Section 4: When title must be registered
28.Section 4 sets out the events that trigger the compulsory first registration of title. These were updated and extended by the Land Registration Act 1997, and the Act therefore largely replicates the existing position. First, compulsory registration is triggered by specified types of transfer of a qualifying estate, which is defined as either a legal freehold estate, or a legal lease with more than seven years to run. The transfers are those made:
for valuable or other consideration (which under subsection (6) includes estates which have a negative value);
by way of gift (which subsection (7) provides will include transfers for the purposes of constituting a trust under which the settlor does not retain the whole of the beneficial interest, or transfers for the purpose of uniting the legal title and the beneficial interest in property held under a trust under which the settlor did not, on constitution, retain the whole of the beneficial interest);
under a court order; and
by means of an assent (including a vesting assent).
29.Under subsection (3), transfers do not include transfers by operation of law (where, for example, an owner’s property vests in personal representatives on death). Undersubsection (4) compulsory registration will not apply to transfers involving:
the assignment of a mortgage term (where there is a mortgage by demise or sub-demise, and the mortgagee assigns the mortgage by transferring the mortgage term); or
where a lease is assigned or surrendered to the owner of the immediate reversion where the term is to merge in that reversion (because the estate transferred disappears).
30.Registration will be compulsory where section 171A of the Housing Act 1985 applies (i.e. where a person ceases to be a secure tenant because his or her landlord disposes of an interest in a house to a private sector landlord (subsection (1)(b), replicating the current law)). Compulsory registration will also apply to the grant of leases out of freehold land or a leasehold, with more than seven years to run, where the lease is granted for valuable or other consideration, by way of a gift, or under a court order, apart from the exceptions in the section.
31.Compulsory registration will also apply where a lease is granted to take effect more than three months after it is granted. This provision is new, and is designed to avoid a conveyancing trap that such reversionary leases may create. At present, a lease granted for 21 years or less, which has not yet taken effect cannot be registered or protected by the entry of a notice in the register against the landlord’s title but takes effect as an overriding interest. A buyer of land so affected may not be able to discover the existence of the lease, because the tenant will not be in possession.
32.Grants of a lease out of an unregistered legal estate under the right to buy provisions of Part 5 of the Housing Act 1985 will also be subject to compulsory registration (replicating the present law). Compulsory registration will also apply to the creation of a protected first legal mortgage (i.e. one which on creation ranks in priority ahead of other mortgages affecting the mortgaged estate) out of a legal freehold estate, or a lease with more than seven years to run.
33.This section enables the Lord Chancellor to add new events to those that trigger compulsory registration, by statutory instrument to be laid before Parliament. There is a similar power under the present law, although the new one is exercisable only after consultation. To be added, events must relate to unregistered estates specified in the section, which correspond to those listed as capable of registration with their own titles under section 3. Under subsection (3), the power may not be exercised to require the compulsory registration of an estate granted to a mortgagee, because no benefit would be derived from requiring a charge over land to be registered, if the title to the estate affected remained unregistered.
Section 6: Duty to apply for registration of title
34.This section imposes a duty on the responsible estate owner to apply for registration within the period for registration if the registration requirement applies. Where registration is triggered by the creation of a protected legal mortgage (under section 4 (1)(g)), the mortgagor must apply for the registration of the estate charged by the mortgage. As now, there is a power by rules to make provision to enable the mortgagee to require the estate charged by the mortgage to be registered, whether or not the mortgagor consents. In other cases it is the transferee or grantee who must apply. The period for registration is two months beginning with the date on which the relevant event occurs (subsection (4)), but subsection (5) enables the registrar, on application by an interested person, to specify a longer period for registration if there is a good reason for doing so.
35.The effect of not complying with the requirement of registration is:
where the event is a transfer, the transfer becomes void and the transferor hold the legal estate on a bare trust for the transferee (subsection (4) avoids the possibility which arises under subsection (1) of converting an unregistered fee simple into a determinable fee, which is not a legal estate); and
where the event is the grant of a lease or the creation of a protected mortgage, the grant or creation is void and takes effect instead as a contract made for valuable consideration to grant or create the lease or mortgage concerned.
36.If a transaction has become void under these provisions and the registrar then makes an order extending the period in which an application for registration can be made, it is treated as having never become void.
Section 8: Liability for making good void transfers etc
37.If it is necessary to repeat a transaction because it became void under the provisions in Section 7, the person who is responsible for the registration is liable to the disponor or mortgagee for all the proper costs of and incidental to the repeated disposition. He or she is also liable to indemnify the disponor or mortgagee in respect of any other liability reasonably incurred because of the failure to register.