Unregistered land: Land charges

Though the majority of land is now registered at HM Land Registry, some land remains unregistered. This is because no transfers or other dispositions of the land have taken place for many years, which would trigger the requirement for registration.

When land and property is transferred, the buyer is subject to the registered charges that affect the land – unless they are removed or cancelled by the time the transaction is complete. So what are land charges in the context of unregistered land, and where are they found?

Nature of land charges

Land charges are interests in land as set out in the Land Charges Act 1972 (LCA). These are protected by registration on the Land Charges Register, which is one of five different registers kept by the Land Charges Department under the LCA 1972.

Classes of land charge

Land charges are divided by the LCA into six classes (A to F):

Classes A and B

These consist of charges on land arising under statutory provisions and are uncommon.

Class C

This class is subdivided into four subclasses. Note that those charges which fall within Class C are registrable as land charges only if they were created on or after 1 January 1926 (or, unusually, if the right was created before that date but was itself transferred to some other holder at a later time).

Class C (i): Puisne mortgage: A puisne mortgage is defined by the LCA section 2(4), as a legal mortgage which ‘is not secured by a deposit of documents relating to the legal estate affected’. If the mortgagee does not take the deeds, the mortgage is a puisne mortgage and should be registered as a land charge.

Class C (ii): Limited owner’s charge: This is a land charge which arises when a tenant for life or statutory owner under the Settled Land Act 1925, or another person with a similar interest, has paid inheritance tax under the Inheritance Tax Act 1984. Such persons may have a right to charge the repayment of the tax against the land and that right is a land charge.

Class C (iii): General equitable charge: This class of land charge forms a kind of ‘dustbin’ category into which fall equitable charges on property not specifically excluded from Class (iii) itself. Charges excluded, and therefore not registrable as land charges, include:

  • any charge which is secured by a deposit of documents relating to the legal estate affected;
  • interests arising under trusts;
  • any charge which falls into another class of land charge.

Class C (iv): Estate contract: An estate contract is a contract to convey or create a legal estate in land, or any option to purchase a legal estate or any right of pre-emption in respect of a legal estate. This is one of the more common classes of land charge. Various statutes have added to this category of land charges; for example, the Landlord and Tenant (Covenants) Act 1995, section 20(6) provides that a request for an overriding lease may be registered under the LCA as if it were an estate contract.

Even where an option has been registered as a Class C (iv) land charge, it has been suggested that there is a need for further registration of an estate contract after notice has been given to exercise the option. However, it was held in Armstrong and Homes Ltd v Holmes [1993] 1 WLR 1482, that there is no need for further registration: the registration of the option gives sufficient warning to any other prospective purchaser of the estate, and any conveyance to such a purchaser will be subject to the estate contract which arises from the option.

Class D

Class D is divided into three subclasses:

Class D (i): Inland Revenue charge: This is a land charge in favour of the Inland Revenue when a liability to pay inheritance tax in respect of land has not been discharged.

Class D (ii): Restrictive covenants: This class includes any covenants or agreements which are restrictive of the user of land. An example would be a restrictive covenant under which pets must not be kept on the property, or restricting the height of border fences.

Class D (iii): Equitable easements: This class consists of any easement, right or privilege affecting land created on or after 1 January 1926, and which are equitable only. Equitable profits a prendre fall within this definition. Legal easements or profits are not registrable as land charges.

Class E

These are very rare and consist of annuities created before 1926 and which are not registered on the register of annuities.

Class F

This class consists of ‘home rights’ under the Family Law Act 1996 (as amended by the Civil Partnership Act 2004). These rights exist only in relation to couples who are married and to civil partners, and give a spouse or civil partner, who is not a co-owner of the matrimonial home, the right to occupy the home owned by the other spouse/civil partner.

Why are land charges important?

If the charge is not registered on the Land Charges Register, it will be void against certain classes of purchaser so it is important to find out whether any unregistered land you are dealing with is affected, and to what extent.

All these classes of land charge are important to a potential purchaser of unregistered land. When they and their solicitor investigate the land and its legal title, they may find that the property is less attractive, or perhaps valueless, because it is subject to a land charge that may not be removed or cancelled. Take specialist legal advice from experienced property solicitors.