Land acquisitions and transfers are an integral part of the development process, yet they can sow the seeds of disruption into a development if not completed carefully.
Disputes concerning boundaries and ownership of land can affect plots and parcels of land of any size, and purchasers of land for development face the same potential problems as buyers of houses or other land. However, all other things remaining equal, larger plots require more scrutiny by virtue of their size.
For developers, it pays to ensure that any potential boundary and land ownership issues are identified early. Having part of or even an entire development put on hold because of a dispute concerning boundaries and ownership can be extremely costly.
It is usual for such disputes to take between one and two years to be resolved, either in the courts or in the property chamber of the First-tier Tribunal, significantly delaying project timescales. If no agreement can be found during the legal process, it is likely that the disputed land will, in the interim, be put on hold by an injunction, further delaying the project.
Even in the absence of an injunction, continuing development when a dispute is pending carries the risk of the disputed land having to be returned to the possession of the other party, an award of damages, or both.
It is safe to say that developers do not intend to become involved in land and ownership disputes, but that doesn’t mean that many don’t become embroiled nonetheless. In all cases, prevention is better than cure, and there are common causes of boundary and ownership disputes that developers should be mindful of from the outset.
Unmeasured boundaries, unwritten boundary agreements and errors
Plans in conveyances and transfers and HM Land Registry filed plans do not normally contain measurements. The usual scales for plans are 1:1,250 or 1:2,500. Even a boundary shown by pencil line on a map can be a metre or more in width when transposed on to the ground. This means that attempts at “scaling up” from a plan in order to ascertain a boundary position on the ground can be a hazardous exercise.
In registered land, section 60(1) and (2) of the Land Registration Act 2002 provide explicitly that boundaries shown on HM Land Registry filed plans are general only. They do not show the exact boundaries unless the boundary has been determined in accordance with that section.
However, most boundaries are delineated on the ground, typically by fences, walls or other demarcating structures that are usually uncontroversial. Boundaries that are unmarked on the ground by any structure are relatively rare. In the event that there is a dispute about boundaries with adjoining landowners, such a determination is carried out by a court or the FTT.
Confusion of over boundaries can also sometimes arise in cases where there is an implicit, unwritten boundary agreement.
This can happen when, for example, landowners unilaterally move a fence between their land and another’s inwards, effectively reducing the size of their own land. In these situations, landowners could inadvertently end up losing the strip of land between the new fence and the original boundary – effectively giving this to the adjacent landowner.
It is also possible, although rare, that there may be errors in the boundaries shown in plans.
Adverse possession
This is colloquially known as “squatters’ rights”, where someone other than the paper owner (the person with paper title, registered or unregistered) makes a claim to property, whether it be land or buildings, residential or non-residential.
This is made out when the other party establishes an intention to possess the land, together with actual possession, for a requisite minimum continuous period. Generally speaking, the period is 10 years for registered land and 12 years for unregistered land.
Purchase of the land does not stop time running. It is the intention on the part of the “squatter” to possess the land that matters. The intention to own or occupy the land is by no means a disqualification but is insufficient on its own.
Overriding interests in relation to registered land
Parties other than the paper owner can have an interest in land, whether that land is registered or not. In registered land, the expectation is that third-party interests will be on the register. Overriding interests in registered land are some types of third-party interests that are not registrable and will, therefore, not show up on any search at HM Land Registry.
These rights, listed in Schedule 3 of the Land Registration Act 2002, are nevertheless capable of overriding the rights of a purchaser, even if that purchaser is registered as the owner post-purchase. The frequency of overriding interests has reduced since the coming into force of the 2002 Act, but they have not been eradicated.
These are interests of third parties who have a proprietary interest in the land adverse to that of the paper owner and are in actual occupation of that land. They include the rights of those claiming adverse possession of the land and those with “short” leases of less than seven years. “Occupation” has a wide meaning and does not just mean personal physical presence. It can extend, for example, to the parking of a car or use of land for livestock by the occupier.
Mitigating risk – identification and prevention
Assuming that the land has passed muster after a preliminary examination of the land by the developer, accurate answers by the seller to standard pre-contractual enquiries and searches by the intended purchaser’s conveyancers can bring most of the potential boundary and ownership problems mentioned above to light.
However, it is obviously unwise to rely only on conscientious answers to pre-contractual enquiries by the seller. There is no substitute for a thorough physical inspection by the intended buyer of the land and its boundaries after the seller has provided answers to the developer’s pre-contractual enquiries.
This inspection should be carried out as soon as possible, after initial pre-contractual enquiries, by the intended buyer’s surveyor and someone from the seller’s side who has knowledge of the land and can answer any questions that may arise during the inspection. The buyer’s surveyor should be accompanied by someone from its conveyancing solicitors. Plans and conveyances that identify the subject land and are intended for inclusion in the contract and transfer should be brought to the inspection.
The contractual maps, plans and conveyances will inform the intended buyer’s representatives about the position of the boundaries of the land to be purchased under the contract as represented in those documents and enable them to match these with what is on the ground.
Any part of the boundary that is not marked by a structure or is a clear mismatch with what is on the ground will be apparent. Any building or enclosure on the land that is in the possession of, or occupied by, a third party should also become apparent. These are signs of potential adverse possession and other occupation capable of giving rise to an overriding interest.
Any unauthorised building by a third party may also found a claim for the land it is on by an estoppel. In short, this is where the paper owner has stood by and allowed a third party to build on their land. Depending on the precise facts, the paper owner could thereby lose that land as a result. The rights of the third party are also enforceable against a subsequent purchaser.
While implicit boundary agreements may not always be easy to spot on the ground, there can be tell-tale signs of the potential for one, such as two parallel fences with a strip of land in between. There will also be an opportunity to check any discrepancy between the seller’s answers to pre-contractual enquiries and what is actually on the ground. Furthermore, any queries by the buyer’s representative to the seller’s can be made at the location in sight of any potential problem area or feature.
Undertaking this kind of comprehensive inspection at an early stage is crucial for developers. It can help them accurately establish whether they are likely to face land ownership and boundary disputes post-purchase – reducing the risk of delays and costs that could affect the viability of the whole project.
Hari Menon is a barrister at Parklane Plowden Chambers
