Unregistered Land System
This is a critical discussion of the unregistered land system has been criticised as being flawed. The only flaw in the system relates to the fifteen-year rule for inspecting the title deeds. The unregistered land system (ULS) is designed to make land more alienable by ensuring the conclusiveness of rights and burdens on land, which is sometimes achieved at the cost of justice. Some argued that in ULS, the fifteen-year title inspection rule (s.23 Law of Property Act (LPA) 1969) is the “only defect” – the only inconclusive rule remained. As will be discussed, focusing solely on conclusiveness may lead to injustice (Gray&Gray), which may be a more serious flaw.
Unregistered land system:
The ULS is essentially a product of 3 major modifications of the English land system: 1)reduction in number of legal estates that can subsist in one parcel of land to two (s.1 LPA 1925), 2)introduction of land charge registration system and 3)limited application of doctrine of notice (DoN) to only non-registrable equitable rights. All these measures aim to enhance certainty and procedural efficiency. Two forms of inspection are required, they are inspection of title deeds and inspection of physical land.
Inspection of title deeds:
Under the ULS, third parties are required to register their registrable equitable rights to protect them. The effect of registration is the binding effect on future purchasers is ensured by actual notice (s.198 Land Charges Act (LCA) 1925). Purchasers who wish to find out about land charges are required to inspect the titles and search in the land charges register. S.23 LPA 1969 requires purchasers to only inspect the titles of previous owners who own the land on and after the most recent conveyancing that is at least fifteen years old. However, this rule is “defective” because some registered equitable interests are behind the good root of title and they are undiscoverable. In those situations, purchasers are still deemed to have “actual notice” of the undiscoverable registered land charges and are bound by them. The law seeks to mitigate the injustice in two ways, 1)purchasers can rescind purchase contracts (s.24 LPA 1969), or 2)they are entitled to financial compensation (s.25 LPA 1969). Therefore, while the fifteen-year rule is a defect, its infrequent occurrence and the available remedies make it a bearable flaw.
There are other problems related to the rules of inspection of title deeds. The name-based land charge registration system is a flawed design (s.3 LCA 1972; Standard Property v British Plastic[1985]). Since name is not constant and stable, the system is prone to two problems. Firstly, if purchasers search against the wrong names, land charges will not be revealed. However, they remain binding because purchasers are deemed to have “actual notice” (Oak Co-operative v Blackburn[1968]). Secondly, if land charges are registered against the wrong names, then the unregistered land charges are void (Diligent Finance v Alleyne[1972]). While the inherent problems of identification with names limit the protection to purchasers and third parties, it is the devotion to the defective system for conclusiveness that amplifies its destructive effect. The effect of this problem is way more destructive than the fifteen-year rule.
Another defect is allowing s.4 LCA 1972 “to be an instrument of equitable fraud”. In situations where: 1)the third party is in actual occupation, and the purchaser has actual acknowledge (Hollington v Rhodes[1951]), or 2)the purchaser has actual knowledge and is not acting in good faith or even fraudulently (Midland Bank v Green[1981]), or 3)there may be a constructive trust claim, yet the interest concerned is an unregistered registrable land charge (Lloyds Bank v Carrick[1996]), if the land charges are unregistered then they are void against “bona fide” purchasers (s.4 LCA 1972). Similar to the last argument, it is the strict adherence of the overly simplified rules that causes unacceptable injustice.
Inspection of physical land:
While ULS aims to remove reliance on DoN entirely, the “residue category” of rights remain governed by DoN, which includes equitable interests under a constructive trust and proprietary estoppel. DoN says bona fide purchasers are bound by those rights if they have notice (actual, constructive or imputed). The doctrine of “constructive notice” is not conclusive at all. The standard for “reasonable inspections” is a fluid concept, leaving room for flexible applications. While flexibility appears to be synonymous with uncertainty, it is actually not. Instead, an appropriate amount of it ensures justice and fairness. Before 1925, “reasonable inspections” require purchasers to enquire the people in possession of the property about their equitable interests (Hunt v Luck[1902]). After 1925, reacting to the social demand and the land law reform, the courts started to limit the application of constructive notice (s.199 LPA 1925) and be more relaxed with the standards of inspections. Caunce v Caunce[1969] reduced the mortgagee’s responsibility to enquire only the legal owner of the property, indicating that the expectation of security in a matrimonial home must give way to the “public interest” of facilitating the transfer of land. The injustice was noticed shortly after, with the flexibility afforded, the courts swiftly responded. In Hodgson v Marks[1971], the judges criticised the stringent application of constructive notice in Caunce, arguing that only if vendors are in occupation of the house, then other occupants do not have to be enquired. Later, in William v Boland[1980], the House of Lords endorsed the view in Hodgson and said in obiter that the enquiries should extend to cover every occupier. In Kingsnorth v Tizard[1986], the court went even further by requiring purchasers to overcome barriers placed by vendors, which is unduly unfair to innocent purchasers. Once again, as the pendulum of fairness swung too far away from purchasers, it began its journey back and Tizard[1986] was criticised for being too relaxed with “reasonable inspections” (Le Foe v Le Foe[2001]). The doctrine of constructive notice is only allowed to react to the socio-economic change of the society and secure justice because it is given flexibility.
Conclusion
In conclusion, while there are strong policy reasons for conclusiveness of rules of the ULS, as land law is an instrument which safeguards distributive justice related to one of the scarcest resources, if any measures should be regarded as “flaws”, they are the ones that displace flexibility and justice.
