Registered Land

What is Registered Land?

The Principles of Registered Land

Registered land is land which has been registered under the provisions of the Land Registration Act 2002. The system of land registration relies on three principles:

Rectification

The Registrar and the court have the power under Schedule 4 of the Land Registration Act 2002 to rectify the Register to correct a mistake, update the Register or give effect to any non-registrable interest.

However, if this would prejudicially affect a registered proprietor who is in possession of the land, then the Register cannot be altered without their consent unless (para 3(2)):

• The registered proprietor contributed to the mistake by fraud or lack of proper care; or
• It would be unjust for any reason not to make the alteration.

The Registration System and Unregistered Land

Certain dispositions of out of the legal freehold or leasehold in unregistered land trigger an obligation on the landowner to register the land: Land Registration Act 2002, s.4

• The transfer of legal estates by assent, gift, court order or consideration.
• The grant of a lease lasting more than seven years from the date of grant for consideration or by court order.
• The grant of a lease taking effect in possession after three months from the date of grant.
• The creation of a first legal mortgage.

Disposing of Interests in Registered Land

Where the land is already registered, many dispositions of that land must be completed by registration. These include: Land Registration Act 2002, s.27

• The transfer of any registered estate (freehold or leasehold).
• Leases granted out of a registered freehold or leasehold, provided one of the following criteria are met: the term is for more than seven years; it takes effect in possession after three months from the date of grant; the right to possession is discontinuous; the grant was in pursuance of a right to buy under the Housing Act 1985; or where s.171A of the Housing Act 1985 applies.
• Leases granted out of a franchise or manor.
• The express grant or reservation of an easement, profit a prendre, rentcharge in possession or right of entry in respect of a legal lease or annexed to a legal mortgage.
• A legal charge.

If the transfer of these interests is not registered, then that transfer is void.

There can be a ‘registration gap’ where the transferee is at risk of losing priority over rights which are created over the land after completion but before registration: see for example Baker v Cragg [2018] EWCA Civ 1126. However, this is ameliorated by two provisions. Firstly, under s.72(2) if the transferee makes a search of the Register, they gain a priority period of 30 business days. Secondly, any successful registration is backdated to the date the registration application was made (s.74).

Notices and Restrictions

Some interests cannot be registered, but a record of them can be placed on the Register.

Priority in Registered Land

The Basic Rule

The basic rule for most dispositions is that the first in time prevails: Land Registration Act 2002, s.28.

For example, A owns the freehold in a plot of land. B acquires a property interest which bind’s A’s freehold on the 1st of June. A gifts the freehold to C on the 2nd of June. Since B’s acquired their right first, C is bound by B’s right.

If there is doubt as to when an interest came into being for the purposes of determining priority, the court will look at the substance rather than the form of the transaction: Abbey National Building Society v Cann [1991] 1 AC 56; Scott v Southern Pacific Mortgages Ltd [2014] UKSC 52. This might take place before the registration of a registrable interest in some cases, such as acquisition mortgages.

Note that priority is only an issue for existing interests which bind the interest being transferred or created. For example, A owns the freehold in a piece of land. B moves in without A’s consent and thereby acquires a lesser freehold through adverse possession. This interest does not bind A’s freehold: A is free to evict B at any time. It can only be asserted against individuals who have a lesser right than B (such as future adverse possessors). As such, if A gifts the freehold to C, C is not bound by B’s interest either.

Defence to the Basic Rule (1): Transfers of Legal Estates for Consideration

The first exception to the basic rule is as follows. s.29 of the Land Registration Act 2002 provides that where:

1. There is a registrable disposition
2. Of a registered legal estate
3. That disposition is for valuable consideration (excluding nominal consideration (s.132(1)))
4. That disposition is completed by registration

the purchaser takes the land free of any interests which are unregistered or not entered as a notice on the Register. This is true even if the buyer knows or has notice of the right: the doctrine of notice does not apply to registered land (Chaudhary v Yavuz [2013] Ch 249).

Interests in land can be registered, entered as a notice, or entered as a restriction, depending on the nature of the interest. Entering the interest as a restriction does not strictly protect the priority of that interest against s.29. However, it will protect the interest to the extent that its conditions prevent the disposition from being registered (because s.29 only applies to registered dispositions).

Defence to the Basic Rule (2): Overreaching

The basic rule also does not apply if the unregistered interest has been ‘overreached’. Overreaching is where an equitable interest is removed from the land and attached instead to the proceeds of the sale.

For example, A and B hold a legal freehold on trust for C and D, who each own 50% of the equitable title. A and B sell the land to E. E takes the land unencumbered by C and D’s equitable interests. Instead, C and D become entitled to 50% of the proceeds of the sale each.

To overreach an interest, the interest must a) be capable of being overreached and b) the transaction must be a conveyance to a purchaser which has overreaching effect (Law of Property Act 1925, s.2).

Any equitable interest or power can be overreached except:

• Those protected by a deposit of documents relating to the legal estate affected.
• The benefit of a covenant.
• Equitable easements and profits a prendre.
• Estate contracts.
• Equitable interests registered under the Land Charges Act 1925 other than an annuity, limited owner’s charge or general equitable charge.

A transaction has overreaching effect if the following criteria are met:

Defence to the Basic Rule (3): Consent

The transferee can take priority over the prior interest-holder’s interests if the prior interest-holder gives their consent to this. This consent must be freely given: it can be vitiated by defences such as undue influence, duress and mistake.

Overriding Interests

There is an exception to the purchaser’s defence under s.29 if the unregistered interest is ‘overriding’. To be overriding, the unregistered interest must not have been overreached (see City of London Building Society v Flegg [1988] AC 54), and must meet the requirements of one of the categories under Schedule 3 of the Land Registration Act 2002.

Rights of Persons in Actual Occupation

Certain property rights held by people in actual occupation of the land can be overriding. These include estate contracts, purchase options, rights under a trust and equities arising under proprietary estoppel.

However, such a right is not overriding if any of the following conditions are met:

1. Inquiry was made of the interest-holder prior to the disposition, and they failed to disclose their rights when they could reasonably be expected to do so: para 2(b). This applies even if the purchaser is aware of the interest: Mortgage Express Ltd v Lambert [2016] EWCA Civ 555.
2. The occupation was not obvious on reasonably careful inspection of the land at the time of the disposition and the purchaser did not have actual knowledge at the time: para 2(c). It does not matter whether an inspection actually took place: Thompson v Foy [2010] 1 P & CR 16.
3. The right is a settlement under the Settled Land Act 1925: para 2(a)
4. The right is a lease taking effect in possession after three months from the date of grant, if possession has not taken effect at the time of disposition: para 2(d).

Other Overriding Interests