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Reform of Land Registration To Stem Property Fraud

Lawyers At Irwin Mitchell Warn This May Lead To More Administration And Delays

30.07.2018

Karen Roberts, Press Officer | 0207 400 8714

The Law Commission has announced its proposals to reform the system of land registration to bring it up-to-date with the modern world, and stem the rise of property fraud.

The commission says that the Land Registry has had to make close to £60m in indemnity payments because of fraud over the past decade, driving up land registration fees for everyone. As a result, it is recommending measures to help prevent fraud from taking place in registered land, alongside wider technical changes to the law intended to 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 are recommending some technical reforms which will iron out the kinks, help prevent fraud and make conveyancing faster, easier and cheaper for everyone.”

The commission’s key proposals to tackle fraud include:

  • Enabling the 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 the Land Registry.
  • If a conveyancer fails to meet his or her duty with respect to identity checks, ensuring that the Land Registry has a right of recourse against the conveyancer to recover the amount 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, to preventing disputes.
  • Creating a new power to introduce electronic conveyancing that does not require completion and registration to happen simultaneously.
  • 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.

The proposals, which follow a wide consultation, involve changes to the Land Registration Act 2002. As a result, alongside its recommendations, the Law Commission has also produced a draft Bill to implement the reforms.

Expert Opinion
“The 2002 Land Registration Act has shown itself to have been over-ambitious in its expectations as to how electronic and online conveyancing would provide an instantaneous, digital and easy land registration system.

“The Law Commission’s latest recommendations are more grounded (pun intended) and limited in scope, focusing heavily on the fear of ever-increasing property fraud, and various other practical changes. The suggestion of another set of standards for conveyancers to adhere to however, is likely to increase administration and delays in the conveyancing process, and divert attention from the real objective of combatting fraudsters.

Modern conveyancers have many masters, all of whom wish to set new agendas, whilst claiming to make things simpler and cheaper. The Government should be wary of allowing the regulatory burden to increase without forcing all the interested parties to sign up to what is proposed."
Jeremy Raj, Partner