The City of London Law Society’s website includes a new updated version of The City of London Certificate, published today on 1 October 2012. This is the City of London Certificate of Title (long form) (7th edition). The new form of certificate, along with other minor changes, now provides for disclosures of information against relevant certifications to be made in each of the certificate’s schedules, rather than en bloc in Schedule 5 as was the case with the 6th edition. Just click on CLLS Certificate of Title documents to access the whole suite of CLLS certificate documents, which consist of The Certificate of Title (long form), The City of London Report (3rd edition), a “Company Confirmation Letter - Draft Certificate” (still relating to the 6th edition but no doubt shortly to have updated references), and a “Company Confirmation Letter - Final Form Certificate”.

The October 2012 edition of the Commercial Property Information Update – Issue 105 – is published today on this website.

Hot off the press, the Land Registry states that it is in the process of updating its adverse possession practice guides. It states that it will not proceed with an application for registration based on adverse possession unless, from the evidence presented to it, it is satisfied that the factual possession relied upon in support of the application did not constitute a criminal offence under section 144 Legal Aid, Sentencing and Punishment of Offenders Act 2012. However, it points out that the offence under section 144 is not retrospective, so that applications based exclusively on adverse possession before 1 September 2012 will be unaffected.

From 1 September 2012, squatting in a residential building has become a criminal offence under section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. An offence is committed if a person is in a residential building as a trespasser having entered it as a trespasser, the person knows or ought to know that he or she is a trespasser, and the person is living in the building or intends to live there for any period. A building is “residential” if it is designed or adapted, before the time of entry, for use as a place to live. The offence is committed whether entry was made as a trespasser before or after 1 September.

A question now arises: can such criminal activity be used as the basis for a claim to title by adverse possession? As a matter of public policy, one would expect not. Yet illegal occupation is as much possession of land as legal occupation, and we have seen in Bakewell Management Ltd v. Brandwood & Ors [2004] UKHL 14 how legal rights can be acquired despite illegality. In that case, a prescriptive right of way for a motor vehicle was permitted to be acquired over land even though the act of driving across private land without consent of the owner was an offence. However, in that case, the House of Lords was drawing a distinction between action that was illegal per se, and action that was illegal merely because it was done without permission of the land owner.

The matter of the criminal trespasser and adverse possession awaits consideration by a court. In Smith, R (on the application of) v Land Registry (Peterborough) [2009] EWHC 328 (Admin), Judge Pelling QC (at first instance – the matter not being dealt with on appeal) said that “whilst Bakewell is a case concerned with prescription and lost modern grant, not the acquisition of possessory title, in my judgment it supports by analogy the proposition that it is a legal impossibility for the claimant to claim adverse possession to part of a highway by reference to the illegal obstruction of it for a period of 12 years prior to the making of the claim contrary to the terms of primary legislation which makes such obstruction criminally and not merely tortiously unlawful.”

In Bakewell itself, Lord Walker commented that: “The present case [on prescriptive easements] is exceptional because of the unusual nature of the offence created by section 193(4) of the Law of Property Act 1925. It creates a criminal offence but it is, most unusually, an offence in respect of which the owner of the soil of the common has a dispensing power. It is common ground that that is the effect of the words "without lawful authority" in subsection (4)….In my opinion it is the landowner's unfettered power of dispensing from criminal liability, exercisable at his own discretion and if he thinks fit for his own private profit, which is the key to the disposal of this appeal. Since a dispensing power of that sort is very unusual, it is unlikely to apply to many other cases of criminal illegality.”

There is no dispensing power in section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Whilst the criminal trespasser could always be licensed at any time by the owner to prevent the crime from continuing (in the same was as a thief might be gifted a wallet?) he/she nevertheless remains a criminal unless and until licence is granted. On that basis, one would argue that illegality ought to prevent possession qualifying towards a title by adverse possession. But the matter remains to be addressed by the courts.

Time is running on the HMRC consultation on proposals to change the stamp duty land tax rules on transfers of rights and sub-sales – see High-risk areas of the tax code: The Stamp Duty Land Tax transfer of rights or sub-sale rules. The consultation period runs until 9 October 2012. HMRC wishes to bring in changes to section 45 Finance Act 2003 in 2013 in order to prevent avoidance of SDLT. It says: “Attempts to abuse these rules have been at the heart of many SDLT avoidance schemes in recent years. Marketing and promotion of this abuse cannot be allowed to continue.” Although any changes will not be effective until next spring, the consultation paper warns that “promoters of SDLT avoidance schemes, and any buyers of residential property inclined to use them, should have no confidence that their schemes will be effective in the meantime.”

Possible options being considered by HMRC include:
- Introducing double-charging provisions where a sub-sale is involved, so that both the purchaser under the main contract, and the sub-purchaser under the sub-sale contract are involved in chargeable transactions, but providing a relief for the intermediate purchaser to be claimed on an SDLT return form.
- As above, but providing a relief only where an anti-avoidance test is satisfied.
- Providing for greater certainty in the terms of section 75A Finance Act 2003 (the wide-ranging SDLT anti-avoidance provision) to make it clear that it applies to section 45 Finance Act 2003.

Forthcoming property webinars that may interest you include:
- 10 September 2012 - Drafting and negotiating developers’ option agreements.
- 24 September 2012 - Due diligence in investment property acquisitions.
- 1 October 2012 - Buying and selling in insolvency situations.
Click on the contact button above and request an invitation to join.

The September 2012 edition of the Commercial Property Information Update – Issue 104 – is published today on this website.

This webinar was over-subscribed in May and is being repeated (live) next Monday 16 July at 12.30pm. Issues to be covered include: The effect of the NPPF; how The Localism Act is affecting planning (neighbourhood development; duty to consult; assets of community value); what activity necessitates permission; what enforcement action may be taken, and when; what are the new rules on deliberate concealment; what additional consents may be necessary for development; how does a conveyancer know that a property is planning law compliant? Click on the contact button above and request an invitation to join.

Underleases give rise to a whole raft of potential problem areas. The next Property PSL webinar on Monday 9 July (12.30pm start time) considers many of these problems, including: What should a landlord consider when permitting underlettings? What drafting issues arise in relation to underleases (e.g. length of term; repair standards; dealings with part; reinstatements; 1954 Act contracting out; easements in under-leases)? What peculiarities arise with concurrent or overriding leases? What effect does termination of a head-lease have on underleases? What are the 1954 Act implications of sub-letting?

See https://propertypsl.webex.com/mw0306ld/mywebex/default.do?siteurl=proper... for all forthcoming property webinars.

Use the contact button above if you would like to join.

The July 2012 edition of the Commercial Property Information Update – Issue 103 – is published today on this website.