The Land Registration Rules 1995 come into force on 3 April 1995.

Apart from amending the rules relating to applications made by charities, the main effect of these rules is to abolish the procedure for entering notices of deposit and notices of intended deposit of land and charge certificates on the register of title, whilst preserving the effect of such notices as are already entered on the register.The result of this will be that, from 3 April, those seeking to protect equitable charges which are supported by the deposit of the land certificate with the chargee will need to apply to register a notice under s.49 of the Land Registration Act 1925 or a caution under s.54.Historically, it has always been possible to create a lien over land by the mere deposit with a creditor of the title deeds to unregistered land, with the intention that such deposit should provide security for the debt.

Such deposit has been treated in equity as giving rise to a contractual obligation to create a legal mortgage over the land.In relation to registered land effect was given to this principle by s.66 of the 1925 Act, which provides that: 'The proprietor of any registered land or charge may...create a lien on the registered land or charge by deposit of the land certificate or charge certificate; and such lien shall...be equivalent to a lien created in the case of unregistered land by the deposit of documents of title or of the mortgage deed by an owner entitled for his own benefit to the registered estate, or a mortgagee beneficially entitled to the mortgage, as the case may be.'To supplement this provision and allow notice of the existence of liens created by deposit of a land or charge certificate to be entered on the register, rr.239 to 246 of the Land Registration Rules 1925 set up the present notice of deposit or intended deposit machinery.

Under these provisions, a notice of deposit can be registered by a depositee of the certificate to give notice of a lien created by actual deposit of an existing land or charge certificate and a notice of intended deposit can be registered by an intending depositee (equivalent to that created by actual deposit of a land or charge certificate) arising as the result of an intention to deposit the land or charge certificate, when issued, with another person as security for money.However, under s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, which came into force on 27 September 1989, the substantive law relating to contracts for the disposition of interests in land generally was amended.

In particular, s.2 of that Act provides that a cont ract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document (or, where contracts are exchanged, in each) and that the document incorporating the terms (or where contracts are exchanged, one of the documents incorporating them) must be signed by or on behalf of each party to the contract.It follows that, from 27 September 1989 onwards, it has been possible to effect a valid contract for the creation of a charge over land only by reducing the contract to writing in the form of a document signed by or on behalf of the parties which sets out, or incorporates by reference, all the terms of the contract.The general opinion has been that the new law prevents effective creation of a lien over land by the mere deposit of title deeds in the case of unregistered land and there has been considerable doubt as to the ability of proprietors of registered land to create such a lien by mere deposit of the land certificate.

However, there has been a lack of certainty on this last point because the 1989 Act did not repeal or amend s.66 of the 1925 Act.

It has therefore remained a possibility that the retained s.66 has some residual efficacy in allowing the creation of liens over registered land notwithstanding the 1989 Act.However, the case last year of United Bank of Kuwait plc v Sahib [1995] 2 WLR 94 which concerned the deposit of a land certificate, has confirmed that s.2 of the 1989 Act now prevents the creation of a lien by mere deposit of a land certificate.

No doubt it will remain important for someone in whose favour an equitable charge over registered land is created by means of a memorandum of deposit or other instrument complying with s.2 of the 1989 Act to obtain and hold the relevant land or charge certificate.

However, possession of the certificate is clearly only incidental to the existence of an effective signed instrument in writing if a valid charge is to subsist.It follows that the provisions in the Land Registration Rules 1925 relating to notices of deposit or intended deposit are now positively misleading.

Applicants are still able to apply for entry of notice of deposit, and the registry is still required to register them.

However, if liens can no longer be created by mere deposit of the title deeds, or of a land or charge certificate, the entries on the register will achieve only an illusion of protection.Accordingly, the registry has recently been issuing notices to applicants on completing the registration of notices of deposit or intended deposit, warning them of the potential difficulties.

However, in the longer term it was clear that it would be inappropriate and unhelpful to allow the facilities for registering notices of deposit and intended deposit to remain available.Accordingly, by r.4 of the Land Registration Rules 1995, rr.239 to 243 of the 1925 rules are amended or revoked so that, with effect from 3 April 1995, application can no longer be made for the entry of a notice of deposit or intended deposit.

The amended r.239 provides for the continuing effect of such notices entered before 3 April 1995.

The procedure for withdrawal of notices of deposit and intended deposit remains unaltered.Where a valid equitable charge is created by an instrument in writing, such as a memorandum of deposit which complies with s.2 of the 1989 Act, it will still be capable of being the subject of an entry on the register.

Although a notice of deposit or intended deposit will no longer be available, application can be made for entry of a notice under s.49 of the 1925 Act where the relevant certificate can be lodged with the application.

Otherwise, where such a charge is created but the relevant certificate is not available to be lodged at the registry, application can be made for entry of a caution against dealings under s.54 of the 1925 Act.The Land Registration Rules 1995 also amend rr.60 and 124 of the 1925 rules in their application to land held by charities.

Under the amended r.60, charity trustees who apply voluntarily to register land which they already own are required to supply the same information about the name and status of the charity as where they acquire the land from a third party, so that the appropriate charity restriction can be entered on the register.Under the amended r.124, where there is a change of trustees, charity trustees are required to apply for entry of the appropriate charity restriction on the register where this is not already entered on the register (for example, because one of the restrictions applicable to a charity which was appropriate before the advent of the Charities Act 1993 is still entered on the register).