Introduction to English Land Law : Chapter 1 Part 4

Compulsory first registration

1. There are specific triggers that cause the requirement of compulsory registration of the fee simple or freehold estate : section 4(1)-(2).

2. This registration must be done within 2 months of the trigger, failing which it will be void for the purposes of transferring, granting or creating a legal estate : section 7(1) and the vendor will hold the property on trust for the transferee until such time as the registration is complete.

3. The relevant triggers are :

o on transfer of a fee simple for valuable or other consideration,

o on transfer of a fee simple by way of gift,

o on transfer of a fee simple in pursuance of a court order,

o on transfer of a fee simple by means of will or intestacy,

o on the grant of a lease of more than 7 years,

o on grant of any protected first legal mortgage.

Interests that override (overriding interests)

The third party coming onto the land is bound by such interests even though they never appear on any register and he does not have actual knowledge of the existence of such interests : section 29(1).

In relation to such interests, the onus rests on persons dealing with a registered estate to seek information outside the register to discover the presence of interests that override through a physical inspection of the land itself.

Note that the recognition of such interests goes against the mirror principle.

Interests that do not amount to interests that override after the LRA 2002 : equitable easements and profits, rights of persons in adverse possession, and the proprietary rights of non-resident landlords.

Schedule 1 para 1 / Schedule 3 para 1

Irrespective of whether any superior estate has been substantively registered, leases of less than 7 years are currently not eligible for substantive registration.

A legal lease granted for a term of less than 7 years [but more than 3 years] from the date of the grant is an interest which overrides on first registration. Note however if the lease (irrespective of its duration) is actually required to be the subject of first registration under the 2002 Act, it cannot be an interest that overrides : Schedule 3 para 1(a) & (b)

The protection available as an interest that overrides for leases does not require the tenant to show that he is in actual occupation of the land but this recognition under para 1 is only applicable to LEGAL leases : City Permanent Building Society v Miller [1952] Ch 840.

An equitable lease is not protected under para 1 although it may be enforceable against purchasers of the reversionary estate provided that the tenant was in actual occupation of the land at the date of the disposition : para 2.

Schedule 1 para 2 / Schedule 3 para 2

These comprise proprietary interests belonging to any person in actual occupation of the land.

In this case, the claimant’s occupation of the land must have been obvious at the time of the disposition : Schedule 3 para 2(c)(i).

The onus of inquiry is placed on the purchaser : Ferrishurst Ltd v Wallcite Ltd [1999] Ch 335.

In determining whether the occupier’s entitlement overrides, it is irrelevant whether the purchaser had actual notice of the right concerned : Sandhu v Singh [1995] Unreported.

The formula under Schedule 3 para 2 :

interest + actual occupation – inquiry = interest which overrides.

This formula is applicable except where

the actual occupier has unreasonably failed, on inquiry, to disclose his own entitlement : Schedule 3 para 2(b)

the relevant occupation was neither reasonably discoverable by, nor actually known to the purchaser : Schedule 3 para 2(c)

The interest claimed must be independent of the occupancy of the land. It may comprise, amongst others, an unpaid vendor’s lien : Ferrishurst Ltd v Wallcite Ltd; an option to purchase a freehold or leasehold estate : Webb v Pollmount [1966] Ch 584; a right of pre-emption : Kling v Keston Properties Ltd [1983] 49 P&CR 212 or any other interest in the land.

Once the protection has been triggered by the fact of actual occupation, the interest protected under Schedule 3 para 2 remains enforceable against the registered purchaser even if the owner of the interest that overrides ceases to occupy the land following the registration of the estate : London & Cheshire Insurance Co Ltd v Laplagrene Property Co Ltd [1971] Ch 499.

The protection accorded is only in relation to the land of which he is in actual occupation : Ferrishurst Ltd v Wallcite Ltd.

There are a variety of implied limitations on the range of interests which come within its scope :

Overriding interests must be recognisably proprietary in character

This means that it must be an interest affecting the estate of the vendor : City of London Building Society v Flegg [1988] AC 54

Actual occupation cannot, for example, protect the rights of a bare licensee as the nature of his rights are non-proprietary : Strand Securities Ltd v Caswell [1965] Ch 958.

Proprietary interests therefore include :

a legal lease : Ashburn Anstalt v Arnold [1989]; an equitable lease : Grace Rymer Investments Ltd v Waite [1958] Ch 831;

a beneficial interest under a bare trust : Hodgson v Marks [1971] Ch 892;

a beneficial interest under some other trust of land : Williams & Glyns Bank Ltd v Boland [1981] AC 487;

an inchoate equity based on proprietary estoppel;

an estate contract, including an option to purchase a legal estate : Webb v Pollmount Ltd; Lloyds Bank plc v Carrick [1996] 4 All ER 630;

a right of pre-emption created on or after 13 October 2003 : section 115;

all equities by estoppel and mere equities from the time the equity arises :section 116 : Birmingham Midshires Mortgage Services Ltd v Sabherwal [2000] 80 P&CR 256; etc.

Overriding interests must be intrinsically enforceable

At the date of the relevant registrable disposition, the interest which is alleged to override should be fully enforceable and undiminished by any estoppel, postponement or waiver (express or implied) : Woolwich Building Society v Plane [1997] EWCA Civ 2372.

Express postponement : the enforceability of an occupier’s rights are curtailed by any express agreement on his part, immediately before a registrable disposition, to concede priority to the competing rights of some other person : Le Foe v Le Foe & Woolwich plc [2001] 2 FLR 970.

Example where a property is in the sole name of one party, a co-occupier is required by the bank to sign a waiver of his rights when the owner takes a mortgage : Woolwich Building Society v Dickman [1996] 3 All ER 204.

Implied postponement : Paddington Building Society v Mendelssohn [1985] 50 P&CR 244.

Statutory exclusion from the category of interests that override

Amongst the interests specifically excluded by statute from overriding status are :

Home rights under the Family Law Act 1996 : this is with reference to the rights of the deserted wife to remain in the family home.

National Provincial Bank Ltd v Ainsworth [1965] Ac 1175 : this is purely a personal entitlement effective only between the spouses themselves. Therefore such an equity, which lacks proprietary character, could not override a husband’s disposition to the bank, regardless that the person entitled to it is in actual occupation of the home.

The equitable rights of settled land beneficiaries : these arise under theSettled Land Act 1925 and are expressly excluded : Schedule 3 para 2(a).

Rights conferred by an access order under the Access to Neighbouring Land Act 1992 : these arise where the courts permit un-consented entry upon adjoining / adjacent land for the purpose of carrying out basic preservation works on the entrant’s own land. This order may be protected by entry of a notice on the register of title of the burdened land.

No protection for undisclosed rights

Schedule 3 para 2(b) withholds overriding status from the interest of any actual occupier of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so.

The onus is on the purchaser to ensure that each occupier is asked what rights he has in the land and these inquiries must be made BEFORE the disposition :Habermann v Koehler [1996] 73 P&CR 515.

Where the occupier does disclose some existing entitlement, the purchaser will be able to demand a waiver of that entitlement as a precondition to the transaction. However if no waiver is obtained, the entitlement of the occupier simply overrides the purchaser : Lloyds Bank plc v Rosset [1989] Ch 350 although this was not the outcome of this specific case.

Where inquiry is made, an onus rests on the actual occupier to disclose any proprietary interest belonging to him if he could reasonably have been expected to do so. If the occupier fails to reveal, or conceals his interest, then his interest will not override : Holaw (470) Ltd v Stockton Estates Ltd [2001] 81 P&CR 404.