Clause 69: Historical information

116.     Clause 69 provides that the registrar may on application provide information about the history of a title. Rules will govern how applications are made and processed.

Clause 70: Official searches

117.     Clause 70 sets out the rule-making powers relating to official searches of both the register and the list of applications received but not yet processed relating to the first registration of title. Rules will govern how applications are made and processed, including the issue of the results of search.

Applications

Clause 71: Duty to disclose unregistered interests

118.     The 1925 Act made no distinction between those interests which are overriding on first registration and those that were overriding on a disposition of registered land. The Bill makes this distinction so that the existing concept of overriding interests is not brought forward into the Bill. Schedule 1 lists the interests which are overriding on first registration and are therefore binding on the proprietor even though there is no entry in the register (see clauses 11(4) and 12(4)). Schedule 3 lists the interests which are binding on persons who acquire an interest in registered land notwithstanding that there is no entry in the register (see clause 29(2)). Clause 71 provides that a person applying for first registration of title or to register a dealing with registered land must disclose such details of known interests falling within the appropriate Schedule as are specified in rules.

119.     This is a new duty. The objective is to ensure that the applicant for registration discloses any interests which are overriding in nature so that they can be entered in the register. 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 the buyer has to provide information, and in relation to which interests it is required.

Clause 72: Priority protection

120.     Official searches undertaken in accordance with rules made under clause 70 are normally priority searches undertaken by persons acquiring an interest for value. The system of priority searching means that any entry made on a register during the priority period of a search will be postponed to a subsequent application to register the instrument effecting the purchase. Clause 72(2) makes new express provision for the protection of priorities, and confirms that an application is protected if there is a priority period in existence under a search and the application is made before the priority period has come to an end. To ensure the mechanics of the system operate correctly, subsection (3) states that the general principle will not apply if the entry is itself made as a result of a earlier protected application and relates to a protected application whose priority search was undertaken earlier in time. Additionally, a court order made under clause 46(3) specifying the priority of an entry relating to that court order may take precedence over the effect of this clause. The registrar is entitled to defer dealing with an application if it appears to him that a protected application might be made, as this would affect the priority of the applications he is to process. Rules may be made concerning the detailed operation of the priority searching system, including the order of competing priority periods. Rules may either provide for priority periods in connection with official searches or with the noting in the register of a contract for a registered disposition of a registered estate or charge. The noting of a contract is not often undertaken at present but will become necessary once contracts to make a disposition of a registered estate or charge take effect only on registration. This clause enables the registrar at that stage to use either the existing official searching system or to base the priority period on the registration of the contract itself.

Clause 73: Objections

121.     Clause 73 provides that, subject to two qualifications, anyone may object to an application made to the registrar. The two exceptions are (1) when the application is to cancel a caution against first registration only the cautioner or such other persons as rules may provide may object (clause 18 deals with how such an application is made) and (2) when the application is to cancel a unilateral notice only the beneficiary of the notice or such other persons as rules may provide may object (clause 36 deals with how such an application is made). Unless the registrar is satisfied that the objection is groundless, he must give notice of the objection to the applicant and may not complete the application whilst that objection still exists. The right to object is subject to rules. If it is not possible to dispose of the objection by agreement the registrar must refer the matter to the adjudicator for determination in accordance with Part 11 and Schedule 9. Rules will govern the making of references to the adjudicator under this clause.

Clause 74: Effective date of registration

122.     Clause 74 provides that any entry made in the register has effect from the time of the making of the application for first registration, and for the registration of registrable dispositions. Rules made under clause 14 will make provision for the making of applications for first registration and how dealings with registered land are undertaken are subject to rules made under clause 27.

Proceedings before the registrar

Clause 75: Production of documents

123.     Although unresolved contested applications must be referred to the adjudicator, there will be many instances of proceedings before the registrar, such as the examination of the title deeds supporting a first registration application. Clause 75 enables the registrar, subject to rules, to require a person to produce a document for the purposes of those proceedings. Such a requirement, as now, is to be enforceable as if it were a court order. This clause includes a right to appeal to the county court in respect of the registrar's requirement.

Clause 76: Costs

124.     Clause 76 enables the registrar, subject to rules, to make an order for costs in respect of proceedings before him. This largely reproduces the power to award costs under the existing legislation. Such a requirement, as now, is to be enforceable as if it were a court order. This clause includes a right to appeal to the county court.

Miscellaneous

Clause 77: Duty to act reasonably

125.     Section 56(3) of the 1925 Act makes anyone who lodges a caution without reasonable cause liable to any person who has suffered damage thereby. Clause 77 considerably develops this, by providing that a person must not exercise the right to apply for an entry to be added to the register of someone else's title, or for the entry of a notice or object to someone else's application unreasonably and if they do so, they owe a duty to anyone who suffers damage. The existence of this duty entitles the person adversely affected to bring an action for damages.

Clause 78: Notice of trust not to affect registrar

126.     Clause 78 ensures that the registrar can carry on his job without worrying about possibly being implicated in a breach of trust.

PART 7: SPECIAL CASES

The Crown

127.     The main categories of Crown land are:

• land belonging to Government departments;

• land held by the monarch in right of the Crown (the Crown Estate);

• the Crown's Private Estate;

• the two Royal Duchies of Cornwall and Lancaster; and

• a residual category of land which includes the royal palaces and parks.

The Bill addresses the following issues in relation to Crown land:

• registration of title to Crown land that is held by the monarch in demesne;

• escheat of registered land

• representation in relation to Crown and Duchy land; and

• the disapplication of certain requirements relating to Duchy land.

Clause 79: Voluntary registration of demesne land

128.     Uniquely, the Crown has dominion over all land as lord paramount. Demesne land is land in which no fee simple subsists and so belongs to the Crown absolutely. Examples of demesne lands of the Crown are most foreshore, land which has escheated to it, and its ancient lands which have never been granted in fee. In the absence of a fee simple, Her Majesty cannot register demesne land, since only estates in land are registrable. This means She is unable to get the benefits of registration, current and under the Bill.

129.     Clause 79 enables Her Majesty, should She so wish, to register demesne land. She can do this by granting to Herself an estate in fee simple absolute in possession out of the demesne land. An application must then be made for registration of that estate within two months (or such extended period as the registrar may order) or the grant will be invalidated. This ensures that the power to grant a fee simple can only be employed to secure the registration of the title to the land and that a fee simple in the Crown's own favour is not inadvertently created if, for some reason, the grant is made but no registration takes place.

Clause 80: Compulsory registration of grants out of demesne land

130.     This clause provides for the compulsory registration of the specified grants out of demesne land. The provision is necessary because clause 4(1) only applies to certain dispositions of, and grants out of, existing estates and demesne land is not an estate in land. It has no equivalent in the current legislation because of differences of drafting in specifying the dispositions which are subject to the requirement of compulsory registration in the 1925 Act, and in the Bill.

Clause 81: Demesne land: cautions against first registration

131.     Clause 81 has the effect of deeming demesne land to be, for the purposes of clause 15, held for an estate in fee simple. This enables Her Majesty, and other people with an interest affecting the land, to lodge a caution against first registration in respect of the land. Lodging a caution against first registration is not, however, a substitute for first registration of title, and substantive registration should occur wherever possible. Paragraph 13(1) of Schedule 12 relaxes this rule generally for the first two years after commencement. In the case of the Crown, it is relaxed by paragraph 13(2) for a period of ten years after commencement, since the Crown will need time to register all demesne land. At the end of the ten year period, subsisting cautions against first registration lodged by the landowner will cease to have effect unless an application has been made for first registration.

Clause 82: Escheat etc

132.     Escheat occurs where a freehold estate determines, most commonly where the freehold is disclaimed in cases that involve insolvency - for example, where the liquidator of a company disclaims a freehold owned by that company (perhaps because the charges secured on it are greater than its value). Normally, when this happens the Crown or one of the Royal Duchies becomes entitled to the land. The land will remain subject to any charges or other encumbrances created by the previous owner or his predecessors.

133.     Some 300 - 500 freehold estates escheat every year. When that happens, the title has to be removed from the register because the estate no longer exists. This works against the aim of achieving complete registration. The current law relating to escheat also creates significant problems for the effective management of escheated land by the Crown, if it is to avoid the liabilities attaching to the property and which have led to the escheat. The uncertainties in relation to liability, which affect both unregistered and registered land, go beyond the scope of the current Bill. The aim of clause 82 is simply to avoid a registered estate having to be removed from the register. It is envisaged that when land escheats, the Treasury Solicitor or the Crown Estate will apply for the entry of a restriction in the register. This is likely to provide that no disposition is to be made of the estate except by order of the court, or by or on the direction of the Crown Estate. When a new fee simple is granted, then upon application it would be registered with a new title number. The old title would then be closed. Any encumbrances to which the former title was subject and which still subsisted in relation to the new estate would be entered in the register of the new title.

134.     Subsection (2) gives specific guidance as to some of the rules that may be made. This will make it possible to require (for example) that appropriate restrictions are entered in the register when a disclaimer occurs; that the register records the encumbrances to which the determined estate was subject and to which the land therefore remains subject; and ensure that when a new estate is eventually granted the old title is closed and the entries of any encumbrance is carried across.

Clause 84: Disapplication of requirements relating to Duchy land

135.     The type of requirement that is being disapplied by this clause is that which provides that a transfer of registered land by the Duchy of Cornwall needs to be enrolled in the Duchy office within six months after it is made to be valid and effectual against the Duke of Cornwall.

Clause 85: Bona vacantia

136.     Registered estates and charges (and other property) pass to the Crown as bona vacantia where there is no other beneficial owner. The most common example is probably where a company has been dissolved and a registered estate or charge belonging to it beneficially has not been disposed of. In such a case the registered estate or charge is not destroyed (unlike when land escheats to the Crown on disclaimer) but vests in the Treasury Solicitor on behalf of Her Majesty or in the Duchies of Cornwall or Lancaster.

137.     This clause enables the Lord Chancellor to make rules about how the passing of a registered estate or charge as bona vacantia is to be dealt with for the purpose of this Bill.

Pending actions etc.

Clause 86: Bankruptcy

138.     This clause makes special provision for the effect of bankruptcy, to reflect the provisions of the Insolvency Act 1986. It ensures that where an individual is the sole registered proprietor of a registered estate or charge, for his or her own benefit, an entry is made in the register that the estate or charge is subject to a bankruptcy petition presented against that person, or a bankruptcy order made against him or her.

139.     At present, when a bankruptcy petition is filed at the court, the relevant court official must apply to register the petition in the register of pending actions kept by the registrar under the Land Charges Act 1972. Where the debtor is the registered proprietor of any land or charge, this can have no direct effect, because registration of a land charge does not affect registered land. This registration serves, however, to trigger a procedure for ensuring that an appropriate entry is made in the register of title. Using the index of the names of registered proprietors, the registrar will attempt to ascertain whether the debtor is the sole registered proprietor of any land or charge in the register. If it appears that the debtor is, the registrar must register a creditors' notice against the title of any land or charge that appears to be affected. This clause replicates this procedure.

140.     A similar procedure applies when a debtor is adjudicated bankrupt and a bankruptcy order is made against him or her. At present, the registrar is then required to enter a bankruptcy inhibition. Again this clause replicates this procedure but because the Bill prospectively abolishes inhibitions, the registrar is required to protect a bankruptcy order by the entry of a restriction.

141.     Subsection (5) provides that in the case of a debtor who has been adjudged bankrupt, a disponee to whom a registrable disposition is made is not subject to the title of the debtor's trustee in bankruptcy, provided that:

i)     the disposition is made for valuable consideration

ii)     he or she acts in good faith;

iii)     at the time of the disposition, no notice or restriction was entered in relation to the registered estate or charge; and

iv)     the person to whom the disposition was made had no notice of the bankruptcy petition or the adjudication.

142.     The approach followed is that in the Insolvency Act 1986 which protects a bona fide purchaser for value without notice.

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

143.     The matters to which clause 87 relates are all the things which, in the case of unregistered land, may be registered under sections 5 to 7 of the Land Charges Act 1972, except for bankruptcy petitions and orders (which are dealt with under clause 86). Section 59 of the 1925 Act provides for such matters to be protected by a caution against dealings, a form of entry which is abolished by the Bill. Section 49(1)(f) to (k) of the 1925 Act enables certain matters also to be protected by means of a notice. The effect of these matters being treated by the clause as interests affecting a registered estate or charge is that, if their priority is not protected, a disponee would take free from them under clauses 29 and 30. The fact that none of the matters is capable of falling within paragraph 2 of Schedule 1 or Schedule 3 means that their priority has to be protected by means of an entry in the register, under the Bill either a notice or a restriction. The fact that a deed of arrangement and an order appointing a receiver or sequestrator cannot be the subject of a notice means that the only way of protecting such a deed or order is by means of a restriction.

Miscellaneous

Clause 89: Settlements

144.     The Land Registration Act 1925 contains detailed provisions about its application to settlements under the Settled Land Act 1925. Settlements are not very common and after 1996 the creation of new settlements under the Settled Land Act 1925 has not been possible, so, in time, settlements will disappear. For these reasons this clause provides for rules to make provision for the Bill's purposes in relation to the application to registered land of the enactments relating to settlements under the Settled Land Act 1925, rather than setting out the provisions in the Bill.

Clause 90: PPP leases relating to transport in London

145.     London Transport Public/Private Partnership leases will arise out of the arrangements for the future running of the London underground railway. These leases will include underground railway lines, stations and other installations. At present such leases: would not trigger first registration; would not be registrable dispositions but would take effect as if they were; would be incapable of substantive registration; and their priority would be protected on first registration or on a registered disposition, without being on the register. This clause provides that such leases shall have a similar status under the Bill.

PART 8: ELECTRONIC CONVEYANCING

Clause 91: Electronic dispositions: formalities

146.     Clause 91 lays down a uniform requirement for making an electronic document, whether that document does the work of a formal deed, such as a transfer or a charge, which must be witnessed, or of unwitnessed signed writing, such as a contract. The use of electronic documents is new and forms a necessary step towards the introduction of a full electronic conveyancing system. The clause can be applied to any document in electronic form which effects the disposition of a registered estate or charge, is a disposition of an interest which is noted in the register; or triggers first registration of title of unregistered land. The actual scope of its application from time to time is to be governed by rules.

147.     In addition, for the clause to apply, the electronic document must meet several conditions designed to reflect the way in which the paper system works at present. First, the electronic document must record the time and date when it takes effect to fix the time at which it operates. Paper documents take effect on "delivery", the formal transfer of a deed by act or by word to the grantee (or a third party). The mechanisms both for executing and for handing over electronic documents can be different. It is therefore necessary to ensure that the document makes specific provision for the time and date when it takes effect, to replace the concept of delivery. Secondly, the electronic document must bear the electronic signature of each person who must authenticate it. In this context, electronic signature does not necessarily mean a "signature" in the ordinarily accepted sense. It is the means by which an electronic document can be authenticated as that of the party making it. There are already several ways in which authentication could be achieved, but they are likely to change and develop with general electronic business and commerce. It is therefore important that the legislation does not seek to specify a particular method or methods. Thirdly, each of the signatures must be certified. Certification is the mechanism by which an electronic signature is authenticated. The current certification methods are also likely to change and develop. Additionally, rules may provide for other requirements to be met to take advantage of further developments in this field which might aid the security of transactions.

148.     The clause does not disapply the formal statutory or common law requirements relating to deeds and documents but deems compliance with them. When the clause applies, the electronic document is therefore to be treated as being in writing, having been executed by each individual or corporation who has attached an electronic signature to it, and, where appropriate, as a deed. The clause also includes a further deeming provision in relation to the execution of electronic documents by agents. Where a document covered by the clause is authenticated by an individual as agent, it is to be regarded as having been authenticated by him or her under the written authority of his or her principal. It will, therefore, not be possible to raise any question as to whether the agent did in fact have written authority to make the authentication. It is likely that solicitors and licensed conveyancers will wish to review their procedures for taking instructions from their clients to ensure that electronic signatures are properly authorised, as a matter of proper professional practice. At common law, authorisation to execute a deed must be given by deed. This is not the case in relation to an electronic document covered by this clause as the document is not a deed, merely treated as if it were.

149.     In a paper-based system, documents have to be executed by the parties and then exchanged and delivered. Where there is a disposition, they must therefore travel from disponor to disponee, and then to the Land Registry for registration. This 'registration gap' has created scope for a number of problems. Electronic conveyancing enables the gap to be eliminated: electronic documents can be executed at the specified time and date, and simultaneous and automatic changes made to the entry in the register. Subsection (7) deals with the assignment of an interest protected by means of a notice. Whether such disposition can be made electronically depends on rules under subsection (1). If it can, subsection (7) enables notice of the assignment to be given electronically as well. This is relevant for the purposes of section 136(1) of the Law of Property Act 1925, which requires notice to be in writing.

150.     Subsection (8) disapplies section 75 of the Law of Property Act 1925 which provides that a person may at their own cost have the conveyance to them attested by a person appointed by them. The arrangements in the Bill for the execution of electronic documents will make this provision otiose. Lastly, subsection (9) deals with electronic documents executed without a seal on behalf of a company. There are a number of ways in which companies can validly execute documents. Section 36A(6) of the Companies Act 1985 provides a presumption of due execution to protect purchasers. Subsection (9) makes it clear that the protection afforded by that section will apply to a document which has been electronically authenticated on behalf of the company.

Clause 92: Land registry network

151.     Clause 92 enables the registrar to establish an electronic communications network, either himself or through a third party, which will be used as he sees fit in connection with registration, and with the carrying out of transactions which involve registration and are capable of being effected electronically. Electronic conveyancing is likely to involve a significant change in the practices of both the Land Registry and of conveyancers. The ways in which it will operate in detail will, therefore, need to be worked out with them, after extensive consultation. These ways are likely to change as the range of conveyancing transactions carried out electronically increases, and as electronic commerce in general expands. The main elements are, however, likely to be that:

• conveyancers will, as now, prepare draft documents but in electronic form;

• those drafts will be shown to the Land Registry, as well as to the parties to the transaction during preparation, to enable errors and discrepancies to be identified at the earliest possible stage;

• once the drafts are approved and a date and time for execution set, the documents will be executed and simultaneous amendments made to the entry in the register, directly by the responsible conveyancer;

• the Land Registry will also have to make sure that do-it-yourself conveyancers would not be excluded from electronic conveyancing.

152.     Schedule 5 establishes a framework for the creation and use of the network.

Clause 93: Power to require simultaneous registration

153.     Initially, paper and electronic conveyancing systems will operate side by side. If electronic conveyancing is to maximise the savings and benefits for the user, however, it must become the only system. For example, if just one link in a conveyancing chain is conducted in the conventional paper-based manner, the advantages of electronic chain management are likely to be lost. Clause 93 contains the power to require transactions which involve registration to be done electronically at the contract and completion stages. Specified transactions involving registered land would have no effect unless effected by a document in electronic form, and simultaneously registered (which could be done automatically by the system). The clause contains a power to prescribe which dispositions of registered estates and charges are caught by the requirement. It also contains power to prescribe which dispositions of interests the subject of notices in the register are caught by the requirement (at present the transfer of noted interests are not recorded in the register, see also paragraph 149 noting subsection 91(7)). The Lord Chancellor is under a duty to consult before making these rules. The clause specifically provides that a document varying the priority order of registered charges is included within the dispositions of registered charges covered by the clause. The registration requirements for a registrable disposition will be the requirements set out in Schedule 2. For all other documents, including, contracts and dispositions relating to the transfer of noted interests, the requirements may be specified in rules. Once a transaction is caught by this section, clause 27(1) is no longer relevant and is disapplied.