Proctor Trial - Registration of Title

Question 1

What does some someone who contributes to the purchase price acquire?

Answer 1

An equitable interest behind a resulting trust.

Question 2

Does someone in actual occupation have an overriding interest or a minor interest?

Answer 2

Not always. The occupier must hold an interest that is proprietary, not personal.

Question 3

Can an equitable interest behind a resulting trust override the interest of a legal mortgagee?

Answer 3

Generally no. But an equitable interest behind a resulting trust held by someone in occupation is protected as an overriding interest, Sch.3, para 2, LRA 2002. Also, the interest may be protected, as a minor interest, by an entry of a restriction in the proprietorship register of the title, ss.40, 43 LRA 2002. The restriction would have prohibited a dealing with the registered estate unless a purchaser or mortgagee obtain a receipt from two trustees

Question 4

To establish an overriding interest, when must actual occupation must be established?

Answer 4

At the time of completion of the disposition, i.e. the transfer or mortgage, Sch.3, para 2; Cook v The Mortgage Business (2012); Abbey v Cann (1991).

Question 5

What are the two main exceptions to the rule that someone in actual occupation has an overriding interest under Sch. 3, para 2, LRA 2002?

Answer 5

When an occupier had reasonable opportunity to disclose his interest upon inquiry, but failed to do so, para 2(b).
When the interest would not have been obvious on a reasonably careful inspection at the time of disposition, para 2(c)(i) and the disposee has no actual knowledge of the interest, para 2(c)(ii).

Question 6

What are the three sections of a Registered Title?

Answer 6

Property Register, Proprietorship Register, and Charges Register.

Question 7

What is the exception to the ‘mirror principle’ that the register reflects accurately all the facts material to a given title?

Answer 7

Unregistered interests which override.

Question 8

What is the insurance principle?

Answer 8

The title is guaranteed by the state and is indefeasible without compensation.

Question 9

What is the curtain principle?

Answer 9

Trusts are kept off the title in order to simplify the transfer of the legal estate.

Question 10

What conceptual change to facilitate electronic conveyancing was introduced by the LRA 2002?

Answer 10

From registration of title to title by registration.

Question 11

What are the three categories of interest in registered title?

Answer 11

1. registered estates and interests the existence of which is guaranteed by entry on the register
2. protectable interests by which an entry can be made on the register protecting or safeguarding a claim to such an interest
3. overriding interests which bind even though they have been neither substantively registered nor protected by means of an entry on the register.

Question 12

What are the estates and interests capable of registration?

Answer 12

Only those estates and interests capable of existing at law; they are (a) an estate in fee simple absolute in possession; (b) a term of years absolute, s.1(1), LPA 1925; a charge by way of legal mortgage, s.1(2)(c).

Question 13

What are third party rights (minor interests) which need to be protected by entry on the register?

Answer 13

All interests which are neither registrable (s.27 LRA 2002) nor overriding. Unlike the former category of registrable
interests, any entry on the register, in respect of a minor interest, does not guarantee the existence of such an interest but simply preserves its priority, insofar as it exists, against a subsequent disposition.

Question 14

What are the two kinds of “minor interest” and how are they protected?

Answer 14

1. A notice is a mechanism by which commercial equitable interests are nailed to the land to ensure they survive subsequent dispositions (s.32 LRA 2002).
2. A restriction provides a means to apply any limitations on a registered proprietor’s ability to deal with the land and is used to ensure that family equitable interests move from the land to the proceeds of sale (s.40 LRA 2002).

Question 15

What is the difference between family equitable interests and commercial equitable interests under the LRA 2002?

Answer 15

Family equitable interests cannot be protected by a notice under s.33 LRA 2002, unlike commercial equitable interests, which can be protected in this way. Commercial equitable interests are “nailed to the land,” meaning they bind subsequent purchasers when protected by a notice. Family equitable interests, however, are not capable of this form of protection.

Question 16

How can family equitable interests be safeguarded under the LRA 2002?

Answer 16

Although family equitable interests cannot be protected by a notice, they can be safeguarded by entering a restriction under s.40 LRA 2002. This restriction requires any purchaser to comply with overreaching rules, thus protecting the beneficiary by ensuring that the purchase monies are paid to at least two trustees, which helps prevent defrauding the beneficiary of their interest.

Question 17

What is overreaching, and how does it protect a beneficiary’s interest?

Answer 17

Overreaching occurs when the purchase monies are paid to at least two trustees, transferring the beneficiary’s equitable interest from the land to the sale proceeds. This prevents the beneficiary from being defrauded of their interest in the land. If overreaching takes place, the purchaser takes the land free from any overreachable interests, including family equitable interests

Question 18

Does a restriction entered under s.40 LRA 2002 bind subsequent purchasers to family equitable interests?

Answer 18

No, a restriction does not bind subsequent purchasers by attaching the family equitable interest to the land. Instead, it ensures that overreaching takes place, which transfers the interest from the land to the sale proceeds, thus offering protection to the beneficiary.

Question 19

What is the consequence if overreaching does not take place?

Answer 19

If overreaching does not occur, whether the purchaser is bound by the family equitable interest depends on whether that interest qualifies as an overriding interest under para.2 of Schedule 3 to the LRA 2002.

Question 20

What is an overriding interest, and when does it bind a purchaser?

Answer 20

An overriding interest is a legal interest in land that binds a purchaser even if it is not registered or protected by a notice. Under para.2 of Schedule 3 LRA 2002, certain equitable interests, like those of persons in actual occupation, can be overriding. If overreaching does not take place, a purchaser may be bound by the interest if it qualifies as an overriding interest.