Monday 13 October 2003 saw the biggest shake-up in English and Welsh land law since 1925. That was the day when the Land Registration Act 2002 (the act) came into force. So has the world as we know it come to an end?
The answer is yes and no. The 1925 Land Registration Act is consigned to history, we have an entirely new land registration regime to work with and all the forms and guidance leaflets have changed. But we have survived – so far. There is still a huge learning curve for both Land Registry staff and the property profession. The new law is so different from the old that, quite apart from the huge changes in conveyancing practice, it may affect the way deals are structured in the future.
Certainly there has been a Herculean effort by the registry to educate both the legal profession and the Land Registry staff about the new law. But the act introduced many changes (see box), and not surprisingly there are teething problems. The following are causing practical difficulties:
Disclosable overriding interests
Whenever an application is made to the registry, the applicant (purchaser, lender etc) now has to say whether they are aware of any ‘overriding interests’, such as short leases, which affect the land. This is quite a complicated area, so a questionnaire needs to be sent to the client to ask if they know of any such interests. (An industry standard form is being prepared and will form part of the Commercial Property Standard Enquiries suite of documents.)
If there are any overriding interests to declare, a ‘Form DI’ has to be completed and sent with the application. The registry then decides whether to note these interests on the register. Although it sounds simple, this process can be rather time-consuming.
Denton Wilde Sapte had a recent case involving the mortgage of a large investment property that was subject to more than 200 short leases, all of which were overriding interests. The firm therefore had to list them all on Form DI and send the registry a copy of each lease, which was an enormously cumbersome exercise. While the aim of the act is to make the register as comprehensive as possible, one wonders whether this kind of exercise is going a bit far.
If those short leases do get noted on the register, then issues of confidentiality arise, as the leases will become open to public view. The parties to the leases might want to consider making an exempt information document (EID) application (see box) in respect of any sensitive information contained in the leases. Once again, this represents more paperwork.
Easements in leases
Under the act, easements granted in leases – for example, rights of way and rights to use cables and other service media – have to be noted against both the landlord’s and the tenant’s title, as well as any other titles over which they are granted, even if the lease itself is too short to be registered in its own right. If the easements are not registered, the tenant risks losing the right to exercise those important rights.
Once the lease is sent up to the registry for those easements to be noted, it becomes available to public view, so once again an EID application may need to be made to blank out any sensitive information it may contain. Yet again, more paperwork.
Blanking out prejudicial information
Now that all leases, mortgages, other documents, correspondence and almost all forms filed at the registry are open to public view, confidentiality issues need to be considered in relation to anything sent to the registry (whether it is a document sent for registration in its own right, a mere application form or just a document sent in as ancillary to another application). If any of the information being sent to the registry is ‘prejudicial’ and needs hiding from public view, an EID application needs to be made.
The EID process can be too easily overlooked. For example, agreements for lease often contain confidential agreements between landlord and tenant, such as the landlord contributing towards the cost of fitting out works. The parties’ attention may be concentrated on the lease, which will probably need to be registered in its own right. However, the agreement for lease may be sent to the registry without the landlord realising it – for example, if the tenant applies to protect the agreement at the registry by lodging a notice. If an agreed notice is used, the agreement will have to accompany it, so the terms of the agreement will come into the public domain (unless an EID has been completed). If a unilateral notice is used, the agreement does not have to be sent to the registry, so it will stay hidden from public gaze. The landlord may therefore wish to add a provision to the agreement for lease, providing that the tenant can only protect the agreement for lease by way of a unilateral notice and not sending the agreement for lease to the registry.
Katharine Fenn is a professional support lawyer at Denton Wilde Sapte
|Land Registration Act 2002 – the main changes|