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Explain the nature of over-riding interests and discuss what are the disadvantages they pose to prospective purchasers.

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Introduction

Explain the nature of over-riding interests and discuss what are the disadvantages they pose to prospective purchasers Registered land is title or ownership of land which is recorded in a register at the Land Registry. The basis of the register is to regulate the transfer, use and enjoyment of the registered land as set down in the Land Registration Act (LRA) 1925. Over-riding Interests come under Registerable Interests, this is divided into three categories these are minor interests, legal estates and over-riding interests. S.20 and S.23 LRA 1925 states that '...a purchaser takes the land subject to any existing over-riding interests, sometimes however these interests are not registered.' The idea behind over riding interests according to those who drafted the LRA 1925 Act is that they would be easily discoverable upon inspection. A purchaser is bound by an over-riding interest even though they are not mentioned in the register. This is because they operate at a distinct advantage to the mirror principle, this principle registers the true interest, but over-riding interest are the exception to this. The principle registers the true interest, but over-riding interests are the exception to the rule. It is held that the register is an accurate and conclusive reflection of relevant interests. ...read more.

Middle

In Chowood Ltd v Lyall 1930 Lyall was sued for trespass by Chowood, the first registered proprietor of the land. Lyall argued successfully that she had gained title by adverse possession and that Chowoods' registration was subject to her over riding interest. S 70 (1),(k), deals with leases that do not exceed 21 years, it does not apply to equitable leases it only applies to legal leases. All legal leases for longer than 21 years would need to be registered as a title interest. S.70, (1),(g); this deals with the rights of the person in actual occupation of the property. There are many controversial issues surrounding S.70,(1),(g). The definition of adverse possession is '...the rights of every person in actual occupation of the land or in receipt of rents where inquiry is made of that person but those details are not disclosed'. A person claiming an over riding interest under this section has to prove all 3 of the following requirements. Firstly that there is a right to 'subsisting in reference to land,' secondly the owner of the right was in actual occupation or in receipt of rents and profits. Thirdly no enquiry was made of the person. The person with the over riding interest in the property will have rights and may be in actual occupation. ...read more.

Conclusion

But she was found to have had an over riding interest in the property through her temporary absence. In Lloyds Bank v Rosset 1989 HL decided that 'the relevant date for ascertaining whether an interest was protected by actual occupation was the date of the creation of transfer of that interest. Also the whole building does not need to be occupied for over riding interest to apply. In Ferrishurst v Wallcite 1999 the court agreed that part occupation of a building was sufficient to claim an over riding interest. However the LRA 2002 would later disregard this ruling. The principle of overriding interest is most frustrating for the purchaser it is imperative that they make all the relevant inquiries with regard to the property. They should establish as soon as possible if anyone other than the vendor has an interest in the property and if so what type. To be able to claim protection from an over riding interest the purchaser must be able to prove that he has examined any proprietary interest a person might have on the property. He must also establish they are not in actual occupation and finally he must have made all the relevant enquiries required to make such checks. The LRA 2002 will address this particular difficulty through electronic conveyancing, this will mean that transfer and registration of the property will take place at the same time ...read more.

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