Overriding interests - LRA 2002.

The introduction of the LRA 2002 will narrow the nature of actual occupation, this is illustrated by the new ‘general rule’ which states that ‘an unregistered interest belonging at the time of disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation will override a registerable disposition’. The decision in the case of Ferrishurst Ltd v Wallcite Ltd will firstly be reversed by the introduction of the LRA 2002. It was held here that a person in actual occupation of part of a registered title who had rights over the whole could, by virtue of his possession of his part, protect his rights over the whole. The effect of this would be that it will diminish the impact of unregistered interests that can override first registration or a registerable disposition. Thus resulting successfully in the aim of the LRA 2002.

The protection that is offered by LRA 1925 s.70(1)(g), with regards to registered land in receipt of the rents and profit, is not continued in the LRA 2002. However, a point to take into consideration is that individuals who are in the process of receiving rents and profits from registered land before the introduction of the 2002 act, will continue to enjoy this right, however, if this process occurs after the act is introduced then their interests will not be protected.

The purpose of these changes in the area of actual occupation arise due to the need of extra protection, however, there are four exceptions to the new rule. Firstly any interests that are created under a settlement under the Settled Land Act 1925, this exception will be protected under the register as it will be subjected to various restrictions, meaning that there will be no change with regards to the LRA 1925. the second exception is an interest of a person that is enquired about, however, the enquiry fails to unveil that persons interest if it seen as reasonably possible to have disclosed the interest.

Thirdly is the exception of a person whose occupation is not apparent after a reasonable inspection at the time of the disposition. a question that arises here is what the purpose of this exception? The answer would be that any unregistered interests of any occupiers will only binding on a new buyer if they are discovered during a reasonable inspection or if the buyer is already aware of an interest of the person in question. The final exception is regarding leases that a tenant takes possession after a period of three months of the lease being granted, (this is deliberated in more detail below).

A question that arises here is what is a reasonable inspection? There has been much deliberation to this question as Thomas J. stated that an occupation must be ‘actual and apparent’. However, on appeal Russell L.J. rejected the above meaning as he favored to give words their literal meaning and stated that the matter of actual occupation is one of fact. Therefore, it can be said that as long as a person actually occupies a property then they are in actual occupation.

In a sense it can be said that the LRA 1925 actually upgraded rights this is as, if a person had a minor interest in addition to actual occupation then it would equate to an overriding interest. This important decision is established through the case of Williams & Glyn’s Bank Ltd v Boland. This equation still does exist in the LRA 2002, however, this is only in substance, and not in form. This is due to the fact that any distinctions that were beforehand placed on minor interests and overriding interests have now been discarded by the new act. The divide is now between interests that are subjected to an entry on the register and any interests which override first registration or a registered disposition. in addition to the above equation being established in the case of Boland it stated that a right which is overriding does not need to confer the right of occupation, and finally it created a substantial division between registered and unregistered land, (this is regarding non-registration). It is stated that if a title is unregistered, and a person has an interest in a property that is registrable, and the property is not registered then the interest will be void against a purchaser, regardless of actual occupation. However, if the title is registered then an interest will override.

The second main overriding interest that now needs to be discussed is easements and profits á pendre, this area was previously presided under s70(1)(a). The effect of the LRA 2002, will create quite an impact here as the previous law was seen as ambiguous. The introduction of the LRA 2002 will mean that an unregistered legal easement or profits á pendre will override a registered disposition. Therefore, any easements or profits that are granted or reserved after the LRA 2002 is introduced and is not registered, then it will by no means override a registrable disposition.

As it is seen with actual occupation there are also exceptions to the rules that govern the LRA 2002. the first of these exceptions is that an unregistered legal easement or profits á pendre which is not registered under the Commons Registration Act 1965 (CRA 1965), and which has not been implemented within one year of the date of disposition, and at which time of the disposition is not within the actual knowledge of the person to whom the dispositions made or would not have been obvious on a reasonable careful inspection of the land over which the easement or profit is exercisable, will not override first registration. Re are legal easements or profits stated

However, the there are legal easements and profits that will override a registered disposition, these include a right of common that is registered under the CRA 1965, secondly if it is known to the disponee under the registered disposition, thirdly that it would have been apparent on a reasonable careful inspection of the property, and finally if the person who states that they are permitted to the easement on the profit providing that the person can prove that there right is exercised within the one year limit.

The third overriding interests concerns leases, under the 1925 it was stated that any lease that was granted for more than a period of 21 years was not classified as an overriding interests, which in turn meant that any lease that did not exceed for more than 21 years qualified as an overriding interest. The introduction of the LRA 2002 has changed the 1925 act as now any leases that are granted for more than a period of 7 years, the tenant should apply for registration. If the lease does not surpass 7 years will qualify normally as an overriding interests, therefore, this will bind the proprietor, on first registration, and on a consequent disposition.However, there are exceptions to this, as leases that do not surpass the 7 year limit will generate a duty for these leases to be registered with titles of their own. Here is great concern regarding a lease that will take effect after a period of 3 months, leases such as these must be registered, and therefore will not be overriding. This can cause problems with tenants and students as most leases are granted more than 3 months prior to possession which can be around the months of September or October.

The final main interest is held in squatter’s rights. S.70(1)(f) of the LRA 1925 stated that ‘subject to the provisions of this act, rights acquired or in the course of being acquired under the limitations act’ therefore, becoming an overriding interest. This meant that a person who took possession of another’s land for a period of 12 years then the actual owners rights to the land would be extinguished. regarding first registration it is now the case that absolute titles will be subjected to interests under the limitation act 1980. therefore, the squatters rights derived from his adverse possession will bind the person registered as first proprietor if the title is unregistered. Also the first registered proprietor will take subject to the rights acquired under the limitation act 1980. This will operate regardless of whether the transferee has notice of the right.

The registered proprietor has the legal title to register land, therefore, where as previously, where the proprietor held the land on trust for the squatter this trust no longer arises transitionally provisions are in place to deal with possessory titles achieved against registered proprietors prior to the new act. For a period of three years from the new coming into force interests which override will include those whose interests are held in trusts. It can be seen from this that the introduction of the LRA 2002 will limit the rights of a squatter and provide more protection for the actual owner of the land in question.  

The main overriding interests have now been discussed, as stated before there are a vast number of ambiguous overriding interests that also need to be deliberated. The introduction of the LRA 2002 has decreased the number of these interests however, a few of these interests can still be created these are public rights, land charges, franchises, and PPP leases. As for interests such as manorial rights, crown rent, a tight to payment in lieu of tithe, and a non-statutory right in respect of an embankment or river or sea wall, these will be phased out within a period of 10 years. The act does provide that a person that hold such an interests an entry it onto the register during the 10 year period free of charge. If there is not a notice placed on the register, the interests it self will not be lost but it will mean it will be unprotected a registered disposition.

The purpose of the LRA 2002 is to create a register that will be complete a record of title as can be, with the result that it should be possible for the land to be investigated almost entirely on-line. The act where it is concerned with overriding interests has succeeding in accomplishing this to a certain extent. As it can be seen the new law narrows most interests, it intends to abolish other interests after a period of 10 years, therefore, the law regarding overriding interests has become stringent. As it is seen there are various ways in which the new act provides more protection an example of this adverse possession, before the introduction of the LRA 2002 a squatter could obtain a title if he obtained possession of land for a period of 12 years, however, due to the new law this is no longer possible. The number of interests has also been decreased, reflecting the intention of completing the aim of the LRA 2002. In addition to adverse possession the transformation in the area of easements is quite important also. It is due to this that transitional provisions have been put in place.

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