Since the commencement of the Land Registration Act 2002 on 13 October 2003, it is no longer possible to acquire a new interest in unregistered land and a transfer of an interest in unregistered land will now in most cases lead to a compulsory registration of that interest.
Even though it has been a number of years since the commencement of the act, it is still common to come across clients who have an unregistered interest in land. These are clients who have had an interest in land since before the commencement of 13 October 2003. In which case, it is advisable that clients are made aware of this and that recommendations are made to them.
Registered and Unregistered Land
It is possible for land to be either unregistered or registered. The concept of registered land was introduced by the Land Registration Act 1925, this is land in which the details of land, such as a description of the land, the ownership of the legal title and any rights third parties have over the land is detailed on the Land Registry. Unregistered land is land that is not registered on the Land Registry and owners instead will prove their interest using title deeds to the property.
The Land Registration Act 2002 makes provision for both voluntary first registration of land and also for compulsory first registration of land, in which certain triggers will mean that first registration of the land is required. These triggers include:
- A transfer of an unregistered freehold estate.
- A transfer of an unregistered leasehold estate with more than 7 years to run.
- A grant of a lease out of an unregistered estate which has more than 7 years or is to take effect more than three months from date of grant
- The creation of first legal mortgage protected by deposit of title deeds over an unregistered freehold estate.
- The creation of first legal mortgage protected by deposit of title deeds over an unregistered leasehold estate with more than 7 years to run.
A transfer in the above context does not need to be for value and could be when an unregistered interest is gifted or alternatively on an assent after the owner has died. The death of a joint tenant is however not a trigger for first registration as no transfer is made.
If a trigger for mandatory first registration arises, it is the obligation of the new owner to make the application.
If it comes to light that a client has an interest in land that is unregistered, it is highly advisable that they register this interest for a number of reasons.
The disposition of the interest on the client’s death (or on second death if the property is owned jointly) is a trigger that will require the property to be registered. Whilst the cost of a first registration varies depending on the value of the property in question, a mandatory registration does have a higher land registry fee than if the owners voluntarily register the property during their lifetimes.
Should title deeds be lost or destroyed, it can be difficult to prove ownership of a property. It is still possible to register a property if titles deeds are lost or destroyed, it does however become a long, difficult and more expensive process and solicitors would need to be involved. If this is completed after death, it could cause a large delay between the death of the clients and distribution of the property to the eventual beneficiaries.
Unregistered land is also at a much higher risk of fraud. Registering a property at the Land Registry protects from a property potentially being fraudulently registered without the owners’ knowledge.