S.3,(xvi); LRA 1925 defines Over-riding interests as ‘….all the incumberances, interests, rights and power not entered on the register but subject to which registered disposition are to take effect.’ Any of the interests listed in S.70,(1) LRA 1925 would over-ride the purchasers interest whether or not they know or ought to have known.S.70 (1) has 12 sub-sections from A - L dealing with these interests. The four most important are:-
S.70, (1),(a), this deals with legal easements, equitable easements are not overriding interests. However in Thatcher v Douglas 1996 the CA held that an equitable easement was an overriding interest under S.70, (1),(a) because of the effect of r.258 of the Land Registration Rules. This decision was later disregarded by LRA 2002 in it’s bid to simplify everything.
S. 70 (1), (f) deals with adverse possession, this is defined as someone taking over someone else’s land or to dispossess the paper owner. The adverse possessor has this right under S. 5 Limitation Act 1980, this states that ‘…no action shall be brought by any person to recover any land after 12 years.’ After which time the paper title owner can no longer enforce his right against the occupier. The adverse possessor can then register his interest on the register. This was the situation in Pubrick v Hackney London Borough 2003. In 1988 Pubrick started parking his car near the empty shell of an old building, which was full of litter, he cleared the litter and started storing his equipment in there and covered it in tarpaulin and chained it down. In 1992 he replaced the roof and fitted a new door to the building. It was held that Pubrick had acquired title by adverse possession. 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. The new buyer would have to make relevant enquiries as to their existence, however if they are not mentioned in the register and they are not visible on inspection of the property then it is extremely difficult to make enquiries about someone you don’t know about. It is of an extreme disadvantage to the purchaser.
It would be extremely controversial and frustrating for a prospective purchaser of property to find on purchase that they have a person claiming an interest in their property. S.70,(1),(g), provides that a person in actual occupation at the time has a proprietary interest in the property and this interest would take precedent over the buyer. If however the buyer has paid his purchase price to 2 trustees or he has proof that he has made all the relevant enquiries then the buyers interest will take precedent of that of the person with the over riding interest
Proprietary interests are the only rights that subsist in the reference to the land and therefore satisfy the criteria of S.70,(1),(g). for example an estate contract is sufficient interest as is a beneficial interest under a trust of land. In Williams and Glyns Bank Ltd v Boland1981, the wife had a beneficial interest in the property. Unbeknown to her the husband re-mortgaged to the bank, he then defaulted on the loan. The bank wanted to sell the property to re-coup their monies but they were prevented from so doing because of the wife’s interest in the property. HL stated it was a question of fact as to whether a person is in occupation at the relevant time. Abbey National BS v Cann 1990 illustrates the difficulty of ascertaining occupation at the relevant time. In this case the son moved the mothers furniture and belongings into the house but she remained living in the Netherlands. She was regarded as not being in actual occupation, only temprorary. Compare this with Chhokar v Chhokar where the situation is that of temporary absence from the property. Mrs Chhokar went into hospital to have a baby, on her return her house had been sold and her furniture removed. 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
