Unregistered land - Land charges

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Overview

For those preparing for the SQE1 FLK2 exam, understanding land charges in unregistered land is key. This guide covers the laws governing these charges, their history, and their role in property transactions. It also reviews important legislation, case law, and real-life applications, providing the knowledge needed to handle unregistered interests and their effects on ownership.

Historical Context: From Doctrine of Notice to Registration

The shift to land charge registration transformed property law:

  • Doctrine of Notice: Previously, interests were based on buyers' actual or supposed knowledge.
  • Shift to Registration: The Land Charges Act 1972 (LCA 1972) introduced compulsory registration to ensure clarity and enforceability.

This change resolved the uncertainties of the notice system, fostering legal clarity in property dealings.

Key Legislation and Concepts

Land Charges Act 1972

The LCA 1972 reshaped land ownership by:

  • Mandating registration of land charges to safeguard equitable interests.
  • Separating equitable interests from legal ones.

Equitable Interests

  • Must be registered to be valid against third parties.
  • Examples: restrictive covenants, equitable easements, and mortgages.

Legal Interests

  • Automatically bind future owners without registration.
  • Examples: legal easements, long leases, mortgages.

Law of Property Act 1925

The LPA 1925 established modern property law by:

  • Defining the current system of land ownership.
  • Creating a more effective structure for property transactions.

Challenges of Unregistered Interests

Unregistered interests in land come with several risks:

  1. Enforceability Issues: Unregistered interests may not hold against future buyers, even if known.

  2. Doctrine of Notice: Offers possible protection, but proving notice is difficult.

  3. Practical Challenges: Unexpected claims and issues in securing clear title can arise.

Categories of Land Charges

The LCA 1972 lists six types of land charges:

  1. Class A: Life and certain legal interests
  2. Class B: Spousal rights under Family Law Act 1996
  3. Class C: Puisne mortgages and certain owner charges
  4. Class D: Equitable easements and estate contracts
  5. Class E: Pre-1926 annuities
  6. Class F: Rights related to re-entry, reverter, or adverse possession

Knowing these categories helps in assessing registration needs and their effects on transactions.

Registration Process and Effects

Register by:

  • Submitting forms to HM Land Registry
  • Detailing the charge and affected property

Registration ensures:

  • Priority over later transactions
  • Validity against subsequent buyers
  • Rights protection against bona fide purchases

Consequences of Non-Registration

Failing to register can result in:

  • Interests becoming void against later buyers
  • Loss of proprietary status, demoting to personal rights

Practical Examples and Applications

Example 1: Restrictive Covenants

If a landowner sells with a covenant banning commercial use but fails to register it, a new buyer unaware of the covenant might not be bound by it.

Example 2: Informal Tenancy Agreements

Without registration, tenants could be evicted upon sale, as new owners are not obligated by unregistered terms.

Example 3: Equitable Mortgages

An unregistered equitable mortgage leaves a lender unprotected against new buyers.

Case Law Highlights

Important cases underline the need for registration:

  • Midland Bank Trust Co Ltd v Green [1981]: A Class C land charge wasn’t registered and so wasn’t enforceable against new buyers, even if they knew about it.

  • Peffer v Rigg [1977]: Showed the importance of accurate records; a misspelling led to a charge being overlooked.

Current Trends and Future Plans

Electronic Conveyancing

The digital shift offers:

  • Better search and registration processes
  • Difficulties in converting historical data to digital formats

Reform Discussions

Current talks include:

  • Simplifying charge categories
  • Improving links between land charges and registration
  • Potential universal land registration, phasing out current registrations

Conclusion

Understanding land charges in unregistered land is essential for SQE1 FLK2 success and future practice. This area requires a clear understanding of:

  • Legal evolution and history
  • Law and categories of land charges
  • Practical challenges in transactions
  • Emerging trends and possible changes

By mastering these areas, legal professionals can protect clients' interests and excel in property law. As the field keeps changing, especially with technology and reforms, understanding these principles remains important for future adaptations.