Strengthening the foundations of land ownership
The Law Commission is reviewing the legal framework that governs the registration of land in England and Wales. In a consultation opening on Thursday 31 March the Commission – the independent body that advises government on law reform – is asking how the Land Registration Act 2002 is working in practice and whether there are opportunities for the system to be clarified and updated.
Land registration underpins conveyancing by providing a single, central source of information on the ownership of land and by guaranteeing that what the land register says about ownership is true. It tells purchasers that the seller has the right to transfer ownership, and whether anyone else has an interest in the land, such as a right of way or a mortgage. Entry on the register is enough to prove ownership – it is a guarantee of title backed up by a state indemnity if things go wrong.
With over 24 million registered titles ranging from residential flats to farms and shopping centres, any inefficiencies or uncertainties in the land registration system can have a significant impact on the property market. The Commission’s project considers a range of often highly technical, but important, legal issues.
One pervasive issue is how the land registration system responds to instances of fraud. A common example is where an innocent purchaser buys property from someone who fraudulently claims to be the owner. The purchaser becomes the new registered owner, displacing the legitimate owner from the register. The land registration system has to determine which of these two innocent parties should have the land, and which should be compensated under the indemnity scheme. The Commission is provisionally proposing a formula to clarify and simplify how these difficult choices should be made.
The provision of an indemnity is an essential part of the land registration system but the ultimate aim is to prevent fraud from happening in the first place. The Commission’s consultation paper examines whether more can be done to help detect fraud, including incentivising the minority of conveyancers and mortgage lenders who do not currently follow best practice to do so. And it considers how the land registration system could include more effective identity checks.
A modern system of land registration should involve electronic conveyancing. The 2002 Act provided for an ambitious electronic conveyancing model which has not yet been achieved. The Commission is seeking views on provisional proposals that will facilitate a more flexible approach to the development of electronic conveyancing.
Professor Nick Hopkins, Law Commissioner for property, family and trust law, said: “Effective land registration is the foundation of conveyancing and essential to the successful operation of the property market in England and Wales.
“The landscape within which land registration operates has changed considerably since the 2002 Act came into force. Our review provides an opportunity for landowners, conveyancers, lenders and all those with an interest in the property market to tell us how the Act has been working in practice. It allows us to consider where we can bring greater certainty and security and what can be done to reinforce the role of the land register as a guarantee of title.”
The consultation is open until 30 June 2016. The consultation paper, setting out the Commission’s provisional proposals, is available on www.lawcom.gov.uk.
Notes for editors
- The Law Commission is a non-political independent body, set up by Parliament in 1965 to keep all the law of England and Wales under review, and to recommend reform where it is needed.
- For more details on this project, visit https://www.lawcom.gov.uk/project/land-registration/
- For all press queries please contact:
Phil Hodgson, Head of External Relations: 020 3334 3305
Jackie Samuel: 020 3334 3648