Land Registration Bill [Lords]

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Mr. Burnett: It is a small point, but as the Minister says, cumbersome unregistered conveyancing will continue, and there will remain unregistered title to land. Will he confirm, either now or in due course, that the land charges register will continue, and whether it will be accessible by electronic means?

Mr. Wills: I can confirm both those points, and I shall be happy to return to them later should the hon. Gentleman wish to develop his question.

Overriding interests are an important and problematic aspect of current law. Such interests bind any person who acquires an interest in registered land, whether on first registration or on a subsequent registrable disposition, but they do not need to be—in some cases cannot be—registered. Those interests cover a significant range, including many easements, the rights of people in occupation of the land, leases granted for 21 years or less, and an array of other interests such as manorial rights, which may be obscure but also very onerous. They are a serious obstacle to the objective of making the register as complete a record of the title as possible.

The Bill reshapes the law, seeking to restrict such interests as far as possible. The guiding principle is that interests should override only when it is unreasonable to expect them to be protected in the register. Current categories of such interests are defined more narrowly in the Bill, and some are excluded. Some of the more obscure interests cease to be automatically protected if not registered within 10 years, but can be entered on the appropriate register without charge in the interim.

Part 3 and its schedule deal with land that is already on the register. Part 3 clarifies the powers that a registered proprietor has in relation to the estate, removing a number of uncertainties in current law with a view to ensuring that the register can provide all necessary information on the title. It lists transactions with registered land that transfer or create a legal estate, and which should be completed by registration. As with first registration, a new requirement to register leases granted for more than seven years will be introduced, with a power to reduce that period still further.

Parts 4, 5 and 6 improve and strengthen registration procedures, and part 7 provides for some important special cases for registration. Although part 8, which deals with electronic conveyancing, is one of the shortest parts, it will undoubtedly effect the greatest changes. An electronic conveyancing system could help to eliminate the anxieties of those unfortunate enough to be at the end of the conveyancing chain, sitting in the removal van and waiting for payments to pass along the chain so that the keys can be released.

The Bill does not, and in our view should not, set out in detail how full electronic conveyancing should work. Instead, it provides a framework for options that, on implementation, will meet the needs of customers, conveyancers and the registry, but which themselves can be adapted and modernised quickly as electronic conveyancing and electronic commerce develop.

The Land Registry has begun an intensive campaign of consultation with conveyancers and all others involved in buying and selling property. That is necessary not simply because there is a range of options for the system—or systems—through which electronic conveyancing will operate, but because it will require conveyancers themselves to work with the systems. They must therefore meet not only the registry's requirements, but those of a modern conveyancing practice. The system's essence will be electronic preparation, execution and distribution of the formal documents—the contract and conveyance—used for dispositions of land.

When the parties are satisfied with those documents, the conveyancer will be authorised, subject to appropriate safeguards, to make direct changes in the register itself. That brings two major benefits. First, conveyancers will use expert systems to prepare documents, which will prove quicker and cheaper than paper systems. Automatic checks with the Land Registry will also be permitted, so that possible errors can be identified at an early stage, rather than at the end of the process, as is all too often the case at the moment.

Secondly, completion and registration will take effect simultaneously. The new arrangements will wholly eliminate the delay that inevitably occurs between the conveyancer's sending paper documents to the registry, and their entry in the register. That registration gap creates a range of problems of its own. At worst, the transaction can take place in the registration gap, whether accidentally or otherwise, and affect the rights of one party to the main transaction. At the other end of the spectrum, because of the registration gap information published by the registry on trends in the market can be as much as six weeks out of date.

Electronic conveyancing will also foster the development of an electronic fund transfer system that will help those involved to tackle the problems of delay and uncertainty in that part of the process. Legislative provision for that system is not necessary.

The introduction of electronic conveyancing will be progressive, starting with the simpler conveyancing transactions and adding complex ones as conveyancers become used to operating within the network. However, the Bill provides a power for electronic conveyancing eventually to be made compulsory for some or all transactions, because some advantages can be maximised only when conveyancing is wholly through electronic means.

The example of most immediate interest to home buyers and sellers is perhaps that of an electronic network for land registration. It would create an entirely new capacity to make often very complex transaction chains transparent by identifying those participants that are falling behind the rest, so that they can be encouraged to catch up. It would also remove the need for progress reports to be relayed repeatedly up and down chains of conveyancers, a process that inevitably results in time lag and chinese whispers. There is much to be said for the system in England and Wales, which permits huge numbers to buy and sell on the same day, thereby avoiding the trouble and expense of arranging bridging loans or alternative accommodation, as well as the attendant stress.

There is no doubt that chain delays are responsible for much of the slowness and stressfulness that is inherent in house buying, and anything that reduces that must be welcome. Equally obviously, if even a single transaction in a chain is managed on paper, rather than electronically, transparency is muddied and the advantages of the new capacity are lost.

There are, therefore, real and practical advantages in making electronic conveyancing universal, but that cannot be a realistic option until it has become the usual method of registered conveyancing. The Bill requires the Lord Chancellor to consult before making electronic conveyancing compulsory, and he will want to do so widely. Following amendments in another place, he must also secure the agreement of both Houses by affirmative resolution to the necessary order.

The Land Registry must also ensure that those who wish to undertake their own conveyancing without employing a solicitor or licensed coveyancer are able to make transactions in electronic form.

Part 9 extends the protection against adverse possession given to owners by registration. The principle should be that where title is registered, the basis of title should primarily be the fact of registration. This is not the current position with either registered or unregistered land, where the title rests ultimately on possession.

Put at its shortest, anyone who takes possession of land acquires a possessory title. If they hold on to it for the length of the relevant limitation period, which is currently 12 years, they cannot be shifted. This may be appropriate in the inherently relative titles of unregistered conveyancing, but it seriously undermines the certainty that registration aims to provide.

The current law has undoubtedly given rise to a number of abuses and straightforward land theft. However, it does enable some of the problems that occur with land to be dealt with. There are the public interest benefits, if land held by an owner who takes no interest in it can be returned to economic use. Even within the registered system, there is scope for reasonable doubt as to where boundaries lie. For example, it is by no means uncommon for the fences and other partitions in a newly developed estate to be put up in places that differ from those shown on the register. Due account has to be taken of those who have reasonably occupied and spent money on land that they thought was theirs.

Part 9 sets out a package that balances the competing interests involved. The main features are, first, that a squatter will be entitled to apply to register as a proprietor after 10 years' adverse possession. Secondly, those with a direct interest must be told of the application, and if there are no objections, the squatter will be registered as proprietor. Thirdly, if an objection is raised, the application will be refused unless the squatter can show that it will be unfair for him or her to be dispossessed because he or she had reasonably believed that he or she owned the land. Fourthly, if the application is refused, and the registered proprietor does not take steps to evict the squatter within a further two years, the squatter can apply for registration again, and this time he or she will be registered as proprietor whether or not the registered proprietor objects.

Parts 10 and 11 complete the provisions relating to the administration of land registry. The most significant change from the current arrangements is the establishment of a new and independent judicial officer, to determine registration disputes between individuals, ensuring that the arrangements are wholly compliant with the European convention on human rights.

Part 12 contains a number of miscellaneous and general provisions that ensure the effective operation of the Bill.

The matters with which the Bill deals are varied and complex. They will affect, in large and small matters, every aspect of the sale of registered land, and create a new relationship between conveyancers and the Land Registry's own responsibilities. I am confident that the systems that will govern that relationship will improve not only the Land Registry's public services, but will give solicitors and licensed conveyancers the chance to develop and improve their own professional services and give the customer a better deal.

I started my speech by referring to the size of the project that the Law Commission and the Land Registry had undertaken. It is not surprising that work on this scale has taken over five years. As an essential part of the programme, a major consultation paper issued in 1998 covered all the issues now covered by the Bill. The proposals were considerably refined and improved in the light of the help from the consultation response and in the discussions and seminars that followed it. It will be obvious from what I have already said about the clarification and improvements that are made by the Bill in this formidably technical area of law, that it represents an achievement of the highest order.

I should like to put on record my gratitude, and the Government's gratitude, for that achievement to the law commissioner responsible for it, Mr. Charles Harpum, whose time at the Law Commission has only recently concluded, and to the parliamentary counsel seconded to the commission with whom Mr. Harpum has worked throughout. We are extremely grateful.

With the Commonhold and Leasehold Reform Bill and the proposals for a seller's pack, the Bill forms part of a comprehensive programme for the delivery of a thorough-going modernisation in registration law and in conveyancing services. It is the best kind of law reform. It clarifies principles, reforms practices and makes the law simpler and more accessible. Above all, it is a practical Bill, which will make home-buying and selling quicker, simpler and cheaper. That will make a real difference to people's lives.

9.54 am

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Prepared 29 November 2001