The recent Court of Appeal case of White v Alder has brought the issue of neighbourly boundary disputes to the fore. The case involved an historic boundary agreement, which the current owner was not aware of. When the property was then sold, the court ruled that the buyer took subject to that agreement.
This article considers the judgment in that case and the practical implications of it for sellers, buyers and their lawyers.
Lady Justice Asplin reiterated in her judgment in the case that there are two types of boundary agreement:
In most cases, the parties will act upon the agreement by building a wall or erecting a fence, but where a boundary agreement does not involve a conscious transfer of land, as set out at point 2 above, it does not need to comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and as such a boundary agreement does not need to be in writing to be enforceable.
Such an agreement defines and delineates the boundary between the properties as from the root conveyance or transfer. As no one can convey or transfer more than they own, this type of agreement is of proprietary effect and binds successors in title whether or not they have knowledge of it. The agreement establishes on the ground the physical extent of the respective legal estates created by the conveyance or transfer. The boundary is presumed to have always been in that location.
The Land Registry gives practical guidance on drafting effective boundary demarcation agreements. These can either form the basis of an agreed application for a determined boundary pursuant to section 60 of the Land Registration Act 2002 or be noted on the registers of title.
The practice guide has been updated to refer to the judgment in the White v Alder case, and that ‘a boundary agreement which demarcated unclear boundaries bound successors in title even though they had no knowledge of it’.
On a practical level, it's advised to put any such agreement in writing and for both parties to sign the document together with a clear plan showing the relevant parcel of land, which is also signed by both parties to confirm their agreement to it. There is no prescribed form for a boundary agreement but there is a proposed format set out in the Land Registry's guidance.
Whilst a mortgagee does not generally need to be a party to a boundary agreement, if the presumption that a boundary agreement does not involve a transfer of land is not rebutted, then ‘the agreed boundary will be taken to be the legal boundary of the mortgagor’s estate from the start’. This will therefore be from the date of the charge. The buyer’s lawyer would therefore need to report this to their client’s lender and valuer in order to take instructions on whether there is an impact on value and/or if they wish to be a party to the agreement. If the agreement as to the boundary is not in writing,it may be necessary for a boundary agreement to be entered into before the lender will proceed to ensure certainty in the event of default by the buyer/borrower.
There will likely be changes made to replies to CPSE 1, enquiry 1 as well. Enquiry 1.4 requires the seller to provide copies of any agreements for the maintenance of any of the ‘boundary features’ which are defined in CPSE 1 as being all walls, fences, ditches, hedges or other features that form the physical boundaries of the property.
It's likely that this will be amended to also include reference to any agreement relating to maintenance of ‘the demarcation of any boundary’. However, given that boundary agreements which do not involve a transfer of land do not need to be in writing and could be verbal, where does this leave clients who may not be aware of an historic boundary agreement being in existence, which only comes to light once they have sold the property?
If the agreement is verbal or has not been noted on the title, then could a seller be at risk of a claim for misrepresentation if they give a reply of ‘not so far as the Seller is aware’ to CPSE 1.1(a), as to whether they are aware of any discrepancies between the boundaries shown on the title deeds?
This type of reply implies the seller has taken reasonable steps to ascertain the answer to the question but has not found any information to the contrary. Therefore, if the seller has not made any investigation, perhaps because they have not had reason to during their period of ownership, then using this phrase is misleading and could lead to issues further down the line. In those situations, the seller is best to confirm they have no knowledge to avoid a buyer claiming they relied on a false representation and suffered a loss as a result, should a previously undisclosed boundary agreement come to light.
We will have to wait and see if this decision is appealed. It further highlights the importance of recording in writing any agreement between neighbours regarding any changes to the boundary between their respective properties.
This is also reflected in the Land Registry guidance and means that when selling a property, the seller can provide a copy of the agreement to the buyer and the buyer can be satisfied that they will not take subject to a historic undocumented arrangement which they were not aware of.
For further information, please contact the real estate team.
