Minister McDowell publishes Land and Conveyancing Law Reform Bill 2006

New law will facilitate on line conveyancing and reduce costs

The Minister for Justice, Equality and Law Reform, Mr Michael McDowell, T.D., has announced that the Government has approved publication of the Land and Conveyancing Law Reform Bill 2006.  The Bill was presented in the Seanad today (9th June) and will be debated at Second Stage on Tuesday, 20 June.

The Land and Conveyancing Law Reform Bill is the outcome of a joint law reform project between the Department of Justice, Equality and Law Reform and the Law Reform Commission (LRC). Its primary purpose is to modernise land and conveyancing law by repealing about 150 pre-1922 statutes - the earliest of which date from the 13th century - and replacing them with provisions more suited to modern conditions.

The Minister said "This Bill is without doubt the single most comprehensive and far reaching reform of the law in this area since the foundation of the State.  Removing archaic laws dating back to the Normans and replacing them with provisions more suited to modern conditions will reduce delays encountered in buying and selling property as well as the costs involved.  The Bill will also remove outdated references to feudal tenure and Crown lands which can have no place in this State's land and conveyancing code."

The project is part of a larger reform programme which includes establishment of the Property Registration Authority and reform of the law relating to registration of land (provided for in the recently-enacted Registration of Deeds and Title Act 2006) and which has as its ultimate goal the implementation of a system of electronic conveyancing of land.

The Minister said "My objectives in bringing forward the Bill include:

  • updating the law to accommodate modern conditions;
  • simplification of the law to make it more easily understood and accessible; 
  • simplification of the conveyancing process, particularly the procedures involved, in order to reduce delays and associated costs;
  • promoting extension of the registration of title system in the Land Registry; and
  • facilitating the introduction of eConveyancing of land as soon as possible."

 

Main Provisions of the Bill

In general terms, land law deals with different types of ownership of land, and the rights relating to each type, while conveyancing law is more concerned with the transfer and disposal of land and rights relating to land, e.g. by sale, lease or mortgage. In many respects, they are two sides of the same coin.  Our current land law and conveyancing law is a complex mixture of old statutes, common law dating back to the 13th century and equity. Successive layers of statute law and judge-made rules have resulted in an unnecessarily complex code, much of which is difficult to apply to modern conditions. There is general agreement therefore that the law needs to be modernised in order to meet the needs of a vibrant market economy in the 21st century.

The main provisions in the Bill are as follows:

 

Ownership of Land

The Bill provides for radical and far reaching changes.  It replaces many antiquated provisions dating back to the Norman conquest of England in the 11th century, including, in so far as it survives, the feudal concept of 'tenure' which meant that all land was held from the Crown. The concept is clearly inappropriate in a democratic republic with a market economy. The 'fee tail' estate, whereby feudal landowners could attempt to ensure that their lands passed down through successive generations of their family, is also to be abolished. The same applies to the unusual form of ownership known as the 'fee farm grant' (a leasehold on which rent is payable) which became popular in Ireland in the 17th century when land was confiscated from the native owners and 'planted' with settlers from England and Scotland.

 

Future Interests

It abolishes a series of complicated rules relating to future interests in land, including the rules against perpetuities and accumulations. A "future interest" arises when land is given to a person at some future date, e.g. to an individual on reaching a certain age; or to a named individual's first child. In future, these interests will be protected by trustees.

 

Trusts of land

The Bill will radically reform the law in relation to family settlements of land by conferring full powers on trustees to deal with the land. Trustees will be subject to this legislation and the general law of trusts. The new provisions will replace the Settled Land Acts 1882 to 1890 which are confusing and no longer appropriate to modern conditions. A procedure for the resolution of any disputes that may arise between trustees, or between trustees and beneficiaries, is also provided for.

 

Powers

It simplifies the law in relation to the exercise of powers relating to property. This arises when, instead of allocating property to a specific beneficiary, a person gives another person the power to select from a group of people, e.g. family members, who should be allocated the property and in what shares.

 

Co-ownership

It will simplify and modernise the law relating to co-ownership of land, e.g. where a group of individuals, or family members, own a house or other land. This has become more common in recent years. It gives the courts wide powers to deal with disputes between co-owners and it will also enable one of the co-owners to obtain a court order to resolve a difficulty which the other co-owners are unwilling to resolve.

 

Appurtenant rights

The Bill clarifies and simplifies the law relating to rights which a person may have over another person's land, e.g. a right of way. It also contains new provisions relating to party structures, i.e. walls which divide adjoining but separately owned houses or other buildings, and the enforcement of freehold covenants relating to land.

 

Contracts and Conveyances

The Bill provides for simplification of the existing, complicated set of rules relating to the conveyancing of land. The ultimate objective of reform is an eConveyancing system which will allow the on-line registration of land. This will both reduce delays and the costs arising from operation of current rules.

 

Mortgages

The Bill also contains proposals to simplify the law relating to mortgages, especially mortgages on unregistered land. It clarifies the respective rights of borrowers and lenders and is generally intended to strengthen the rights of borrowers while safeguarding a lending institution's right to protect its security. In cases of default, the lending institution will be required to sell any property at the best price reasonably obtainable. It also simplifies the law relating to judgment mortgages, i.e. where a creditor seeks to recover a debt by registering a judgment mortgage against the debtor's land.

Examples of the types of reforms contained in the Bill are set out in the Annex.

9 June 2006

 

Annex

Examples of reforms contained in Land and Conveyancing Law Reform Bill 2006

 

Abolition of feudal tenure

The feudal concept of tenure was introduced into England by the Normans after their victory at Hastings in 1066 and was introduced into Ireland from the end of the 12th century.  Its key feature is the idea that all land was ultimately held by the Crown.  Individuals holding land owed a duty of loyalty to the Crown and would forfeit the land if services or conditions under which they held it were not performed.  This form of relationship between Crown and subjects is not compatible with the relationship between citizen and State under the Constitution.  In so far as it survives, feudal tenure is therefore abolished by section 9.  

 

Abolition of the fee tail

The fee tail estate was created by the State of Westminster II in 1285 and was designed to enable feudal landowners to ensure that their lands descended through successive generations of their family (usually through the male line). While it became possible to convert a fee tail into a fee simple estate in 1834 (to 'bar the entail'), it still remains possible to create a fee tail.  Section 13 of the Bill will prohibit the creation of such estates in future.

 

Severance of joint tenancy

One of the important aspects of the law of co-ownership is the concept of severance of a joint tenancy, i.e. when a joint tenancy is converted into a tenancy in common. The difference between a tenancy in common and a joint tenancy is that there is no 'right of survivorship' whereby on the death of a co-owner his or her interest in the land passes automatically to the surviving co-owner(s) in the case of a tenancy in common.  Severance of a joint tenancy has significant consequences for the joint tenants because it means that they lose the expectation that one of them will, as the last surviving joint tenant, end up as the sole owner of the land.  In order to remedy this situation, section 28 will prohibit unilateral severance of a joint tenancy without the written consent of the other joint tenants.

 

Party walls and boundaries

Disputes occasionally arise between neighbouring land owners in relation to party walls or other structures dividing their properties.  Problems may also arise where buildings are so close to a boundary wall between the properties that the only means of access is through the neighbouring property.  Part 7 of the Bill contains a set of new provisions designed to regulate the rights of the neighbouring owners.  Where agreement is not possible, a building owner may seek a 'works order' from the District Court to authorise the carrying out of specified works.

 

Freehold covenants

Part 7 also remedies a longstanding defect in the law regarding the limited enforceability of freehold covenants affecting land. Such covenants are frequently entered into when a landowner sells part of the land to someone else and the purchaser agrees to restrict the use of the land and to undertake various positive obligations relating to building and repairs.  Unlike the case of leasehold covenants which generally bind successors in title, freehold covenants are enforceable against successors in title to a limited extent only.  Chapter 4 changes the law in order to bring the enforceability of freehold covenants, whether positive or negative, into line with that of leasehold covenants.

 

Contracts and conveyances

Section 50 of the Bill will restore a previously accepted view that the entire beneficial interest in land passes to the purchaser upon the entering into of the contract for sale regardless of how much of the purchase price is paid at that time (usually only a 10% deposit is paid then).  Section 51 abolishes the rule which restricts the damages recoverable by a purchaser for a breach of contract by a vendor who fails to make good title to the land contracted to be sold. This abolition will apply to future contracts for sale.

 

Title

Section 54 deals with the title a vendor is required to deduce under an 'open' contract for sale, i.e., where there is no express provision on the matter in the contract. The period of title will be reduced to 20 years from the 40 years prescribed by section 1 of the Vendor and Purchaser Act 1874. Section 54 also confirms the longstanding rule that where the title commences with a fee farm grant or lease, that grant or lease must be produced.

 

Deeds

Section 60 substantially modifies the law relating to conveyances of land.  The modern deed will be the only method of conveying legal title, subject to certain exceptions. The various methods developed under the feudal system such as 'bargain and sale', 'covenant to stand seised' and 'feoffment with livery of seisin' will be abolished.

 

Mortgages

Part 9 introduces substantial simplification and modernisation of the law of mortgages. In particular, it assimilates the law relating to unregistered land with registered land by making a 'charge' the sole method of creating a legal mortgage. Mortgages by conveyance or assignment of the borrower's estate or interest in the land or by demise in the case of leasehold land are abolished. The Bill also introduces provisions to ensure that mortgagee's remedies to enforce security are exercised only when appropriate.

 

Mortgagor's powers and rights

Section 89 abolishes a lender's right to consolidate mortgages, i.e. the right to insist that the borrower pays off all mortgages held with the same institution or none at all. It also confirms that a borrower can redeem any mortgage without having to redeem any other, whether it relates to the same or other property mortgaged to the same lender.

 

Foreclosure

This traditional remedy, which involves obtaining a court order destroying the borrower's right of redemption and thereby leaving the lender as the owner of the land, has always been controversial. It is difficult to reconcile it with the fundamental concept that a mortgage is, in essence, a secured loan, not a method of acquiring ownership of the land. In practice, the courts have preferred to order a sale of the land so that the proceeds of sale can be divided between the borrower and lender. Nevertheless, section 93 will abolish the lender's right of foreclosure.

 

Registration of title

Part 11 and Schedule 1 contain various amendments to the Registration of Title Act 1964 arising from reforms elsewhere in the Bill. These reforms will help to further streamline and simplify the registration process and will reduce registration delays for applicants.


Download a PDF version of the Bill:

Land and Conveyancing Reform Bill 2006 (PDF – 1.2MB)