This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
Under s. 20 of the L. T. Act, 1897, a purchaser of land in a compulsory area is not under his conveyance, as there defined, to acquire the legal estate unless or until he is registered as proprietor.
Neither copyholds nor customary freeholds requiring admittance nor terms of years subsisting in them are to be registered under the Acts (e).
In the case of freeholds the Acts apply to the fee simple, legal or equitable (f), not to particular estates and remainders.
The compulsory provisions.
(d) For a treatise from the conveyancing point of view, see Cherry and Marigold's L. T. Acts, and see introductory chapter therein for a general explanation of the Acts ; for the official view, see Brickdale and Sheldon on the Acts ; for precedents under the Acts, see Prideaux, 19th ed.
(e) L. T. Act, 1875, ss. 2, 26.
(f) Ib. s. 5.
The compulsory provisions do not apply to incorporeal hereditaments or to mines and minerals apart from the surface, or to an undivided share, or to freeholds intermixed and indistinguishable from lands of other tenure (g).
Under L. T. Rules, 1903, rr. 68 to 70, the compulsory provisions are extended to sales and grants of leases and underleases, but there must be at least forty years of the term to run or two or more lives to fall in. Unless or until the lessee or assignee is registered as the proprietor the lease or underlease or the assignment operates only as an agreement, so that the lessee or purchaser does not acquire the legal term until he is registered.
Where money is to be borrowed to effect the completion of the purchase of the land or lease, difficulties occur unless the mortgagee is willing to rest satisfied with a registered charge (h), which does not pass any estate or term in the land, but merely gives on registration certain statutory powers of sale, of entry and of foreclosure (i).
Difficulties arise where money is borrowed to complete the sale or lease.
Except in simple cases or where the loan is to be temporary, or the security is exceptionally good, the practice has been to take a legal mortgage off the register as well as the registered charge, the object being to secure to the mortgagee the same rights as if the mortgage were of unregistered land. Thus though a registered chargee has a power (s. 25) to enter, still it is doubtful whether, as the reversion is not vested in him, he can, under Conv. Act, 1881, s. 10, oust a lessee under the power of re-entry in the lease, or oust a trespasser without bringing the legal estate into Court (k). Again, in the case of a possessory title the mortgagee may properly wish to have the protection of the legal estate against undisclosed incumbrances (/).
Practice to require a legal mortgage.
(g) L. T. Act, 1897, e. 24.
(h) This is executed under L. T. Rules, 1903, r. 96, before the land La registered.
(i) L. T. Act, 187.), ss. 2.5, 26, 27 ;
L. T. Act, 1897, s. 9 (2).
(k) Allen v. Woods, (1893) 68 L. T. 143.
(/) Capital and Counties Bank v. Rhodes, 1903, 1 Ch. 631 ; 72 L. J. Ch. 336.
The compulsory provisions prevent the purchaser or lessee from acquiring the legal estate or term before he has registered himself as proprietor, hence he cannot pass it by a deed executed before the date of first registration. The vendor will not part with his conveyance till the purchase-money is paid; a valid application, which in the case of possessory titles fixes the date of first registration, cannot be made till the deed is produced to the registrar (m).
The mortgage has to be stamped before registration so as to free the registered charge from duty (n), but as it cannot then pass the legal estate or term, this must either be got in by a separate deed after registration, as is the present practice in regard to freeholds, or the mortgage must be executed as an escrow, for production to the registrar, and only delivered and dated after the registration of the mortgagor's title (o).
Legal estate cannot pass before registration.
As already explained, the legal estate or term acquired with so much difficulty is even now capable of being defeated by a registered transfer for value by the registered proprietor, or by the registered proprietor of a subsequent charge, under his power of sale. Hence, it must either be protected by a restriction, or, in the case of a mortgage term, by a notice under s. 50 of the L. T. Act, 1875. The notice in the case of leaseholds works better than a restriction, because the notice makes the term an incumbrance subject to which the disposition takes effect, whereas the restriction prevents the registration of the disposition without the consent of the mortgagee, who, if he consents, must make a bargain to get back his estate after the disposition is registered.
The protection of the defeasible legal estate.
(m) L. T. Rules, 1903, rr. 18 and 22.
(n) L. T. Rules, 1903, r. 123.
(o) This is the present practice in regard to leaseholds so as to avoid the additional fees which would be payable under paragraph D. of the L. T. Fee Order, 1903, if the mortgage term were created by a further assurance and then protected under s. 50 ; and see infra. It has been suggested that the legal estate or term might be obtained, under the doctrine of estoppel, by a recital of the seisin or lease and of registration of the mortgagor; but as the mortgagor has an equitable interest which he can pass, and the deed would have to contain a recital which was known to be untrue to both parties, this suggestion hardly seems feasible.
However, a difficulty arises in connection with the notice under s. 50. To avoid having to pay a larger fee than 10s., the application for the notice must be delivered at the same time as the registered charge (p), and this charge is executed (q) before the date of first registration. Thus, the application for the notice has to be sent in before a legal term has been acquired, but as the registrar will accept a notice accompanied by a mortgage deed undated and executed as an escrow, the difficulty is thus surmounted, but the mortgage deed has to be produced again to the registrar when it has been dated and finally delivered, so that the date may be entered in the notice. The solicitor of the mortgagee must be given the conduct of the registration proceedings, so that they may not fall through.
Notice under s. 50 of the L. T. Act, 1S75, to protect a mortgage term.
On the purchase of freeholds, or on the assignment of a term, the compulsory provisions can be, and are, evaded by leaving the legal estate or term outstanding, and getting it in by the mortgage instead of by the conveyance or assignment; the mortgagor then is not bound to register till he takes a reconveyance.
Evasion of the compulsory provisions.
However, if the legal estate is not outstanding, it is not always possible to evade the compulsory provisions in this way. Thus, if the vendor is a tenant for life, selling under the S. L. Acts, or is a trustee selling under a trust for sale, or is a mortgagee selling under his power of sale, the legal estate cannot be vested in a trustee to await completion. On the grant or assignment of a legal term, if the lessee's covenants are onerous, there is practically no way of evading, for the lessee or person in whom the legal term was vested would remain liable to the lessor till he disposed of the legal term.
Evasion not always possible.
Where leaseholds within a compulsory area are sold, it is usual to provide that the purchaser shall be bound to register the term, otherwise the term would remain vested in the vendor, and he would, by reason of his privity of estate, continue to he liable to the lessor for the covenants in the lease.
Usual condition of sale in case of leaseholds in a compulsory area.
(p) L. T. Fee Order, 1903, par.D. (q) The form refers to the assignment or lease instead of to the title number, and thus shows on its face that it is executed before registration of the land.
To protect intended dispositions of land about to be registered, a priority notice (r) can be lodged to secure the proper priority of the intended transaction.
Priority notice in the case of land about to be registered.