Land Registry Practice Guide 66 – Overriding interests losing automatic protection in 2013 – was given an interesting updating amendment at the end of last month. LRPG 66 says “Section 6 [of the Practice Guide] has been amended to confirm that the courts have still to consider if and when it may be possible after 12 October 2013 for the holder of an interest to apply for alteration of the register for the entry of a notice following first registration or the registration of a disposition for valuable consideration.”
As we all know, from midnight on 12 October 2013, some of the more obscure classes of property rights lose their status as overriding interests under the phasing out provisions of the Land Registration Act 2002. Once the status of the right as an overriding interest is lost, if the right is not protected by an entry in the register, a purchaser of the land will be able to take free from it. These rights include franchises, manorial rights, and the not-so-obscure chancel repair liability. So, what is the Land Registry saying by this Practice Guide amendment? Is 13 October 2013, and a subsequent disposition for value of the registered title, not the end of the matter?
Of course, any registered title may be the subject of an application for rectification (“rectification” being a form of alteration of the register which involves the correction of a mistake and which prejudicially affects the title of a registered proprietor). This is not a point specific to the categories of interests losing overriding status in October. Hence, if by mistake, the Land Registry had failed to enter a notice of an incumbrance such as a restrictive covenant on to a title, the holder of the benefit of that incumbrance might apply to rectify the register in an attempt to enter a notice of it. However, there exists a “proprietor in possession” defence. No order for rectification can be made without the consent of the proprietor whose registered title is prejudicially affected, and who is in possession of the land, unless the proprietor has, by fraud or lack of proper care caused or substantially contributed to the mistake, or it would for any other reason be unjust for the alteration not to be made. Whilst rectification might be expected to succeed against the proprietor who had entered into the covenant, it would most probably not succeed against a purchaser of the property. If a post-October 12 purchaser has acquired a registered title at a time when no notice of a chancel repair liability has been entered on the register, and the purchaser is in possession, it is difficult to conceive of circumstances where the register could be rectified to enter notice of the interest. Even if the purchaser was aware of the unprotected liability, it is no fraud to take advantage of the provisions of the Land Registration Act 2002 to take free from the liability.
Perhaps the Land Registry is more focused upon unregistered titles. An unregistered owner may be aware that its title is subject to an interest such as a chancel repair liability, and may voluntarily register title after 12 October in an attempt to defeat it. On first registration, there would be no duty on the applicant to disclose the interest under section 71 Land Registration Act 2002 as a “known overriding interest” since the interest would no longer be overriding. However, on first registration, an applicant must still disclose to the Land Registry “all deeds and documents relating to the title that are in the control of the applicant” – see rule 24 Land Registration Rules 2003. Breach of this duty could result (a) in a mistake in the register (in omitting reference to the interest affecting the property); (b) a rectification application by the holder of the interest; and (c) no availability of the proprietor in possession defence because the applicant was at fault.