Following a consultation exercise two years ago, the Law Commission has published a massive 600 page report that recommends changes to the land registration system in England and Wales and incorporates a draft Bill to achieve its proposals.
The land registration system in England and Wales was last revised 15 years ago when the Land Registration Act 2002 (LRA 2002) came into force in October 2003. Over the past two years, the Law Commission has carried out a thorough review of this area of law, with a view to clarifying parts of it and updating other parts. As part of this, a comprehensive consultation exercise took place during 2016.
The Law Commission has now issued its recommendations and this article contains a summary of them. Many of the recommendations are detailed and technical, but this is inevitable given the complexity of land law in England and Wales. In most cases the changes are unlikely to be retrospective.
Reducing fraud - property fraud is very much in the headlines at the moment, typically involving a fraudster assuming the identity of the owner of a property, selling it and then disappearing with the proceeds of sale. Effectively the Land Registry (which means the taxpayer) underwrites the parties' loss in such circumstances.
The proposal is that the Land Registry should be able to set out steps that conveyancers are expected to undertake to verify the identity of their clients, to root out fraudsters. If a conveyancer fails to meet those requirements, and causes loss to the Land Registry, the Land Registry will have a right of recourse to recover the loss from that conveyancer (meaning, effectively, the conveyancer's insurer).
The quid pro quo for conveyancers is that so long as they follow the required steps, they will not be held responsible to the Land Registry if fraud still occurs. However, the position may not be quite as simple as this suggests, since conveyancers may also have responsibilities to their own clients if fraud occurs, which the Law Commission's proposals do not seem to address. This aspect may need more consideration.
Mines and minerals - currently it is not obligatory for separate ownership of mines and minerals to be registered with its own title. If is registered and so a separate title for mines and minerals is created, the Land Registry will not notify the owner of the surface title that the separate mines and minerals title has been created. The Law Commission recommends that sub-surface mines and minerals should be subject to compulsory first registration on a dealing for value and also that the Land Registry should be required to notify the surface owner(s) if an application to register sub-surface mines and minerals is made.
Electronic conveyancing - the LRA 2002 contains a framework to allow electronic conveyancing but the assumption at that time was that completion and registration would happen simultaneously. Such a system is no longer in favour, and so a new system of electronic conveyancing is being proposed, under which completion and registration will remain separate processes.
Adverse possession - Under the LRA 2002, it is registration at the Land Registry, not possession, that is key and so it is extremely unlikely that squatters will now be able to obtain title to registered land by adverse possession. The Law Commission recommends some technical amendments to the current scheme, where the existing provisions have been found to contain ambiguities.
Registration of easements - Currently all easements granted in leases need to be registered, even where the lease itself does not need to be registered because its term is seven years or less. The Law Commission proposes that it should no longer be necessary to register any easements granted in a lease that does not itself require registration. In practice it is thought that many tenants of such leases are not aware of the need to register the easements separately, so this change will bring the law into line with practice. Such easements will become overriding interests and will therefore will bind third parties without the need for registration.
Clarifying the powers of the First-tier Tribunal (Property Chamber) - currently it is unclear whether the Land Registration Division of the First-tier Tribunal (Property Chamber) has the power to determine where a boundary lies, which can involve parties having to bring litigation in two different forums, one to ascertain that the boundary is in the wrong place and the other to ascertain where the correct boundary lies. A simple amendment to part of the LRA 2002 will solve that problem.
What happens next?
It will take time to read the 600 page report, but it is likely that the majority (at least) of the Law Commission's recommendations will be received enthusiastically by the Land Registry and the Land Registry's users. However, it is far too early to know whether the government will be keen to implement them. And, of course, the government has its hands full with Brexit negotiations at present.
Traditionally, Law Commission reports have been left to gather dust for many years. However the LRA 2002, itself the product of a Law Commission report, was enacted with surprising speed by the government of the day. Perhaps the same will happen with this report.
Law Commission consultation - Updating the Land Registration Act 2002