There exist today two types of land: Registered and unregistered land. Each of them consist their own rules concerning the transfer of land from one person to another and the enforcement of third party proprietary interests affecting the land. We will firstly need to be familiar with Registered Land.
The Land Registration Act (LRA) 1925 (now the LRA 2002) provided a system of registration of titles but not titles to land. Therefore, there can be more than one title applicable on the same piece of land. The main aim of LRA 2002 is to make arrangements to the legislation to enable dispositions of registered land to be dealt with electronically.
The land registration scheme rests on 3 principles:
(1) Mirror Principle- All facts are relevant to the title are to be found on the register.
(2) Curtain Principle- Purchasers need not to look beyond the register and are not concerned with trust.
(3) Insurance Principle- Any flaw in the register leads to the payment of compensation to a person affected.
Scheme of the Land Registration Act
The LRA 2002 takes different types of estates and interests in land and classifies them for the purposes of land registration in the following ways:
(1) Dispositions which must be completed by registration.
(2) Unregistered dispositions which override registered dispositions. These correspond to the old category of overriding interest and the effect is that a buyer of the land can be bound by an interest that is not on the register.
(3) Interests which must be protected by an entry against the title which they bind. These were formally known as minor interests.
REGISTRABLE DISPOSITION
s27(1) LRA 2002 stated that:
If a disposition is required to be completed by registration, then it does not operate at law until it is registered in accordance with the requirements.
s27(2) LRA 2002 stated that:
The disposition which must be completed by registration:
(a) A transfer of registered freehold estate- This includes transfer by any of the following methods:
i. for valuable or other consideration
ii. by way of gift
iii. in pursuance of a court order
iv. transfer by personal representatives on death.
(b) The grant of a legal lease with more than 7 years to run. In addition, certain leases for less than 7 years are registerable, such as those which take effect more than three 3 after the date of the grant.
(c) Certain other leases and rights arising under leases. For example, registration of the grant of right to buy a lease under the Housing Act 1985.
(d) The express grant or reservation of legal easements, legal profit, legal rentcharges.
(e) A first legal mortgage created out of the estate. This will apply whenever existing legal mortgages are discharged and new mortgage created. This rule has proved to be one of the main means of transferring land from the unregistered system to the registered system.
The above-mentioned are the 'triggers' to registration of title. They cover almost all the possibilities but not quite: the appointment of new trustees and registration of the freehold on the grant of a long lease are not triggers.
This follows with the coming sections as:
s28 LRA 2002, where:
Basic rule- The priority of an interest affecting a registered estate or charge is not affected by the disposition of the estate or charge. The effect is that priority of the interests in registered land depends on their date of creation.
s29 LRA 2002, where:
The effect of a registered disposition made for a valuable consideration is that it takes priority over any rights affecting the estate prior to the disposition which are not protected by registration or are overriding. Thus, an interest which is neither overriding nor protected by any entry on the register will not be binding on the purchaser.
The relationship between ss.28 and 29 is demonstrated as below:
Jacey, the registered proprietor of Blackacre, has made a contract to sell it to Casper.
(a) Jacey dies and Tracey inherits the estate. Casper's contract binds Tracy as Casper's right was created first. (s28)
(b) Jacey sells the estate to Tracy. As the disposition was for valuable consideration, s29 applies and of Casper's contract was not protected by the registration, it will not bind Tracy.
The relationship between ss28 and 29 was considered in the case Halifax Plc v Curry Popeck, where the issue was the priority of two mortgages to different lenders over a property. The property had been transferred fraudulently and therefore no question of valuable consideration arose, so s28 applied. Thus the mortgage created first has the priority. The reason for the litigation was that the first lender had not acquired immediate charge over the property as there was no contract to satisfy s2 of the LP(MP)A 1989. However, the first lender did have a right by proprietary estoppel.
There are few dispositions of freehold land or leases with at least 7 years which will not be caught by the above rules and which will not need to be registered, such as an assignment of mortgage. Voluntary registration is also possible. For example, a freehold estate may be registered even though it is not being transferred.
OVERRIDING INTEREST
Overriding interest is an unregistered disposition which overrides a registered disposition. The LRA 2002 distinguishes between:
(1) The interests which override on first registration of the land and
(2) Interests which override on subsequent registration of the land.
The reason is because the effect of a first and subsequent registration is different.
COMPARING THE SCENARIO
SCENARIO 1:
Jacey sells 112 High Street, which has unregistered title to Casper. Follwing the sale, Casper registers the title. Jacey's Mom, Rita who contributed to the purchase price when Jacey bought the house, wtill lives there. Rita may have an equitable interest in the property. It is not at this time an overriding interest as 112 High Street has not beed registered. Time for deciding if Rita's interest is binding on Casper is when Casper acquired the title to it and the principles of unregistered land are relevant. However, when Casper's title is registered later, Rita's interest may then count as an overriding interest.
SCENARIO 2:
Now the title is registered. This time the crucial time is when Casper's title is registered. Now Rita's interest is counts as an overriding interest throughout the transaction.
SCENARIOS DIAGRAM:
(1)First registration
Completion of transaction------------------------------------------------------- Title then registered
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Validity of interest decided
(2) Subsequent registration
Completion of transaction-----------------------------------------------------Title then registered
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Validity of interest decided
INTERESTS WHICH OVERRIDES ON FIRST REGISTRATION:
(1) Legal leases not exceeding 7 years.
(2) Interests of persons in actual occupation.
(3) Legal easements and profits (not equitable).
(4) Miscellaneous such as local land charges.
INTERESTS WHICH OVERRIDES SUBSEQUENT REGISTRATION:
Leases:
(1) Legal leases with more than 7 years to run are registrable dispositions.
(2) Legal leases not exceeding seven years are overriding interests. (Shedule 3 para 1)
(3) Equitable leases should be protected by registration as minor interests. But if they are not and if the leaseholder is in actual occupation, then they may have an overriding interest such under Schedule 3 para 2, LRA 2002.
Note that s118(1) LRA 2002 gives the Lord Chancellor power to reduce the period for which registration of a legal lease is required. It is likely to be reduce to 3 years.
Overriding interests of occupiers- Schedule 3 para 2, LRA 2002
An interest belonging at the time of the disposition to a person in actual occupation except for:
(i) an interest of a person whom enquiry was made before the disposition and who failed to disclose the right when he could have been reasonable expected to do so;
(ii) an interest which belongs to a person whose occupation would not have been obvious on a reasonable inspection of the land at the time of the disposition and of which the person whom the disposition was made does not have actual knowledge.
In Williams & Glyn's Bank v Boland,
The wife had contributed to the purchase price of property and so had acquired the beneficial interest in it. The husband mortgaged it to the bank which sought possession when he did not keep up the repayments. As the wife was in occupation under an equitable interest, she had an overriding interest which bound the bank.
CASE DIAGRAM
Mortgage
Mr Boland------------------------------------------------------------------------------------- Bank
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Mrs Boland
When determining the question based on Williams & Glyn's Bank v Boland, the approach for a problem question:
1.Does the person claiming have a legal or equitable interest in the land?
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2. Was he/she in actual occupation at the time of the disposition?
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3. If so, does he/she has an overriding interest?
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4. Is it binding on the purchaser?
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5. Apply test (i) and (ii) in Sch3 para2.
To decide when does a right qualify as for overriding status:
National Provincial Bank v Ainsworth
When it is a proprietary interest in land, whether legal or equitable. The principle is given statutory force by s29(1) LRA 2002 which refers to any interest 'affecting the land', such as proprietary interest.
EASEMENTS AND PROFITS
Legal easements and profits created expressly after 13.10.2003 (by deed) are registrable disposition.
Equitable easements and profits created on or after 13.10.2003 can only take effect as minor interest.
The new legal easements and profits that can be overriding are:
(1) created by implied reservation
(2) created by implied grant (Wheeldon v Burrows rule or s62(1) LPA 1925)
(3) created by prescription (Sch 3 para 3 LRA 2002)
Where an easement can be overriding, it will then be the same way as for rights of occupiers. But remember:
Where the person entitled to the easement or profit proves that it has been exercised in year previous to the disposition then it will in effect always be overriding.
EXAMPLE SCENARIO:
Jacey has a right of way (easement) over Casper's land. Casper sells the land to Johnny.
(1) If the easement was granted by deed, it will not bind Johnny unless registered.
(2) If the easement was granted by agreement but not in a deed, it is equitable and will not bind Johnny unless protected on the register as a minor interest.
(3) If the easement was created by implied grant or prescription, it can be overriding but will not bind Johnny where cases (i) or (ii) in Schedule 3 para 2 apply. However, it will bind Johnny if Jacey exercised it in the year previous to the disposition (sale to Johnny).
PROTECTED REGISTERED INTERESTS: MINOR INTERESTS
Protected registered interests is the interests in land which are not overriding and include: restrictive covenants, equitable easements and profits, estate contracts and rights of beneficiaries under a trust.
Most of these must be protected by an entry on the register to bind a purchaser. One significant change from pre-LRA 2002 law was that where an overriding interests in protected on the register by notice, it ceases to be an overriding interest even if the notice is later removed from the register. There are two ways of protecting the interest:
(1) By a notice
(2) By restriction
ALTERATION OF THE REGISTER
Register can be alter by refering to s65 and Sch4 LRA 2002.
INDEMNITIES
If the register needs to be altered, compensation can be paid to whoever has suffered the loss subject to s103 and Sch 8 LRA 2002.
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