Land Registration Act shape up could build on fraud fighting efforts and make conveyancing better for everyone

Property fraudsters could be stopped in their tracks by technical fixes of the law, according to the Law Commission.

The independent legal body say HM Land Registry has had to fork out close to £60million in indemnity payments because of fraud over the past decade.

As a result, it’s recommending measures to help prevent fraud from taking place in registered land, alongside wider technical changes to the law which will make conveyancing “faster, easier and cheaper for everyone”.

Law Commissioner Professor Nick Hopkins said:

“For many, the land they own is the most valuable thing they will ever have, so it’s important that the registration system provides clarity over who owns what.

“The Land Registration Act was a huge leap forward in land ownership, but 15 years on it needs to be refreshed to adapt it to the modern world and make things as efficient as possible.

“We’re recommending some technical reforms which will iron out the kinks, help prevent fraud and make conveyancing faster, easier and cheaper for everyone.”

A complete and accurate register

An effective land registration law is essential for everyone who owns land, whether the land is a home, a business or an investment. Land registration makes land ownership more transparent and more valuable, by recording and guaranteeing who owns the land and also noting significant rights that other people have over land.

85% of land in England and Wales is now registered, amounting to 25 million titles. The other 15% will be registered at the latest the next time it is sold or otherwise transferred.
Land registration in England and Wales is governed by the Land Registration Act 2002.

The Act repealed and replaced its predecessor, the Land Registration Act 1925, and accomplished a great deal of modernisation.

But dealings and disputes that engage the land registration regime can be complex and require expert advice. Uncertainty in the regime makes advising clients difficult, incentivises litigation, and increases costs for landowners.

In recent years, the landscape in which land registration operates has changed. External factors since the time of the 2002 Act include:

  • the long-term increase in incidents of fraud relating to registered land
  • technology not developing in the way that was predicted
  • the financial crash shaping attitudes to mortgage-lending and property transactions

In the face of these changes, it is more important than ever for the register to be accurate and complete.

Registration reform recommendations

Any inefficiencies or uncertainties in the land registration system can have a significant impact on the property market, and the wider economy. As a result, following wide consultation, the Law Commission is recommending changes to the Land Registration Act 2002.

Recommendations that tackle fraud include:

  • enabling HM Land Registry to set the reasonable steps that conveyancers must undertake to verify the identity of their clients, to help root out fraudsters
  • imposing a duty of care on conveyancers with respect to identity checks, based on the directions issued by HM Land Registry
  • if a conveyancer fails to meet his or her duty with respect to identity checks, ensuring that HM Land Registry has a right of recourse against the conveyancer to recover the amount HM Land Registry paid for the loss caused by the fraud. Conveyancers who follow the required steps won’t be responsible if fraud still happens

Other recommendations include:

  • preventing the register from being changed once a mistake has been on the register for 10 years, to make the register more accurate and final
  • requiring evidence of interests that people want to protect with a unilateral notice at an earlier stage, preventing disputes at the Tribunal
  • bringing mines and minerals onto the register
  • creating a new power to introduce electronic conveyancing that does not require completion and registration to happen simultaneously, to facilitate electronic conveyancing
  • beefing up the powers of Land Registration Division of the First-tier Tribunal (Property Chamber) – including an express statutory power to determine where a boundary lies, so that parties do not have to re-litigate the same issue

Alongside the recommendations the Law Commission has also produced a draft Bill to implement the reforms.

The Commission’s report has been welcomed by experts in the field.

Russell Hewitson, chair of the Law Society’s Conveyancing and Land Law Committee said:

“Effective land registration is essential for everyone who owns land and so we welcome the Law Commission’s recommendations to the Land Registration Act 2002 and look forward to the Government’s response to these recommendations and the accompanying draft Bill. In particular we welcome changes that would both improve fraud detection and highlight the threat of fraud. Overall these recommendations should improve the conveyancing process for home buyers and sellers, business owners and investors.”

Further information

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. Since then more than two-thirds of all reports have been accepted or implemented in whole or in part.

The project formed part of the Law Commission’s Twelfth Programme of Law Reform published in July 2014.

The report and draft Bill is published here: https://lawcom.gov.uk/project/updating-the-land-registration-act-2002/

|