FORGERIES AND INDEMNITY IN LAND REGISTRATION

Extract

A standard land law problem is that land, or an interest in it, is claimed by two persons, usually as a result of a mistake or fraud of a third party, not worth suing. Both of the claimants are innocent parties. Common law solutions tend to an all-or-nothing approach – one person wins and the other loses. Land registration possesses the significant advantage that compensation (indemnity) may be paid to the losing party. For this to be possible, either a loss must be caused by rectification of the register or there must be a loss which requires rectification to be remedied. So, if the wrong person is registered as proprietor, whoever loses the land (which is likely to turn on the rules for rectification of the register) will be compensated. There has been little litigation on indemnity, but it was established by Re Chowood's Registered Land [1933] Ch. 574 that a purchaser bound by an overriding interest is not entitled to indemnity. Rectification of the purchaser's title recognises existing legal rights to the land and itself causes no loss to the purchaser.