Give me my property back! When you find out somebody else owns “your” property


Author: Nick Wood


The problem

A registered proprietor of land owns the legal and beneficial interest to that land. When this principle was conceived it was quipped that “instead of the citizen telling the state who owns the land, the state will henceforth tell the citizen”. You may not consider this troubling on the face of it. However, picture the following scenarios:

  1. You have been granted a lease and are in occupation of the property. You therefore assume a leasehold estate is yours. You then discover that HM Land Registry have, by mistake, registered somebody else as the registered proprietor of your leasehold title.
  2. You have bought a freehold estate and let your property to an occupational tenant. You then discover that the tenant has forged your signature, sold the freehold estate to itself and then registered itself as the proprietor of the freehold estate.
  3. Scenario 2 above, but in addition the tenant has now sold the freehold estate on to a third party who is registered as the freehold owner and then takes occupation of the property.

In these circumstances, you are likely to argue that the registered proprietor should not own the legal or beneficial interest in what was or should have been your estate. In short, to borrow from the title, you will want your property back!

The legal background

Section 58 of the Land Registration Act 2002 vests legal and beneficial title to land in the registered proprietor. The title conferred on a registered proprietor by this section is, in a sense, morally blind. Its only weakness will be defined wholly by any statutory provisions which soften it. Fortunately for you in the scenarios above, Schedule 4 of the Land Registration Act 2002 (Schedule 4) can act as something of a white knight in that it permits the Land Registry or the courts to alter the register in certain specified circumstances. To see how and when Schedule 4 might operate, I will take each of the three scenarios above in turn.

Scenario 1

Schedule 4 entitles the Land Registry or the courts to alter the register to correct a mistake. Indeed, the Land Registry must do so unless there are exceptional circumstances that justify not doing so.

“Exceptional circumstances” have been understood by the courts to describe circumstances which are unusual, special, or uncommon. However, the court is not just looking for exceptional circumstances. It is further looking to whether such circumstances justify not altering the register. In weighing this up, the court will consider the effect on both parties of allowing or refusing the alteration and will consider whether the registered proprietor was aware that there was likely to be a dispute about the title.

Given that this scenario appears to be a straightforward mistake and does not appear to present any exceptional circumstances that would justify not altering the register, the Land Registry or the court will alter the register on your application and you will be registered as the proprietor. Once the register has been updated, you will own your leasehold estate and not be regarded as a trespasser any more.

Scenario 2

The registrar or the courts cannot alter the register to correct a mistake if that would prejudice a registered proprietor in possession. Initially this poses a problem as the tenant here is a registered proprietor in possession. However, Schedule 4 rides to the rescue again by carving out of this principle situations where (a) the proprietor has by fraud or lack of proper care contributed to the mistake and (b) it would for any other reason be unjust for the alteration not to be made. Situation (a) is clearly the case here and in such circumstances the registrar must correct the mistake unless there are exceptional circumstances that justify not doing so. Exceptional circumstances are construed in the same way as described above.

In a recent case, Farakh Rashid v Mohammed Rashid [2017] UKUT 332 (TCC), a registered proprietor in possession who had obtained their estate by fraudulent activity argued that there were exceptional circumstances that justified not altering the register because they had been in occupation since 1990 and had acquired adverse possession. The judge in this case gave short shrift to this argument, saying that it was “nonsense” to regard a registered proprietor with statutory title as having an additional title by possession. It is not possible for a registered proprietor to be in adverse possession, whether or not possession was unlawfully obtained. As such, there were no exceptional circumstances that justified not altering the register. In Scenario 2 then, even though the registered proprietor is in possession and no matter how long they have been in possession, the Land Registry will alter the register on your application and you will be registered as the registered proprietor. Once the register has been updated, you will own your freehold estate and will be able to legally take possession of the property again.

Scenario 3

Applying the principles we have discussed above, we come to Scenario 3 and find it a little more complicated. As the third party buyer is a registered proprietor in possession, the registrar will only be able to alter the register to give you what was your estate if it can firstly be shown that either (a) the third party buyer has by fraud or lack of proper care contributed to the mistake or (b) it would for any other reason be unjust for the alteration not to be made. If this can be shown (and situation (b) is arguable), you will then further need to convince the Land Registry or the courts that there are no exceptional circumstances that justify not altering the register. Remember that the registered proprietor being unaware that there was likely to be a dispute about the title is a feature of such exceptional circumstances. Each of these cases will turn on its facts.

Conclusion

Whether or not you are successful in your application to alter the register, you should note that the Land Registration Act 2002 supplements Schedule 4 with a scheme to compensate those who suffer loss because of a mistake in the register. This may be an avenue you would wish to pursue in any of the above scenarios.

If your estate in land is registered and you would like to know who the registered proprietor is, you can obtain this information online for a small fee from the Land Registry. Once you have confirmed that you are the registered proprietor of your estate, we would advise you sign up to the Land Registry’s free “Property Alert” service which will notify you each time there is significant activity on the register relating to the property you are monitoring. This should help you protect your property from fraud.

If you are surprised by the name of the registered proprietor of “your” land, or if you receive an alert notifying you of fraudulent activity on your property, you should obtain legal advice. Fladgate would be happy to offer such advice should it be required.

Nick Wood, Associate, Fladgate LLP (nwood@fladgate.com)

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