Enforcement of Interests

Question 1

The Land Registration Act 2002

Answer 1

Simply, the LRA 2002 places all estates and interests in land into one of three categories and
explains what must be done in terms of registration in order to make those estates and interests
binding on new owners of the servient land.
The categories interact with LRA 2002, s 28 and s 29 to determine whether an estate or interest
will be binding on new owners of servient land.
The three categories are:
* Registrable dispositions
* Interests protected by entry
* Overriding interests

Question 2

The ‘basic rule of priority’

Answer 2

It is logical to start with the ‘basic rule of priority’ in LRA 2002, s 28. It states that an interest of
whatever kind will take priority over later dispositions.
Example: The basic rule of priority
If a man has a registered freehold estate and grants an easement to one neighbour, then enters a
covenant with another neighbour, then sells the freehold to a women, the women will take the
freehold subject to the pre-existing easement and covenant.
LRA 2002, s 29 provides an important exception to this rule, which operates where there is a
disposition of a registered estate for valuable consideration. This is actually the majority of land
transactions.

Question 3

‘A disposition of a registered estate for valuable consideration’

Answer 3

LRA 2002, s 29 is difficult to understand, but its effect is this:
Enforcement of interests 5 over registered land
A registrable disposition of a registered estate made for valuable consideration will take priority
over any pre-existing rights in the land except those which have been protected on the register or
those which are overriding interests. This means that s 28 and the normal rule of priority is limited in scope to transactions not made
for valuable consideration: where the new owner is a ‘donee’ (also referred to as a ‘volunteer’).

Question 4

Registrable dispositions: legal interests

Answer 4

To achieve an accurate register of title, LRA 2002, s 27 states that some transactions, set out in s
27(2) and called ‘registrable dispositions’, must be completed by registration. Section 27(1) states
that the dispositions do not operate ‘at law’ until the registration has been completed. We call this
‘compulsory registration’.
Some of the dispositions listed in s 27(2) relate to legal estates. The transfer of an existing
registered freehold or leasehold estate must be completed by registration (s 27(2)(a)); as must the
grant of a new lease for a term of more than seven years (s 27(2)(b)).

Question 5

Express legal easements

Answer 5

The express grant or reservation of an easement is a ‘registrable disposition’ (LRA 2002, s
27(2)(d)). This means that once the formalities of a deed have been met, the deed must be
submitted for registration and the easement will not be legal until it has been properly registered.
The easement will then appear on the property register of the dominant land and in the charges
register of the burdened land. It will be a properly registered disposition and will bind a purchaser
for valuable consideration (LRA 2002, s 29(2)).

Question 6

Grant of a legal mortgage

Answer 6

The grant of a legal mortgage (also known as a legal charge) by a borrower is a ‘registrable
disposition’ (LRA 2002, s 27(2)(f)).
As with express legal easements, the mortgage must be created by a deed which is submitted for
registration. The mortgage will not be legal until it has been properly registered, and failure to do
so has a huge impact on the lender’s powers to repossess and sell.
Once registered it appears in the charges register of the mortgaged land.

Question 7

Grant of a landlord’s right of entry

Answer 7

The grant of a landlord’s right of entry, known as a right of forfeiture, is a ‘registrable disposition’
(LRA 2002, s 27(2)(e)). As with other legal interests it must be created by a deed and must be
submitted for registration. The right will not be legal until it has been properly registered.
A right of entry is a right to bring a legal estate, a lease, to an end. It is a very powerful right which
has drastic consequences for the tenant, thus it is logical that it has a high degree of formality to
meet.

Question 8

Equitable interests protected by entry and overreaching

Answer 8

An equitable interest in the land (eg an estate contract) can be validly created and exist without
any registration requirement.
Whether the equitable interest with be binding and enforceable against a third-party purchaser
of the burdened land will depend upon whether it has been protected by entry of either a notice
or restriction.
5: Enforcement of interests over registered land 103
All equitable interests (other than an interest in a trust of land) must be protected by the entry of a
notice in the Charges Register of the burdened land (LRA 2002, s 32).
If an interest is protected this way, it will bind subsequent purchasers, who may be buyers or
lenders (LRA 2002, s 29(2)).
Remember: a new owner of the burdened land who is a donee would be automatically bound by
any equitable interests regardless of whether they have been protected under the basic rule of
priority (LRA 2002, s 28).

Question 9

1 Interests which may be protected by entry of a notice (LRA 2002, s 32)

Answer 9

A notice is the appropriate way to protect an interest which is intended to last beyond a change
of ownership.
The most commonly encountered interests which cannot be protected by notice are beneficial
interests in a trust of land (which can be protected by a restriction), and short legal leases for a
term of three years or less (which are binding as overriding interests).
A notice is intended to bring the relevant equitable interest to the attention of a purchaser,
notifying them that the interest will be binding if the purchaser proceeds.
The entry of the notice does not guarantee that the interest has been properly created so as to be
valid. It simply means that if the interest has been properly created, it will be binding.
Some interests must be protected by notice to be enforceable against a purchaser; others may
be, but do not have to be. For example, legal leases which are granted for more than three years
and up to seven years can be, but do not have to be protected by notice as they will still be
binding as overriding interests.
Assessment focus point
A notice in the charges register must not be confused with the ‘doctrine of notice’ which is
relevant only to unregistered land.

Question 10

Interests which may be protected by entry of a restriction (LRA 2002, s
40)

Answer 10

A restriction in the Proprietorship register is the appropriate way to protect an interest which is not
intended to last indefinitely. It is a means by which conditions can be imposed on a purchaser: it
is only when the conditions have been fulfilled can, for example, the transfer of the freehold to a
purchaser be registered.
104 Land Law
A restriction may also be entered where the registered proprietor of the land is bankrupt. In that
situation, the trustee in bankruptcy may enter a restriction to the effect that no disposition of the
land may be registered without the trustee in bankruptcy’s consent. This ensures that no sale can
take place without the trustee’s knowledge, and the trustee’s consent can be granted on condition
that the sale proceeds are paid direct to the trustee, rather than the bankrupt.
The best example of use of a restriction is by a beneficiary of an interest in a trust of land. In this
type of case, a restriction will usually ensure that overreaching occurs.
Assessment focus point
Restrictions cannot prevent dispositions altogether: they simply impose conditions which must
be fulfilled before the disposition can be registered.

Question 10

Overreaching

Answer 10

Overreaching is a very important concept in land law and applies to interests in trusts of land and
to no other interest.
Overreaching is governed by LPA 1925, s 2 and s 27 and applies equally to registered and
unregistered land. It is not a feature of one system, rather it is something that must be considered
if a trust of land exists.
A purchaser (which may be a buyer or lender) of land that is subject to a trust will need to ensure
it will not take the land subject to any equitable interest a beneficiary of the trust has. To ensure it
takes the land free of any equitable interest held by a beneficiary it must overreach the interest.
3.3.1 How is an equitable interest in a trust of land overreached?
A purchaser must make sure that the capital money (which is the purchase price or the mortgage
advance) is paid to at least two trustees. The money must not be paid direct to the beneficiaries,
unless they are also a trustee. This has the effect of transferring the equitable interest from the
land to the monies paid.
3.3.2 How does a restriction trigger overreaching?
If a restriction is entered on a registered title in respect of an interest in a trust of land, it will
require the purchaser to pay the monies to two trustees. A restriction used in this way therefore
triggers overreaching, and ensures a purchaser/lender will take the land free of the trust interest.

Question 11

Overriding interests

Answer 11

Overriding interests: They are interests which will bind a purchaser for value, whether a buyer
or lender, even though they have not been protected by registration.
The main aim of land registration is to ensure that the register represents a complete record of all
of the interests affecting any particular piece of land, enabling a prospective purchaser to view
the register and see exactly what interests benefit and burden it.
Overriding interests defeat that aim. Their recognition has been contentious ever since they were
introduced in the LRA 1925 because they undermine the integrity of the register.
The Law Commission did consider abolishing overriding interests altogether but recommended
retaining them in limited form in the LRA 2002. Their continued existence means that inspections
and enquiries which go beyond simply looking at the registers of title will still be needed.
Overriding interests may be said to provide a safety net of protection for those who are not able
to, have not, or cannot reasonably be expected to take steps to protect their interests in land.
4.1 The main categories
If there is a ‘registrable disposition’ of the land, the new registered proprietor will take the land
subject to any overriding interests.
Where land is already registered, the list of overriding interests is set out in LRA 2002, Schedule 3.
These are:
* Paragraph 1: legal leases granted for a term of seven years or less.
* Paragraph 2: equitable interests held by people in actual occupation of the land, subject to
exceptions.
* Paragraph 3: implied legal easements or profits a prendre, if conditions are met.

Question 12

What is ‘actual occupation’?

Answer 12

Williams & Glyn’s Bank v
Boland [1981] AC 487
Actual occupation is to be given its plain meaning, and involves a
degree of physical presence.
Abbey National v Cann
[1991] 1 AC 56
There must be ‘permanence and continuity’ and not simply a
‘mere fleeting presence’ preparatory to moving in.
Thompson v Foy [2010] 1
P&CR 16
The person claiming the interest must be in actual occupation at
the time of the transfer deed and possibly also at the time of
registration to claim an overriding interest.
Chhokar v Chhokar [1984]
FLR 313
Actual occupation is not defeated by temporary absences such
as holidays, hospital stays or business trips.
Stockholm Finance Ltd v
Garden Holdings Inc
[1995] NPC 162
There will be a point at which a prolonged absence means there is
no actual occupation. For example, protracted periods of
absence in a second home elsewhere will make an argument for
actual occupation unsupportable.

Question 13

Exceptions to actual occupation

Answer 13

LRA 2002, Sched 3, para 2(b) and (c) sets out two situations in which there will be no overriding
interest even though the holder is in actual occupation.
An interest will not override a disposition where it is:
(b) an interest of a person 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.
Note. It is the holder of the interest (or their solicitor) who must be asked and fail to disclose, and
those who do not know they have an interest cannot reasonably be expected to disclose it so it
remains overriding
(c) an interest –
(i) which belongs to a person whose occupation would not have been obvious on a
reasonably careful inspection of the land at the time of the disposition, and
(ii) of which the person to whom the disposition is made does not have actual knowledge
at the time.
It is the occupation which would not have been obvious, and it is the interest which the purchaser
does not know about. Both elements must be met for if the interest is to lose overriding status.
This protects purchasers from interests which they do not know about, and where there is no
obvious actual occupation to prompt an enquiry.

Question 14

Title deeds

Answer 14

In unregistered land, the title information (ie who owns the property) is contained in various old
paper title deeds which show:
* The history of the land;
* Who has owned the land;
* How the beneficial title is held where there are co-owners;
* What rights benefit and/or burden the land.
In unregistered land, the documentation is held by the right holder, not by a centrally
administered authority.
As the seller may have lots of old title deeds of varying degrees of usefulness relating to the
property, they must only select those which contain relevant detail about the property and then
make a copy of these documents. This bundle of relevant copy documents is called an epitome of
title. On a sale, the seller is required to show the epitome of title to the buyer. This is called
deducing title.
On completion, the seller hands the originals over to the buyer. The buyer then needs to send
these original documents to the Land Registry so the land and the buyer’s ownership can be
registered for the first time.

Question 15

Enforcement of legal and equitable third-party rights in unregistered
land

Answer 15

Purchasers will need to ascertain if there are any third-party proprietary rights which could bind
them as the new owner of the unregistered land following completion.
In order to do this a purchaser needs to identify whether any legal or equitable interests exist.
Enforcement of interests 6 over unregistered land
KEY
TERM
Unlike registered land, there is no central register which contains details about the interests that
benefit/burden a piece of land. Instead, a buyer of unregistered land must conduct extensive
searches to ascertain what rights exist.
There are different rules depending on the nature of a right and the year it was created.

Question 16

Equity’s darling

Answer 16

• Prior to 1926, legal interests over land would always be binding. However, equitable interests
  would not be binding on ‘equity’s darling’.
• Equity’s darling is a purchaser of the land who has acted in good faith and does not have
  notice of the interest. This required a purchaser to undertake extensive investigations of a
  piece of land.
• Post 1926, legal interests remained binding over everyone. For equitable interests a ‘stop gap’
  solution was introduced which requires the majority of equitable interests be protected by way
  of a land charge.
• Equitable easements and restrictive covenants created before 1926, and equitable interests
  under a trust cannot be protected by a Land Charge and remain subject to the doctrine of
  notice

Question 17

Compulsory first registration of unregistered land

Answer 17

Once completion has taken place, the buyer of the unregistered land must register it at the Land
Registry for the first time.
This is compulsory first registration under LRA 2002, s 4. Failure to register the land means that
legal title (the legal ownership) will revert to the seller after two months.
Once land has been registered for the first time, it is then governed by the registered land system

Question 18

Land charges

Answer 18

The majority of equitable interests created after 1926 over unregistered land will need to be
protected by way of a land charge, under the LCA 1972
There is one exception to the rule that only equitable interests are registered as land charges, and
that is a puisne mortgage.
A puisne mortgage is a second legal mortgage.
A first legal mortgage over unregistered land is protected by the depositing of the title deeds with
the mortgage lender (the mortgagee). It is not possible for a second legal mortgage to be
protected this way because the title deeds are already held by the first mortgage lender. For this
reason, a second mortgage holder must protect their interest by the entry of a land charge.
Interests that can be protected by entry of a land charge:
The only equitable interests that cannot be protected by way of a land charge are interests in a
trust of land and equitable easements and restrictive covenants created pre-1926.
Note. A spouse’s matrimonial right of occupation is not an interest in the land. It a statutory right,
for a non-owning spouse, to occupy the family home under the Family Law Act 1996.

Question 19

Interests that can be protected by entry of a land charge:

Answer 19

Puisne mortgage (ie second or subsequent
legal mortgage)
Class C(I)
Estate contract (eg a contract to buy land, an
option agreement, or a contract to have a
lease granted over land)
Class C(IV)
Restrictive covenant created after 1926 Class D(II)
Equitable easement created after 1926 Class D(III)
Spouse’s matrimonial right of occupation Class F

The only equitable interests that cannot be protected by way of a land charge are interests in a
trust of land and equitable easements and restrictive covenants created pre-1926.
Note. A spouse’s matrimonial right of occupation is not an interest in the land. It a statutory right,
for a non-owning spouse, to occupy the family home under the Family Law Act 1996.

Question 20

The effect of entry of a land charge

Answer 20

Once the land charge is entered on the Land Charges Register, the interest will be binding on a
purchaser (LPA 1925, s 198). This is so irrespective of the state of the purchaser’s knowledge.
This overcomes the uncertainty associated with the old doctrine of notice, at least in respect of
those interests which are able to be protected by a land charge.
Of course, entry of a land charge does not guarantee the validity of the interest in question, so
that if something is protected which is not actually an interest in land, protection by entry of a
land charge will not confer validity on it.

Question 21

The effect of non-entry of a land charge

Answer 21

LCA 1972, s 4 explains the effect of non-entry in respect of each land charge. Although different
terminology is used depending on the land charge in question, the effect of this provision is that
non-protection of an interest will make it void against a purchaser of the land, but not against a
donee ie someone who is gifted or who inherits the land.

Question 22

Entering a land charge

Answer 22

The land charge is entered against the name of the landowner at the time the right is
granted/created LCA 1972, s 3(1).
The name to enter the land charge against, is the name in the title deeds, rather than the name
as it may appear in other contexts, such as a birth certificate.
Should the land charge be entered against an incorrect name (for example, because there has
been an omission of one of the estate owner’s names which appears in the title deeds), the
protection is a nullity.

Question 23

The doctrine of notice

Answer 23

The enforceability of certain equitable interests in unregistered land depends on the doctrine of
notice.
Before 1926, the doctrine of notice applied to the enforceability of all equitable interests in the
land.
Since 1926, the doctrine of notice only applies in respect of:
* Equitable easements and restrictive covenants created before 1926.
* Equitable interests in a trust of land that have not been overreached and therefore the interest
has not transferred from the land to the purchase money.
Assessment focus point
Remember, overreaching is a concept that applies whenever there is a trust of land. It is not a
feature of one system. Where the land held on trust is unregistered, there is no means of
alerting a buyer to the existence of the trust to trigger overreaching ie in the unregistered land
system, there is no equivalent of a restriction that exists in the registered land system.

Question 24

Equity’s darling

Answer 24

Under the doctrine of notice, an equitable interest over the land is binding on anyone except
‘equity’s darling’.
‘Equity’s darling’ is a ‘bona fide purchaser for value of a legal estate without notice’.
* Bona fide: means the buyer must act in good faith
* Purchaser: means any person who acquires an interest in the land otherwise than by
operation of law (obtaining land upon intestacy would be an example of operation of law)
* Value: means money or money’s worth or future marriage (including nominal consideration, as
the adequacy of the value is not investigated)
* Legal estate: means a freehold or leasehold estate (or, for this purpose, a charge by way of
legal mortgage)
* Without notice: means without any of the three kinds of notice described on the next page:
actual, constructive or imputed notice
A buyer has to prove all of these elements to be ‘equity’s darling’.

Question 25

2 Notice

Answer 25

To be equity’s darling, the purchaser of the land must be ‘without notice’.
Notice can be actual, constructive or imputed.
3.2.1 Actual notice
The purchaser actually knows of the equitable interest.
3.2.2 Imputed notice
This is notice received by the buyer’s agent, for example the solicitor on a land purchase.
Where the agent has notice, whether actual or constructive, of an interest, that knowledge is
imputed to the buyer.
3.2.3 Constructive notice
A purchaser will be fixed with constructive notice of an interest if they fail to pursue a line of
enquiry which ought reasonably to have been made. For example, if a purchaser is aware that
there are, or may be, covenants restricting the use of the land but fails to discover their exact
content; they will nevertheless take the land subject to such restrictions as may exist.
The obligations on a purchaser to make enquiries is limited to making a proper investigation of the
title deeds, and making a proper inspection of the land.
118 Land Law
When checking the land, the purchaser must take care to see who has use of the land.
For example, is there any evidence of worn tracks which may suggest a right of way? If yes, who is
using that right of way?
The purchaser should also ensure that that it makes enquiry of all the occupiers of the land.
Where the purchaser discovers that it is not dealing with the legal owner, the purchaser should
enquire of that person what interest, if any, they hold in the land.

Question 26

Equity’s darling – is the interest then lost forever?

Answer 26

The full rule is that an equitable interest is void against such a purchaser or someone claiming
through them.
It follows that once an equitable interest becomes void for want of notice, it cannot be revived so
as to bind a subsequent buyer who does have notice of the equitable right, for otherwise equity’s
darling might not be able to realise the full value it paid for the land on a subsequent sale.

Question 27

Problems with the doctrine of notice

Answer 27

From the perspective of the buyer:
* The buyer would have to satisfy all the requirements of being a bona fide purchaser for value
of a legal estate without notice in order to take free from the interest.
* The buyer would need to carry out extensive investigations of both the property and
associated documents to find out about existing equitable interests, otherwise it might find
itself bound.
* This is time consuming, expensive and may not guarantee discovery of those interests which
should be discovered.
From the perspective of the owner of the interest:
* The interest is fragile because it could be destroyed forever if a bona fide purchaser for value
of a legal estate without notice purchased the land. This would be through no fault of the
owner of the interest and in circumstances where the owner could not have done anything to
protect it.
Assessment focus point
Remember, a donee (someone who is gifted or inherits the estate) can never be equity’s
darling, even if they do not have notice of the interest.