An Overview of Compulsory First Registration
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The Land Title Registration Act 2011 (“LTRA 2011”) became operative on 14 June 2018 and the Land Title Registrar activated the first three trigger events at the end of August 2018. What exactly does this mean and how has this affected property transactions over the last 15 months?
Compulsory registration is triggered by certain events which are set out at section 24(1) LTRA 2011. There are 13 events in total, however, the Registrar has chosen to activate only 3 of those triggers to date. The triggers currently activated are: i) a conveyance for value, ii) a first legal mortgage and iii) a conveyance by court order. Following completion of any of these transactions, a property owner must register their property within the two month period provided in the land title registration legislation.
The application for compulsory registration is submitted by the property owner’s legal advisor who submits the original title deeds, together with relevant forms and application fee, to the Land Title Registry Office. The application is reviewed by a Land Title Registry Officer and can take several weeks to be processed. Once finalised, the property owner can expect to receive either a provisional title or an absolute title, absolute title being the highest class of title that can be granted.
Provisional title will be granted where there is some irregularity with the title. This may not be a permanent issue and once the issue is resolved, if there is no other concern with the title, the provisional title will be adjusted, on application, to an absolute title.
Possibly one of the most common scenarios where a provisional title may be granted in Bermuda is where there are missing title deeds. Under Bermuda law, a property owner must be able to show clear title for 20 consecutive years prior to his ownership. A missing deed, or deeds, can create a gap in the title. If the owner is unable to produce evidence to substantiate ownership during the ‘gap’ period, the Registrar may be unable to grant absolute title. A provisional class of title will be granted and once a clear 20 year period of ownership has accrued, or evidence has been obtained to satisfy the Registrar of ownership with respect to the ‘gap’ period, the owner may apply to the Registrar for the class of title to be raised to ‘absolute’.
A few points to note under the new registered system:
– when a property owner enters into a mortgage under the new registered system of land, the legal title to the property will not be transferred to the mortgagee (as has been the case under Bermuda’s unregistered system of land). The owner of the property will be recorded as the legal owner on the certificate of title and any mortgage against the property will be noted on the title certificate as an encumbrance against the property in the form of a legal charge. This negates the requirement for a reconveyance to be executed by the mortgagee when the legal charge has been satisfied.
– before proceeding with the purchase of a property it is advisable to ensure that, in addition to the usual searches and reviews that will be carried out, your legal adviser checks to see if a caution against first registration has been entered in the cautions register against the property. Section 20 LTRA 2011 provides that any individual may enter a caution against first registration of a property which will include particulars of the estate or interest claimed by the cautioner. A couple of examples of such claims may be: i) a neighbour who believes that a significant portion of the land on the subject property belongs to him, or ii) an aggreieved family member who believes that he has an interest in the subject property and should therefore benefit from the proceeds on sale.
Once a property has transitioned from Bermuda’s unregistered system of land, to its registered system, the owner’s evidence of title is no longer his title deeds. Under the registered system the owner’s evidence of title is recorded electronically at the Land Title Registry Office and his title is guaranteed by the Bermuda Government. Although, following registration, there is no longer a legal requirement to retain original title deeds, we strongly recommend that all deeds continue to be retained in a secure location.
During the past 15 months a number of properties have gone through the process of first registration, however, most properties in Bermuda remain unregistered. It will be sometime before all Bermuda properties have gone through the process of first registration and it is most likely that the Land Title Registry system will continue to be revised as new situations arise.
We look forward to providing further updates as this system progresses beyond first registrations.