Land Registration Notes

Learning Outcomes

Understand the historical position, aims of the Land Registration Act 2002 (LRA), Schedules 1 and 3 of the LRA 2002, and the principles of ‘overriding interests’ and ‘overreaching’ equitable interests.

What is Land Registration?

Land registration involves recording land title (the ‘estate’ in land) in a central register managed by the Land Registry. The Land Registration Act 1925 was replaced by the Land Registration Act 2002, which came into force on 13/10/2003.

Main Aims of the LRA 2002

  • Strengthened, simplified, and modernized title registration.
  • Updated substantive principles of land registration.
  • Framework for eventual e-conveyancing.
  • Efficient and inexpensive transfer of estates and interests.
  • Proper protection of third-party property interests.
  • Maximize the number of estates, interests, and property rights entered on the register.
  • Building on the LRA 1925.

Land Registration Aims

  • Provide a complete and accurate reflection of the state of land.
  • Minimize additional inquiries and inspections.
  • Remove the cost and drudgery of title investigation.
  • Reduce fraud risk and protect purchasers.
  • Alert potential purchasers to property rights burdening the land.
  • Standardize and improve the conveyancing process.
  • Support the market and benefit the economy.

Registrable Estates

Only a 'qualifying estate' is registrable.
Only a legal estate can be registered under LRA 2002, such as:

  • A legal freehold.
  • A legal leasehold estate (over 7 years from creation or with more than 7 years left at the time of transfer).

Registered Land

Once registered, land remains registered, and subsequent transactions occur through the Land Register, which is updated to reflect changes in ownership or property transactions.

The Register

  • Property Register (A): Description of land, title (freehold/leasehold), plan reference, interests benefiting the land (easements, covenants), and lease details.
  • Proprietorship Register (B): Class of title, name/address of registered proprietor, date of registration, price, and restrictions.
  • Charges Register (C): Third-party rights adversely affecting the title (registered charges, mortgages, restrictive covenants, and easements).

Registrable Dispositions (S.27 LRA 2002)

  • Transfer of a registered fee simple.
  • Transfer of a registered lease.
  • Grant of a lease (term > 7 years) out of a registered estate.
  • Grant of a reversionary lease.
  • Grant of a discontinuous lease.
  • Grant or reservation of a legal easement.
  • Grant of a legal charge/mortgage.

Priority Rules

  • Basic Priority Rule (S.28 LRA): A non-purchaser takes the land subject to all prior third-party property rights.
  • Special Priority Rule (S.29 LRA): A purchaser takes free from all pre-existing third-party property rights except registered charges, overriding interests (Schedule 3 LRA), and protected third-party registered interests.

Priority Rule Application

  1. Is there a registrable disposition (S.27 LRA 2002) of a registered estate (Ss. 2, 3, 4 & 27 LRA 2002)?
  2. Has valuable consideration been provided (S.132 LRA 2002)?
  3. Has the disposition been completed by registration (Sch. 2 LRA 2002)?
    If yes to all, S. 29 applies, and the disposition takes priority over all pre-existing, unprotected interests (unless overriding under Sch. 3 LRA 2002). If no, S. 28 applies, and priority is determined by the date rights were created.

Three Basic Principles

Theodore Ruoff identified three basic principles:

  1. The mirror principle
  2. The curtain principle
  3. The insurance principle

The Mirror Principle

The register should accurately reflect the state of the title. Exceptions: overriding interests and alterations/rectifications.

The Insurance Principle

The Land Register provides a true reflection of the title and is guaranteed by the State and loss from error is compensated.

The Curtain Principle

Details of equitable ownership behind trusts are kept off the register; purchasers need only check for at least two trustees to overreach equitable owners' rights. See City of London Building Society v Flegg (1988) and Ss2 and 27 LPA 1925.

Overreaching and Registered Land

  • City of London Building Society v Flegg: Interest transferred to proceeds of sale.
  • State Bank of India v Sood (1997): No requirement to pay two trustees where no capital monies are raised.
  • Williams & Glyn’s Bank v Boland (1981): Payment to a single trustee does not overreach.
  • HSBC v Dyche (2009): Overreaching cannot occur in fraudulent cases.

Operation of Registered Land

A purchaser is bound by registered third-party property rights. Unregistered rights do not bind a purchaser unless they are 'overriding interests.'

Schedule 1 LRA 2020

Unregistered third party interests override a first registration. If registered, they cease to be overriding. The interests listed are similar to those overriding registered dispositions in Schedule 3.

Schedule 1 Interests

  • Schedule 1(1): Legal Leases for 7 years or less
  • Schedule 1(2): Interests of Persons in Actual Occupation

Schedule 3(2) LRA 2002

Protects third parties with property rights in 'discoverable' actual occupation. Personal rights excluded.
Crucially, the actual occupation of the right holder must additionally ‘be obvious on a reasonably careful inspection of the land at the time of disposition or within transferee’s knowledge. The inquiry must be the correct one, such as the question: “What property rights (if any) do you have in relation to this property?”

Key Cases

  • Williams and Glyn’s Bank v Boland [1981] AC 487
  • Abbey National v Cann [1991] AC 56
  • Link Lending v Bustard [2010]

Establishing Overriding Interest Under Schedule 3 Para 2

To establish an overriding interest of actual occupation under schedule 3 para 2:

  • QUALIFYING INTEREST
  • ACTUAL OCCUPATION

Interest will be overriding UNLESS:

  • An inquiry was made and the interest was not disclosed when it was reasonable to do so Sch. 3, para 2(b)
  • Occupation would not have been obvious on an reasonably careful inspection of the land at the time of disposition Sch. 3, para 2(c)(i) AND the person to whom the disposition is made does not have actual knowledge of the interest at the time of disposition.