Transcripts of interviews with practitioners of land law

Interview with Mr Sahib Sehrawat, Chief Land Registrar

Q: How many titles still have to be registered?
A: At the moment we have about 22 million titles registered. As a rough estimate there are about 3 million more. In terms of area, we have covered 67% or so of the country so 33% still remains unregistered. These areas are large, for example, Salisbury Plain. We are moving very fast now because, as the housing market is going down and our work dealing with land that is already registered is decreasing, we are extending our work to voluntary first registration.

Q: Does the Land Registry have any plans for 100% registration by making it compulsory for all unregistered titles to be registered within a certain period?
A: We will never get 100% registration as such because we don’t include footpaths and roads, for example, so the definition of comprehensive registration refers to land which is occupied. We reckon that, the way we are going, by 2011-12 we should be about 90% there because we are now using approximately 2,000 staff in registering land for the first time. We submit the Land Registry Annual Report and Accounts every year to the Secretary of State for Justice and the Lord Chancellor. We inform the Lord Chancellor every year about the geographical coverage. The Land Registry has not fixed a target date for registering all the land in England and Wales. I think that persuasion is the best way rather than legislation for achieving comprehensive geographical coverage. We are running a national campaign promoting the benefits of voluntary first registration. The arguments in favour of complete geographical coverage are compelling. In general, it is not satisfactory to have two national systems of land ownership running side by side. There seems no justification for allowing the very small minority of owners whose properties are neither registered nor the subject of transactions to preserve this secrecy indefinitely and so prevent full national coverage of the register.

Q: How do you encourage voluntary registration?
A: We’ve got the Register Development Group for this. We do a lot of advertising, we go through the Farmers Union and attend agricultural fairs and we contact the Department for Environment, Food and Rural Affairs. It’s easy also for us to go to Local Authorities, Government departments such as the Ministry of Defence and the utility companies. For private land we don’t go from house to house to house because some people get offended so we advertise in the local papers. We have our stand at fairs and exhibitions and we advertise the benefits of registration. We contact firms of solicitors locally and nationally so that they can contact their clients.

Q: How much does it cost to voluntarily register property?
A: There is a discount of 25% on the fee. The whole idea is that once we have brought the land onto the registered system, any further transactions provide further fees. We do subsidise first registration because it’s more intensive work than dealing with land that is already registered - that’s straightforward - so it’s a balancing act.

Q: When unregistered land is registered for the first time, what are the common problems that lawyers come up against?
A: The first one is the root of title because you only get 15 years’ root of title (page 46). The second problem is identifying the exact extent of the land because the plans attached to old deeds were for identification only. They were not to scale, they were not complete and the boundary might have changed, so the problem for us is how we best prepare a filed plan.

Author’s notes: Old unregistered conveyancing plans can be a nightmare as they can be simply a rectangle coloured pink with a road name and a north sign. The Land Registry provides Ordnance Survey plans showing the boundaries of each property (although these are not said to be an accurate determination of the boundary as there is an additional procedure to be gone through to determine the exact boundaries (page 99)). However, the problem is that the Land Registry may find it very difficult to plot the boundaries of the property with a very old plan which does not accurately reflect the position on the ground. If there is a missing deed that can also cause a problem.

Author’s notes: A missing deed could contain missing covenants (where a covenant is a promise undertaken by the owner of the land to do or not do certain activities on the land, for example, not to keep animals).

Q: Are there a lot of problems with first registration?
A: I wouldn’t have said so. Because of our experience we can try to overcome the defects - that’s the whole idea of registration. We ignore the minor defects. We can also look at adjoining registrations so we have information as to what is happening in that area. If there’s an issue over an easement (a right over someone else’s land like a right of way) or a covenant and you have three titles, then it is likely that the one in the middle is part of the same scheme. We have a lot of information, which the practitioner doesn’t have. The caseworker puts this information together and tries to create a register that is sensible.

Q: What happens when someone turns up and asks you to register the land for the first time but the title deeds have been lost?
A: We’ve got different policies. If the deeds have been lost in the custody of a solicitor, bank or building society, we get a statutory declaration from them of how and when the deeds were lost. We do give proper weight to those considerations and we try to reconstruct the register. If we can’t, we give possessory title and make a protective entry (because there might be interests over the land that we don’t know about) stating that we haven’t seen the conveyance. If someone turns up later on with the title deeds, we are not exposed to an indemnity claim because we have only given possessory title and possessory title is subject to any outstanding interests. This situation does happen. One case was in London where an elderly person had died. The property was let at the time and the tenant knew everything that had happened in the family. He made an application to us claiming that he had lost the title deeds. He was able to provide us with the utility bills, insurance information and so forth. He said that he bought the property through a solicitor but that the solicitor had been struck off, which we checked with the Law Society. He had done his homework! We gave only possessory title. He got an indemnity policy for possessory title and sold the property within two months for half a million pounds.

Author’s notes: The indemnity policy is an insurance policy given by a defective title insurer which would indemnify the owner of a property and his or her successors in title (the people who inherit the land or buy it from him/her) against a particular claim, i.e. by the true owner of the property or by the person with a benefit of a covenant, for example. The indemnity policy is taken out to cover specific defects in title and depending on the risk substantial premiums may be payable to the insurer.

By this time the real owners had inherited the property, had obtained probate and were in possession of the title deeds. They applied for registration only to find that the tenant was now the registered proprietor. They applied for rectification although we did not have to pay any compensation because we had given possessory title only to the tenant. We are more careful now on lost deed cases. I had a case about 20 years ago to do with a cottage near Winchester. An elderly person came to the Weymouth Land Registry and gave a statutory declaration that the title deeds were lost. In that case we gave absolute title because we were satisfied that he was telling the truth. He then sold the property to a builder. The builder’s bulldozer went in until the neighbours told him that the real owner lived in Scotland. The real owner applied for rectification in that case and we had to pay a full indemnity to the builder because he had bought in good faith and we had given absolute title. We never found the fraudster.

Q: I remember you had a good story about a Saudi princess here as well…
A: That’s a case when we had to pay compensation. It was in the early 1980s when a princess bought a mansion in Kent outright without a mortgage. She had ideas on renovation but went back to Saudi Arabia for a couple of years. A fraudster saw that nobody was living in the property. He took a copy of the register for the property and saw that there was no mortgage. He then went to a firm of solicitors and said ‘I’m a builder. I have completed the renovation work on the property and I’m owed a hundred thousand pounds so could you please take proceedings’. Proceedings were taken in the High Court and the fraudster gave all sorts of declarations and affidavits and in the end he won power of sale under the Law of Property Act 1925. He immediately auctioned the property, which was bought by a developer who got planning permission to turn it into a hotel. When the princess returned to England she got the shock of her life. The Land Registry couldn’t rectify the register because the developer had bought in good faith so the Land Registry had to pay £3.5 million compensation and the cost of both sides’ solicitors.

Q: Do these cases come up a lot?
A: No, not a lot. Mostly lost deeds are genuinely lost in solicitors’ custody or else they are destroyed in fire or flood. In some cases where they are stolen there is a police report. In the majority of cases it is not a problem but, where the fraudster is committed to obtaining the land, it is one of the vehicles they use. We have tightened up the procedure now quite a lot. We now need ID, which we never used to.

Q: Do you catch up with the fraudsters?
A: Yes, we do now. The problem was that the police weren’t interested and, initially, some of them didn’t have the relevant experience. We approached Scotland Yard and the Economic and Specialist Crime Unit and now we work closely with a fraud squad unit to prevent fraud.

Q: What are other problems that you face?
A: Problems occur if a client has created a second charge (mortgage) but hasn’t told his solicitor and the solicitor has failed to make an official search or failed to lodge an application within the priority period. The solicitor also has to deal with Stamp Duty Land Tax, which can again cause problems.

Author’s notes: Just before a buyer’s solicitor completes the purchase of a property he or she takes out a search of the land register with priority. This search basically confirms that there have been no additional entries to the register since the date the office copies were seen by the buyer’s solicitor, i.e. no new covenants or mortgages created. The solicitor gets a 30 working day priority period then to register the application he or she wanted to protect – that will be the purchase by the client where there is no mortgage or the first mortgage to the bank where there is a mortgage. Failure to register within this period will mean the period expires and someone else can make an application to enter something on the register such as a second charge, a transfer, covenants etc. It is therefore a fundamental rule of practice to diarise and register in this period. You can’t extend that period automatically unless the Land Registrar agrees that you have a good reason but you can put in a new search to take effect from the end of the first period. Even so, this might rank behind another search someone has tried to make, which is a risk. The Stamp Duty Land Tax (SDLT) point relates to the main reason it takes so long to register at the moment – which is that you need a certificate confirming payment of SDLT in order to register the property. However, the Land Registrar will not cancel your application at the end of the priority period if you have explained the reason for the delay – it is a question of being organised but if you let the period expire you are, of course, at risk.

We also face mortgage fraud. Organised mortgage fraud takes many forms, from the overvaluation of properties to bogus application based on false identity documents. Mortgage fraud is concentrated in pockets around the country, with London being the hot spot (46% of cases).

Q: What percentage of people do their own conveyancing of registered land?
A: We haven’t got any exact figure but very few. If they need a mortgage then they can’t do their own conveyancing because they can’t give a Certificate of Title to the lender.

Author’s notes: Where a bank lends money against a property they require a Certificate of Title to be given to them by a solicitor. That Certificate basically confirms that the property has a good and marketable title and this is a pre-requisite before the bank or building society will lend money. The Certificate can only be given by a qualified solicitor from a firm which is approved by the lending bank. If a buyer uses a solicitor’s firm which is not approved by the lender, the lender will instruct a different firm of solicitors to act in the mortgage transaction. In some circumstances (such as a commercial lending situation) the bank will instruct its own lawyer to provide a Certificate of Title and will not rely on a Certificate given by the buyer’s solicitor – but in residential transactions usually the buyer’s solicitor will also act for the lender.

A Certificate of Title is also needed because the mortgage company need an indemnity (insurance) policy

Author’s notes: The question of indemnity insurance is relevant because the bank will rely on the solicitor’s professional indemnity insurance to pay out in the event that the Certificate is wrongly given. A private individual doing their own conveyancing will not be able to offer the same professional indemnity insurance cover in the event of a defect in title.

Therefore, the people who can do their own conveyancing are limited to those who don’t need a mortgage.

Q: How is electronic conveyancing progressing? What are the main problems in its implementation?
A: Electronic conveyancing is on track. Last year we had a trial on Chain Matrix at Portsmouth, Fareham and Bristol for the year.

Author’s notes: Chain Matrix is the name for the conveyancing process the Land Registry intends to offer. The idea is that the whole of the transaction from start to finish will be recorded by steps on the land registry i.e. contract issued/exchange/completion etc. The transfer of money will also take place via the website. Because the Land Registry is made aware of the terms of the sale early on (i.e. the buyer’s details and any new covenants to be created) the register should be updated on the day of completion.

We learnt quite a lot from the trial because practitioners were involved. We have postponed the Chain Matrix now because we’re moving forward step by step rather than with one ‘big bang’ but electronic lodgement has already started. The Land Registry Board made the decision to focus resources on electronic discharges, charges and transfers – thus automating our core business of registering land as the priority in the e-conveyancing programme. The Land Registration (Network Access) Rules 2008, the Land Registration (Electronic Conveyancing) Rules 2008 and the Network Access Rules 2008 are all now in force. We have to make sure that the fraudster is not one step ahead and here the problem is in the transfer of funds, which can be a very large sum, so we’re leaving this to the end. It is likely that it will take until the middle of the next decade to complete full e-conveyancing.

Q: Is it a major challenge dealing with people electronically?
A: There are issues over liability if something goes wrong. The Land Registry is committed to delivering products that will bring transparency to the conveyancing process and will facilitate the speedy transfer of funds. There are people who deal with the Land Registry, but have no Internet access. Those people without Internet access could use public libraries offering free Internet access or Internet cafes. The Land Registry may provide the use of a PC in its own premises if there is a customer demand. Security will be a major challenge. The security infrastructure has been designed to conform to H.M. Government Cabinet Office security standards.

Q: Will fraud increase when you use electronic conveyancing?
A: I think it will probably decrease because the conveyancers who wish to undertake electronic conveyancing will apply for an access agreement that allows them to use the conveyancing services that will be offered by the Land Registry. The Network Access Agreement will be granted to the conveyancing firm or to an organisation that has a qualified conveyancer working for it, or to an individual sole practitioner.

Q: Will people try and become the licence holder in order to commit fraud?
A: We will vet them very carefully. To get a Network Access Agreement, a conveyancer will need to complete an application form and return the form to the Land Registry, together with a signed Network Access Agreement. Any breach of the terms of the Agreement will be treated as a serious matter. In the case of a serious breach the Registrar may terminate the Network Access Agreement without notice.

Q: What are the main challenges facing the Land Registry at present?
A: At the moment the downturn in the housing market is the main challenge and it’s a continuing main area of concern for us because not enough work is coming in for our highly skilled staff.

Q: Is this because of the decline in the housing market?
A: Yes, that’s definitely affecting us especially in the northern office more than the southern office. We don’t want to close any offices and we don’t want to make people redundant. We want to employ them because it takes at least 12 to 18 months to train staff to be part of a highly skilled workforce. The challenge to us now is to bring the remaining unregistered land on the register. The challenge used to be too much work coming in. Now it’s the other way round. Voluntary first registrations is the only category holding steady as a result of Register Development activity.

Q: Last time we met I remember you were wondering how to get work done in time!
A: It’s gone full circle!

Q: How many hits does the Land Registry website have in a month?
A: By way of illustration, during September 2008 the site had over 236,000 visitors, averaging almost 20,000 per day. As part of our drive to make property transactions easier for all, we have increased electronic access to, and provision of, services for all our customers. This includes our Land Registry Direct service for business customers, and Land Register Online which allows the public to view individual registers and title plans via the internet. The total number of applications being processed through Land Registry Direct exceeds 1.8 million per month. Land Register Online continues to grow in popularity with almost 100,000 downloads being requested each month.

Q: Has the Land Registration Act 2002 reduced the number of claims for adverse possession of registered land?
A: It has. Gone are the days when you can just go in occupation of a house and sit there and say ‘it’s mine’. That’s not going to work any more under the 2002 Act.

Q: Following Stack v Dowden (2007), is anything being changed to ensure that when land is conveyed to two or more people that their beneficial interest is stated on the transfer?
A: We are definitely very interested in changing our form TR1. We had a word with the Law Society and they said they need proper consultation. It’s not as straightforward as we think because, [for example,] if a couple declare the beneficial interest as 80%/20%, it could change the following week to 70%/30%. There will then be an obligation to update the register and, if this doesn’t happen, the issue of negligence arises. The arguments need proper consideration so we will issue a consultation document and take it that way. It makes sense because, at the purchase stage, people know the extent of their interest, later on they forget and things do change. The beneficial interest creates more litigation than anything else in property law.

Q: What type of title does the Queen have to the land that she personally owns, such as Sandringham? Is her personal land holding registrable?
A: The answer is in section 79 of the Land Registration Act 2002. Section 79 provides for voluntary registration of demesne land by allowing Her Majesty to grant to Herself a freehold estate out of demesne land. The grant is voluntary, but a freehold estate is only to be regarded as created if the grant is registered. There is no requirement to lodge any title deeds and documents other than the grant itself. If the grant is not registered, the land will remain demesne land. Demesne land is defined in section 132 of the 2002 Act as land belonging to Her Majesty in the right of the Crown, which is not held for an estate in fee simple absolute in possession. It is neither a freehold nor a leasehold estate in land and so in the past has not been capable of registration. Section 80 of the 2002 Act provides for compulsory registration of grants of freehold and leasehold estates out of demesne land by Her Majesty other than to Herself. Incidentally, neither Sandringham Estate nor Buckingham Palace are registered.

Q: What is the most frequently asked question of the Land Registry by the public?
A: I think the public mostly ask about their fencing. You have a high wind, the fence has come down, who is responsible? They want to know who is going to pay for it but we don’t know. This is a problem in that although there may be a covenant, in the majority of cases it doesn’t say who will maintain the fence. The second frequent question is ‘How can I find out who owns a property?’

Q: What do you recommend people do?
A: If it’s to do with fencing, we tell them it might say something in the unregistered title deeds. Otherwise we advise them to speak to the next door neighbour or the Citizens Advice Bureau. About finding out who owns a property, we tell them to go to www.landregisteronline.gov.uk. Alternatively, they can write to the Land Registry.

Q: What is the most frequently asked question of the Land Registry by professionals?
A: Professionals ask lots and lots of questions. When we got the Land Registration Act 2002 and the law changed, we went out and gave lectures on it. We are not allowed to give legal opinion although we can give information about the Land Registration Act practice and procedure. Sometimes questions about practice and procedure go too far but we take the view that if we resolve the problem there and then, it helps us when further requests come in on the same case because we have already seen the background. So we do help professionals quite a lot, for example in the approval of statutory declaration, approval of a transfer and approval of leases. We have a very helpful enquiry line so people ask all sorts of questions. The whole idea is that we help the professional public so that, at the end of the day, when the application comes in it’s not defective. It costs us more when the application is defective because we have to deal with it and the correspondence backwards and forwards costs money. So, if we can resolve issues by telephone or correspondence beforehand, that’s much better.

Q: What the most common cause of complaint about land registration?
A: I think what we get from professionals now is that we deal with their application too quickly! The reason is that we want to register land on the same day we receive the application. If we can’t register it on the same day, we raise a Requisition.

Author’s notes: When there is a reason the property cannot be registered on the day the Land Registry receives the application (such as failure to provide evidence that a mortgage has been discharged (paid off) or failure to have a transfer signed properly etc.), the Land Registry write to the applicant for registration (via their solicitor) and ask for this to be remedied. This request is known as a Requisition.

If we raise a Requisition, we give the solicitor 21 days to reply. If he doesn’t reply, we send him a warning - ‘you must reply within two weeks or your application will be cancelled’. When he doesn’t do anything, we cancel the application. The professionals complain because they don’t have time to deal with the Requisition, for example if they are a sole practitioner and have been away on holiday at the time. With electronic conveyancing there will be a different culture. We don’t want to raise any Requisitions because, once the money has been transferred on completion, registration will take place. We need to deal with the issues before completion and a chain manager will be appointed to monitor the chain throughout. If we spot problems earlier, the solicitor can also increase his fees to deal with any defect in title rather than discovering that, having agreed a conveyancing fee of £500, it has cost £2,000 to resolve the problems that we have raised.

Q: What are the best features of the Land Registry?
A: There are two things which make us great. First, we do not take money from Parliament. We are self-sufficient. In terms of funding we receive funding from the conveyancing of land but we also receive funding from searches as to who owns land. We are also very active in helping other countries implement a system of land registration and we send our staff out to help in this way. We have always managed to create a surplus year after year so our finances are sound. The workforce is committed, we have never made anybody redundant and, yes, we have responded to the various challenges. Second, we provide an excellent service. Our customer survey has given us 98% excellent service. Our Cabinet Secretary, who is the head of the Civil Service, did his own survey and we came number one, so it’s a success story. It’s a very committed workforce - we’re very customer orientated. If we make a mistake we put our hands up and there’s an indemnity. We’re not hiding anything. The Freedom of Information Act 2000 helps here and the Land Registration Act 2002 itself helps by allowing things to be open. We’ve got the new rules which we wanted, and we are moving towards electronic conveyancing, so it’s going to be a very modern system. We’ve got an international unit and we’re helping a lot of other countries to establish a land registration system. It’s very satisfying when people say that the Land Registry of England and Wales is a leader. We’re also involved with Eastern Europe, the Middle East and Africa and that’s when people recognise how good we are, how efficient we are. We are also very involved in the European Land Information System (EULIS). This is a system working towards a single European property market and cross-border lending. Information will be available online as to how conveyancing and registration systems work in the different member countries (currently England and Wales, Republic of Ireland, Scotland, Austria, Finland, Lithuania, the Netherlands, Norway and Sweden). So, if you wanted to buy a property in the Netherlands, you could find out who owns it and obtain an official copy of the register together with an explanation of its terms.

Thank you.