEDULE 8

INDEMNITIES

729. Schedule 8 contains provisions relating to the payment of indemnity. Although recast, this Schedule achieves substantially the same effect as section 83 of the Land Registration Act 1925 (as substituted by section 2 of the Land Registration Act 1997).

Paragraph 1

730. This paragraph sets out eight circumstances in which a person who suffers loss is entitled to be indemnified by the registrar.

731. The first is where a person suffers loss by reason of rectification of the register of title: paragraph 1(1)(a). For the meaning of "rectification" see paragraph 11(2).

732. Paragraph 1(2) extends the scope of paragraph 1(1)(a) to cover two situations in which a person will be treated as if he or she has suffered loss by reason of rectification, even though this might not otherwise be so. This is the case where:

(i) he or she suffers loss by reason of the registrar exercising his power to upgrade title under Clause 62 of the Bill; or

(ii) the register is rectified in relation to the proprietor of a registered estate or charge claiming in good faith under a forged disposition.

733. The second circumstance in which a person is entitled to indemnity is where he or she suffers loss by reason of a mistake, whose correction would involve rectification of the register: paragraph 1(1)(b). This will cover two situations:

(i) Where there is a mistake but the register is not rectified because, for example, there is a proprietor in possession. This deals with the situation presently covered by section 83(2) of the Land Registration Act 1925.

(ii) Where the register is rectified, but the person in whose favour it is rectified still suffers loss as a result of the mistake. This achieves the same effect as section 83(1)(b) of the Land Registration Act 1925.

Under paragraph 1(1)(b) no indemnity is payable until a decision has been made whether or not to alter the register and the loss suffered by reason of the mistake will be determined in light of that decision: paragraph 1(3). For the definition of mistake, see paragraph 11(1).

734. The third situation is where a person suffers loss by reason of a mistake in an official search: paragraph 1(1)(c). This replicates the effect of part of section 83(3) of the Land Registration Act 1925 and is a necessary corollary to Clause 70 of the Bill which governs official searches.

735. The fourth situation is where loss is suffered by reason of a mistake in an official copy: paragraph 1(1)(d). This replicates the effect of part of section 133 of the Land Registration Act 1925. For the provisions of the Bill relating to the issue of official copies and their legal consequences, see Clause 67.

736. The fifth situation is where a person suffers loss by reason of a mistake in a document kept by the registrar which is not an original and is referred to in the register of title: paragraph 1(1)(e). The right to indemnity in this situation is a natural corollary to the presumption created by Clause 118 that such a copy is to be taken as correct and to contain all material parts of the original document. Paragraph 1(1)(e) is based upon, but substantially extends the scope of, section 110(4) of the Land Registration Act 1925.

737. The sixth situation is where a person suffers loss by reason of the loss or destruction of a document lodged at the registry for inspection or safe custody: paragraph 1(1)(f). This reproduces part of the effect of section 83(3) of the Land Registration Act 1925.

738. The seventh situation is where a person suffers loss by reason of a mistake in the register of cautions against first registration: paragraph 1(1)(g). This provision is novel. It is a natural concomitant of the formal establishment of a register of cautions against first registration under the Bill and the provisions which govern alteration of that register: see Clause 19 and Clauses 20 and 21, respectively.

739. The eighth situation is where there is a failure by the registrar to perform his duty under Clause 50 to give notice of the creation of an overriding statutory charge: paragraph 1(1)(h). For example, where a prior chargee makes a further advance to the registered proprietor because the registrar has failed to notify him of the creation of an overriding statutory charge, he or she may be entitled to indemnity if the security proves to be insufficient to meet the advance.

Paragraph 2

740. This paragraph replicates the effect of section 83(5)(b) of the Land Registration Act 1925.

Paragraph 3

741. Paragraph 3 makes provision for the payment of costs or expenses incurred where an indemnity is paid. It reproduces the effect of section 83(5)(c) and (9) of the Land Registration Act 1925.

742. The general rule is that costs or expenses may only be recovered if they are reasonably incurred by the claimant with the registrar's consent: paragraph 3(1). This is subject to exceptions. Where the registrar's prior consent is not obtained, costs or expenses may still be recovered if:

(i) they were incurred by the claimant urgently and it was not reasonably practicable to apply for the registrar's consent in advance: paragraph 3(2); or

(ii) the registrar subsequently approved the incurring of them: paragraph 3(3).

743. Legal costs or expenses may also be recovered without the registrar's prior consent where the claimant made an application to the court to determine whether he or she was entitled to an indemnity or to determine the amount of any indemnity: paragraph 7(2). This latter provision replicates part of the effect of section 2(2) of the Land Registration and Land Charges Act 1971.

Paragraph 4

744. The effect of paragraph 4 is new and remedies a deficiency in the present law. It gives the registrar a discretion to pay the costs or expenses of a claimant who fails to obtain indemnity. Generally, such costs or expenses must be incurred reasonably in connection with the claim and with the consent of the registrar: paragraph 4(1). Where prior consent was not obtained, the registrar may still exercise his power to pay costs or expenses if:

(i) it appears to him that they were incurred by the claimant urgently and it was not reasonably practicable to apply for his consent in advance: paragraph 4(2)(a); or

(ii) the registrar subsequently approved the incurring of them: paragraph 4(2)(b).

Paragraph 5

745. Paragraph 5 sets out factors that will bar a claim for indemnity or reduce the amount that can be recovered. This paragraph is intended to replicate the effect of section 83(5)(a), (6) and (7) of the Land Registration Act 1925.

Paragraph 6

746. Where a party is seeking indemnity for the loss of an estate, interest or charge, paragraph 6 has the effect of limiting the maximum value of indemnity payable in respect of that estate, interest or charge. It does not, however, limit the entire claim for indemnity to that sum. For example, the claimant may be able to recover his or her additional costs.

747. Where the claimant is entitled to indemnity by reason of loss suffered by rectification, the maximum value of the estate, interest or charge for the purposes of indemnity is taken to be its value before rectification of the register of title, but as if there were to be no rectification: paragraph 6(a).

748. Where the claimant is entitled to indemnity by reason of loss suffered because of a mistake whose correction would involve rectification of the register, the maximum value of the estate, interest or charge for the purposes of indemnity is taken to be its value at the time when the mistake which caused the loss was made: paragraph 6(b). Paragraph 7

749. Paragraph 7(1) replicates the effect of section 2(1) of the Land Registration and Charges Act 1971. Paragraph 8

750. Paragraph 8 reproduces the effect of section 83(12) of the Land Registration Act 1925.

751. Paragraph 8 makes the liability to pay indemnity a simple contract debt for the purposes of the Limitation Act 1980. It will therefore be barred six years after the date on which the cause of action arose: Limitation Act 1980, section 5.

Paragraph 9

752. This paragraph confers a new power on the Lord Chancellor to make rules about the payment of interest on an indemnity. Such rules will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125(3).

753. Amongst other things, paragraph 9 will help to place current land registry practice on a more formal and transparent basis. At present, where the register is not rectified the land registry tends to pay interest on indemnity from the date of the mistake. This practice is based upon section 2(5) of the Land Registration and Land Charges Act 1971, which gives the registrar the power to settle claims for indemnity by agreement.

Paragraph 10

754. Paragraph 10 replicates the effect of section 83(10) and (11) of the Land Registration Act 1925. It sets out the circumstances in which the registrar may recover from a third party the amount of any indemnity that he has paid to a claimant. These are set out below.

755. First, the registrar may recover the amount paid from any person who caused or substantially contributed to that loss by fraud: paragraph 10(1)(a). An example would be where a mistake in the register was caused by impersonation of the registered proprietor.

756. Secondly, he is entitled to enforce the rights of action (of whatever nature and however arising) which the claimant would have been entitled to enforce had the indemnity not been paid: paragraph 10(1)(b) and (2)(a). An example would be where a mistake in the register is caused by the negligence of the claimant's solicitor.

757. Thirdly where the register has been rectified, the registrar is entitled to enforce any right of action (of whatever nature and however arising) which the person in whose favour the register has been rectified would have been entitled to enforce had it not been rectified: paragraph 10(1)(b) and (2)(b). This situation may be illustrated by the following example. Rectification is ordered in favour of X because his solicitor negligently lodged inaccurate documents. Y obtains indemnity from the registrar because she has suffered loss as a result of the rectification. The registrar can recover from X's solicitor the amount of the indemnity paid to Y. This is the case even if Y would have had no cause of action against X's solicitor, so long as X would have had a cause of action against the solicitor in the absence of rectification.

SCHEDULE 9

THE ADJUDICATOR

758. Schedule 9 makes provision about the new office of Adjudicator to HM Land Registry. Schedule 9 has already been considered in the context of Clause 105: see above, paragraphs 475 and following.

SCHEDULE 10

MISCELLANEOUS AND GENERAL POWERS

Part 1:

Miscellaneous

Paragraph 1

759. Paragraph 1 provides that rules may make provision applying the Bill to a pre-registration dealing with an estate which triggers compulsory first registration under Clause 6 as if the dealing had taken place after the date of the first registration of the estate, and about the date on which registration of the dealing is effective. This power replicates a power under section 123A(1)(a) of the Land Registration Act 1925. Rules under that power have provided that the provisions of the Land Registration Act 1925 apply to such pre-registration dealings as if they had taken place after the date of first registration: see Land Registration Rules 1925, rule 73. Rules under paragraph 1 of Schedule 10 will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125(3).

Paragraph 2

760. Paragraph 2(1) concerns the obligation that a seller of land owes to prove his or her title. It confers a power on the Lord Chancellor to make provision about the obligations with respect to:

(i) proof of title; or

(ii) perfection of title;

of a seller under a contract for the transfer, or other disposition, for valuable consideration of a registered estate or charge. The reference to provision about the perfection of title is intended to cover the case of a seller who is not the registered proprietor, as where he or she is executor of a deceased registered proprietor or the registered proprietor holds the registered estate or charge on trust for the seller. In such cases rules may provide for the steps that a seller is required to take to perfect his or her title.

761. Proof of title to registered land is presently governed by section 110 of the Land Registration Act 1925, which sets out in detail the documents that a purchaser can require a vendor to produce. It also deals with the situation where a seller of land is not in fact registered as proprietor of the land.

762. Section 110 of the Land Registration Act 1925 reflects the state of the law when it was first enacted. At that stage, searching the register and obtaining office copies could be both costly and time consuming. In contrast, the register is now open so that it is no longer necessary to obtain a seller's consent to search the register or to obtain copies of documents referred to in the register. Moreover, the system of searching the register has become much simpler and cheaper than was formerly the case, in particular with the availability of direct access official searches by computer. In light of these developments, the prescriptive nature of section 110 and its inflexibility can produce unnecessary difficulties for the parties.

763. Paragraph 2 of Schedule 10 achieves a high degree of flexibility in relation to the law governing proof of title to registered land.

764. Paragraph 2(2) provides that any rules made under the power contained in paragraph 2(1) may be expressed to have effect notwithstanding any stipulation to the contrary. This leaves open the possibility that, if appropriate, rules as to proof of title might prevent the parties from excluding them. Rules under paragraph 2 will be land registration rules and will be required to be laid before Parliament only: see Clauses 129(1) and 125(3).

Paragraph 3

765. Paragraph 3 makes provision for rules to be made in relation to implied covenants for title. Covenants as to title are a kind of warranty given by the seller as to his or her title. Often, they are the only remedy that a grantee or transferee of land has for any defects in title that emerge after completion.

766. In relation to registered land, section 38(2) of the Land Registration Act 1925 currently contains a rule-making power for "prescribing the effect" of covenants for title implied under the Law of Property (Miscellaneous Provisions) Act 1994. The rule-making powers contained in paragraph 3 of Schedule 10 are more precisely defined.

767. Paragraph 3(a) enables rules to make provision about the form of provisions that extend or limit any covenant that is implied by virtue of Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994. There are certain rules in the Land Registration Rules 1925 that have this effect: see Land Registration Rules 1925, rules 76A(5) and 77A(3). The power contained in paragraph 3(a) will enable similar provisions to be made.

768. Paragraph 3(b) allows rules to make provision about the application of section 77 of the Law of Property Act 1925 to transfers of registered estates. Section 77 is concerned with covenants that are to be implied on a conveyance of land which is subject to a rentcharge. Rules might, for example, enable the implication of the covenants to be modified or negatived: cf Land Registration Rules 1925, rule 109(6).

769. Paragraph 3(c) confers the power for rules to make provision about reference in the register to implied covenants, including provision for the state of the register to be conclusive in relation to whether covenants have been implied. This rule-making power may be used to effect a change to the present law. Subject to one exception, rule 76A(4) of the Land Registration Rules 1925 currently provides that no reference shall be made in the register to any covenant implied under Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994.

Paragraph 4

770. Paragraph 4 confers the power to make various rules about land certificates.

771. At present, section 63(1) of the Land Registration Act 1925 makes provision for the issue of land and charge certificates. Charge certificates are not retained under the Bill and the role of land certificates is to be greatly reduced. In particular, it will no longer be necessary to produce a land certificate in order to secure the entry of a notice or a restriction in the register: see above, paragraphs 173 and following.

772. In future land certificates are unlikely to play any part in the conveyancing process. A land certificate will simply be a document certifying that the registration of a registered estate has taken place and that a named person is the registered proprietor. Nevertheless, land certificates will continue to perform a useful function. A land certificate might, for example, alert a personal representative that the deceased was the registered proprietor of a property, when this would not otherwise have been apparent to him or her.

773. Rules made pursuant to paragraph 4 will be land registration rules and will be laid before Parliament only: Clauses 125(3) and 129(1).

Part 2: General

Paragraph 5

774. Paragraph 5 confers the power for rules to make provision about the form, content and service of any notice under the Bill. This replicates the effect of provisions contained in the Land Registration Act 1925, section 79.

Paragraph 6

775. Paragraph 6 confers a general power to make certain rules in relation to applications under the Bill. There are numerous applications that can be made to the registrar under the Bill: see, for example, Clauses 3 and 4 (first registration); Clause 67 (application for official copies); Schedule 6, paragraphs 1 and 6 (applications by a squatter to be registered as proprietor).

776. Rules under paragraph 6 may:

(i) Make provision about the form and content of applications under the Bill. It is likely that all applications in electronic form will be in a prescribed form to ensure the effective working of the system: see above, paragraph 402.

(ii) Make provision requiring applications under the Bill to be supported by such evidence as rules may prescribe.

(iii) Make provision about when an application under the Bill is to be taken as made. This will ensure that there is a power to allocate priority to competing applications that come into the land registry.

(iv) Make provision about the order in which competing applications are to be taken to rank. Again, this will ensure that there is a power to allocate priority to competing applications that come into the land registry.

(v) Make provision for alteration by the registrar to correct a mistake in any application or accompanying document. The purpose of this power is to ensure that the registrar is able to correct clerical errors without the need to obtain the consent of the applicant. Rules are likely, for example, to enable the registrar to correct a property description or a detail in an address where it is established elsewhere in the application and the parties do not object. It is considered that there should be a statutory foundation for the registrar's power to make such alterations. At present, the power is found in rules: see Land Registration Rules 1925, rule 13.

Paragraph 7

777. Paragraph 7 provides that rules may make provision about the form of any statement required under an enactment to be included in an instrument effecting a registrable disposition or a disposition which triggers compulsory first registration of title. A number of statutes require that an instrument which makes a disposition contains certain particulars. This is so (for example) in relation to certain dispositions by charities, and in relation to vesting deeds which convey the legal estate to the tenant for life of a settlement under the Settled Land Act 1925: see Charities Act 1993, sections 37 and 39 and Settled Land Act 1925, section 5, respectively.

Paragraph 8

778. This paragraph contains a residual rule-making power. It replicates the power presently found in the Land Registration Act 1925, section 144(1)(xxxi). However, because the rule-making powers conferred by the Bill are more sharply focussed than those found in the 1925 Act, it is anticipated that it will not be necessary to employ this residual power as often as has been the case under the present legislation.

SCHEDULE 11

MINOR AND CONSEQUENTIAL AMENDMENTS

779. Schedule 11 makes minor and consequential amendments to other enactments. These notes refer to a few of the more significant.

Paragraph 2

780. Paragraph 2(2) inserts a new subsection (4A) in section 44 of the Law of Property Act 1925. This provides that subsections (2) and (4) of that section do not apply to contracts to grant leases that trigger compulsory first registration under Clause 4 of the Bill.

781. Section 44(2) and (4) of the Law of Property Act 1925 provide that subject to express provision to the contrary:

(i) under a contract to grant or assign a lease, there is no right to inspect title to the freehold;

(ii) under a contract to grant a sublease, there is no right to inspect title to the leasehold reversion.

As a result of paragraph 2(2), where the owner of an unregistered estate contracts to grant a lease or sublease that will be subject to the requirement of compulsory first registration, he or she will have to deduce his or her title for the statutory period, unless the parties agree to the contrary. This will help to secure one of the aims of the Bill which is to ensure that, where appropriate, leases are registered with absolute title.

782. Paragraph 2(4) inserts a new subsection (12) at the end of section 44 of the Law of Property Act 1925. This provides that the section does not apply to the transfer of a registered estate or to a lease derived out of a registered estate. Section 44(1) of the 1925 Act provides that the statutory period for commencement of title is fifteen years. Section 44(2) and (4) have already been considered above: see above, paragraph 781. Although section 44 does currently apply to registered land, it has little significance in relation to the transfer of a registered estate or the grant of a lease out of such a registered estate. This is because the register of itself is proof of the title to a registered estate so that any transferee or grantee can inspect the title of the estate that is to be transferred or out of which the grant is to be made: see Land Registration Act 1925, section 112; see also, Clause 66 of the Bill. Therefore, the restrictions imposed by section 44 of the Law of Property Act 1925 no longer have any real practical effect on the right to inspect title to registered land. This is why they are disapplied by the amendment made under paragraph 2(4).

Paragraph 28

783. Paragraph 28 adds the Adjudicator to HM Land Registry to Schedule 5 of the Judicial Pensions and Retirement Act 1993. This has the effect of attracting to the Adjudicator the retirement date provisions in section 26 of that Act. Accordingly, the Adjudicator must retire at the age of 70, but may be authorised to continue in office on a yearly basis until the age of 75: Judicial Pensions and Retirement Act 1993, section 26(1), (4), (5) and (6).

Paragraph 31

784. Paragraph 31(2) inserts a new subsection (4) in section 6 of the Law of Property (Miscellaneous Provisions) Act 1994.

785. The Law of Property (Miscellaneous Provisions) Act 1994 makes provision for covenants of title which are to be implied into dispositions of property. These are a kind of implied warranty given by the seller as to his or her title. Often, they are the only remedy that a grantee or transferee of land has for any defects in title that emerge after completion.

786. Section 6 of the Law of Property (Miscellaneous Provisions) Act 1994 provides that there is no liability in relation to some of the covenants implied by Part 1 of that Act in certain circumstances. In particular, under section 6(2), the person making the disposition is not liable under any of the relevant covenants for anything that is either within the actual knowledge, or is a necessary consequence of facts that are within the actual knowledge, of the person to whom the disposition is made.

787. Rule 77A(2) of the Land Registration Rules 1925 makes additional provision as to implied covenants in relation to registered land. The effect of rule 77A(2) is that any covenant implied by virtue of Part 1 of the 1994 Act takes effect as if the disposition had been expressly made subject to:

(i) anything that was entered in the register at the time when the disposition was executed; and

(ii) any overriding interest of which the person to whom the disposition was made had notice at the time the disposition was registered.

As such, there will be no breach of an implied covenant in relation to these matters.

788. Paragraph 31(2) inserts section 6(4) into the Law of Property (Miscellaneous Provisions) Act 1994 to deal with matters currently covered by rule 77A(2) of the Land Registration Rules 1925. It provides that where the disposition is of an interest the title to which is registered under the Bill, the covenantor is not liable for anything which was at the time of the disposition entered in relation to that interest in the register of title.

789. The effect of paragraph 31(2) is similar, but not identical, to rule 77A(2) of the Land Registration Rules 1925. The key changes are as follows:

(i) There is nothing in the new subsection that corresponds to rule 77A(2)(b) in relation to overriding interests. Section 6(2) of the Law of Property (Miscellaneous Provisions) Act 1994 makes that provision unnecessary.

(ii) Paragraph 31(2) will only apply to those covenants listed in section 6 of the 1994 Act, whereas rule 77A(2) currently applies in relation to all of the covenants implied under Part 1 of that Act. This change is unlikely to be material and greatly simplifies the present law.

SCHEDULE 12

TRANSITION

790. Schedule 12 contains the transitional provisions applicable to the Bill. It addresses the following matters-

(i) existing entries in the register;

(ii) existing cautions against first registration;

(iii) pending applications;

(iv) former overriding interests;

(v) cautions against first registration;

(vi) certain applications by cautioners;

(vii) adverse possession;

(viii) indemnities;

(ix) implied covenants on transfers of pre-1996 leases.

Some of these matters have already been explained and, where this so, a cross reference is made to the earlier discussion.

Paragraph 1

791. Under paragraph 1, the validity of existing entries on the register is unaffected by any repeal made by the Bill.

Paragraph 2

792. Under paragraph 2(1), notices entered under the Land Registration Act 1925 are treated in the same way as a notice entered on application under Clause 34(2)(a) of the Bill. For the provisions of the Bill relating to notices, see Clauses 32-39.

793. Under paragraph 2(2), existing restrictions and inhibitions are treated in the same way as restrictions entered under the Bill. For the provisions of the Bill relating to restrictions, see Clauses 40-47. It was explained above that under the Bill inhibitions are to be abolished because they are, in reality, just one form of restriction: see above, paragraph 161.

794. Paragraphs 2(3) and (4) contain provisions relating to cautions against dealings. Under the Bill there is no power to lodge further cautions against dealings: see paragraph 161. Paragraph 2(3) provides that sections 55 and 56 of the Land Registration Act 1925 shall continue to have effect in relation to existing cautions against dealings. Paragraph 2(4) confers power to make rules in relation to existing cautions. It is likely that such rules will replicate the effect of existing rules relating to the operation of cautions: cf Land Registration Rules 1925, rules 217-219, 221 and 222.

Paragraph 3

795. Prior to April 3, 1995, it was possible to create a lien by depositing a land or charge certificate with the lender. Such a lien could be protected on the register by a notice of deposit or a notice of intended deposit: Land Registration Rules 1925, rules 239-243. Since April 2, 1995, it has not been possible to protect a lien by these means. At present, rule 239 of the Land Registration Rules 1925 provides that where a lien protected by a notice of deposit or a notice of intended deposit of a land or charge certificate was entered on the register prior to April 3, 1995, it shall take effect as a caution against dealings under section 54 of the Land Registration Act 1925. Paragraph 3 therefore preserves the effect of rule 239 of the Land Registration Rules 1925.

Paragraph 4

796. Paragraph 4 preserves the effect of section 56(3) of the Land Registration Act 1925 in relation to cautions against first registration lodged under that, or any earlier, Act. Section 56(3) provides that where a person causes damage to another by entering a caution without reasonable cause he or she will be liable in damages. For the equivalent provision in relation to cautions entered under the Bill, see Clause 77.

Paragraphs 5 and 6

797. Paragraph 5 preserves the effect of the Land Registration Act 1925 in relation to applications for the entry of a notice, restriction, inhibition or caution pending at the time of the repeal of the provision under which the application is made.

798. Paragraph 6 provides that where an application for a caution against first registration is pending at the time of the repeal of section 56(1) and (2) of the Land Registration Act 1925, those provisions shall continue to apply to that application. Section 56(1) enables a person aggrieved by an act of the registrar in relation to a caution to appeal to the court. Section 56(2) expressly provides that a caution shall not prejudice the claim or title of any person and shall not have any effect except as provided by the Land Registration Act 1925.

Paragraph 7

799. Paragraph 7 creates an additional category of unregistered interests which override first registration by inserting paragraph 15 in Schedule 1 for a period of three years.

800. Under section 70(1)(f) of the Land Registration Act 1925 the rights of a squatter are protected as overriding interests. On first registration such rights are protected as overriding interests even if the squatter is not in actual occupation of the land at that time. The Bill does not replicate the effect of section 70(1)(f). Under the Bill, a squatter's rights will only be protected as an interest which overrides first registration if he or she is in actual occupation so that they come within paragraph 2 of Schedule 1. However, paragraph 7 continues for the first three years of the new regime the automatic protection which the existing regime affords to a person who has acquired title by adverse possession, but who is no longer in actual occupation.

801. Paragraph 7 means that for three years after Schedule 1 is brought into force, a squatter will have an interest which overrides first registration where he or she had, before the coming into force of the Schedule, extinguished the title of the person who is registered as first registered proprietor. This will provide a reasonable opportunity for any squatter who is no longer in actual occupation of the land which he or she claims, to register his or her rights.

Paragraph 8

802. Paragraph 8 creates a further category of unregistered interests which override registered dispositions by inserting paragraph 2A in Schedule 3. This provision is necessary because under the Bill overriding status will be removed for the rights of persons who are in receipt of rents and profits in respect of land. The rights of such persons are currently protected as overriding interests under section 70(1)(g) of the Land Registration Act 1925.

803. Paragraph 2A(1) provides that an interest which, immediately before the coming into force of Schedule 3, was an overriding interest under section 70(1)(g) of the Land Registration Act 1925 by virtue of a person's receipt of rents and profits, continues to be so for the purpose of Schedule 3. However, by virtue of paragraph 2A(2), that interest will cease to be overriding for these purposes if, at any time thereafter, the person having the interest ceases to be in receipt of the rents and profits. If, for example, X holds the residue of an unregistered 99-year lease and, before the Bill came into force, granted an underlease to Y, X would continue to have an interest capable of overriding a registered disposition for the purposes of the Bill. If, however, Y's underlease determined and X then granted a new underlease to Z, X would at that point cease to have an overriding interest. However, an interest of the kind described above will not override a registered disposition if inquiry is made of the person with the benefit of the interest before the disposition, and he or she unreasonably fails to disclose it.

Paragraphs 9 and 10

804. Paragraphs 9 and 10 are transitional provisions relating to easements and profits à prendre which override registered dispositions.

805. Under the Bill the class of easements and profits that override a registered disposition will be narrower than at present. In particular the following easements and profits will cease to be such interests:

(i) equitable easements or profits;

(ii) easements and profits expressly granted or reserved out of registered land; and

(iii) legal easements and profits that fall within one of the exceptions set out in Schedule 3, paragraph 3.

806. By virtue of paragraph 9 any easement or profit that is an overriding interest at the time when Schedule 3 comes into force, but would not have been overriding by virtue of paragraph 3 of that Schedule if it had been created thereafter, will retain its overriding status. Those who have the benefit of such rights are not at risk of losing them.

807. The effect of paragraph 10 is that for a period of three years after Schedule 3 is brought into force any legal easement or profit that is not registered will be capable of overriding a registered disposition. This will, therefore, cover all legal easements and profits that arise before or after the Schedule is brought into force. However, that overriding status will cease three years after the date on which the Schedule is brought into force. Thereafter the priority of an unregistered legal easement will only be protected as an overriding interest if either:

(i) it falls within paragraph 3 of Schedule 3; or

(ii) it is an overriding interest at the time when the Schedule comes into force and continues to be so by virtue of paragraph 9 of Schedule 12.

Except in relation to equitable easements or profits, paragraph 10 ensures that there is a period of three years' grace before the new provisions take effect. It should be noted that under the Bill easements and profits that are expressly granted or reserved after the Bill comes into force will only be equitable unless and until they are registered: Clause 27(1) and 2(d). As such they will never gain protection under the transitional provision in paragraph 10.

Paragraph 11

808. Paragraph 11 creates an additional category of interests which override registered dispositions by inserting paragraph 15 into Schedule 3 for the period of 3 years from the commencement of that Schedule. This provision is similar to paragraph 7 of Schedule 12, except that it deals with the position where a squatter is entitled to be registered as proprietor of a registered estate by virtue of his or her adverse possession immediately before Clause 96 is brought into force: cf above, paragraphs 571 and following.

Paragraph 12

809. Paragraph 12 provides that paragraph 1 of Schedules 1 and 3 shall be taken to include an interest which immediately before the coming into force of the Schedule, was an overriding interest under section 70(1)(k) of the Land Registration Act 1925. At present, leases granted for a term of 21 years or less are protected as overriding interests: see Land Registration Act 1925, section 70(1)(k). Under the Bill, a lease will not override first registration or a registered disposition unless it was granted for a term of 7 years or less: see paragraph 1 of Schedules 1 and 3. Paragraph 12 therefore preserves the overriding status of legal leases which are granted before Schedules 1 and 3 come into force and which fall within section 70(1)(k).

Paragraphs 14, 15 and 16

810. Paragraph 14 makes transitional provision in relation to cautions against first registration. It has already been considered in relation to Clause 15: see above, paragraphs 76 and 77.

811. Paragraph 15 makes provision in relation to cautions against first registration in respect of the Crown's demesne land. It has already been considered in relation to Clause 81: see above, paragraph 363.

812. Paragraph 16 ensures that existing cautions against first registration entered under section 53 of the Land Registration Act 1925 are treated in the same way as cautions entered under Clause 15 of the Bill. For the main provisions of the Bill that deal with cautions against first registration see Clauses 15-22.

Paragraph 17

813. Paragraph 17 means that where a person has lodged a caution against dealings under section 54 of the Land Registration Act 1925 in respect of an estate, he or she may only apply for the entry of a notice or restriction in respect of that estate under the Bill if he or she also applies to withdraw the caution. This provision is a natural concomitant to the prospective abolition of cautions against dealings: see above, paragraph 161.

Paragraph 18

814. Paragraph 18 makes transitional provision for the situation where, prior to Clause 96 coming into force, a squatter had become entitled to be registered as proprietor of an estate by virtue of section 75 of the Land Registration Act 1925.

815. Paragraph 18(1) confers an entitlement to be registered on any squatter who is a beneficiary under a trust under section 75 of the Land Registration Act 1925 immediately before Clause 96 comes into force. That entitlement is a proprietary right and will be protected without the need for registration if the squatter remains in actual occupation: see Schedule 3, paragraph 2.

816. Paragraph 18(2) provides that the entitlement to be registered under paragraph 18(1) will constitute a defence to any proceedings for possession. If a person successfully claims the benefit of this defence, the court must order the registrar to register the squatter as proprietor of the estate to which he or she is entitled: see paragraph 18(3).

817. Paragraph 18(5) enables rules to make transitional provision for rentcharges held in trust under section 75 of the Land Registration Act 1925. This situation is not covered by paragraph 18(1) because that provision applies only to estates in land. A rentcharge is not an estate in land: see Law of Property Act 1925, section 1(1).

Paragraph 19

818. Paragraph 19(1) applies Schedule 8 to claims made before the commencement of the Schedule which have not been settled by agreement or finally determined by that time. Schedule 8 makes provision for the payment of indemnities and, although recast, substantially replicates the effect of section 83 of the Land Registration Act 1925 (as substituted by section 2 of the Land Registration Act 1997).

Paragraph 20

819. Paragraph 20 replicates the effect of section 24(1)(b) and (2) of the Land Registration Act 1925 in relation to the assignment of leases which are not "new tenancies" for the purposes of section 1 of the Landlord and Tenant (Covenants) Act 1995.

820. In relation to a lease granted prior to 1996, the tenant remains liable for the tenant covenants contained in the lease for its whole duration, regardless of any assignments that might take place. As regards leases granted prior to 1996, section 24(1)(b) and (2) of the Land Registration Act 1925 makes provision for implied indemnity covenants on the part of the transferee in favour of the transferor, and, in relation to a transfer of part, implied indemnity covenants on the part of the transferor in favour of the transferee. The continuing liability of the first tenant for the duration of the lease regardless of assignments was prospectively abolished by the Landlord and Tenant (Covenants) Act 1995. However, section 24(1)(b) and (2) was preserved by the Landlord and Tenant (Covenants) Act 1995, in relation to leases granted before 1996: see Landlord and Tenant (Covenants) Act 1995, sections 14(b) and 30(3). Paragraph 20 of Schedule 12 replicates the effect of the present law in this respect.

SCHEDULE 13

REPEALS

821. Schedule 13 lists repeals of provisions in other enactments.

Ý
Ü   Þ