Priorities

Comparison with Registry of Deeds

The general rules on priority which are applicable to transfers of property, leases, mortgages and the grant of other rights in property in unregistered title land are modified in relation to registered title. The Registry of Deeds registers the priority of deeds only and does not guarantee title to the property. In contrast, the Land Registry guarantees title.

The Registry of Deeds applies to deeds, conveyances, leases, mortgages and other dispositions of property and interests and rights in property. It covers most dispositions of property other than those by will.  Registration in the Registry of Deeds is not mandatory. However, non-registration may have consequences by way of loss of priority.

The Registry of Deeds legislation commenced in the early 18th century. It changed the fundamental principle that the earlier transfer, mortgages, etc. of a legal estate had priority over the later disposition. The registration of a deed gives it priority over another deed which is registered second after it.  This is usually the case, notwithstanding that the earlier deed may have been made first.

In effect, registration it the Registry of Deeds, gives notice of the earlier registered deed to the whole world. A person who takes a transfer or other disposition of property is effectively obliged to make a search in the Registry of Deeds against the seller’s name. He is fixed with notice and is thereby subject to first registered transfers etc, which he would have discovered,  if he had made the searches, regardless of whether he in fact, does so.

Land Registry Principles

Registration is not notice for all purposes.  It is necessarily notice of everything contained in the deed. It is notice primarily, of whether the deed is duly registered.

Registration applies only to documents.  The priority of a disposition of property without a document, including in particular an equitable mortgage by deposit, is not affected by non-registration. If it is accompanied by a note or memorandum, this may be registrable to protect priority.  Another example was the vesting of freehold unregistered title prior to 1959, in the heir at law.

As between to registered transfers, the first registered takes priority.  They take priority in accordance with the date of registration.  The date of execution is not the determining factor. A registered deed or transfer takes priority over an earlier or later unregistered, but registrable deed.

A may make a transfer of property to B and makes a further transfer to C, each of which doesn’t register.  If C transfers to D and D registers, D will have priority over B.  This appear to be so, if the title of the grantor of the registered deed would have been good, if the unregistered deeds were ignored.

If the subsequent purchaser who registered first,  knows of the earlier deed, it would appear in the wording of the Act that he nonetheless has priority over that earlier deed.  However, it has long been held, that such a person with actual knowledge of the earlier deed will not obtain priority, on equitable principles.  A statute may not be used as an instrument of fraud.

The above principle requires that the purchaser has actual notice of the earlier.  Actual notice to his agent or solicitor would suffice.  However, constructive notice i.e. that he, his agent or solicitor would have discovered the deed, if he had made the usual investigations, is insufficient.

In the case of a Land Registry title, registration of a transfer for value determines priority.  Actual notice does not displace it in the absence of exceptional circumstances.

Prior to the abolition of Land Certificates, a charge/mortgage could be created by deposit of Land Certificate with a lender.  In the absence of the Land Certificate, the registered owner could not deal with the land. Its production was required on the registration a disposition.   Accordingly, the absence of the Land Certificate could effectively block all dealing with the register, in the absence of a fraudulent application for a duplicate land certificate.

Certain types of interest affect registered title without registration.  In these cases, the general principles of priorities apply.

Overreaching

The Land and Conveyancing Law Reform Act 2009 provided for overreaching by purchasers of interests in certain cases, regardless of notice.   In these cases, the purchaser takes free from equitable interest, regardless of whether has had notice of them.  The rights of the party concerned attached to the proceeds.

The principle applied originally in the context of land subject to settlements. It now applies where are trustees of land.  There must be at least two trustees or a trust corporation where the trust land comprises  a strict settlement, a trust, including a trust for sale of land held for persons by way of succession, or  land vested in or held on trust for a minor,

Where it conveys the legal estate in land to a purchaser, the conveyance overreaches any equitable interest in the land so that it ceases to affect that estate or interest, whether or not the purchaser has notice of the equitable interest.

This provision does not apply to any conveyance made for fraudulent purposes of which the purchaser has actual knowledge at the date of the conveyance or to which the purchaser is a party.

It does not apply as against any equitable interest to which the conveyance is expressly made subject, which is protected by deposit of documents of title relating to the legal estate or legal interest.

Various Interests

In the case of a trust with a single trustee, it is subject to an equitable interest which is protected by registration prior to the date of the conveyance or is a burden which affects land without registration or would do so as such a burden if the land were registered land.

Where an equitable interest is overreached under this section it attaches to the proceeds arising from the conveyance and effect shall be given to it accordingly.

In the case of a charge/mortgage, that is security for present and future advances, it has a priority for the original advance and later advances made up to the date of actual notice to charge of the subsequent charge.

A transfer of registered land which is not for value is subject to all unregistered rights affecting the property.  The same principle applies to a judgment mortgage.  However, a transfer for value takes priority even over prior transfers for value, which are not registered first.

A mortgage by deposit of title deeds is not registrable unless accompanied by a note or memorandum of its terms.  In this case, it is registrable and must be registered or may lose priority.