Unregistered Land — SQE1 FLK2 Land Law

Your client exchanged contracts on an unregistered cottage for £250,000 and paid her deposit. Her solicitor meant to register the contract at the Land Charges Registry, and never got round to it. Two months later the seller found a better price and sold the cottage to somebody else for £260,000. That buyer searched, got a clear certificate, and knew nothing about her. Who owns the cottage now? Not your client.

This is Unregistered Land, and that answer is the whole system in one line. No register of title, so a buyer takes greater care. And a separate register, of charges, that works with a brutal mechanical simplicity. Register, or lose it. Keep that cottage in mind. We are coming back for it.

Here is the route. Title deeds first, and the root of title. Then the Land Charges Act 1972: what is registrable, how you search, and what happens when nobody registers. Then the interests the Act does not reach at all, which is where the doctrine of notice lives. Then overreaching. And at the end, the two-step question that decides every problem in this topic.

Start with what is different. Most land in England and Wales is registered, but some is not, and for that land there is no state-backed register to consult. Title is proved by the deeds. A bundle of conveyances, transfers, wills, grants of probate, showing the chain of ownership.

That chain has to start somewhere, and the starting point is the root of title. A good conveyance, usually a conveyance or transfer on sale, at least 15 years old, from which the current owner's title is derived. The seller must produce the root and every deed since, showing an unbroken chain down to himself. A gap in the chain, a missing link, and the buyer cannot be sure the seller owns anything.

In practice the seller's solicitor sends an epitome of title, a chronological summary of the deeds with the effect of each. It saves the buyer reading everything from scratch. The full deeds must still be available for inspection.

Now the Land Charges Act 1972, which is the machinery that makes unregistered conveyancing workable at all. Certain third-party interests are registrable as land charges. Register one, and a buyer will find it. Fail to register, and it is void against him.

And here is the thing that trips everyone. Land charges are registered against the name of the estate owner, not against the land. That is the opposite of the registered system, where an interest is noted on the title of a particular property. It has an obvious consequence. If the owner marries, changes their name, or appears in the deeds as Jonathan when everyone calls them John, a search against the wrong name will miss the charge. It is a known flaw and the exam knows it too.

So which interests are registrable? Section 2 sets out the classes. Class A is tax charges. Class B, general equitable charges not caught elsewhere, rare in practice. Class E, annuities. Then the four you actually need.

Class C, subdivided. C one, puisne mortgages. C two, a limited owner's charge. C three, general equitable charges. C four, estate contracts. Class D, also subdivided: D one, a charge for unpaid inheritance tax; D two, restrictive covenants entered into after 1925; D three, equitable easements. And Class F, home rights of a spouse or civil partner under the Family Law Act 1996.

Try one on Class C one. A man already has a mortgage with a building society, which holds the deeds. He now grants a bank a second mortgage, by deed. That is a legal mortgage, and there are no deeds left for the bank to hold. It is a legal interest, so does it bind a buyer automatically?

No. That is a puisne mortgage. A legal mortgage not protected by a deposit of the title deeds, the classic example being a second mortgage where an earlier lender already has them. It is registrable as a Class C one land charge, and unregistered it is void against a purchaser however legal it is. The old rule that a legal interest binds the world does not survive for the interests this Act lists.

Searching is a Form K search at the Land Charges Registry, against the name of the current estate owner and of previous owners within the root of title period. You get a certificate back. Search against the owner's correct full name as it appears in the deeds, and that official certificate is conclusive in your favour under s 10(4).

Which cuts both ways, and there is a case each way. A charge registered against a different or incorrect version of the name is void against a buyer who searched against the correct one. But a buyer who searches against the wrong name is not protected. The registry does not cross-reference. Nobody is checking your spelling for you.

And search every name, not just the seller. A charge is registered against whoever was estate owner when it was created, so a covenant given by an owner in 2003 sits under her name for ever. Registration is actual notice to the whole world, under s 198 of the Law of Property Act 1925, so it binds every later purchaser. Search the vendor alone and the certificate is conclusive only for the name you searched. The charge is still there, and it still binds you.

Now the consequence of not registering, which is where this topic earns its reputation. Under s 4 of the 1972 Act, a registrable land charge that is not registered before completion is void against a purchaser. Void means void. The interest holder cannot enforce it against that purchaser at all. There is no discretion to soften the result.

Read the definitions carefully, because the Act is not uniform. For estate contracts and the Class D charges, s 4(6), the charge is void against a purchaser of a legal estate for money or money's worth. So he must actually take a legal estate, not merely a contract, and he must give money or money's worth rather than receive a gift. A donee is not a purchaser and takes subject to everything.

What is not in that definition is any requirement of good faith. And that omission was tested to destruction. A father granted his son an option to buy the family farm. The son never registered it as a Class C four land charge. To defeat it, the father conveyed the farm to his wife for £500. The farm was worth around £40,000.

In Midland Bank Trust Co Ltd v Green, from 1981, the House of Lords held the unregistered option void against her. She was a purchaser of a legal estate for money or money's worth, and the Act asks for nothing more. Her knowledge of the option was irrelevant. So was the fact that the whole conveyance was a scheme to defeat it. And £500 against £40,000 was grossly inadequate, but it was not nominal.

Which brings your cottage back. A contract to buy land, once it complies with s 2 of the 1989 Act, makes the buyer the equitable owner. That is an estate contract, a Class C four land charge, and it must be registered against the seller's name. Register it the day contracts are exchanged. Your client's solicitor did not, so her interest is void against the second buyer. She is left suing a seller who has spent the money, and her own solicitor in negligence.

Restrictive covenants next, and watch the date. A covenant entered into after 1925 is registrable as a Class D two land charge. Unregistered, it is void against a purchaser for money or money's worth. But a covenant created before 1 January 1926 is not registrable at all. It falls outside the scheme, and its priority is governed by the old doctrine of notice instead.

Which is the other half of this topic. Some equitable interests are simply not registrable as land charges. A beneficial interest under a trust of land is the great example. For those, the question is not registration. It is notice.

The rule is the one every land lawyer learns first. A purchaser of a legal estate for value who takes without notice of a prior equitable interest takes free of it. Equity's darling. But if he has notice, he takes subject to it. And notice comes in three kinds.

Actual notice is direct knowledge. He knows. Constructive notice is deemed knowledge: he is fixed with everything he would have discovered had he made the inquiries and inspections which ought reasonably to have been made. That is s 199 of the Law of Property Act 1925. And imputed notice is the knowledge of his agent or solicitor, attributed to him, whether or not the solicitor ever passed it on.

Constructive notice does the work, and it comes from two places. From the title deeds, if a proper examination would have revealed the interest. And from the land itself. A buyer is expected to inspect, and if the inspection would reveal evidence of an equitable interest, he is fixed with notice of it whether he looked or not.

The leading illustration. A husband mortgaged the matrimonial home to a lender without telling his wife. She was in actual occupation and had a beneficial interest. The lender made no enquiries of her. The court held it had constructive notice of her interest, because it should have asked the person it found in occupation. Where an adult other than the seller is living in the property, you ask them on what basis they are there.

But there is a boundary, and it matters. Try this. You inspect and find a tenant in occupation. She tells you she rents on a monthly tenancy, and the terms are unremarkable. What nobody mentions is that she pays her rent not to the seller but to another man, who holds the entire beneficial interest under a trust. Are you fixed with notice of his interest?

No. Hunt v Luck, from 1902, draws exactly that line. A purchaser who finds a tenant in occupation is fixed with notice of that tenant's rights. But not of the rights of people standing behind the tenancy, including whoever receives the rent. You are not obliged to trace where the money goes. Occupation gives notice of the occupier's rights. Not of everybody's.

Last piece, and it is the buyer's best friend. Overreaching. Where land is held on a trust of land, a disposition of the legal estate can detach the beneficial interests from the land and transfer them into the purchase money. The buyer takes the land free of the trust, and the beneficiaries look to the money instead.

It has a price, and the price is the two-trustee rule. Under s 2(1)(ii) and s 27 of the Law of Property Act 1925, capital money must be paid to at least two trustees or a trust corporation. Pay it to a sole trustee and overreaching simply does not happen. The safeguard is that two trustees are less likely than one to act fraudulently.

Try it. A farmhouse is conveyed to two brothers, who hold it on trust for themselves and their widowed mother, who lives there. A buyer pays the price to both brothers. Does the mother's interest bind him?

No. Two trustees, so her interest is overreached. It detaches from the land and attaches to the money in their hands, and the buyer takes free. Note what did not matter. Not her occupation. Not whether he knew about her. Overreaching, where it operates, makes notice beside the point entirely.

And when it fails, you are back where you were. Money paid to a sole trustee, no overreaching. A disposition that is not of a legal estate, no overreaching. Then the interest is still attached to the land, and the buyer's position depends on the land charges rules or the doctrine of notice, as the case may be.

So here is the two-step that answers almost every question in this topic. First: is the interest a registrable land charge? If it is, registration decides, and notice is irrelevant either way. If it is not, then ask whether it was overreached, and if it was not, ask about notice. Get that order right and these problems come apart cleanly.

A word on how SQE1 tests this. You will not be asked to recall a case name or a section number. You get a scenario, five answers, and one instruction: pick the best. So learn which system you are in, and which of the two routes the interest travels by.

If you keep only three. Section 4 of the Land Charges Act 1972, because unregistered means void. Midland Bank Trust Co Ltd v Green, for the fact that void means void even against a buyer who knew. And the two-trustee rule, because it is the one thing that makes a beneficial interest disappear without anybody needing to know about it.

Five traps. One: do not apply the wrong system. The Land Charges Act 1972 and the doctrine of notice are unregistered land. The Land Registration Act 2002 and overriding interests are registered land. If the facts do not say which, look for the clues.

Two: notice is irrelevant to a registrable charge. If the interest is registrable and was not registered, it is void against a purchaser for value, and it makes no difference at all that he knew. Notice only governs interests the Act does not reach.

Three: a legal interest is not automatically safe. A puisne mortgage is legal, and unregistered it is still void. Four: a donee is not a purchaser. Take the land as a gift and you take subject to every unregistered charge on it.

And five: the date on a restrictive covenant decides the route. After 1925 it is a Class D two land charge and stands or falls on registration. Before 1926 it is outside the scheme altogether and lives or dies on notice.

Quick check. A buyer is purchasing an unregistered house of which the seller is the only legal owner. When he visits, an elderly woman is plainly living in a self-contained annexe. Her furniture is there and she answers the door to him. He asks the seller, who says she is his mother, there as his guest, with no rights at all. The buyer asks her nothing and completes. In fact she holds a substantial share under a trust.

Is the buyer bound by her interest? Three candidate answers. One: no, because he asked the seller about her occupation and was given a clear answer. Two: no, because her interest was not registered as a land charge before he completed. Three: yes, because he should have enquired of her himself, so he has constructive notice. Pause here if you want a moment.

The answer is three. Run the two-step. The seller was the only trustee, so the price paid to him overreached nothing. A beneficial interest under a trust is not a registrable land charge. So it is a question of notice, and he is fixed with what reasonable inquiries would have revealed.

Why the others fail. Option one asks the wrong person. Enquiry of the very person with an interest in concealing the answer does not discharge the duty. Option two treats a trust interest as registrable. It is not, and that is precisely why notice governs it.

Five things to take away. One: your client lost the cottage because nobody sent off a form. An unregistered land charge is void against a purchaser for value, and his knowledge is irrelevant. Two: charges are registered against names, not land, so search the correct full name, and get the certificate that is conclusive in your favour.

Three: know the four classes that matter. C one puisne mortgages, C four estate contracts, D two post-1925 restrictive covenants, F home rights. Four: overreaching needs two trustees or a trust corporation, and where it works, occupation and knowledge stop mattering. Five: where it does not work, and the interest is not registrable, you are on notice, and occupation gives notice of the occupier's rights alone.

That is Unregistered Land. Next time, Co-ownership.

Practise this topic with exam-style questions at sqe1prep.co.uk. This episode is for education and exam revision only, not legal advice, and we are not affiliated with or endorsed by the SRA or Kaplan.