DUBLIN SOLICITORS CPD 26 TH March 2015 THE LAND AND CONVEYANCING LAW REFROM ACT 2009 IMPACT FOR CONVEYANCING PRACTITIONERS

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1 DUBLIN SOLICITORS CPD 26 TH March 2015 THE LAND AND CONVEYANCING LAW REFROM ACT 2009 IMPACT FOR CONVEYANCING PRACTITIONERS Codification and Simplification were the key aims behind the Act. The Act removed outmoded concepts of feudal tenure and abolished types of grants such as the fee tail, fee farm grant and leases for lives, the rule against perpetuities, the common law remainder rules and other restrictions on the creation of future interests. The Act has had a wide ranging effect on many aspects of land and conveyancing law, including mortgages, co-ownership, easements, party structures and trusts. The remit of this paper is however to pick out some of the important provisions which effect day to day conveyancing. Commencement Orders The Land and Conveyancing Law Reform Act 2009 (Commencement) Order 2009 (SI 356/2009) 1 st December 2009 appointed day for the whole Act (other than Section 132); The Land and Conveyancing Law Reform Act 2009 (Commencement) (section 132) Order 2009 (SI 471/2009) appointed 28 th February 2010 as the day that Section 132 would come into operation. Regulations S.I. No. 653/ Land and Conveyancing Law Reform Act 2009 (Section 100) Regulations 2010.These Regulations prescribe the form of notice to be used for the purposes of section 100(1) S.I. No. 654/ Land and Conveyancing Law Reform Act 2009 (Section 103) Regulations Obligations on selling on foot of a Power of Sale Form of Notice to be served on Mortgagor 28 days after completion of the sale; S.I. No. 655/ Land and Conveyancing Law Reform Act 2009 (Section 108) Regulations 2010 re Appointment of Receiver; Other Effects; Land Registration Rules 2009, 2011 and 2012; Registration of Deeds Rules S.I. No. 387/2013 regarding form of registration of judgment mortgage; 1

2 Civil Law (Miscellaneous Provisions) Act /2011- amends s. 38(b) re acquisition of easements and profits a prendre by prescription [under s.38 (b) any claim under the old law had to be made before 1 st December 2012 and it was not clear when claims under the new law must be made. The amendment provisions for an extended transitional period of 12 years] ; Rules of the Superior Courts (Land and Conveyancing Law Reform Act 2009) 2010 (S.I. No. 149 of 2010); Circuit Court Rules (Land and Conveyancing Law Reform Act 2009) (S.I. No. 155/2010 ) RELEVANT PARTS OF THE ACT AND THEIR IMPACT ON CONVEYANCING PART 2 OWNERSHIP OF LAND Sections 9-14 This Part abolishes the concept of feudal tenure and restricts ownership of land to the estates and interests specified therein; The only legal estates in land which may be created or disposed of are the freehold and leasehold estates specified in Section 11; As a result, freehold estates such as the life estate and the estate pur autre vie no longer subsist at law and only in equity ( behind a trust mechanism); Any other estates take effect in equity only and nothing effects judicial recognition of equitable interests; The creation of fee farm grants is prohibited and any deed purporting to create a fee farm grant will vest a fee simple. Existing fee farm grants continue as a legal estate and may be disposed of [Section 12]; The creation of a fee tail is prohibited and any attempt to do so will create a fee simple estate. The Act also converts fee tails and base fees in existence on 1 st December 2009 into fee simple estates (note 2 exceptions) [Section 13]; The grant of a lease for a life or lives of any contract for such a grant is void at law and equity [Section 14]. 2

3 Chapter 1 - Contracts Relating to Land Section 51 Evidence in Writing PART 9 CONTRACTS AND CONVEYANCES Section 51 (1) re-enacts Section 2 of the Statute of Frauds 1695 and provides that no action shall be brought to enforce any contract for the sale or other disposition of land unless the agreement on which such action is brought or some memorandum or note of it, is in writing and signed by the person against whom the action is brought or that person s authorised agent ; The section does not affect the law in relation to part-performance and expressly states that payment of a deposit in money is not necessary for an enforceable contract (unless the contract so provides); Section 52 Passing of the Beneficial Interest Section 52 reverses the rule in Tempany v Hynes [1976] I.R 101 and provides that on the making of an enforceable contract for the sale of land, the entire beneficial interest passes to the purchaser. Previously, the equitable ownership did not pass until the purchase price was paid and therefore, for example, a purchaser could be bound by judgment mortgages registered between contract and completion. Section 55 Vendor and Purchaser Summons Re-enactment of Section 9 of the Vendor and Purchaser Act 1874 and allows for the summary resolution of certain disputes in relation to the sale of land. A Vendor and Purchaser Summons can deal with disputes in relation to the interpretation of the contract, any requisition, objection etc. It cannot be used to determine the validity of a contract. The Rules of the Superior Courts have been amended [Rule 3 (12)] to provide for the issuing of a Special Summons to determine a matter under s.55, however, although the Circuit Court has concurrent jurisdiction to deal with all (except 2) matters under the Act, there was no amendment to the Circuit Court Rules providing for the summary disposal of a Section 55 issue. 3

4 Chapter 2 Title N.B. Sections 56,57 and 58 all take effect subject to the terms of the contract. Section 56 Root of Title Reduces the period that the length of title must be shown in an open contract to 15 years; Open contracts are rare and usually only arise where a purchaser has inadvertently created a binding contract and the length of title is not limited; The 15 year period is a default period only and the Conveyancing Committee continues to recommend a minimum period of 20 years. It is anticipated that this will be reduced. If title commences with an older Fee Farm Grant or Lease, however, the purchaser may require production of same; As to what constitutes a good root this remains the same e.g. a freehold conveyance for value, vesting certificate, fee farm grant, a legal mortgage executed before 1 st December 2009; A bad root also remains the same e.g. voluntary deed, deeds requiring extrinsic evidence. N.B Assents require the grant of representation, a conveyance under a power of sale requires production of the power itself. Section 57 Tenancies This section collates various provisions relating to the title to be shown on the grant or assignment of a tenancy and again relates to open contracts only; For example, on the grant of a tenancy exceeding 5 years for full market rent, a grantee can call for a good root of title at least 15 years old; On the assignment of a tenancy, however, the grantee is not entitled to call for anything the saving provision is that if the grantee is a purchaser for full consideration, they will still be covered by Section 56; Section 57(4) also provides that where the grantee is not entitled to call for the title to the fee simple or superior tenancy, they are not affected with notice of any matter which the title would have disclosed. Section 58 Other conditions of title This sections sets out the requirements which a purchaser is entitled to call for, for example, not entitled to production of a deed older than 15 years. 4

5 Section 59(1) Protection of Purchasers Reliance on Recitals This section updates and extends Section 2 of the Vendor and Purchaser Act 1874 as to the circumstances in which recitals in title documents may be presumed to be correct; It provides that a recital, statement, and description of facts, matters and parties contained in a deed which is 15 years old is sufficient evidence of the truth of such facts, matters or parties, except so far as they are proved to be inaccurate; Particularly helpful if a deed has been lost, as the recital coupled with a certified copy memorial, may be sufficient evidence of the lost deed. Section 62 Conveyances by deed only CHAPTER 3 Deeds and their operation Section 62 provides that legal title can only be conveyed by deed; There are some exceptions, for example, an assent, surrender, disclaimer etc.[section 63]; Section 62(3) also removes the need for the inclusion of a resulting use in the case of a voluntary conveyance, and the section now provides that a resulting use for the grantor is not implied merely because the land is expressed to be conveyed for the use of the grantee. Section 64 Formalities for Deeds Section 64(1) removes the requirement of sealing of deeds (except for Companies) and abolishes the rule that authority to deliver a deed must be given by deed; Section 64 (2) provides that an instrument is a deed if it; (a) Is described correctly at its head of words e.g. Conveyance, Lease, Indenture etc. (b) Is executed correctly in accordance with Section 64 (2)(b). Previously, for a natural person to validly execute a deed the common law required that it be sealed by him or her. The practice of the affixation of the red sticker arose. Often times however, this was not done (or they would fall off over the years) and a deed would only be signed by the party. This could give rise to whether the deed had been validly executed, but in practice, the lack of a seal is only considered as evidence that the seal has become detached. The statement signed, sealed and delivered must be taken as evidence that the party was aware of the obligation to seal. 5

6 Section 64(2)(b) now contains new rules for execution by an individual, company or body corporate. An individual must now sign (only) in the presence of an attesting witness or direct another person to sign, in the presence of a witness or may sign and then later acknowledge their signature in the presence of a witness. (c) Is delivered as a deed by the person executing it or by a person authorised to do so. Section 67 Abolition of Words of Limitation This is one of the most significant changes and Section 67(1) now provides that a conveyance of unregistered land with or without words of limitation passes the fee simple or other entire estate or interest which the grantor had power to create or convey, unless a contrary intention appears; Also of note is that these provisions apply retrospectively to conveyances executed before 1 st December 2009; Section 68 provides for the extinguishment of interests to which persons were entitled by reason of the failure, in a pre-act conveyance, to use words of limitation. Such a person can apply to Court before 1 st December 2021 to preserve their interest. An example would be a conveyance To X. Section 71 Features and rights conveyed with land This section provides that a conveyance passes existing interests such as buildings, drains, fences, fixtures, hedges etc. and does not create new interests; Section 71 can be contracted out of by inserting a provision in the conveyance/contract. Section 76 All Estate Clause CHAPTER 4 Contents of Deeds Section 76 re-enacts the all-estate clause previously contained in Section 63(1) of the Conveyancing Act 1881 and provides that unless its terms provide to the contract, a conveyance of land passes all the claim, demand, estate, interest, right and title which the grantor has or has power to convey. This can be useful for example if there is an unmerged leasehold estate not expressly conveyed. 6

7 Section 77 Receipts in Deeds Provides that a receipt for consideration contained in the body of a deed constitutes an effective discharge of that consideration, without the need to endorse on the deed. Section 80 Covenants for Title Section 80 is specifically confined to conveyances made after 1 st December 2009 and does not apply in the granting of a tenancy; Section 80 then goes on to provide the covenants relating to title which are implied according to 5 different classes of conveyance; In summary form, the classes of conveyance for valuable consideration include, a conveyance made by a person who is expressed to convey as beneficial owner ; Class 1: Of an estate or interest in land; Class 2: Of land comprised in a lease; Class 3: Comprising a mortgage of land; Class 4: Comprising a mortgage of land comprised in a lease. Class 5 is a conveyance made by a person who is expressed to convey as trustee, as mortgagee, as personal representative, or under order of the court; The covenants are annexed to the Act at Schedule 3 Parts 1 and 2 and should be examined according to the class of conveyance; For example, the covenants in respect of Class 1 are; o That the covenantor has the right to convey; o Quiet enjoyment; o That the subject-matter of the conveyance is free from all claims, demands, estates and incumbrances and interests; o That the covenantor will take such action as may be necessary for the better assuring of the subject-matter of the conveyance. Section 80(4) re-enacts the previous position, holding that if the magic formula appropriate to one of the classes is not used, then no covenants will be implied by Section 80; An exception to this is provided by Section 52(6) Succession Act 1965, where covenants under Class 5 are implied in an assent by a personal representative, whether or not they are expressed to convey as personal representative. 7

8 Section 84 production and safe custody of documents Where there is a certified copy deed on title (for example where it is required for 2 titles at once) the person retaining the original must give a Statutory Acknowlegment and Undertaking. Section 84 now provides that the acknowledgement and undertaking is binding on any person who has possession or control of the document. It was common before the introduction of this section to find an assignment of the benefit with the deeds, but it is now no longer necessary to have an express assignment. If there is no acknowledgement and undertaking available, this must be rectified by the Vendor before closing. It should be dealt with in the same way as a lost deed, as the risk is that the original deed may have been pledged as security; If the original can be tracked down, the Vendor can be called upon to execute an acknowledgment and undertaking. In this regard, where the Vendor sells as beneficial owner the Purchaser is entitled to rely upon the one of the covenants implied by Section 80 i.e. that the covenantor will take such action as may be required for the better assurance of the property [See Schedule 3 Part 2]; Further, Section 58(5) provides that the inability of a vendor to furnish an acknowledgment of the right to the production and delivery of copies of deeds is not an objection to title where on completion, the purchaser will have an equitable right to production of such documents e.g. where title is split. A purchaser can however still maintain the objection that there was no undertaking for the safe custody. 8