Topic 3 – Registration of title

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Module: Property law 2023-24 Date: Sunday, 23 June 2024, 1:40 PM

Book: Topic 3 – Registration of title

 Table of contents

Learning outcomes
Topic reading
Introduction
Lecture plus
3.1 Basic features of the system
3.2 Land Registration Act 2002
3.3 The categories of interest in registered title
3.4 The effect of the Land Registration Act 2002: overriding interests
Reflective activity 1
3.5 Diagrammatical summary of registered title
Learning activity 1
Discussion activity 1
Examination tips
Sample examination question 1
Sample examination question 2
Quick quiz 1
Am I ready to move on?
Further reading
 Learning outcomes

By the end of this topic and the relevant readings, you should be able to:

set out the principles of registered conveyancing

distinguish these from the system of unregistered conveyancing
explain how third-party rights are to be protected in registered land
explain ‘overriding interests’, the problems to which s.70(1)(g) LRA 1925 gave rise and the changes under LRA 2002
explain the circumstances in which title must be registered compulsorily
evaluate the reforms introduced by LRA 2002.

Throughout your study of property law, you should make absolutely sure that you understand that:

registered title is the norm, although unregistered title does still exist
separate rules apply to land of registered and unregistered title in many topics studied
it is crucial to have clear and separate notes on the rules that apply to registered and unregistered title in respect of each new topic studied
it is extremely important to be able to apply those principles accurately in problem questions.
 Topic reading

Core text
Dixon, Chapter 2 ‘Registered land’: Sections 2.1–2.4, 2.6–2.9 and 2.12.
 Introduction

In the previous topic we examined the principles underlying the 1925 legislation and in particular the reforms designed to simplify unregistered conveyancing. However, the unregistered system is
becoming increasingly much less important now that registration of title has become compulsory on dispositions throughout England and Wales. This system is contained in the Land Registration Acts,
supplemented by the Land Registration Rules. The mechanics of the system are fairly complex and you are not expected to master them completely. This topic will concentrate on the general
principles underlying the system and some of the flaws that have emerged in its operation. You should fully understand the fundamental changes made by LRA 2002, which came into force on 13
October 2003. In particular, you must be aware that LRA 1925 has been repealed; any references to that statute in this online module guide or in the readings are for the purposes of comparison only.
One interesting outcome in comparing the 1925 and 2002 legislative schemes is to identify similarities and how far key principles have evolved and why.
 Lecture plus

This Lecture Plus by Professor Martin Dixon (the author of your text book) covers the whole of the subject matter of this topic. In addition, towards the end of the lecture he spends some time on
Schedules 4 and 8 of the Land Registration Act 2002, the system governing alteration of the Land Register and indemnity for loss caused thereby. These are interesting subjects, but they are not
currently part of your course. The lecture is a full and accurate statement of the law as it is now.

1:06:29

Download Lecture | Download Transcript

This video lecture was part of the Lecture plus activity and was recorded in November 2018.
 3.1 Basic features of the system

Core text

Dixon, Chapter 2 ‘Registered land’: Sections 2.1–2.3.

As noted in Topic 2, a comprehensive (but not immediately universal) title registration system was first introduced in England and Wales by LRA 1925, to be succeeded over three-quarters of a century
later by LRA 2002.

Reference will, however, continue to be made at various points in this topic to the LRA 1925: first, as part of historical context; and, second, since many of its principles and rules survive in the new
legislation. Although, as new authoritative cases are emerging (and will continue to emerge) on key aspects of LRA 2002, you will still need to be familiar with cases decided on the ‘old’ law under LRA
1925. However, you must treat such cases with appropriate caution and appreciate that, if the rules were different at the time when those cases were decided, this may affect their value in
understanding the current law.

A registered title comprises an area of land in respect of which a person is the registered proprietor (i.e. owner). Each title is subdivided into a property register, a proprietorship register and a charges
register, a copy of which used to be issued to the current registered proprietor. It was formerly known as the land certificate and provided evidence of title, but LRA 2002 makes no provision for land
certificates. No copies of the register are issued, but a proprietor may be issued with a Title Information Document which provides basic information about ownership of the land. However, this is not a
‘title deed’, because the register is the proof of title. Prospective purchasers can, and should, inspect the land register before finalising the transaction.

As has already been indicated, the term ‘registered land’ is convenient and widely used. However, strictly speaking, it is an inaccurate label: it is the estates (and some interests) in land which are or
can be registered (see s.1 LPA 1925; and ss.4 and 27 LRA 2002). One fundamental difference from the system of unregistered title should also be noted at the outset. Whereas in the unregistered
system a purchaser will require a vendor to show a good root of title and a fresh investigation of title becomes necessary on each sale, in the registered system the legal title is investigated just once
(by the Land Registrar) and then registered. The registered system is often described as being based on three principles:

1. The mirror principle. This means that the register is intended to reflect accurately all the facts material to a given title. Purchasers (who in the language of the LRA 2002 are 'disponees') are not
concerned with the past history of the title, nor are they required to carry out the sort of inquiries and inspections that may be expected of the purchaser of unregistered land; the doctrine of
notice has no application. Overriding interests (a category more accurately/fully described in the LRA 2002 as ‘unregistered interests that override a disposition’) are the one important
exception to the mirror principle.
2. The curtain principle. Trusts are kept off the title in order to simplify the transfer of the legal estate.
3. The insurance principle. The title is guaranteed by the state and is indefeasible without compensation.

However, you should be wary of this description as:

1. The mirror is cracked, as the existence of a category of overriding interest that binds, despite not being protected on the register, means that the registered title does not accurately reflect the
totality of interests that are material to the given title.
2. It is sometimes argued that the curtain is ripped as, according to State Bank of India v Sood [1997] Ch 276, overreaching can only occur if the trustees are acting intra vires. This would appear
to require the transferee to inspect the trust instrument to check whether the trustees have the power to transfer title.
The criticism would appear to be unfounded, however, because even if the dictum is true (which seems unlikely) under s.26 LRA 2002, the purchaser’s title is not affected by any limitations
which have not been effected by means of a restriction recorded on the register.
3. The insurance premium is probably the most expensive in the world with only an extremely tiny proportion of the fees received being paid back out in compensation.

The system of registration of title was designed to simplify conveyancing and was not a code of land law; indeed, it is generally undesirable that the substantive law applicable to a piece of land should
depend on whether the title to the land is registered or not. Whereas in unregistered conveyancing the transfer of a legal estate is completed by the deed of transfer (the conveyance), in registered
conveyancing the transfer, under LRA 1925, was effectual and complete only when the transferee was recorded in the land register as the new proprietor (see Section 3.2 regarding the position under
LRA 2002). The purchaser for value thereby acquired a legal estate subject to entries on the register and overriding interests but free from all other estates and interests irrespective of whether he had
notice of them. Of course, if the disposition is made without valuable consideration (which, unlike in unregistered title, excludes nominal consideration: s.132(1) LRA 2002), the transferee takes subject
to all pre-existing property rights, irrespective of whether they are registered or overriding (s.28 LRA 2002).
 3.2 Land Registration Act 2002

Core text

Dixon, Chapter 2 ‘Registered land’: Sections 2.4 ‘An overview of the registered land system under the Land Registration Act 2002’ and 2.12 ‘An overview of the Land Registration Act 2002’.

As a first attempt to create a comprehensive title registration system, LRA 1925 was by no means unsuccessful, although it is probably fair to say that the overall concept was more impressive than
the detail, where various flaws emerged over time. In order to address those weaknesses, and to take advantage of new technology to make the transfer of land more efficient, the Land Registry and
the Law Commission consequently joined forces to produce an improved model. Law Com 271 was published in July 1998 and entitled ‘Land registration for the twenty-first century: a conveyancing
revolution’. The Act that finally emerged, however, notwithstanding the tagline, included rather more evolution than revolution; particularly given the subsequent history of one of its key proposals – the
introduction of a comprehensive electronic conveyancing system.

LRA 2002 received Royal Assent on 26 February 2002 and came into force in October 2003. Most of the changes only affect land once it is subject to a new disposition under the terms of the Act (i.e.
when a subsequent registered transaction occurs or, with previously unregistered titles, when any of a list of ‘trigger’ events occurs, such as grant of a lease for more than seven years, transfer of an
existing lease with more than seven years to run, and of course sale of a fee simple).

In testament to the success of the original vision, the new system shares many of the features and principles of its predecessor. The fundamental objective of LRA 2002 is that ‘the register should be a
complete and accurate reflection of the state of the title of the land at any given time, so that it is possible to investigate title to land online, with the absolute minimum of additional enquiries and
inspections’ (Law Com 271, para.1.5). It remained true to the mirror principle, but intended to use technology to ensure that the reflection of rights was clearer and more accurate. The curtain and
insurance principles, and the corresponding concepts of overreaching and indemnity, are largely unaffected by LRA 2002.

One of the most revolutionary aspects of the new regime was to have been a radical system of compulsory electronic conveyancing – for which s.93 paved the way. This envisaged collapsing three
stages (creation of an interest applying for registration and entry on the register) into one, resulting in the simultaneous completion and registration of a transfer of land. A purchaser’s solicitor would
directly access the Land Registry’s computers and a single flick of a switch would replace all the pre-2002 stages – simplifying and speeding up the traditional house buying process (and removing the
problems created by the so-called ‘registration gap’). Such a seismic shift would sweep away the need to follow paper formalities in most circumstances and also mean that, without registration, no
interest could come into existence. However, it proved difficult to overcome various practical, legal and technical obstacles, and the Land Registry consequently abandoned their programme to
develop end-to-end e-conveyancing in 2011. Since 2018, the Land Registry has, however, been devising less radical e-conveyancing plans that would be phased in over time (see further Chapter 20
of ‘Updating the Land Registration Act 2002’ (Law Com 380 (2018))), leaving implementation of the original conception of paper-free conveyancing for the future.

To enable electronic conveyancing, a key conceptual change introduced by LRA 2002 was to move from a system of registration of title to one of title by registration, with the actual act of registration
conferring title on the transferee, rather than simply recording the transfer that has taken place. However, because this substantive conceptual change has been made in the absence of electronic
conveyancing, it remains to be seen how well the new rules will work absent the system they were intended to support.

In tandem with the conceptual shift (but not as a direct result of the new Act) the Court of Appeal in Swift 1st Ltd v Chief Land Registrar [2015] Ch 602 held that Malory Enterprises Ltd v Cheshire
Homes (UK) Ltd [2002] Ch 216 had been decided per incuriam in deciding that the fraudulent transfer of an estate only transferred the bare legal title on registration, leaving the original proprietor with
a beneficial interest. Thus, under both LRA 1925 and LRA 2002, a registered transfer now gives the transferee in good faith full legal and beneficial ownership, even if preceded by a fraud.

The other main changes introduced by LRA 2002 were as follows:

changes to the nature and scope of overriding interests in registered land

substantial changes to the law of adverse possession for registered land (see Topic 10)
the expansion of the situations in which registration of land is compulsory, with a corresponding encouragement of voluntary land registration
the creation of a new Office of the Adjudicator to Her Majesty’s Land Registry to deal with disputes about registered land (from July 2013, the functions of the Adjudicator have been
transferred to the Land Registration division of the Property Chamber of the First-tier Tribunal).
 3.3 The categories of interest in registered title

Core text

Dixon, Chapter 2 ‘Registered land’: Sections 2.6–2.9.

There are three basic categories of interest in registered title to which the priority rules (e.g. s.29) are relevant:

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 that bind even though they have been neither substantively registered nor protected by means of an entry on the register.

3.3.1 Estates and interests capable of registration

The registrable category comprises the only estates and interests capable of existing at law. Of these, estates are capable of being registered substantively in their own right with their own distinct title
number; and their validity is then guaranteed by the Land Registry.

Originally, the only interests capable of substantive registration under the LRA 1925 were the legal fee simple and any legal term of years of which more than 21 years remained unexpired. Legal fee
simples and leases remain the most important of the substantively registrable interests under s.3 of the LRA 2002; but the category is broader than it was previously in that it extends to leases with
more than seven years unexpired. Two other leases must be registered, future leases (that are to take effect after three months) and discontinuous leases (e.g. for a fortnight in each of the next four
years) because of the difficulty purchasers would otherwise face in discovering them. The list of other registrable interests in the LRA 2002 also includes:

Legal mortgages
Expressly created legal easements where the servient land is a registered title (even if the dominant land’s title is not yet registered)
Expressly created legal profits.

These registrable interests are registered as part of an existing freehold and leasehold title rather than substantively. With these interests, an entry is placed on the title of the land affected and, where
such an interest also benefits land (for example, an express legal easement), an entry may also be required on the title of the benefited land. Until they are registered, registrable interests cannot take
effect as legal interests. This category, therefore, is made up of legal rather than equitable interests, a distinction that continues to be recognised by the land registration provisions, but not so as to
displace the priority rules the LRA 2002 has put in place.

3.3.2 Third party rights which need to be protected by entry on the register
This category (formerly known under the LRA 1925 as ‘minor interests’) includes all interests which are neither registrable (s.27 LRA 2002) nor overriding, but can be protected by an entry on the
register. 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. For example, if A protects an option by an entry against the registered title of B, who then transfers her registered title to C, C takes the land
subject to A’s option insofar as it exists. Whether or not the option binds C, however, is ultimately not dependent upon A’s entry on the register but on whether its validity can be independently
established, if challenged by C. In other words, the entry on the register is a necessary but not conclusive step in preserving A’s option. Normally, then, failure to protect a valid option means that it
cannot take priority through the register, even if it may still take priority as an interest that overrides by virtue of being coupled with actual occupation (considered below). Aside from that possibility, an
unregistered option may exceptionally be given priority by imposing personal liability on a purchaser by imposing a constructive trust to prevent behaviour that would otherwise amount to an
unconscionable attempt to deny the existence of the right: Lyus v Prowsa [1982] 1 WLR 1044; Lloyd v Dugdale [2001] EWCA Civ 1754; and Chaudhary v Yavuz [2011] EWCA Civ 1314.

There are two kinds of interest under this category, which are protected by two different types of entry on the register.

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).

Thus, any commercial equitable interests that in unregistered land would be registrable under LCA 1972 will bind a purchaser if protected by entry of a notice on the register (s.32 LRA 2002). If they
are not protected, they do not bind even a purchaser who has notice of an interest (unless it comprises an overriding interest as discussed below). Note, however, that equity will not allow a statute to
be used as an engine of fraud. This may be the best way of justifying the decision in Lyus v Prowsa Developments Ltd [1982] 1 WLR 1044.

In contrast, family equitable interests, under s.33 LRA 2002, cannot be protected by a notice and are therefore not capable of the same form of protection as commercial equitable interests. However,
the beneficiary under a trust may enter a restriction (s.40 LRA 2002) requiring any purchaser to comply with the rules of overreaching. Thus, although a restriction does not protect family equitable
interests by nailing the interest to the land and binding subsequent purchasers, as a notice does in respect of commercial equitable interests, it can be used to safeguard them, by giving the
beneficiary the protection of overreaching (which makes it much harder to defraud a beneficiary of his interest, by requiring that the purchase monies are paid to at least two trustees). If overreaching
takes place, because either a restriction was entered requiring it, or because the purchaser complied with its requirements anyway, the purchaser takes free from any overreachable interests (e.g.
family equitable interests). If, on the other hand, there is no restriction and overreaching does not take place, whether or not the purchaser is bound by such an interest depends upon whether it is an
overriding interest under Sch.3, para.2, as discussed below. The important point to note is that an overreachable interest will never bind a purchaser who complies with overreaching (City of London
Building Society v Flegg [1988] AC 54) and will only bind a purchaser who does not comply with overreaching, if it is additionally an overriding interest (Williams & Glyn’s Bank v Boland [1981] AC
487).

3.3.3 Interests that override

Registered dispositions take effect subject to unregistered interests that override (formerly known as ‘overriding interests’ and still commonly referred to as such). As overriding interests do not appear
on the register, sensible purchasers need to inspect the land and make enquiries so that they know whether the land they are buying is affected by any such interests. It is thus very important to know
whether a third-party interest in land is one which overrides or one which requires protection on the register (see below). Overriding interests are hence a hazard for the purchaser: not visible on the
register but binding upon the purchaser regardless of notice. No compensation is payable if the register is altered to give effect to an overriding interest since, strictly speaking, the purchaser has
suffered no loss. Some limited information on how overriding interests operated under the LRA 1925 is helpful in order to appreciate the changes introduced under LRA 2002. It is, however, important
to remember that s.70 of the LRA 1925 has been repealed and replaced, and so its categories are no longer the law; they are mentioned here for comparison purposes only. Overriding interests were
listed in s.70 LRA 1925 and included, among others, the following four categories:

s.70(1)(a) easements and profits, including some openly exercised equitable easements under Celsteel Ltd v Alton House Holdings Ltd [1986] 1 WLR 666 and Thatcher v Douglas (1995) 146
NLJ 282 (CA). This category continues under LRA 2002, but in a more limited form (see below).
s.70(1)(f) ‘rights acquired or in the process of being acquired under the Limitation Acts’, that is, the rights of an adverse possessor (see Topic 10): these will generally not override under LRA
2002 in their own right but will normally come within para.2 (see below).
s.70(1)(g) ‘rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed’: this
was the most litigated category of overriding interest and generated detailed case law. The person claiming an overriding interest had to prove that:
they had a right subsisting with reference to ‘land’
they were ‘in actual occupation’ or in receipt of rents and profits
no inquiry had been made of them concerning their interest. Again, this category continues under LRA 2002 but in a more limited form (see below).
s.70(1)(k) ‘leases granted for a term not exceeding 21 years’. This category continues under LRA 2002, but in a more limited form (see Section 3.4).

Study task 1

Can you distinguish Strand Securities Ltd v Caswell [1965] Ch 958 and Chhokar v Chhokar [1984] FLR 313, bearing in mind the fact that in each case the persons claiming the overriding interest
had furniture in the property though they were living elsewhere? Consider also Kling v Keston Properties Ltd [1985] 49 P&CR 212.

Show feedback

It may be relevant that in Strand Securities the person claiming overriding status was not in actual occupation and his daughter (who was living in the house) was not acting as his agent,
 whereas Chhokar concerned the interest of a wife who was only away from the house because she was in hospital giving birth at that time.

Study task 2

Read Williams & Glyn’s Bank Boland [1981] AC 487 and Abbey National Building Society v Cann [1991] 1 AC 56, and make notes on their relevant facts, decisions and ratios.

1. Which of Mrs Boland’s interests in the land were overriding, and why?
2. What is actual occupation?
3. When must actual occupation occur in order to protect an interest?
4. Why was Mrs Cann not in actual occupation at the relevant time?

Show feedback

1. Those under a constructive trust, not her matrimonial rights, since the latter were excluded by statute from s.70(1)(g) protection.

No feedback provided for parts (2)–(4).

Study task 3

Look up the rule in Lyus v Prowsa [1982] 1 WLR 1044. Why is this case treated as a questionable decision?

Show feedback

A land transfer was made expressly subject to an interest which should have been, but was not, entered as a minor interest on the register. Held: the purchaser was bound by the interest
because of his express undertaking to uphold it. This appears contrary to the entire logic of the LRAs. See the discussion of this issue by the Court of Appeal in Chaudhary v Yavuz [2011]
EWCA Civ 1314.

3.3.4 Complications in the system

The scheme is generally that equitable interests are either registrable or overreachable and that legal interests will bind a purchaser either because they are registered or because they are overriding.
However, it is important to note that interests in registered land may sometimes fall into one class and sometimes into another; in particular, where someone with an interest is in actual occupation,
they may either make an entry on the register or rely on their occupation as entitling them to an overriding interest. Thus, as noted above, an unprotected commercial equitable interest (such as an
option to purchase the freehold) that can be protected by entering a notice, may constitute an overriding interest if coupled with actual occupation.

Moreover, a family equitable interest (such as a beneficial interest arising under a trust of land) which cannot be protected by a notice but could have been safeguarded (to the extent overreaching
does safeguard) by the entering of a restriction (requiring overreaching) may bind a purchaser as an overriding interest if likewise coupled with actual occupation (assuming that overreaching has not
otherwise occurred).

Thus, the person who has failed to use the tools available to protect (notices) or safeguard (restrictions) their interest might still be protected. However, the purchaser is required to make enquiries (not
unlike those required under the doctrine of notice in the unregistered system) to discover interests that could have been protected by means of a notice or safeguarded by means of a restriction.
In the (very rare) case of strict settlements, the problems discussed above do not arise. Similarly, a spouse’s or civil partner's right of occupation under the Matrimonial Homes Act 1983 (now the
Family Law Act 1996) is declared not to be an overriding interest; it should be protected by entry on the register. Note, though, that a spouse or civil partner may incidentally have another interest
which is capable of overriding the disposition, such as a constructive trust interest (see Topic 4).

Some cases also expanded the protection of overriding interests. In Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] EWCA Civ 151, actual occupation of derelict land did not require
residence but ‘some physical presence, with some degree of permanence and continuity’.

Study task 4

1. What were the main criticisms made of LRA 1925?

2. What are the apparent inconsistencies between the protection of third party rights in unregistered and registered title?

Summary
The system of registered title to land was introduced in order to simplify and facilitate conveyancing of land. In order to do so, one of its fundamental principles is that the register should be a complete
mirror of the interests in the land, guaranteeing those interests. It has by no means been completely successful in doing so, but the further reforms under LRA 2002 should go some way towards
meeting the criticisms of its predecessor statutes. Interests in registered land can be divided into those which require registration in their own right as ‘titles’, those which override registration and those
which can be protected or safeguarded by entry of a notice or restriction on the register.
 3.4 The effect of the Land Registration Act 2002: overriding interests

Core text

Dixon, Chapter 2 ‘Registered land’: Sections 2.4 ‘An overview of the registered land system under the Land Registration Act 2002’ and 2.12 ‘An overview of the Land Registration Act 2002’.

As mentioned previously, LRA 2002 effected significant changes to the nature and scope of overriding interests. In particular, it sought to minimise the number of interests that can bind despite not
being recorded on the register. Section 70(1) LRA 1925 has consequently been replaced by a smaller category of interests as detailed in Schedules 1 and 3 LRA 2002.

Although superficially similar, care must be taken as there are significant differences between the two schedules. Schedule 1 applies to the first registration of title and is broader than Schedule 3,
which applies to subsequent registrations and contains a more limited array of overriding interests. The reason for this difference is because first registration is an essentially administrative act,
recording the title already acquired under the rules of unregistered conveyancing, and is not intended to have any substantive effect on the title registered. Thus, those unregistrable interests that
bound the land, when it was acquired by the new purchaser via the unregistered conveyance immediately preceding first registration, need to survive that initial entry on to the register.

Questions on registered land are far more likely to concentrate on the rules of registered conveyancing rather than on issues of first registration. It is consequently Schedule 3, rather than Schedule 1,
on which you should focus your studies.

Section 71 imposes a duty on the person applying for first or subsequent registration of a disposition to disclose information about any rights of which they are aware which might fall within the scope
of Schedules 1 or 3 and are therefore overriding. The number of overriding interests should therefore diminish as more dispositions are made under the new legislation. It is also likely that some
interest holders will lose rights which were overriding on first registration when there is a later disposition (see Dixon, M. ‘The reform of property law and the Land Registration Act 2002: a risk
assessment’ (2003) Conv 136–56).

There are clearly some rights that were overriding interests under s.70(1) LRA 1925 which no longer override under either of the above Schedules. The rights of adverse possessors no longer override
unless they are accompanied by actual occupation, while the rights of a person in receipt of rents and profits from the land are likewise no longer protected.

Most short legal leases have also been recategorised, since para.1 of both Schedules allows them to override if they run for seven years or less, a reduction from the former s.70(1)(k) requirement of
21 years. There are exceptions (s.4 LRA 2002), including reversionary leases that take effect more than three months after the date of their grant. Leases for more than seven years, or with more than
that length of time to run, are now registrable in their own right. Power exists in s.118 LRA 2002 to reduce further the qualifying period from seven years. It may be used as and when e-conveyancing
is up and running. When viewed against the LRA 2002’s drive to achieve a conclusive register, it may be wondered how exempting short leases from the LRA 2002 provisions may be justified. As
some will be leases of people’s homes and others granted for short-term use of commercial properties, expecting registration may be unrealistic, burdensome and clog up the register for very little
benefit.

Leases more than three years but less than seven years have acquired a dual status and can be protected by entering a ‘notice’ on the Register (and often are in commercial contexts), although there
is currently no need as they qualify as overriding interests, provided they are legal. Care should be taken in respect of equitable leases, as para.1 (of both Schedules) does not apply to them as the
term ‘granted’ refers exclusively to legal leases (see City PBS v Miller [1952] Ch 840).

The category of easements that override has also been reduced under para.3 by limiting it to legal easements and excluding all equitable easements (reversing Celsteel v Alston [1986] 1 WLR 666).
As an expressly granted legal easement can only acquire that status via registration (s.27(2)(d) LRA 2002), this limits the category of unregistered easements that override to those legal easements
that arise either impliedly or by prescription. Furthermore, under Schedule 3 (but not Schedule 1) the category is further limited to include only those legal easements that have been exercised within
12 months of the disposition, or were known to the transferee, or were obvious on a reasonably careful inspection of the land. These limitations in Schedule 3 aim to reduce the likelihood of a
purchaser being bound by easements that are invisible (such as drainage rights) or used intermittently and it is hoped may encourage their registration by those who benefit from such rights.

Actual occupation
The most problematic category of overriding interest will continue to be the interests of those in actual occupation of the land, formerly governed by s.70(1)(g) and now by para.2. As before, the
provision only covers those with an interest in the land (i.e. the mere fact of occupation is not itself protected if the occupier has no separate property interest in the land) but, provided the occupier
does have such an interest, there need be no causal connection between that interest and the occupation that might thereby protect it (e.g. an unprotected option over the land owned by someone
who, quite separately, say as a family member, happens to be in actual occupation of the land, is still capable of being an interest that overrides). Whether governed by Schedule 1 or Schedule 3, the
rights of a person in actual occupation will override only to the extent that they coincide with that occupation. This reverses Ferrishurst Ltd v Wallcite [1998] EWCA 1874 (decided under s.70(1)(g) of
the 1925 LRA) and emphasises that ‘actual occupation’ is really just a warning to an intending purchaser of the existence of third party rights in the land, not in itself a guarantee of such rights. Actual
occupation has a significantly different meaning under Schedule 3 (from Schedule 1) where the rights of a person in actual occupation will not override a purchaser if either:

enquiries have been made of the right-holder and they have failed to disclose the right in circumstances where they could reasonably be expected to disclose it, or
the right-holder’s actual occupation is not obvious on a reasonable inspection of the land, and the person potentially bound did not have actual knowledge of the interest at the time of the
disposition.

Let us look a little more closely at the different meanings of actual occupation mentioned above.. The first shows how s.70(1)(g) LPA 1925 has been replaced with a modified rule that appears kinder
to non-disclosers in one respect: a person who does not know they have a right cannot be expected to disclose it under Schedule 3. An example of this would be where estoppel might operate but the
interest holder (whose interest has proprietary status by virtue of s.116 LRA 2002) does not yet know that they have a right which they should disclose.

However, the new provision has arguably gone further and (inadvertently?) reversed Hypo-Mortgage Services v Robinson [1997] 2 FLR 71. In that case it was held that, as a child cannot sensibly
answer any enquiry made of them, such a person cannot be in occupation for the purposes of s.70(1)(g). In other words, the court limited the provision only to those occupiers whom the purchaser can
sensibly question, on the basis that it would be unfair to the purchaser if they were bound by the occupation of someone whom they could not quiz as to whether they had an interest. In contrast, the
new provision states that only those who fail to answer the question when they could reasonably be expected to do so risk losing their interest, which implicitly suggests that those who cannot answer
the question can still be in occupation (for there is no need to excuse their failure to answer if they are, as in Hypo-Mortgage, not deemed to be in occupation for the purposes of the provision). The
LRA 2002 is narrower than its statutory predecessor in another respect – the removal of overriding status from those who are in receipt of rents and profits from the land.

More importantly, the second change Schedule 3 makes to the meaning of actual occupation is significantly more restrictive, since interest holders in undiscoverable occupation will no longer be
protected. Thus, a purchaser is no longer bound by an occupier’s interest unless the interest holder’s occupation (rather than their interest) is obvious on a reasonably careful inspection of the land or
is otherwise known to the purchaser. Although the Law Commission were strongly of the view that this provision would not reintroduce the equitable doctrine of notice, critics have argued it will
necessarily reintroduce a (less developed or subtle) form of constructive notice concerning what is, and is not, ‘obvious’ on what is, and is not, a ‘reasonably careful’ inspection of the land. There has
been a dearth of cases from which to judge who is right and it will probably be advisable to think in a ‘before and after’ way for some years to come. There can be no doubt, however, that many of the
cases from the ‘old’ law of s.70(1)(g) will remain relevant in interpreting the requirements of LRA 2002, although you must not forget that the rules have changed and you need to note that when
citing/applying pre-2003 case law.

There has been considerable judicial (and academic) exploration of actual occupation both before and since the LRA 2002. The courts have (understandably) declined to suggest a definitive and
comprehensive test, partly because much may depend on factors such as the nature and purpose of the land being occupied: see Link Lending v Bustard [2010] EWCA Civ 424 (Mummery LJ); and
Abbey National v Cann [1990] UKHL 3 (Lord Oliver). Determining the existence of physical presence is essentially a question of fact (Lord Wilberforce in Williams & Glyn’s Bank v Boland [1981] AC
487). Occupation should certainly be more than temporary/preparatory and involve a considerable degree of continuity and permanence even with derelict land that appears abandoned (Rock Ferry
Waterfront Trust v Pennistone Holdings Ltd [2021] EWCA Civ 1029). Ordinarily, this will present little difficulty where the claimant is living in a house. Even then, the occupier’s absence for a period of
time may not be fatal, depending on its duration, the reason for the absence and the existence of a continuing intention to occupy – maybe supported by the presence of belongings and furniture: see
Link Lending; Chhokar v Chhokar [1984] EWCA Civ 7; Thompson v Foy [2009] EWHC 1076 (Ch); and compare AIB Group (UK) plc v Turner [2015] EWHC 3994 (Ch). Alternatively, a claimant may be
in actual occupation either via some representative – other than a licensee (such as a caretaker) (Strand Securities v Caswell [1965] Ch 958) or merely through the presence of the claimant’s furniture.
Exercising a right of way over the servient land is use rather than occupation (Chaudhary v Yavuz [2011] EWCA Civ 1314); and, even if an easement of parking or storage might count as occupation
for the purposes of para.2 to be overriding, it will need to be obvious on a reasonably careful inspection of the land.

At what date must a claimant be in actual occupation to override a disposition? This is potentially problematic where a claimant moves into occupation during the so-called ‘registration gap’ – the
period that customarily elapses between the date of the completion/transfer to the disponee and the later date when the title is registered. For s.70(1)(g) LRA 1925, the House of Lords in Abbey
National v Cann (obiter) identified the date of transfer as the time to test for actual occupation and, although the LRA 2002 refers to the person being in actual occupation at the date of the disposition,
this has also been taken to be the time of the transfer – and there is even a judicial suggestion by Lewison J (Thompson v Foy) that occupation must continue to the time of registration.
As mentioned previously (see also Topic 2) a beneficiary in occupation may gain overriding status where mortgage monies are paid to only one trustee (Boland), signalling the dual nature of the
protection the LRA 2002 affords such rights. But, where the payment is to two trustees, the beneficial rights cannot be overriding because they will have already been overreached (City of London
Building Society v Flegg [1988] AC 54).

Study task 5

1. What are the key changes introduced by LRA 2002?

2. How has LRA 2002 changed interests that override?
3. What is the difference between interests that override a first registration and interests that override a subsequent transfer of the land? Why is there a difference?
4. Where registered land is transferred, when will a right protected by actual occupation lose its overriding status?
5. What would be the advantages of abolishing overriding interests altogether?
 Reflective activity 1

From your reading, draw up a table for the following grades of title to freehold and leasehold land that may be registered, and fill in the details of where each of them applies and which third party
interests bind the registered proprietor of each.

Absolute freehold
Possessory freehold
Qualified freehold
Absolute leasehold
Possessory leasehold
Qualified leasehold
Good leasehold

Write your answer in the Topic 3 – Reflective activity 1.

Topic 3 – Reflective activity 1

 3.5 Diagrammatical summary of registered title

Once you have assimilated these rules you need to ensure you understand how they dovetail together. The following diagram might help you in that process as it distils this sometimes bewildering set
of rules into a series of binary questions. As we hope you will see, the system is not as complex as it first appears.

Diagram showing registered title (Read in text format)

The diagram will work for any interest and can be used to establish whether an interest granted by an estate owner will bind a subsequent transferee of that estate.

Study task 6

Paul transfers the registered title of Whiteacre to Samantha for £10,000. Will Samantha be bound by the following interests, all of which arose prior to the sale of Whiteacre to Samantha?

1. An easement granted by Paul to his neighbour Bethany.

2. A restrictive covenant granted by Paul to his neighbour Saskia.
3. Eloise’s beneficial interest in Whiteacre arising from her contribution to the purchase price Paul paid when he bought the property.
4. Tamara’s licence to occupy Whiteacre.
 5. The option to purchase Whiteacre Paul granted Chris.
6. How, if at all, would your answer to each of the questions change in each of the following alternative circumstances?
a. Samantha paid £10 for Whiteacre.
b. Samantha paid a peppercorn for Whiteacre.
c. Samantha gave no consideration for Whiteacre.
d. The legal title of Whiteacre was co-owned by Paul and Gordon who jointly conveyed it to Samantha.

Show feedback

1. Although use of the term ‘granted’ signifies that a deed has been used, the easement will only be legal once it has been substantively registered under s.27(2)(d) LRA 2002. If that had
occurred, Samantha would obviously be bound but if it had not been substantively registered it is equitable and will only bind Samantha if protected by means of a notice under ss.32–39
LRA 2002.
2. A restrictive covenant is not substantively registrable but can be protected by means of a notice under ss.32–39 LRA 2002.
3. Eloise’s interest is not substantively registrable, nor is it protectable by means of a notice (see s.33(a) LRA 2002). However, she could have entered a restriction under ss.40–47 LRA 2002
ensuring no dealings with the legal title occur unless overreaching takes place. As a purchaser will always take free of an overreachable interest by complying with overreaching, this is
the limit of what Eloise could have done to protect her interest. On the facts, no such restriction has been imposed as Samantha was able to purchase the property from Paul even though
he was a single trustee (and thus the purchase monies could not have been paid to at least two trustees). In these circumstances Eloise’s interest will not bind Samantha unless she has
an overriding interest by means of her discoverable occupation under para.2 Schedule 3 LRA 2002.
4. Tamara’s licence is not a property interest but if you use the diagram correctly you will still get the right answer as the interest is not substantively registrable, not protectable, not
overreachable and not overriding.
5. An option is a form of estate contract and can be protected by means of a notice.
a. As for the changed facts: This is (on our reading of Midland Bank v Green) still valuable consideration so it should make no difference.
b. The peppercorn, unlike the £10, is nominal consideration which is excluded from the definition of valuable consideration under s.132 LRA 2002 so Samantha would be bound.
c. Samantha has provided no consideration and so she is bound.
d. Provided the purchase monies were paid to both Paul and Gordon, Eloise’s beneficial interest will have been overreached whether or not she is in discoverable occupation under
para.2 Schedule 3 LRA 2002. However, overreaching would have no effect on Bethany’s easement or Saskia’s restrictive covenant as these equitable interests are specifically
excluded from the effect of overreaching under s.2(3) LPA 1925. Thus, whether or not these interests bind Samantha will continue to be determined, as detailed above.

Study task 7

1. What are the key changes introduced by LRA 2002?

2. How has LRA 2002 changed interests that override?
3. What is the difference between interests that override a first registration and interests that override a subsequent transfer of the land? Why is there a difference?
4. Where registered land is transferred, when will a right protected by actual occupation lose its overriding status?
5. What would be the advantages of abolishing overriding interests/interests that override altogether?
6. Which third party interests bind a first registered proprietor?
7. Why are interests that override a danger for the purchaser of a registered title?
8. What are ‘minor interests’ now called? Give examples, and explain how they appear on the register.
9. Which events trigger compulsory registration of title?
10. Why would a person choose to register title to his land voluntarily?
Learning activity 1
Check your understanding of the different way in which estates and interests in land are
protected in the system of registration of title by dragging these interests into the correct box.
1. Substantively 2. Third party rights 3. Overriding interests 4. Interests under a
registered estates and requiring protection by trust that can be
interests entry of notice on the protected by entry of a
register restriction

Equitable interests under

A legal freehold A lease of over 7 years A lease of 3 years or less
a trust
Equitable interests not An express legal An implied legal
A legal mortgage
under a trust easement easement

 Check
 Discussion activity 1

Discuss the following questions:

In the system of Registered Title, the ‘mirror’ is cracked: there are many interests that might bind a purchaser that are not entered on the title. Is this a good thing? Should interests that override be
abolished?

Post your answers in the Topic 3 – Discussion activity 1.

Topic 3 - Discussion activity 1

 Examination tips

Within the scope of this topic, there are three principal areas for assessment:

1. An essay title asking you to consider the suitability and efficacy of the reforms to the land registration system in 2002. This may involve some comparison with the three mechanisms that
operated in unregistered land for the protection of land law interests (land charges, overreaching and the doctrine of notice) discussed in Topic 2.
2. A problem question asking you to consider the appropriate treatment of a variety of different property rights within the land registration system.
3. A problem question asking you to consider the rights of people in ‘actual occupation’ and other informal rights against the registered proprietor of the property.

Assessment tips
In problem questions, always ask whether the title is registered or unregistered and be prepared for questions that ask you to apply the rules pertaining to both systems. If you are not told
whether the title is registered or not, answer in the alternative where that is significant.
If you are advising on both registered and unregistered title, initially answer the entire problem on the basis of registered title and then briefly explain how each of your conclusions would differ
(either in outcome and/or detail) if title was unregistered.
Avoid obvious errors – for example LCA 1972 applies only to unregistered title, not registered title.
Do not go behind the facts you have been given – thus if you are told ‘X has given Y an easement’ you do not need to consider the Re Ellenborough requirements of an easement as you have
already been told that Y has one. Nor do you need to consider whether it was expressly or impliedly granted as, in that example, you have already been told it is an express assignment as X
gave it to Y. You therefore only need to consider whether the easement is legal or equitable (i.e. how it was given) and how that will affect its status in registered and/or unregistered title.
Remember, in registered title there are three basic categories of property interest:
1. Major interests – registrable legal interests (e.g. fee simples, leases over seven years, easements, charges and profits in gross) the existence of which is guaranteed by the Land Registry.
2. Minor interests – a prima facie interest that can be protected by either a notice (e.g. commercial equitable interests such as estate contracts, restrictive covenants, equitable easements) or
a restriction (e.g. overreachable beneficial interests behind a trust of land) entered on the register – these interests are not guaranteed by the Land Registry and thus their legitimacy has
not been tested but the right (insofar as it exists) is protected (insofar as it can be) by registration.
3. Overriding interests – interests that can bind even though not substantively registered nor protected (even if they are registrable and/or could be protected): including short- and medium-
term legal leases (i.e. no longer than seven years); implied or prescriptive (but not express) legal easements (that have either been exercised in the last 12 months, or are known to, or
discoverable by, the purchaser); and any property interest that is coupled with (but not necessarily causally linked to) discoverable occupation.
Remember, in registered land, under s.27 LRA 2002, any express registrable interest capable of being legal will only be legal (even if a deed has been used to convey it) once it has been
registered. Until then it is only equitable (and, as such, can be protected by means of a notice if there is some reason why it cannot be substantively registered and hence made legal).
 Sample examination question 1

Question
Lucy was the registered proprietor of Pinkacre. In 2018 she granted Peter a five-year lease of a cottage on Pinkacre; in 2019 she contracted to grant Quentin a four-year lease of a field for grazing
purposes; in 2020 she agreed orally to let Rick have exclusive use of a barn for three years at an annual rent of £300, and she invited Rick to pick as many apples as he liked from her orchard. In
2022 she sold Pinkacre to William, who has now written to Peter, Quentin and Rick telling them to keep off his land.

Discuss.

Tutor guidance
The issue here is plainly whether the various interests (or not) created by Lucy are binding on Peter. We are helpfully told that this is registered land, so the relevant legal scheme is that set out in LRA
2002.

You need to classify what Lucy was doing, and thereby discover what, if anything, Peter, Quentin and Rick should have done to protect themselves against a purchaser, and whether they did it or not
what the position would be as against William.

➕ Feedback
This is not a question on leases and licences; the key issue is whether William, the purchaser of Pinkacre, would be bound by the interests of Peter, Quentin and Rick – a question which requires
an understanding of LRA 2002. Thus, Peter’s five-year (legal) lease is not compulsorily registrable and would clearly bind William as an overriding interest within para.1 of Schedule 3. Quentin’s
contract for a lease could be protected by a notice on the register, and even if it was not protected on the register, would bind William as an overriding interest within para.2 of Schedule 3, assuming
that he is in actual occupation.

Rick would appear to have a (legal) three-year tenancy of the barn (s.54(2) LPA 1925) which would bind William under para.1 of Schedule 3. On the other hand, Rick’s bare licence to pick apples
on Pinkacre would not be a proprietary interest capable of binding a purchaser.
 Sample examination question 2

Question
W lives in Rose Cottage, the matrimonial home, of which her husband, H, was the registered proprietor with absolute title. In 2021 H deserted W and mortgaged the cottage to B Bank. The mortgage
payments are well in arrears and B Bank now seeks possession of the cottage. W, who had given H £10,000 towards the purchase price of the cottage, refuses to leave.

Discuss.

➕ Feedback
What is the nature of W’s interest in the cottage? Without going into the details that we will consider in Topic 4, it is clear that her contribution to the purchase price will give her an equitable interest,
as a beneficiary behind a trust for sale (now a trust of land governed by TLATA 1996) (see Topic 4).

Could she have protected her interest on the land register? The answer here is that she is excluded from doing so by s.33 of the LRA 2002. The only way of protecting beneficial interests in a trust
on the register is by entering a restriction, typically one preventing a sole owner from disposing of the estate. Here it seems that she did not take that precaution, since the bank would have seen
the restriction and refused the mortgage.

However, there is another way to preserve the priority of her interest (see s.29(2) LRA 2002), namely, if it is protected as an interest that overrides under Schedule 3 to the Act; more particularly, if
she can show that she is in actual occupation under paragraph 2. You may wish to consider here the limitations on the rule and how likely she is to be able to use it.

The relevant cases to consider are Boland and Cann.

Quick quiz 1
  Text summary of the diagram

Use the diagram above to help you work out the answers to the following questions.

Anne wants to transfer her registered title in Whiteacre to Paul. Which is the correct method?

 She hands the bundle of deeds she has to Paul.

 She hands Paul a deed which states that Anne transfers Whiteacre to Paul (the document complies with s 1 LP(MP)A 1989)
 Am I ready to move on?

You are ready to move on to the next topic if, without referring to the module guide or text book, you can answer the following questions:

What are the three principles of land registration?

What is the difference between the system of conveyancing of registered title and that in unregistered title?
How are third party rights protected in registered title?
What is an ‘overriding interest’? How and why did the position change under the Land Registration Act 2002?
When must a title be compulsorily registered?
What reforms were made under the Land Registration Act 2002, and how effective were they at achieving their goals?
 Further reading

Bevan, C., Chapter 2 ‘Registered land’ (excluding Section 2.9 ‘The mechanics of registered land: alteration of the register and indemnity’).
Bevan, C. ‘Overriding and over-extended? Actual occupation: a call to orthodoxy’ (2016) Conveyancer and Property Lawyer (2) 104.
Bogusz, B. ‘The relevance of “intentions and wishes” to determine actual occupation: a sea change in judicial thinking?’ (2014) Conveyancer and Property Lawyer 27.
Bogusz and Sexton, Part 3 ‘Registered land’.
Bogusz and Sexton, Chapter 6 ‘Interests protected by registration and overriding interests’: Section 6.5 ‘Overriding interests or unregistered interests that override registered dispositions’.
Cooke, E. and P. O’Connor ‘Purchaser liability to third parties in the English land registration system: a cooperative perspective’ (2004) 120 LQR 640.
Dixon, M. ‘The reform of property law and the Land Registration Act 2002: a risk assessment’ (2003) Conv136.
Dixon, M. ‘Proprietary estoppel and formalities in land law and the Land Registration Act 2002: Theory of unconscionability’ in Cooke, E. (ed.) Modern studies in property law. Vol. 2 (Oxford: Hart
Publishing, 2003) [ISBN 9781841131733].
Gravells, Chapter 3 ‘Registration of title’.
Gray and Gray, Part 8 ‘Dealings and their effect’: Sections 8.1 ‘Contract and transfer’ and 8.2 ‘Dealings with registered estates’.
Law Commission Report, ‘Land registration for the twenty-first century: a conveyancing revolution’ (2001) Law Com 271.
Law Commission Report, ‘Updating the Land Registration Act’ (2018) Law Com 380.
Smith, Chapter 13 ‘Purchasers: registration of title’ (excluding Sections 3 ‘Alteration’ and 4 ‘Indemnity’) (available in VLeBooks).
Sparkes, P. ‘The discoverability of occupiers of registered land’ (1989) Conv 342.