House of Commons - Explanatory Note
Land Registration Bill [HL] - continued          House of Commons

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Clause 34: Entry on application

77.     This clause provides that a person claiming to have the benefit of an interest capable of being the subject of a notice may, subject to rules, apply to the registrar for entry of an agreed or a unilateral notice in respect of the interest. The clause sets out the circumstances in which the registrar may approve an application for an agreed notice. The first two are cases where the relevant registered proprietor consents to entry of the notice. The third would, for example, cover where the applicant could establish to the registrar's satisfaction that the registered proprietor had granted him or her an easement.

Clause 35: Unilateral notices

78.     Under this clause, when the registrar enters a unilateral notice, which may be entered without the proprietor's consent, in the register he must give notice to the affected proprietor and to such other persons as may be prescribed. Rules may provide, for example, that notice be served on the liquidator of a company which was the registered proprietor. Subsection (2) provides that a unilateral notice must indicate that it is such a notice, and identify the beneficiary. It is unlikely that anything else will appear in the register. At present, cautions are often entered in preference to notices where transactions are of a commercially sensitive character, because the entry of a caution in the register gives no indication as to the matter that lies behind it. The subsection, however, makes it possible to achieve the same commercial confidentiality by means of a unilateral notice.

Clause 36: Cancellation of unilateral notices

79.     Unilateral notices may be entered without the registered proprietor's consent. This clause therefore provides that an affected proprietor or person entitled to be registered as proprietor of the affected estate or charge may apply for 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. If the matter cannot be disposed of by agreement, it must be referred to the adjudicator.

Clause 37: Unregistered interests

80.     This clause gives the registrar power to enter a notice in respect of an interest that is an interest of the kind mentioned in Schedule 1, provided that it is not excluded by clause 33 above. This is part of the strategy of the Bill to eliminate, where practicable, overriding interests and ensure that they are entered in the register. The clause provides that notice of the making of the entry will be served on such persons as rules may provide.

Clause 38: Registrable dispositions

81.     In order to register certain registrable dispositions, it is necessary to enter a notice in respect of that interest on the title of the registered estate burdened by it. This includes easements, profits ... prendre and customary and public rights. This clause therefore requires the registrar to enter a notice in respect of an interest under a disposition falling within section 27(2)(b) to (e).


82.     Restrictions are retained under the Bill, but in altered form. Inhibitions are abolished because they are not needed: they are, in reality, just one form of restriction. The provisions of the Bill relating to restrictions will apply to restrictions and inhibitions entered under the Land Registration Act 1925 (Schedule 12, paragraph 2(2)).

Clause 40: Nature

83.     This clause defines the nature of a restriction. Because 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, no restriction can be entered in respect of dealings with interests the title to which cannot be entered in the register. So, for example, it would not be possible to enter a restriction against the assignment of a lease granted for a term of seven years or less, since the title to such a lease cannot ordinarily be registered.

84.     The clause gives particular - but non-exhaustive - examples of the form that a restriction might take. Examples of cases where restrictions might be employed using such form are: to reflect a freezing injunction granted over a registered property; where the registered proprietor (typically a corporation or statutory body) has limited powers of disposition; and where under a registered charge the chargor agrees with the chargee to exclude his or her statutory power of leasing under the Law of Property Act 1925, section 99.

Clause 41: Effect

85.     This clause provides that, subject to an exception, no entry in respect of a disposition to which a restriction applies is to be made in the register otherwise than in accordance with the terms of the restriction. The exception is that upon the application of a person who appears to have a sufficient interest in the restriction, the registrar may order that the restriction be disapplied or modified in relation to a particular disposition or disposition of a specified kind. An example of where it might be appropriate for the registrar to exercise his power is if the restriction requires a consent by a named individual and he or she has disappeared.

Clause 42: Power of registrar to enter

86.     Under this clause the registrar may enter a restriction where it appears to him necessary or desirable to do so for the purposes set out in the clause. The following are examples of situations in which such an entry might be made:

  • To prevent unlawfulness, say a breach of trust, where the trustees of the land are required to obtain the consent of some person to a disposition.

  • To secure that interests under a trust of land or settlement under the Settled Land Act 1925 are overreached - the restriction could be to the effect that the proceeds of any registered disposition must be paid to at least two trustees or a trust corporation.

  • To protect a right or claim (which need not be proprietary) in relation to a registered estate or charge: a restriction to protect a claim by a person that he or she has a beneficial interest in the property under a resulting or constructive trust because he or she has contributed to the cost of its acquisition; or a restriction entered in respect of an order appointing a receiver or sequestrator; or a restriction entered in respect of a charging order relating to an interest under a trust.

87.     A restriction is simply a means of preventing some entry in the register except to the extent if (any) that it is permitted by the terms of the restriction. It is not intended to confer priority. For these reasons the clause provides that the registrar's power to enter a restriction for the purpose of protecting a right or claim in relation to the estate or charge is limited in that 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 provision does not, however, prevent a notice and restriction being entered in respect of the same interest, provided that each serves its proper function. 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.

Clause 43: Applications

88.     Clause 43 sets out who may apply under clause 42 for a restriction. If a person entitled to apply applies for a form of restriction not prescribed by rules then the registrar may only approve the application if it appears to him that the terms of the restriction are reasonable and that the application of the proposed restriction would be straightforward and not place an unreasonable burden on him.

Clause 44: Obligatory restrictions

89.     An example illustrates an effect of this clause - 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 disposition 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 was appointed.

90.     Other provisions of the Bill also impose a duty on the registrar to enter a restriction in respect of bankruptcy petitions (clause 86(2)).

Clause 45: Notifiable applications

91.     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 makes a notifiable application (as set out in the clause) for a restriction the registrar must serve notice on the registered proprietor and such other persons as rules may prescribe.

92.     A person receiving notice of an application may object to the application under the general right conferred by the Bill to object to an application to the registrar. If the matter cannot be disposed of by agreement, it must be referred to the adjudicator.

Clause 46: Power of court to order entry

93.     The court is most likely to order the entry of a restriction under the provisions of this clause where, under the present law, it would order the entry of an inhibition. Whereas inhibitions prevent the entry of any dealing in the register, however, the entry of a restriction under the Bill might be of more limited 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. By contrast, where the court has granted a "freezing injunction" the court might also order a restriction on the making in the register of an entry in respect of any dealing. Such a restriction would have an effect similar to that of an inhibition at present.

94.     This clause gives the court the power to direct that a restriction ordered by it has overriding effect so that the restriction overrides the priority protection given to an official search or the entry of a notice in respect of an estate contract. Terms and conditions may be imposed if the power is exercised - these might require an undertaking from the applicant that he or she would indemnify any person acting in good faith who has suffered loss as a result of the court's direction and require the applicant to give security, pay money into court, pay costs, or to withdraw some entry in the register.


Relative priority

Clause 48: Registered charges

95.     Clause 48 sets out how the order of priority of registered charges can be discovered from a registered title. Rules will govern how the register shows that order and how applications can be made to record that a different order has been agreed between several chargees.

Clause 49: Tacking and further advances

96.     Clause 49 deals with the existing legal doctrine of tacking. The effect of this doctrine is that a chargee who has granted more than one mortgage to a borrower may sometimes gain the same priority for a later charge as he has for the earlier one. This clause provides that a chargee may make a further advance on the security of an existing charge if in the meantime he has not received notice from another chargee that a subsequent charge has been created. Rules will govern when a notice is treated as having been received. This is a change from the current legislation but reflects how the lending industry currently works in practice. Additionally, as now, the chargee can obtain the same priority for two charges if the original charge contains an obligation for the further sum to be paid and that fact is recorded on the title register. The clause also provides a third and novel method of achieving the same priority for two advances by recording a maximum figure for the total money lent. As long as the sums due to the first chargee do not exceed the figure specified, and have been entered in the register in accordance with rules at the time of the creation of the competing charge, the charges will take the same priority over any subsequent charge. Rules may limit the circumstances in which the third method is available and impose conditions for its use. Unless one of these three methods is used, the first chargee must get the consent of any subsequent chargee to obtain priority for his further charge over any subsequent charge.

Clause 50: Overriding statutory charges: duty of notification

97.     There are numerous statutory provisions which permit or require the creation of statutory charges. These statutory charges when they arise are often given priority to existing charges by the legislation under which they take effect, and will take priority over further advances made by existing chargees even though details of the statutory charge do not appear in the register. Clause 50 imposes a new duty on the registrar to notify such persons as are set out in rules (likely to be chargees whose interests are protected in the register) of statutory charges being entered in the register which have priority to existing registered charges. Previously no notice would have been given to those chargees as the entry of the details of the statutory charge into the register does not change the priority order that existed before the entry was made. The new duty will, for example, enable a chargee to make an informed decision as to whether or not he should make further advances to a chargor on the security of an existing charge where the security had been eroded because of a statutory charge.

Powers as chargee

Clause 51: Effect of completion by registration

98.     Historically, there are two forms of words that can be used in a charge document to create a registrable charge. Clause 51 provides that they both have the same effect and that the chargee has the same rights and remedies for the purpose of the Law of Property Act 1925 once they are registered. Clause 25 enables rules to be made which prescribe a single form of charge for the future.

Clause 52: Protection of disponees

99.     The sole purpose of clause 52 is to protect the rights of someone in whose favour a disposition is made by a chargee. It therefore corresponds to clause 26. If nothing appears in the register to the contrary, the chargee is taken to have all the powers of disposal of a legal mortgagee under the Law of Property Act 1925 so that the rights and interest given by the disposition cannot be challenged under any circumstances. The clause is limited in scope, and does not, for example, prevent any claims being brought against the chargee by the chargor.

Clause 53: Powers as sub-chargee

100.     A chargee can charge the indebtedness which the registered charge secures by way of sub-charge. This clause gives the sub-chargee the same powers over the registered estate as the chargee himself has been given by the original charge, as is currently provided by rule. The clause also applies to a registered sub-sub-charge in which case the sub-sub-chargee has not only the powers of the principal chargee in relation to the property subject to the principal charge ( i.e. the registered estate), but also the powers of the sub-chargee in relation to the property subject to the sub-charge ( i.e. the indebtedness secured by the principal charge). This is a new provision not covered in the current rules.

Realisation of security

Clause 54: Proceeds of sale: chargee's duty

101.     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" (section 105 of the Law of Property Act 1925). 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.

Clause 55: Local land charges

102.     Local land charges arise under a variety of statutory provisions and usually relate to costs of repairing a property or the amenities in the immediate vicinity of the property, such as roads. Local land charges bind a subsequent owner of registered land even when they are not registered at the Land Registry, although they normally appear on the local land charges register kept by the local authority. Some local land charges are charges on land to secure the payment of money, such as a charge to recover expenses incurred by a local authority because of non-compliance with a repair notice. Clause 55 provides that although a local land charge binds the owner, powers to realise the money due cannot be exercised until the charge is registered at the Land Registry. The intention is to ensure that it is clear on the face of the register if someone has powers of disposal over registered land.


Clause 56: Receipt in case of joint proprietors

103.     Clause 56 is concerned with the identity of the persons entitled to give a valid receipt for the money secured by a charge which is registered in the names of one or more proprietors following the death of one or more of the proprietors.

Clause 57: Entry of right of consolidation

104.     A right of consolidation is the right of a person who has the benefit of two or more mortgages to refuse to allow one mortgage to be repaid unless the other or others are also repaid. This right has to be expressly agreed between the parties. Clause 57 provides that rules may govern how a right of consolidation is recorded in the register.


Registration as proprietor

Clause 58: Conclusiveness

105.     A fundamental principle of registered conveyancing has always been that registration vests the legal estate in the registered proprietor. Clause 58 provides for the continuation of that principle so that if, for example, a person is registered as proprietor on the strength of a forged transfer, the legal estate would nevertheless vest in the transferee by virtue of registration. Subsection (2) is designed to prevent subsection (1) overriding the rule in relation to registrable dispositions that a disposition only operates at law when all the relevant registration requirements have been met (i.e. entry of the disponee in the register as proprietor may not always be the only requirement). The legal estate will not vest in the transferee until all of the appropriate requirements for registration set out in Schedule 2 have been met.

Clause 59: Dependent estates

106.     Clause 59 deals with how entries in the register relating to the ownership of certain estates are to be dealt with. First, if a legal estate, such as an easement or profit ... prendre, subsists for the benefit of a registered estate, the entry must be made in the register relating to that registered estate. If the registration is of the ownership of a charge, then the entry should be made in relation to the registered estate which is subject to the charge. Lastly, where the registration is of the ownership of a sub-charge, then the entry must be made in relation to the registered charge which is subject to the sub-charge.


Clause 60: Boundaries

107.     For practical and historical reasons, the current register has been compiled using the "general boundaries rule" which means that although the plans are usually mapped to a feature, the exact line of the boundary is left undetermined, e.g. which side of the boundary the feature lies. Rules permit those with an interest to apply for boundaries to be fixed. Clause 60 for the first time incorporates the general boundary principle into statute, and provides for rules to be made in relation to the fixing of boundaries. That may happen in two situations. First, as now, the parties may request it. Secondly, the Bill enables rules to be made providing for boundaries to be fixed when that is required, for example on the resolution of a boundary dispute or one over adverse possession. Rules will cover when boundary fixing can occur, how it will be done and what procedures will be used. Rules will also stipulate how the fact that the boundaries are fixed is recorded in the Registry's records including the register of title.

Clause 61: Accretion and diluvion

108.     Clause 61 states that the fixing of the position of the boundary shown on land registry plans does not prevent the adding of land by accretion or the removal of land by diluvion. This happens when the natural boundary between land and water changes gradually over time, in particular where land is formed by deposits from the sea (accretion) or washed away by waves (diluvion). In normal circumstances the adjoining landowners' title would be extended or diminished as a result of the changes. If several landowners have made an agreement that the natural boundary changes will not have that legal effect, for example in relation to the location of a stream, then that agreement will only take effect if it is registered. Rules will govern how that is to be achieved.

Quality of title

Clause 62: Power to upgrade title

109.     Clause 9 sets out the three grades of title which with freehold title can be registered and clause 10 sets out the four grades of title with which leasehold land may be registered. Clause 62 empowers the registrar to upgrade to absolute any of the lesser titles when he is satisfied as to the title to that estate or, in the case of good leasehold title, satisfied as to the title to the superior estate. The registrar may also upgrade possessory title to absolute for either leasehold or freehold land if the proprietor is in possession and at least 12 years has elapsed since possessory title was first registered. The length of this period coincides with the length of the period after which most classes of landowner would have lost their right to reclaim the land under the Limitation Acts. There is power in subsection (9) for the Lord Chancellor to change that period by order, for use if limitation periods should change. The clause lists the persons who have a right to apply for the upgrading of the title but also provides that if there is a claim outstanding at the time that the power to upgrade would be exercised, which is protected by the fact that a lower grade of title has been awarded, then the registrar cannot exercise his power.

Clause 63: Effect of upgrading title

110.     Clause 63 spells out the effect of upgrading title, which is merely left to be inferred by the current legislation. A possessory title preserves the rights of any person with a superior estate that might come forward, and a qualified title the rights of any person which are covered by the qualification (see clauses 9 and 10). When freehold or leasehold title is upgraded to absolute, the registered proprietor ceases to hold the estate subject to those rights. A similar effect occurs when possessory or qualified leasehold title is upgraded to good leasehold, although this does not affect the rights of the superior owner to allege that the lease was not validly granted. There is another possible effect of upgrading title - some risk that an estate, right or interest may thereby be defeated, and the person who previously had the benefit might, therefore, suffer loss. In such circumstances, there would be entitlement to be indemnified for loss by reason of the rectification of the register (under paragraph 1 of Schedule 8).

Clause 64: Use of register to record defects in title

111.     Clause 64 deals with a situation not currently catered for under the land registration system, where something happens in the course of the ownership of the property that itself makes the title bad. The most obvious examples are: (1) when a lease is subject to a right of re-entry for breach of covenant and the tenant commits a breach of covenant entitling the landlord to end the lease; and (2) where a freehold title is subject to the payment of a rentcharge (with a right of re-entry if that payment is not made) and the rentcharge is not paid. Clause 64 enables the registrar to record in the register the fact that a right to determine a registered estate has arisen. Rules will govern when the registrar is under a duty to make the entry, and how such entries are made and removed.

Alteration of the register

Clause 65: Alteration of the register

112.     Clause 65 incorporates the provisions contained in Schedule 4.

Information etc

Clause 66: Inspection of the registers etc

113.     Clause 66 provides that, subject to any exceptions specified in rules, anyone may inspect and make copies of the register of title together with any other document either referred to in the register or kept in relation to an application affecting that register. This extends the current legislation, which excepts leases or charges (or copies of them) from inspection. In addition documents kept by the registrar relating to an application, but not referred to in the register can currently only be inspected at the registrar's discretion. A right to inspect and copy any such document is now established. Anyone may also inspect the register of cautions against first registration. Rules will govern how those rights are exercised, including the requirement to pay fees.

Clause 67: Official copies of the registers etc

114.     Clause 67 provides that the official copy registers and other documents obtained under the right contained in clause 66 are admissible in evidence to the same extent as the original document would be. Rules will specify the form of official copies, how they are applied for and who supplies them, and may impose conditions including the requirement to pay fees. Subsection (2) provides 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. The person who suffers loss will be entitled to indemnity in accordance with paragraph 1 of Schedule 8.

Clause 68: Index

115.     Clause 68 provides that the registrar must keep an index which will indicate for any parcel of land in England and Wales, if there are any registered estates relating to that parcel and if there are, the title number or other identifier used for the register(s) relating to that parcel. The index must also show if there is a caution against first registration of unregistered land. Rules may specify how the index, and the information in it, is to be kept and how official searches of that index are to be undertaken. Rules may also specify additional information to be found from the index.

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Prepared: 9 November 2001