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Lord Goodhart: Amendments Nos. 17 and 59 stand in my name. They concern the same subject but have a somewhat different objective. Under the present law, adverse possession extinguishes the title of a previous
Under Section 70 of the Land Registration Act 1925, rights that are acquired or are in the course of being acquired under the Limitation Act are overriding instruments. The Bill will alter that. Under Clause 11(4)(c), adverse possession binds the estate on first registration only if the freehold proprietor, the person with the paper title or the person acquiring the title has notice. I am afraid that it is not altogether clear to me why notice for that purpose is relevant. Indeed, it will give rise to a somewhat difficult issue about whether the proprietor in fact has notice. Except to that very limited extent, those possessory interests do not override.
There is a new procedure, which appears in Part 9 and Schedule 6, for acquiring title by adverse possession. I have no problem whatever with the new system operating when adverse possession has lasted for less than 12 years at the date at which the Bill comes into force. That is in line with the long-established principle that limitation periods can be changed without being treated as a retrospective alteration of existing rights. When the 12-year period has already been completed the adverse possessor will have acquired an indefeasible title. There are several reasons, apart from the mere abandonment of the land, why the new proprietor might not have notice of that indefeasible title. It is wrong that in those circumstances an adverse possessor should be deprived of what, by the time the Act comes into force, will have already become an indefeasible title. The adverse possessor would at best have existing rights taken away and would be forced to apply to the registrar under the new procedure, which, in many cases, it might not be possible for him to do because he would no longer have a possessory title that he could register at that point.
That would give rise, among other things, to concerns about what is in effect the appropriation--the confiscation--of existing indefeasible rights and it raises the question of whether that is in accordance with Article 1 of the First Protocol to the Human Rights Act. I am concerned about the drafting that is used to defeat what would under existing law be an indefeasible title. I recognise that that is to a limited extent a complication because it means that someone who appears to have a paper title may find that that title is no good. Nevertheless, I am doubtful about the justification for changing existing law for those who have already acquired an indefeasible title.
Clause 11(4)(c), in respect of freehold land, and Clause 12(4)(g), in respect of leasehold land, are intended to cover the case in which a person has acquired title by adverse possession, has then left the land and the former owner has resumed possession. Within 12 years of doing so the former owner then sells as apparent owner. On the conveyance or assignment the buyer will not get title but will acquire only such rights as the seller had as squatter. However, provided that he does not have notice of the squatter's interest at the date of registration, the buyer will "take" free of it.
The effect of the amendment would be that a buyer will "take" subject to the interest of a squatter who is in adverse possession at the time of registration, such as in the example, even though the squatter is not in actual occupation and even if the buyer did not have notice and so could not reasonably have discovered the squatter's interest. However, the case of a squatter who has already acquired title and is in actual occupation falls within the terms of Clause 11(4)(b) or Clause 12(4)(d), so the proprietor "takes" subject to the squatter's rights.
Paragraphs 3.46 and 3.47 of the Law Commission's report, Land Registration for the Twenty-First Century--A Conveyancing Revolution, with which the noble Lord, Lord Goodhart, and the noble Baroness, Lady Buscombe, will be very familiar, explains the reasons for those provisions and the way in which they work.
Amendment No. 105 relates to the transitional provisions in Schedule 12 in respect of rights already acquired by squatters over unregistered land under the existing law before the Bill comes into force. It is consequential to Amendments Nos. 9 and 10.
The effect of paragraph 7 is to create an additional but temporary category of overriding interest on first registration. Under the present law rights of squatters are overriding interests. Under the Bill a squatter's rights will override first registration only if the squatter is in actual occupation. Squatters who are no longer in actual occupation will therefore no longer fall within the protected category when the new law comes into force. That could involve some unfairness. Paragraph 7 therefore provides for the existing regime to continue for three years. That will allow sufficient time for squatters who have extinguished the title of the paper owner but who are no longer in actual occupation to make application for registration of title.
In our view the Bill strikes a fair balance between the squatter and an innocent buyer. To make no transitional provision would be unfair to those who have acquired rights by adverse possession but to preserve those rights in perpetuity would prevent the realisation of our aim that the register should be as complete a record as possible of the title. I hope that the noble Baroness therefore feels that it is appropriate to withdraw her amendment.
I turn to Amendments Nos. 17 and 59, tabled by the noble Lord, Lord Goodhart, to whom I listened carefully. As was made clear on Second Reading, the Bill's proposals set out to provide a careful balance between the rights of owners and the need to ensure that neglected property continues in useful life. In particular, I was happy to agree with the noble Lord's observation that the Bill would be unlikely significantly to damage the position of those who had taken over property to house themselves in the short term. Indeed, by clarifying the periods involved, it may positively help them. Nevertheless, we believe that it is important to ensure that the balance stays in the right place.
The amendments would shift two careful balances in the Bill. First, they would significantly reduce the protection that the Bill gives to the rights of registered owners. Secondly, under the transitional arrangements to be found in Schedule 12, the rights of all those who have acquired rights by possession of land under the general limitation Acts are fully protected for three years. This would include both those who have remained in continuous occupation of the land, and those who have acquired possessory rights, but whose occupation has been discontinuous.
The rights of the first group will form a permanent feature of the Bill. Anyone in actual occupation of the land will have rights which override both first registration and subsequent registered dispositions of the land under Schedules 1 and 3.
Despite what the noble Lord has said with his usual eloquence and erudition, I am far from being convinced that those who have once squatted on land but have subsequently left it should be protected in the same way.
That is only partly because of a wish to preserve the rights of registered owners. It is fundamental to the Bill that the register should give the clearest possible picture of the rights and obligations to which land is subject. Rights should have overriding status only when it is impracticable or impossible that they should be registered.
There are obvious problems for someone in actual occupation of land being required to register in order to retain those rights. The application for registration would be, at least for some, merely the prelude to steps by the owner to recover possession. Therefore, we understand those issues.
But the position of someone who has occupied land, but subsequently left it, is rather different. He has no ground to expect such immediate action by the owner. The provision in paragraph 7 of Schedule 12 will give three years grace in which it will be possible for someone who claims to have acquired a title which extinguishes that of the first registered proprietor to protect his rights by registration. We suggest that is not a particularly onerous price to pay for that protection.
But the permanent continuation of the transitional protection suggested by the amendment would create very significant practical problems for buyers. They would run the risk of finding themselves bound by the rights of squatters, where that squatter is no longer in actual occupation. The chances of ascertaining that someone had acquired a permanent right, hidden from the register, from past occupation would in many cases diminish to nothing.
I would therefore argue that the noble Lord's suggestion would in fact significantly damage the structure of the Bill. It would put prospective buyers in the future under a burden of risk that is unreasonable. In the light of that explanation, I hope that the noble Lord will feel able to withdraw his amendments.
I am somewhat concerned. I am not sure that this is a major issue because I am not aware of many problems caused nowadays by squatters who have been in occupation for 12 years and then moved away. So I am not sure that we are talking about very much. But in the case where somebody has acquired an indefeasible title before this Act comes into force--it will be a transitional matter because there will be no new rights to do that--I am unhappy with the concept of that being removed after the end of the three year transitional period. So again, that is something to which we may wish to return on Report.
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