The Law Commission’s recommendations for updating the Land Registration Act 2002 – thoughts on the government response

17 May 2021

In a densely populated country like the UK, land is a scarce and valuable commodity in which vast sums of money and intellectual and emotional energy are invested. That gives rise to a multi-layered, multi-faceted complexity in our dealings with it. The effective, smooth running of the systems which regulate those dealings are therefore matters of the first importance to the government and our system of law. The government’s response to the Law Commission’s recommendations for updates to the Land Registration Act 2002 (LRA) published in March 2021, recognises this. The government agrees that, broadly, the current system is working well and makes no reference to renewed proposals for the privatisation of HM Land Registry.

The government's proposals and criticisms received

The LRA 2002 sought to address criticisms of the Land Registration Act 1925 by creating a more coherent overall scheme. It too has attracted academic and professional criticism, not the least damning of which is that the draftsman prized, “tersity over clarity”!

The criticism has been directed mainly at LRA 2002, Sch 4 which prescribed a new scheme for determining when and how a ‘mistake’ on the register might be ‘altered’ or ‘rectified’ and its interaction with claims for indemnity under LRA 2002, Sch 8.

The Commission’s report acknowledged those criticisms and recommended various consequential amendments to:

  • redefine mistakes to include all ‘derivative’ mistakes flowing from an original mistake;
  • re-shape the categories of protected proprietors in possession; and
  • create a ten year long-stop beyond which alteration should be possible only in very limited circumstances.

The proposed changes to LRA 2002, Sch 4 resulted in a significantly expanded and more complex LRA 2002, Sch 4. The government, rightly in my view, has rejected the ten year long-stop proposal. It is in the nature of some mistakes that they lie hidden for long periods, emerging only when a title changes hand.

The government also calls for further evidence to support the need for change, consideration of possible unintended consequences and for a revised draft bill to address its concern that the current proposals are undesirably complex. Again, this seems sensible. Many of the problems have now been worked out in practice, further changes might well produce a fresh round of clarificatory litigation.

However, for the most part, the Commission’s recommendations were of a narrow technical character directed to clarifying or patching aspects of the new scheme and/or preparing for the long-awaited advent of electronic conveyancing - these have been accepted although no date for their implementation has been proposed.

Some of the Law Commission’s key recommendations

  • clarification that the ‘owner’s powers’ of a person entitled to be registered are not limited by reason only of his/her equitable interest pending registration. This plugs the hole created by the decisions Scott v Southern Pacific Mortgages Ltd [2014] UKSC 52 and Skelwith (Leisure) Ltd v Armstrong [2015] EWHC 2830 (Ch) that the nemo dat principle applies so that an, as yet unregistered, proprietor with owner’s powers could only create equitable interests in the land which s/he had acquired pending registration.
  • nominal consideration is no longer to be valuable consideration. Therefore, such a transferee would not benefit from protection against prior unregistered interests
  • the court should have power to order the entry of a restriction to protect a charging order relating to an interest under a trust, but only one in Form K.
  • schedule 4 should explicitly confirm that the ability of a person to seek alteration or rectification of the register to correct a mistake is not a property right, correcting the ‘Malory II heresy’.
  • that the limitation period for claims to an indemnity should run from the date on which the register is either rectified or a decision is made not to rectify it.
  • where claimants of title by adverse possession rely on LRA 2002, Sch 6, para 5(4), they must apply within 12 months of their reasonable belief that the land belonged to them coming to an end. In Zarb v Parry [2012] 1 WLR 1240 the Court of Appeal held that a squatter seeking a title to registered land pursuant to LRA 2002, Sch 6 must hold the reasonable belief when he seeks to register his title. That requirement is inherently impractical but the proposed solution undesirable. The question when a claimant’s belief in their ownership of the land ceased to be reasonable will almost certainly be contentious and intimately bound up with the flaring up of the dispute. It might be preferable to amend the schedule so as to provide simply that the claimant must have held a reasonable belief as to their ownership of the land for any continuous period of ten years. This would do justice without promoting boundary litigation.
  • where a person is registered as the proprietor of previously unregistered land by reason of their adverse possession, time should continue to run in favour of their claim whilst their title is open. This issue has apparently been resolved by the decision of the Court of Appeal in Rashid v Nasrullah [2018] EWCA Civ 2685 reversing Parshall v Hackney [2013] Ch 568. Less welcome is the accepted proposal that an applicant for a possessory title to previously unregistered land must show that the paper title has been extinguished. The difficulty in many such cases is that the owner of the paper title is either unknown or uncontactable. Therefore, it is possible that it is a defunct company (30-year limitation) or a person under a disability (uncertain period of limitation) creating difficulties of proof.
  • delegation of power to the Chief Land Registrar to determine when and how electronic conveyancing should become mandatory.

Finally, and of particular interest to me as a judge of the First-tier Tribunal Land Registration Division, is the proposed extension of its jurisdiction to permit it to:

  • determine how proprietary estoppels should be satisfied; and
  • declare the extent of beneficial interests in land.

These are sensible extensions which will enable the specialist judges of the Land Registration Division to determine all necessary matters to relating to such claims which come very frequently before them.

This analysis was first published by LexisNexis®PSL on 14 May 2021.