Although, overhauling of the property law in England and Wales through LPA 1925 made it much easier for the purchaser to get the title free from most of the third party rights, however, it could not give the outright relaxation to the purchaser and even after its implementation most of the buyers found themselves in court sued by third parties proclaiming to have interest in property by one way or the other. These problems have been overviewed by the law commission and in LRA 2002, a defined package have been presented from which a purchaser would be benefited.
Analysing LPA 1925
Overriding interests by definition never appear on any register of title, but are quite literally ‘overriding’ in the sense that they automatically bind the disponee of any registered title. It is this aspect of the legislation that ignites such controversy and appears to undermine the ‘mirror principle’. s70(1) LPA 1925 lists the interests that are capable of being overridden. The majority of these are non-contentious but the most important ones are restricted to paragraphs (a), (f), (k) and (g). The latter paragraph is concerned with the rights of persons in actual occupation of a property and represents the biggest flaw in the legislation as it creates a significant danger to the purchaser. This is because the wording is such that the courts have interpreted it as providing protection for holders of equitable interests. This has the effect of distorting the structure of the act and detracts from the basic principles of registration. Consequently, the purchasers are bound by a range of equitable interests. Another failing in the system is that the only protection for the purchaser is the ‘enquiry clause’ which is analogous to the old doctrine of notice. In order to satisfy s70(1)(g), three requirements must be met: Firstly, there must be an existing property right in relation to the land. Secondly, the holder of the right must be in actual occupation of the land or in receipt of rents and profits from the land. Thirdly, the purchaser must have made enquiry of the holder of the right and not been told of it.
The meaning of ‘actual occupation’ has been the subject of two major judicial decisions. In Hodgson v Marks, where the Court of Appeal held that a widow, who conveyed her house to her lodger had her interest protected because she was physically occupying the house. In the leading case on s70(1)(g), Williams & Glyn’s Bank Ltd v Boland, the House of Lords held that Mrs Boland had an equitable interest in land of which her husband was the sole registered proprietor. The significance of the decision in Boland is that the House of Lords chose to prefer the interests of occupiers against those of banks, building societies and conveyancing solicitors. Since then, the courts have found ways to retreat from Boland without actually overruling it. In City of London Building Society v Flegg, for example, in circumstances unlike those in Boland, it was held that, where two legal owners execute a mortgage (as in Flegg), instead of one (as in Boland), the overreaching guarantee in the LPA 1925 is triggered and protects the mortgagee. What can be deduced is that however full the enquiries made by the purchaser, the enquiries may not discover every relevant fact. Registered land is potentially burdened by a fairly extensive list of these overriding interests. The significance of this flaw cannot be underestimated and the implications are far reaching.
Extent of Successfulness of LRA 1925
The system of registered land was perhaps the greatest of the reforms to come out of the 1925 legislation. The new system offered numerous advantages but it is fair to say that the scheme of registration is not as tightly drawn as might perhaps have been desired. This lack of effectiveness can be seen when one considers that the subsequent Land Registration Acts have been enacted, not to develop the system, but simply to cure existing problems. A legitimate criticism is that the completion and development of the register has essentially been of an irregular nature and taken far longer than necessary. In recent years, however, the regime of registered title has begun quickly to surpass unregistered title and, therefore, now constitutes the primary regime of modern land law.
Undeniably, the greatest problem with the registered system is the class of overriding interests. The LRA 1925 appears to destroy the integrity of the registered land concept by allowing these interests to remain effective and binding irrespective of whether or not they appear on the register. It has been seen that s70(1)(g) creates, by far, the greatest potential hazard to a purchaser.
The Law Commission proves to be a useful gauge as to whether the aims of the registered system have been met. The Commission has been successful in its endeavours to reform the system given that three Land Registration Acts enact Law Commission reports. Furthermore, the Commission is at the very forefront of recommending reformation of the 1925 Act and they clearly feel that the present system necessitates this level of attention. According to the Commission, the Land Registry ‘has coped well with the defects in legislation and has made the system work despite it rather than because of it.’
It is reasonable to assume that the time has now come for an extensive overhaul of the LRA 1925 and it is likely that forthcoming and long awaited legislation will significantly amend the 1925 Act. This need for reform is heightened by the desire for a system of electronic conveyancing. It is, however, worth bearing in mind that the concept of an absolutely comprehensive register is probably unattainable given that it is impossible to register some rights (for example, squatter’s rights). Furthermore, it is impracticable to register others (for example, short tenancies and local land charges).
Trust of Land and Appointment of Trustees Act 1996 and Settled Land Act 1925
On the other hand overreaching has also been encapsulated in TOLATA 1996 where most trusts of land are governed by the said act. However, some trusts continue to be governed by the Settled Land Act 1925. In either case, provided that there are at least two trustees or a trust corporation, the interests arising under the trust will, under s.2 Law of Property Act 1925, be overreached on a sale, or other dealing for consideration, so that the purchaser takes the land free of the interests under the trust. Those interests will, instead, transfer to the purchase monies in the hands of the trustees. The land thus becomes available but the wealth interest of the beneficiaries is maintained by being transferred to the purchase money. Overreaching will not, however, apply in the case of a disposition that is not for consideration or one where there is only one, non-corporate, trustee. This would not undermine the interest of the purchaser, and there would be a clean transfer to the purchaser at the end of the transaction if rules in s2 have been followed.
Furthermore the Settled Land Act 1925 continues to govern those settlements to which it was already applying on 31st December 1996. As such settlements were generally set up with the aim of governing the land through successive generations; the Act will remain relevant for some decades yet. It imposes a complex regime, as a development from that first enacted in the Settled Land Act 1882, with the aim of ensuring that the land can always be sold clear of the trusts, which will be overreached and transferred to the purchase moneys. The lynch-pin of this scheme is the Tenant for Life. Under s.19 Settled Land Act 1925 this is "the person of full age who is for the time being beneficially entitled under a settlement to possession of settled land for his life". This definition is expanded in s.20 to include various other classes of beneficiary. In essence, the beneficiary with an immediate interest in possession will be or have the powers of Tenant for Life, who has a dual position as both beneficiary and trustee.
However, the Act also confers on the Tenant for Life extensive and in excludable powers of management and disposition. These include powers of leasing and of mortgaging the legal estate for specified purposes connected with the land. Leases or mortgages properly executed under these powers will continue to bind the legal estate in the hands of a subsequent Tenant for Life. Most importantly, they also include a power to sell the legal estate and overreach the beneficial interests. To have this overreaching effect, however, the purchase moneys must be paid to the Trustees of the Settlement, of which there must be at least two or a trust corporation, or into court.
The trustees of settlement unlike the tenant for trustee of legal estate so long as it is unsold. The integral role of trustees of the settlement is of a watchdog on the tenant for life to ensure there is no abuse of powers. On a transaction the trustees of settlement receive the money and then hold that money as trustees.
The diagram can be referred as an example of overreaching where P is paying the capital money to X and Y under s2 of TOLATA 1996 to give effect to overreaching for vindication of any trust on the land. Where X and Y are holding land on trust for A and B for life and for C as a fee simple.
The land is thus made available without being tied up in the settlement but the intended trusts of the value, of the wealth interest as compared to the use interest or the power interest, still take effect to keep that wealth "within the family". Because these trusts will not affect a purchaser they are declared in a separate Trust Document which a purchaser is not entitled to see. The Vesting Deed by which the legal estate is transferred to the Tenant for Life and which names the Trustees of the Settlement is sufficient for the purchaser.
Where there is no tenant for life, as for instance if there is purely a contingent fee simple interest or the person otherwise entitled to be Tenant for Life is a minor and thus incapable of owning a legal estate, the Trustees of the Settlement will have the legal estate vested in them as Statutory Owners on the trusts of the settlement. They will then have all the powers of a tenant for life, including that of making an overreaching sale. This carries through the policy that there should always be someone entitled to sell the legal estate in the land and make it available free of the trusts.
As well as applying to trusts creating limited or future interests which can no longer be legal estates, the Settled Land Act applies to trusts for a minor created before 1st January 1997 even where the minor's beneficial interest is in a fee simple absolute in possession unless that interest arose under an immediate binding trust for sale. The Trustees of the Settlement act as Statutory Owners and have power to sell and overreach. The Act also applies where a legal estate is subject to family charges created before 1997 unless there was an immediate binding trust for sale. These charges may thus be overreached on sale. Where land is held on charitable trusts created before 1997 the trustees have the powers of a tenant for life under the Settled Land Act including the power to sell and overreach.
All trust affecting land, unlike those which continue to be governed by the SLA 1925 are of trust of land within the meaning of TOLATA 1996. This thus includes trust created as trust of sale so as to exclude the SLA1925. And all trust created since 1996; include trusts for limited interest, trust for minors, charitable trust and express or implied co-ownership trust. It also includes bare trust where there is a sole sui juris beneficiary entitled to a beneficial fee simple absolute in possession or term of years absolute.
Conclusion
The Acts introduced in 1925 all tried to make buying and selling a much easier process, and in many ways have succeeded as discussed above, but there are still areas such as the overriding interests which the purchaser has to be careful of where the court might ordain that the trust arise in favour of the third party. This is why when purchasing any land, registered or un-registered, a thorough investigation should be undertaken. The LRA 2002 has helped a lot by reducing the number of overriding interest that are the ones buyers must be aware of.
Bibliography
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Sexton, R (2001) Land Law Oxford University Press
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Howarth, W (1997)Land Law 4th Edition, Sweet and Maxwell
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Todd Paul ER Ives v High 11/01/96 available from (accessed 14/11/03)
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Law commission reports 1965 – 2003 available from (accessed 14/11/03)
Web Journals
Paul Todd MA BCL Trusts of land and third parties available from
(accessed 14/11/03)
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Nicola Glover LLB and Paul Todd MA BCL Occupation for Life: Satisfying the Equity available from
(accessed 14/11/03)
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1 National Westminister Bank v Ainsworth (1965) AC 1175
2 The Royal Commision of Land Transfer and Registration (1857)
This was deemed to be extremely important in what was, at the time, an increasingly mobile and industrialized society.
In essence this is the system which is in operation today, although its present statutory authority is the Land Registration Acts 1925 to 1997.
LRA 1925, ss20(1)(6), 23(1)(2)
s70 does not, in fact, provide a complete list of all overriding interests: Celsteel v Alton House Holdings Ltd. (1985) WLR 204 established that there is a further category not contained in the s70 list. In this case it was an equitable easement. Despite criticism, this decision has been followed and applied by the Court of Appeal in Thatcher v Douglas (1995) 146 NLJ 282. This demonstrates a key failing in the effectiveness of the legislation.
Easements and profits a prendre
Leases not exceeding 21 years
This is effectively the statutory application of the rule in Hunt v Luck (1902) 1 Ch 428
I.e. that the transfer of land was safer, simpler and economical, legal title was guaranteed, the risk of fraud was reduced and there was no need to trace good root of title
Central London Commercial Estates Ltd v Kato Kagaku Co Ltd (1998) Sedley J: ‘The [LRA] has not had good press’. Clark v Chief Land Registrar (1994) Nourse LJ: ‘Legislation of extremely low quality’.
Those of 1986, 1988 and 1997
During the 1980s the Commission issued four reports directed towards a reformulation of major features of the 1925 Act. This culminated in 1998 with the Draft Land Registration Bill, which never reached the statute book and has been overtaken by more recent proposals.
Law Commission, Property Law: 4th Report on Land Registration (Law Com No 123, 8 Nov 1988)
see s.106 Settled Land Act 1925
ss.41-48 Settled Land Act 1925
s.71 Settled Land Act 1925
ss.38-40 Settled Land Act 1925
s.72 Settled Land Act 1925, s.2(1)(i) Law of Property Act 1925
or other capital moneys such as the loan in respect of which a mortgage is given -s.71(1) - or a premium on grant of a lease - s.42(4)
s.110 Settled Land Act 1925
ss.23,26 Settled Land Act 1925
s.1(1)(ii)(d) Settled Land Act 1925
ss1, 26 Settled Land Act 1925
s.1(1)(v) Settled Land Act 1925
However, the legal estate may be sold subject to those charges rather than their being overreached - s.1 Law of Property (Amendment) Act 1925
s.29 Settled Land Act 1925