Property Law – New Additions

By : Michelle Stevens-Hoare

Probably the most dramatic change to the law made by the Land Registration Act 2002 (“the Act”) is the introduction of a new system by which the ability of squatters to obtain property rights is determined. The provisions dealing with adverse possession in the context of registered land are contained in s96 to 98 of the Act and Schedule 6. The draft Land Registration Rules have now been published.

The Act disapplies the s15 of the Limitation Act 1980 for registered land. Once a case falls to be considered under the new regime no period of adverse possession alone will extinguish the documentary owner’s title.

The Act introduces a new scheme that incorporates an early warning system for registered owners of property. Once a person has been in “adverse possession” for at least 10 years he will be entitled to apply to be registered as proprietor of the property concerned. Such a person is not entitled to apply if he is involved in possession proceedings or a judgment for possession has been made against him within the last 2 years. The Act provides that where someone is otherwise entitled to apply under the new adverse possession regime an order for possession against them ceases to be enforceable after 2 years. The meaning of “adverse possession” for these purposes is the same as under the current law. The Registrar is required to give the registered proprietors of the estate, any charge, any leasehold interest in the same, plus such other persons as the rules provide, notice of the application. If someone given notice raises an objection to the application , then subject to three conditions/defences, the application will fail. If there is no objection the applicant can be registered as proprietor.

Once the first application has been made and failed the owner has 2 years in which to recover possession or at least commence possession proceedings. If no steps have been taken the applicant can reapply and his application will be granted.

Once an application has been granted whether first or second time round, and the applicant has been registered as proprietor, the original owner’s title is extinguished.

It follows the effect of the new regime is hugely beneficial to land owners since any registered owner who keeps their contact details at the registry up to date is given a 2-year early warning, so that they can easily (and cheaply) avoid losing their land. However, the adverse possessor faced with an inactive or lost registered owner could now secure the land after only 10 years.

Defences

A first application will be successful despite objection if one of three conditions/defences are satisfied.

First, if the application can raise an equitable estoppel, such that it would be unconscionable for the registered proprietor to seek to repossess, the application will succeed. Second, if the applicant can establish he is, for some other reason, entitled to be registered as a proprietor he will succeed first time round. The third defence is designed to protect those innocently involved in a boundary dispute from being cut out by the new scheme

• The land that is the subject of the application is adjacent to land belonging to the applicant;
• The exact line of the boundary has not been determined;
• For at least 10 years of the period of adverse possession ending on the date of the application, the applicant reasonably believed that the land belonged to him; and
• The estate to which the application relates has been registered for at least 1 year.

It follows that the neighbour who deliberately moves a boundary to his advantage will not be able to escape the 2 year early-warning period. However, that person’s successors who have been in situ for 10 years may well be able to do so.

Unregistered land

The new regime does not apply to unregistered land so long as it remains unregistered. In those circumstances the current law of adverse possession continues to operate. Where land is registered for the first time the new registered proprietor will not be affected by any interest acquired by adverse possession unless:-

• It operates as an overriding interest for the purposes of first registration (Schedule 1); or
• The new proprietor has notice.

The stated policy behind those provisions is that someone who has acquired title by adverse possession, extinguishing the original owner’s title, would lose his own title if he was not actually occupying the land when the original owner purported to sell the property to a “unwitting” third party.

Transitional Provisions

Schedule 12 of the Act contains various transitional provisions. Amongst those provisions is one that includes, for a period of 3 years, a right acquired under the Limitation Act in Schedule 1 and Schedule 3 of the Act; the lists of overriding interests for the purpose of first registration and dealings with registered property. It follows the adverse possessor of registered land, not in occupation, will nevertheless be protected in the event the property is registered during the first 3 years after the Act’s implementation.