The law on adverse possession has seen a major overhaul recently with the coming into force last autumn (13 October 2003) of the Land Registration Act (LRA) 2002. Heralded in most parts of the press as a ‘welcome end to squatters’ rights’, the new rules make it much harder to obtain ownership of registered land from the legal owner by adverse possession. Instead of possessory title passing after 12 years’ adverse possession, an ‘adverse possessor’ wishing to assert their right over a piece of land must now occupy for ten years and then wait for the Land Registry to serve notice on the legal owner/paper title owner and give them the opportunity to assert their rights to ownership, which the paper title holder must do within 65 business days.

The old law

Before the LRA 2002 came into force, and in respect of cases where 12 years’ adverse possession has occurred before 13 October 2003 , a squatter has to establish that the paper owner has either discontinued possession or been dispossessed and that thereafter they (or a series of squatters) have been in adverse possession for a continuous period of 12 years.

In the case of JA Pye (Oxford) Ltd v Graham [2002], Lord Browne-Wilkinson said that many difficulties in this area of law stem from a feeling that a squatter must act adversely to the paper owner, when the question is simply whether the squatter has dispossessed the paper owner by going into ordinary possession of the land for the requisite period without the paper owner’s consent. The squatter has to exercise control of the land for their own benefit and they must intend to possess it as opposed to own it.

The old law still applies to unregistered land and to cases which come within the transitional provisions of the LRA 2002, where 12 years’ possession occurred prior to 13 October 2003 and the claim is made by the squatter by 13 October 2006.

The new law

Following the introduction of the LRA 2002, since 13 October 2003 the adverse possessor will only acquire title by registration in respect of registered land. The LRA 2002 disapplies the provisions of the Limitation Act 1980, which means that adverse possession will have no effect upon the title to the registered land unless the squatter’s application for registration is accepted.

The squatter will be entitled to apply to register their title after ten years’ adverse possession. Their application must be made whilst in possession or within six months after eviction (unless evicted by court order). An application cannot be made:

• while defending possession proceedings;
• if judgment for possession has been ordered within two years; or
• whilst the registered proprietor is under a disability (see Schedule 6 to the LRA 2002).

Once the application is made, the Land Registry will give notice in form NAP to:

• the registered proprietor;
• the registered chargee;
• the superior registered proprietor (if leasehold); and
• anyone registered as a person to be notified.

The time limit for reply is 12 noon on the 65th business day after the date of issue of the notice, as opposed to the date of service.

It is therefore essential that the addresses on the register are up to date and that the proprietor of the land and charges have a system in place to deal with Land Registry notices within 65 business days.

If the Land Registry does not receive a reply within the required time, the squatter will be entitled to take over the existing title and they will take it free from any registered charge, unless:

• the application was opposed and the squatter has been registered because there is an equity by estoppel in their favour;
• there is some other reason why they should be registered; or
• there has been a reasonable mistake as to where the boundary lies, in which case the squatter will have the right to have the charge apportioned.

The registered proprietor can respond to the squatter’s claim by placing a cross in the appropriate box on form NAP:

(1) consenting to the claim;

(2) requiring the Land Registry to deal with the application under paragraph 5 of Schedule 6 to the LRA 2002;

(3) objecting on the grounds stated in panel 6 (an objection on the merits, eg a sufficient period of adverse possession has not been shown and the onus is on the objector).

The paper title owner will, if well advised, object to the squatter’s claim on paragraph 5, Schedule 6 grounds (see box) and the panel 6 objection. The onus is on the squatter under paragraph 5, Schedule 6 to show that they are entitled to be registered, whether by estoppel or on the basis of a binding arrangement, or there is a mistake as to where the boundaries lie. In other words the squatter has to show that their claim is based not on adverse possession but upon some other right or interest. The priority of that right (and therefore its ability to bind the registered proprietor) will depend upon its protection on the face of the title or as an interest with overriding status. If the right was not properly protected and did not have overriding status, a purchaser for value will have taken priority to it.

Practical implications

Headlines such as ‘Swat the Squatters’ and ‘Owners to be Protected from Home Hijackers’ have dominated the coverage of the changes to date. This is perhaps not surprising considering the extent to which the tabloids have always delighted in sensational ‘Squatter becomes owner of £100,000 flat’ stories. The vast majority of adverse possession cases have nothing to do with the anti-social and the media’s focus on this sensationalist element means there is now misinformation about how the new rules on adverse possession affect legitimate landowners.

Consider the buyer who has spotted that there is an issue about an element of the property for which they cannot buy paper title. The seller is occupying that part of the land in good faith, but they do not have paper title to sell. The buyer now has a dilemma: to be sure of obtaining paper title they may wish to assert their rights under the laws of adverse possession, but in so doing they are alerting the legal owner (by means of the Land Registry’s notice in form NAP). The paper title holder then has 65 business days to respond from the date the Land Registry issues form NAP and the paper title owner will, if well advised, take steps to recover possession if the application is rejected.

Ultimately, the risk in attempting to obtain ownership by adverse possession means that the buyer may lose use of that piece of land altogether. When faced with this dilemma the transitional rules should be checked. If the occupier has already accrued 12 years of possession before 13 October 2003 then they can use the old rules to gain title providing they apply before 13 October 2006.

An alternative for our buyer may be to seek title indemnity insurance. However, should they get that insurance, it will almost certainly be a requirement of the insurer that they then do not seek to get paper title – even if they can prove occupation of that part of the land for the requisite time period. This is because the insurer, having issued cover, wants to let sleeping dogs lie and avoid notices being served to all and sundry by the Land Registry.

Here the buyer is caught between a rock and a hard place. What they really want is paper title, because of the government-backed guarantee. But the very act of trying to obtain it may result in them losing even their occupational rights.

Facilitating e-conveyancing

The media’s insistence in referring to this as changes to ‘squatter laws’ is unhelpful and does nothing to inform innocent occupiers of the new pitfalls. The government has not presented the changes in this way. Debates recorded by Hansard clearly show that the main thrust of the Act was to facilitate electronic conveyancing and the changes to adverse possession contained within the Act reflect this drive. This is clear from the emphasis on paper title. For e- conveyancing to function, there must be an emphasis on paper title and a curtailment of the rights of adverse possessors. For the Land Registry to function, its registers need to reflect property rights accurately. Rights that are only ascertainable from inspection of the property do not fit in with the e-conveyancing idyll, where all property rights need to be ascertainable from a computer screen.

The new word in conveyancing is e-conveyancing and that is clearly what the government is pushing forward in arguably the largest wholesale review of property law since 1925. Along the way all sorts of additional and specialist elements of property law have been drawn in, but let us all be clear what the changes mean for the vast majority of our clients and not let our judgement be dazzled by the media’s predilection for sensational stories.

Chris Hobson is a property litigation partner at commercial law firm Kanter Jules. © Property Law Journal