Created in 1862, the land registry records all landowners and their titles in the UK, forming a database evidencing ownership for over 87% of the landmass in England and Wales. Anyone wishing to buy or sell property or land must register new owners. Interests in land or property, e.g. if someone wishes to take out a mortgage must also be recorded. Generally, anyone who suffers losses as a result of errors or omissions in the register will be entitled to compensation (the insurance principle). The Land Registration system aims to help purchasers find out what exactly the vendor is selling by providing both evidence of entitlement and fuller details of matters affecting the land, so it is in purchasers’ interests to utilise the register make inquiries about the land before buying. The registry aims to provide reliable information surrounding ownership and interests but does it always, and is it ultimately fit for purpose?
The Law Commission in its 2016 report: ‘Updating the Land Registration Act 2002’ (ULRA) stated that ‘the buyer of land may find it subject to a mortgage or (easements) and so on. The buyer of land has to be sure that he or she will buy it free of unwelcome or undisclosed interests’. Although the Land Registration system aims to mirror all that burdens a piece of land, there are inevitable cracks in the mirror, which means that a buyer of land can never be sure if their purchase is free of ‘undisclosed interests’. Indeed, it generally gives people protection of their interests at a basic level, yet still fails to strike a balance between purchasers’ interests and other interests in the land. As a database created over a century ago, we should expect much more of the Land Registration system – especially as it sets out to ‘eliminate uncertainty in conveyancing’ (ULRA, 2.7).
A fundamental land law concept, the mirror principle dictates that all things burdening the land should appear in the register. However cracks in the mirror mean that not all interests are required to be shown on the register – equitable interests can be excluded under the curtain principle. S33 of the Land Registration Act (LRA) 2002, in ss(a) states that neither an interest under trust of land or a leasehold estate in land of three years or less is required to be registered. This undermines the insurance principle as, although the state guarantees the register and compensates purchasers for any mistakes made, this is perhaps futile if some interests are hidden from the register but not deemed as ‘mistakes’. The purchaser is thus provided no compensation despite having purchased land subject to equitable interests that he was unaware of and which may have deterred the purchase. Therefore, it seems that there is a problematic imbalance between the interests of the purchaser and others with an interest in the land; although those with equitable interests are provided protection, this protection materialises in a way which can certainly be deemed as unfair to the unaware purchaser.
Is everyone afforded the same protection?
The Land register does ensure that some interests have protection. In Barclays Bank v Guy 2008, a fraudster, borrowed £100 million from Barclays Bank secured on Guy’s land. Due to the legal title fraudulently held by the fraudster at the time of the loan, the mortgage was held to be valid, even if Guy corrected the register as to title. Ultimately, the innocent party was left in an unwanted situation with no solution. It is wrong to say that the register gives people the chance of having their interests protected if it does not do this for all persons and therefore, these people should expect much more from the Land Registry system.
Some interests which do not appear on the register are also binding on purchasers according to the ‘special rule’ in S29 LRA 2002 and survive even the sale of a property. These overriding interests include legal leases not exceeding seven years (Schedule 3 paragraph 1), interests in land by actual occupation (Schedule 3 Paragraph 2) and some legal easements and profits (Schedule 3 paragraph 3). Although a key policy of the LRA 2002 was to reduce the interests in this ‘special category’, they still pose significant problems in practice as seen in Baker v Craggs 2016. This case concluded with the Craggs having purchased land with a right of way they previously did not agree to and could not argue against; it was held that the right of way (easement) stood. Despite the purchaser having some level of protection by accessing the register and viewing burdens on the property, this unforeseeable overriding interest would not have been discovered. This fundamentally undermines the purchasers’ interest in favour of interests under this special category; purchasers are deeply disadvantaged by cracks in the mirror.
Overreaching is an unfair stripping of a purchaser’s equitable interest in a property. A case of Stack v Dowden arises where there is a sole legal owner, but another person holds an interest in equity as they paid towards the purchase price. In that case, this interest is capable of being undermined through overreaching. Suppose two or more people subsequently become registered as trustees for the property. In that case, the property’s equitable owner will no longer have an interest in the property, but rather, the money paid. In this case, the Land Registry provides no remedy for the equitable owner who can be deprived of interest against her will and therefore has no protection.
In the Registry’s defence, it could be argued that the Register never explicitly aimed to protect owners with equitable interests but instead stood to provide a tool where any purchasers could discover what burdened the land they were about to buy rather than protecting their interests after it is bought. Perhaps in the case of overreaching, we cannot expect much more.
To cut a long story short…
Overall, there is a certain imbalance between interests of purchasers who are subject to protected overriding interests and unforeseen ‘cracks in the mirror’ which they are left with, with no remedy. Therefore it seems that although the Land Register does provide some protection for those with minor interests and purchasers, as the register aims to be a transparent system where purchasers can uncover all that burdens land, they should expect much more.