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The Pamphlet Collection of Sir Robert Stout: Volume 88

Handy Book on the Land Transfer Acts. — General Remarks

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Handy Book on the Land Transfer Acts.

General Remarks.

"THE Land Transfer Act, 1870," gave to New Zealand a system of registration of title similar to that which was first introduced into South Australia by Mr. Torrens, and was subsequently adopted by the other Australian Colonics and Tasmania. This Act repealed "The Land Registry Act, 1860," which provided for the registration of title on a somewhat different plan. The latter Act,—though constructed with great ability, and capable, with slight amendments, of being made perhaps more complete than the one which superseded it,—never became popular, and was practically a dead letter. The success of the Torrens system in Australia, its simple mechanism, and the importance of maintaining uniformity with the other colonies in so large a branch of law as that of immovable property, fully justify the action taken by our Legislature in its adoption.

The Torrens system substitutes title by registration for title by deed. Under the old law, the deeds constitute the title; and on every dealing, the deeds have to be investigated, however many there may be, until the ownership is traced back from the person proposing to deal, to the person named in the Crown grant. Each deed is a link in the chain, and must be carefully perused and tested by trained lawyers. Nor is this all. The deeds themselves may show a good title, but some one or more of the numerous owners between the Crown grantee and the intending seller or mortgagor may, through fraud or mistake, have sold, mortgaged, or leased the property, or part of it, twice over. To ascertain this, the Deeds Registry has to be searched—an operation always requiring great care, and frequently entailing considerable labour. In these processes there is no finality; they have to he repeated upon every fresh transaction, and as each transaction entails a fresh deed, the chain is lengthened, and every new dealing becomes more complicated than the preceding one. The lawyer, of course, expects to be paid for his labour in investi- page 2 gating titles, and for his responsibility in damages to his client in case a title proves defective. Hence the expense of transactions under the old system, and, with the expense, no corresponding advantage, for a man has no guarantee for the goodness of his title beyond the skill of his lawyer. The necessity of these laborious investigations of course involves delay, and thus prevents land from being so merchantable a commodity as it might otherwise become.

If a man having a piece of land rashly concludes that he can deal with it as he can with a horse or cow, agrees to sell it, and signs an ordinary sale note for it, he has laid himself open to a possibility of endless annoyance. His title may be absolutely perfect, but even in that case he can be called upon not only to produce his title deeds but also to provide, at his own expense, an abstract of his title. Frequently, however, his title is one of that numerous class known as good holding titles, that is to say, titles which, although not technically perfect, are practically secure against disturbance. If so, the seller can be compelled by the purchaser to make good, at his own expense, every technical defect; and if the purchaser's solicitor should insist on the title being made absolutely perfect, the seller will have to spare no expense to make it so. If he attempts to shirk, he is brought up with the threat of a suit for specific performance. The seller will have lost time, money, and temper in the affair, and will have acquired, in return, some knowledge of the law of real property, which will not prevent him from including the law and its ministers in a general condemnation.

From these considerations it will appear that the old system of conveyancing is defective in the following respects : —
1.It tends to constantly increasing complexity.
2.It is expensive; and as complexity of titles increases, expense will increase also.
3.It causes delay.
4.It is uncertain. No man has any sure guarantee of the goodness of his title.

These defects present great and increasing obstacles to dealings with land, and are a heavy burden upon all proprietors of land, but especially upon small holders, who form the great body of landowners in the colony. It is these defects that the Land Transfer Act is intended to remove.

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Land bought from the Crown since the Land Transfer Act came into operation is under the Act ipso facto. The Crown grant is registered under the Act without the grantee taking any steps in the matter, and by "The land Transfer Amendment Act, 1871," full provision is made for dealing with such land in terms of the Act in the interval between the purchase of the land and the issue of the Crown grant. The old system of conveyancing, therefore, cannot be applied to land bought from the Crown since the Land Transfer Act came into operation, but all dealing with such land must be conducted on the system of registration of title.

Any other land may be brought under the Land Transfer Act on the application of the persons interested.* The application, with the deeds, is left at the District Land Registry Office, and the title is there investigated by officers appointed for that purpose. If it he found that the title, although perhaps not technically perfect, is yet secure against ejectment and against the claims of any other person, the land will be brought under the Act, and the proprietor or his nominee will receive a certificate of title. It is, of course, possible that the certificate of title may, through error, issue to the wrong person, and that injustice may he done. In such case the person injured has a remedy in damages against the Government, and in order to form a fund to meet claims of this nature, a fee is charged of a half-penny in the pound on the value of all land brought under the Act. On the issue of the certificate, the old deeds, if they relate exclusively to the land applied for, are cancelled and retained in the Land Registry Office. If they relate to other property, they are returned, each deed being marked as cancelled, so far as relates to the land brought under the Act. In any case they are of no use as to the land brought under the Act, since from thenceforth the certificate of title is conclusive evidence that the person named in it is entitled to the land it describes. The certificate of title operates as a Government guarantee that the title is perfect. It is indefeasible, and there is no going behind it.

Certificates of title are issued to every person entitled to any estate of freehold in possession in land under the Act. Every certificate is in duplicate. One duplicate is given to the proprietor, the other is retained in the Land Registry Office. The certificates page 4 in the office constitute the register-book, which, in the words of Mr. Torrens, is the pivot on which the whole mechanism turns. Every certificate is marked with the number of the volume and folium of the register-book. Crown grants of land bought since the Act came into operation are also issued in duplicate, one of which is bound up in the register-book, and such grants are in all respects equivalent to certificates of title.

Printed forms of transfer, mortgage, lease, and other dealings in outline, are to be procured at the Lands Registry Office, and must be used in all cases, except under such special circumstances as may in the opinion of the Registrar justify him in dispensing with the same. If a proprietor holding a certificate of title wishes to sell the whole of the land included in it, he fills up and executes a printed form of memorandum of transfer to the purchaser. The transfer is presented to the Registry Office, and a memorial of the transfer is recorded by the Registrar on both duplicates of the certificate of title. The purchaser, by the recording of this memorial, stands in precisely the same position as the original owner. If only a part of the land in a certificate is to be transferred, such part is described in the memorandum of transfer, the transfer is noted on both duplicates of the original certificate, a fresh certificate is issued to the purchaser for the part transferred, and the original certificate is noted as cancelled with respect to such part. This process is repeated on every sale of the freehold, and it will thus be seen that every person entitled to a freehold estate in land under the Act has but one document to show his title, through however many hands the property may have passed, and such document vests in him an absolutely indefeasible title to the land it describes.

If the proprietor wishes to mortgage or lease his land, or to charge it with the payment of a sum of money, he executes, in duplicate, memoranda of mortgage, lease, or encumbrance, in the form provided by the Act, altered so as to meet the particular circumstances of the case. These are presented at the Registry Office, with the certificate of title; a memorial of the transaction is entered by the Registrar on the certificate of title and on the duplicate certificate forming the register-book. The entry of this memorial constitutes registration of the instrument, and a note, under the hand and seal of the District Land Registrar, of the page 5 fact of such registration, is made on both duplicates of the instrument. Such note is conclusive evidence that the instrument has been duly registered. One of the duplicates is then filed in the office, and the other is handed to the mortgagee or lessee. The certificate of title will thus show that the original proprietor is entitled to the land it describes, subject to the mortgage, lease, or encumbrance; while the duplicate instrument held by the mortgagee, lessee, or encumbrancee, will show precisely the nature of his interest. Each person has and can have but one document of title, and this shows conclusively the nature of the interest he holds, and to that interest his title is indefeasible. If a mortgage is paid off, a simple receipt is indorsed on the duplicate mortgage held by the mortgagee. This is brought to the Registry Office, and the fact that the mortgage has been paid off is noted on the certificate of title. Here a striking inconvenience of the old system is done away with. Few things are more preplexing to simple minds than the necessity, which that system imposes, of a deed of reconveyance when a mortgage has been paid off. A mortgage under the Act does not involve a transfer of the "legal estate," although the mortgagee is made as secure as if such transfer had taken place. The necessity, therefore, for a deed of reconveyance, when the mortgage is paid off, at once vanishes. If a lease is to be surrendered, it has merely to be brought to the Registry Office, with the word "surrendered" indorsed upon it, signed by the lessor and lessee, and attested, and the Registrar will note the fact that it has been surrendered on the certificate of title. Mortgages or leases are transferred by indorsement, by a simple form. The Act provides implied powers of sale and foreclosure in mortgages; and in leases, implied covenants to pay rent and taxes, and to keep in repair, together with power for the lessor to enter and view the state of repair, and to re-enter in case of non-payment of rent or breach of covenant. All these may be omitted or modified if desired. In order to save verbiage, short forms are provided, which may be used for covenants in leases or mortgages, the longer forms which they imply being set out in the Act. Thus, in a lease, the words "will not without leave assign or sublet," imply a covenant "that the said lessee shall not, nor will, during the term of such lease, assign, transfer, demise, sublet, or set over, or otherwise, by any act or deed, procure the lands or premises therein mentioned, or any part thereof, to be assigned, transferred, page 6 demised, sublet, or set over, to any person whomsoever, without the consent in writing of the said lessor first had and obtained."

Every person, therefore, entitled to a freehold estate in possession, has a certificate of title, on which are recorded memorials of all mortgages, leases, or incumbrances, and of their discharge or surrender. If he transfers his entire interest, a memorial of the transfer is recorded on the certificate, and the transferee takes it, subject to recorded interests. The transferee can, if he chooses, have a fresh certificate issued in his own name, and in that case the old certificate is cancelled, and the memorials of the leases or mortgages to which the land is subject are carried forward to the new one. If a proprietor transfers only a part of his land, his certificate is cancelled so far, a fresh certificate is issued, and memorials of outstanding interests are similarly carried forward. Memorials of dealings with leases or mortgages are noted on the duplicate lease or mortgage held by the lessee or mortgagee, and on the folium of the register-book. The Registrar, therefore, and persons searching, can see at a glance the whole of the recorded dealings with every property; while each person interested can see, by the one document he holds, the precise extent of his interest.

The books kept in the Registry Office, other than the register-book, are—

1.An application-book, in which particulars of applications to bring land under the Act are noted.
2.A journal, in which are entered, shortly, particulars of land brought under the Act, and of instruments registered.
3.An index of the names of persons entitled to any interest in land under the Act. This is posted from the journal. Each person has a page allotted to him, and every time any instrument is registered vesting any interest in him, an entry is made stating shortly the nature of the instrument, the date of registration, and the property affected, and referring to the folium of the register where a memorial of it has been entered.

Thus, whenever it is desired to know what interests any person has, it is only necessary to turn to the folium of the index under his name, and all the interests he has ever had will be seen at a glance. A reference from thence to the several foliums of the page 7 register where they are recorded will show whether he is still entitled to them, or in what manner they have been disposed of.

These books, with the register-book, and the various instruments presented for registration which are retained in the office, and of which each class is kept separate and numbered consecutively, form the whole machinery. When land is first brought under the Act, an entry of the fact, referring to the volume and folium of the register-book, is entered against the property in the Deeds Registry Office. A person, therefore, by searching there, and subsequently referring to the volume and folium of the register-book to which he is directed, will find out every particular. With respect to land purchased since the Act came into operation, a reference to the name of the original grantee in the index will give the volume and folium of the register-book where the grant is to be found, and from thence a person searching can discover in whom the land or any part of it has become vested.

The foregoing remarks form a slight and necessarily imperfect, sketch of the objects and machinery of the Land Transfer Act. They are intended merely as a short introduction to its principles, suited to the comprehension of ordinary readers, and they illustrate its operations with respect to the simple transactions of every-day life.

It must not, however, be supposed that the Land Transfer Act prevents dealings of a complex nature. A person seized in fee-simple can settle his land on his children in strict settlements if he chooses, with as great facility as under the old law.

A dissertion on this and kindred subjects would stretch to an inordinate length, and be interesting to few; moreover, the infor- mation it would afford could be obtained more satisfactorily by a study of the Acts. Those who desire to avail themselves of the provisions of the Act should peruse carefully the detailed instructions in this pamphlet; while to legal practitioners and brokers, an accurate knowledge of the Acts themselves is of course indispensable.

Except in the case of mortgages to Building Societies, and of Crown grants of public reserves, no notice of trusts can be entered on the register, nor can any instrument declaring trusts be registered. Instruments declaring trusts may, however, be deposited with the Registrar for safe custody; but these deeds, page 8 although of course binding between the parties to them, in no way affect persons dealing with trustees who are registered proprietors; and every person who is registered as the proprietor of any estate or interest is permitted to deal with such estate or interest as he pleases, and to give an absolutely indefeasible title to the persons with whom he deals, notwithstanding he may be in fact a mere trustee.

The risk of fraud is, however, narrowed to the utmost by section 74 of the Act, which provides that in any case where two or more persons who are trustees are registered as joint pro-prietors, the words "no survivorship" may be written on their instrument of title, and that thereafter the interest in respect of which they are registered cannot be dealt with by any less number of persons than the number originally registered, without the sanction of the Supreme Court. If, for instance, three persons were appointed trustees, and the words "no survivorship" were indorsed on their certificate, the three must unite to commit a breach of trust. Moreover, any person who is interested in trust property may, so long as it remains on the register in the names of the trustees, lodge a caveat, and thus effectually prevent any dealing with the property by them contrary to the intent of the instrument creating the trust; and the Registrar is empowered to lodge caveats in cases where he deems it necessary for the protection of persons beneficially interested. The principle of non-recognition of trusts obtains with respect to the entire funded debt of Great Britain, amounting to nearly eight hundred millions of money; to the shares of every private company in the British Dominions, amounting to at least as much more; and to the whole shipping interest of the empire. In each of these cases a system of registration of title prevails; in none are trusts recognized; and the modes of preventing breaches of trust are by no means so simple or effective as those provided by the Land Transfer Act. The justice of the principle has been practically admitted by the legal profession of the colony, for in nearly every case where land is vested in trustees under the old law, a discretionary power of sale is given to them; and, if they are fraudulently inclined, they can sell, and appropriate the money, as their receipts discharge the purchaser.

* Full instructions as to the steps to be taken and the fees payable will be found at page 10.