Public opinion sought on reform of contradictory land law

8 September 2023

The Law Reform Commission is inviting members of the public to submit their views on the potential reform or repeal of a 25-year-old land law.

The Settled Land Act (1998 Revision) provides a legal way to create successive interests in land – but parts of it contradict another already established law.

The commission has dubbed it “unsatisfactory” and says that, while rarely used, the conflicting laws have the “potential for highly problematic outcomes”.

An online discussion paper, published on Friday, 1 Sept., outlines the history of the act with reference to the core concepts.

It traces the development of the law in the United Kingdom and examines recent reforms.

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According to the commission, the “little known” act has its roots in a form of trust developed to protect hereditary land holdings under English common law.

The paper also outlines the existing Cayman legislative regime on settled land and trusts, and identifies the difficulties with the current system.

Finally, it briefly examines reforms and attempts at reform in other jurisdictions, and proposes two models for the Cayman Islands.

“The continued operation of the act has implications for the modern system of land trusts and land registration in the Cayman Islands ,” the commission warns.

Cayman’s law

The Cayman Islands enacted its own Settled Land Act on 1 Jan. 1964. It was modelled on the United Kingdom’s 1882 act, and was updated several times in the years following.

The definition of ‘settlement’ – during which land is officially surrendered to another person in a written document – contains the same core requirements in both countries’ laws.

Cayman’s act gives the new ‘tenant for life’ the power to sell, exchange, lease and mortgage land that is the subject of a settlement, but they do not legally own it.

According to the discussion paper, they must consider the interests of all parties entitled under the settlement, and are deemed to have the duties of a trustee.

Meanwhile, Cayman’s Registered Land Act (2018 Revision), in a contradictory rule, allows the tenant for life to be registered as proprietor of the land.

Problems with act

The commission considers the current law to be “unsatisfactory” for several reasons.

The Settled Land Act (1998 Revision) and the Registered Land Act (1998 Revision) do not interact in a logical fashion, it says.

“The overlap between the two acts creates the potential for highly problematic outcomes.”

Section 123(1) of the Registered Land Act (1998 Revision) allows the tenant for life of settled land to be registered as proprietor of the land – contradicting the settled land law.

The commission adds there is no justification for retaining a dual system of trusts and settlements, and “a unitary system of statutory trusts would simplify the statutory regime”.

Options for reform

The Law Reform Commission provides two options for reform.

In the first, it says the law would not be repealed, but would be amended so that no future settlements can be created.

Existing settlements would be preserved, and the act would continue to apply to those settlements.

All future life interests in land would be created under a trust of land, and would be governed by new provisions of the Trusts Act (2021 Revision).

In its second option, the commission says the act would be repealed.

A transitional period of a year would be provided for any existing settlements to be converted into a ‘trust of land’ governed by the Trusts Act (2021 Revision).

It adds that regardless of what option is chosen, section 123(1) of the Registered Land Act (1998 Revision) should be repealed.

“This would remove the danger of the overlap between the two acts leading to problematic outcomes,” the commission said.

This would mean the tenant for life under a settlement could no longer be registered as the owner of settled land, but would still have the power to convey the land.