Registered land: enforcement of interests

Question 1

SUMMARY OF EVERYTHING

Answer 1

Question 2

What is the enforcement of interests over registered land governed and administered by?

Answer 2

• Governed by Land Registration Act 2002
• Administered by Land Registry (maintain electronic register of all registered land in E+W)

Question 3

What does it mean to enforce a proprietary right against a third party?

Answer 3

To enforce it against a new owner of burdened land

Question 4

What determines whether a proprietary right is enforceable over the burdened land/?

Answer 4

The enforcement rules under LRA 2002

Question 5

What are the three categories that the LRA places all estates and interests into and what do they mean?

Answer 5

1. Registrable dispositions
2. Interests protected by entry
3. Overriding interests

Categories determine what must be done re registration to make them binding on new owners of servient land`

Question 6

What is the basic rule of priority?

Subject to the exception

Answer 6

An interest of whatever kind will take priority over later dispositions

I.e. unprotected interests will take priority

E.g. man has registered freehold estate and grants an easement to one neighbour, then enters a covenant with another neighbour, then sells freehold to women - the woman will take the freehold subject to the pre-existing easement and covenant

Question 7

What is the exception to the basic rule of priority?

Answer 7

A disposition of a registered estate for valuable consideration

Operates in majority of transactions affecting land

Question 8

What is the effect of a registered estate for valuable consideration?

The exception to basic rule of priority

Answer 8

A registerable disposition of a registered estate made for valuable consideration will take priority over any pre-existing rights in land except for those which have been protected on the register or those which are overriding interests

I.e. an interest not properly protected would not bind owner

E.g. a woman buys freehold land and registers the disposition, the woman takes land subject to interests which have been protected on register and overriding interests - but not subject to any interests which should have been protected but have not

Question 9

What will a donee take the land subject to?

Gifted/inherited

Answer 9

All pre-existing interests whether they have been protected by registration or not

I.e. bound by equitable interests not on register

Question 10

What does ‘valuable consideration’ not include?

Answer 10

Marriage consideration or nominal monetary consideration

Question 11

What happens to unprotected interests if land is purchased for non-valuable consideration, and then purchased for valuable consideration?

Answer 11

• First transaction: owner will be subject to unprotected interests
• Second transaction: owner not subject to unprotected interests and they are lost and not binding on subsequent owners on land

So if a third transaction involved a donee, they would not be bound by the previous unprotected interests

Question 12

What are registrable dispositions?

First category

Answer 12

Transactions that must be completed by registration (in order to create legal estate/interest)

Once created, are enforceable against new owner of land

Question 13

What is compulsory registration?

Answer 13

Dispositions will not operate ‘at law’ until registration has been completed

Question 14

What is covered by registrable dispositions?

Answer 14

• Transfer of registered freehold or leasehold
• Grant of a lease for more than 7 years
• Express legal easements
• Grant of a legal mortgage
• Grant of a landlord’s right to entry AKA right of forfeiture

Question 15

Where will easements and mortgages appear on the official copies of the land?

Answer 15

• Easements = property register of dominant land, charges register of burdened land
• Mortgages = charges register of mortgaged land

Question 16

What does the ‘interests protected by entry’ category cover?

Second category

Answer 16

Equitable interests in the land

Question 17

What can an equitable interest in the land (e.g. an estate contract) be validly created and exist without?

Answer 17

Any registration requirement

Question 18

How must equitable interests be protected by entry of notice?

Two ways

Answer 18

1. Notice in the Charges Register of the burdened land; or
2. Restriction in the proprietorship register of the burdened land

If so = will bind subsequent purchasers

Appropriate way to protect an interest which is intended to last beyond a change of ownership

Question 19

What 2 equitable interests cannot be protected by notice (in the charges register)?

Answer 19

• Beneficial interests in a trust of land (can be protected by restriction)
• Legal lease for a term of three years or less (binding as overriding interests)

Legal leases between >3 and up to 7 years may be protected by notice but do not have to be - will still be binding as overriding interests

Question 20

Does the entry of a notice guarantee that the interest has been properly created so as to be valid?

Answer 20

No - only means that if interest has been properly created it will be binding

Question 21

What are the equitable interests that can be protected by entry of notice?

Answer 21

• Restrictive covenants affecting freehold land
• Estate contracts (failed legal lease/easement/mortgage but contains all terms in writing and signed by both parties)
• Equitable easements (for uncertain term)
• Equitable leases
• (Optionally legal leases more than 3 and up to 7 years)

Question 22

What is restriction in the proprietorship register for and what does it do?

Answer 22

• Appropriate way to protect interest not intended to last indefinitely
• Conditions can be imposed on a purchaser - only when these are fulfiled can transfer of freehold to purchaser be registered

E.g. beneficial interest in the trust of the land - restriction might instruct purchaser to pay capital money to at least 2 Ts ensuring that B’s interest is overreached and converted into an interest in the sale proceeds

E.g. registered proprietor of the and is bankrupt - restriction entered to effect that no disposition may be registered without the T in bankruptcy’s consent

Question 23

Can restrictions prevent dispositions altogether?

Answer 23

No - they simply impose conditions which must be fulfilled before disposition can be registered

Question 24

To what interests does overreaching apply?

Answer 24

Only B’s equitable interests in trusts of land (e.g. the beneficial interest in land)

Both registered and unregistered

Question 25

What do the overreaching provisions say must happen?

Answer 25

To take land free of B’s interests, the purchaser/lender must make sure that the capital money (price or mortgage funds) is paid to at least 2 Ts not direct to Bs (unless they are also Ts

Avoid situation where purchaser mortgagee is bound by the pre-existing interests of B

E.g. Flegg - Fleggs (mum and dad) and Maxwell-Browns (daughter and son-in-law) bought house together - legal title held by MBs, Fleggs had beneficial interest from contribution to purchase, MBs - unbeknownst to Fleggs - re-mortgaged property several times to help business, defaulted and building society sought possession. Fleggs said they had beneficial interest so building society could not enforce mortgage. Court held that, when MBs borrowed money, the building society paid money to MBs (2 trustees!) so Fleggs interest in property transferred to money (which was now gone)

Question 26

How does overreaching work?

Answer 26

1. Buyer/lender pays purchase/loan money to 2 Ts (two legal owners/one legal owner and someone else appointed to take receipt of monies)
2. B’s equitable interests move away from land (land no longer encumbered)
3. B’s interest instead transferred into the money

Achieves balance of interests as far as possible: buyer/lender holds property free from B’s interest, and B still has interest under a trust (in money, not land)

E.g. B has 25% beneficial interest in land, interest is overreached on sale, the B thereon has a 25% beneficial interest in proceeds of sale

Question 27

Does overreaching require the consent/knowledge of the B (those with equitable interest?

Answer 27

No

Question 28

What happens if money is paid to only one T?

I.e. when overreaching fails

Answer 28

B’s interest is not overreached and remains in land, whether it will be binding depends…

Should appoint second T to overreach any interest of B

Question 29

Where B’s interest is not overreached in registered land, will their interest be enforceable on purchaser/lender?

I.e. what does it depend on?

Answer 29

Depends on whether B in actual occupation…

• Is in actual occupation = can claim overriding interest
• Is not in actual occupation = interest remains in land but unenforceable against buyer/lender

Cf unregistered land (constructive notice + equity’s darling)

Question 30

What can a B, with an interest in a trust of land, do to make sure they are protected?

Answer 30

Register restriction on the proprietor register of registered title instructing purchaser to pay money to at least 2 Ts

Not many do this!

Question 31

What is an overriding interest?

Third category

Answer 31

Interests that will be binding on a purchaser for value (buyer or lender) even though they do not appear on the register of title of the burdened land

Defeat the aim of the register giving a complete record of property

Provide safety net of protection for those who are not able to/have not/cannot reasonably be expected to take steps to protect interest in land

Question 32

Will a new registered proprietor take the land subject to overriding interests in a registrable disposition of land?

Answer 32

Yes

Question 33

What are the 3 categories of overriding interests?

Answer 33

1. Legal leases for 7 years or less
2. Equitable interests held by people in actual occupation (e.g. not been overreached)
3. Implied legal easements and profits a prendre

Question 34

Why do legal leases which are shorter than 7 years not have to be registered to bind a new freehold owner as overriding interests?

Answer 34

1. So many short leases that it would be impractical to make registration a practical proposition
2. Unreasonable to expect those who occupy premises under short leases to register them (esp residential)

Question 35

Why are equitable interests held by people in actual occupation protected as overriding interests?

Answer 35

1. Unreasonable to expect people whose interests had arisen informally to take formal steps to protect them
2. When people occupy land, they may not appreciate that position may be precarious and do not think about whether they need to do anything to protect position

Designed to protect peope who do not realise their vulnerable position

Question 36

What are the two things needed for equitable interests held by people in actual occupation?

Answer 36

1. Interest in the land (not a personal right) e.g. equitable interest in a trust of land, equitable leases and options to purchase
2. Holder must be in actual occupation

Question 37

What is actual occupation?

Answer 37

No single test

• Given plain meaning
• Must be permanence and continuity and not a mere fleeting presence
• Not defeated by temporary absences like holidays and hospital stays
• Prolonged absence will mean no actual occupation e.g. second home

Question 38

What are the exceptions to actual occupation?

I.e. When will an interest not override a disposition?

Answer 38

1. Failure to disclose of actual occupation by holder of the interest (or solicitor) when asked before disposition
2. Not obvious on reasonable inspection

Question 39

When will implied legal easements be binding as an overriding interest?

3 circumstances

Does not apply to easements that are equitable in status (implied into contract)

Answer 39

If:
1. New owner knew about it
2. New owner did not know about it but it was obvious on a reasonable inspection of the land
3. It has been exercised within 12 months immediately before disposition

So most implied legal easements will be overriding interests

Question 40

Will the actual occupation rules also apply to interests that have not been protected by entry of notice?

Answer 40

Yes