Interests in land; land registration Flashcards
(28 cards)
Pettitt v Pettitt [1970] AC 777
Question: What is the significance of Pettitt v Pettitt in the context of interests in land, particularly concerning trusts?
Facts: A woman purchased a matrimonial home for herself and her husband to live in out of her own sums and conveyed the home into her name. The husband and wife cohabited the home together, during which the husband made alterations and improvements to the home. Following the couple’s divorce, the former husband claimed that he had a beneficial interest in the home as his contributions to the property had increased its value.
Significance: This case established that financial contributions (or contributions to a common fund for the purchase price) to a property, even if legal title is in another’s name, can give rise to a beneficial interest under a resulting or constructive trust.
Relevance: It is foundational for understanding how proprietary interests can arise informally, which then might be protected as overriding interests if the beneficiary is in actual occupation. It highlights the potential for a “hidden” equitable interest.
Chhokar v Chhokar [1984] FLR 313
Question: How did Chhokar v Chhokar interpret “actual occupation” for the purposes of an overriding interest?
Facts: A wife, who had contributed to the purchase price, was temporarily absent from the matrimonial home (in hospital giving birth) when the husband sold it. Her belongings remained in the house.
Held: She was still in “actual occupation.” Temporary absence does not necessarily negate actual occupation, especially if there is an intention to return and evidence of ongoing presence (like furniture and belongings).
Relevance: This case broadens the interpretation of “actual occupation,” making it clear that continuous physical presence is not always required.
overriding interests: Malory Enterprises Ltd v Cheshire Homes [2002] EWCA Civ 151
Question: What was the main point established in Malory Enterprises Ltd v Cheshire Homes regarding the effect of registration on a voidable transaction under the LRA 1925? (Note: This case was pre-LRA 2002).
Facts:
Malory Enterprises fraudulently obtained title to land and sold it to Cheshire Homes. The original owner, Malory BVI, remained in actual occupation. Malory BVI claimed that either:
A trust arose, making the registered titleholder a trustee; or
Their right to rectify the register, supported by actual occupation, was an overriding interest.
Held:
The Court of Appeal accepted that:
A void registration could result in the new proprietor holding land on trust for the original owner (though this was later overruled in Swift 1st).
Even without a trust, the right to seek rectification could itself be an overriding interest if supported by actual occupation.
Significance:
The case remains controversial, especially the idea that a right to rectify (a discretionary remedy) could be a proprietary right.
Although parts were later overruled, Malory is still cited for the principle that actual occupation can support a right to rectify as an overriding interest under the Land Registration Act 1925.
Link Lending Ltd v Bustard [2010] EWCA Civ 424
Question: What is the significance of Link Lending Ltd v Bustard regarding “actual occupation” and the LRA 2002?
Facts:
Ms Bustard, suffering from severe mental illness, was detained in psychiatric care and unable to live independently. During her absence, a fraudulent “friend” mortgaged her property. Ms Bustard visited the home weekly (supervised), kept her belongings there, and intended to return if her health improved.
Held:
The Court of Appeal held that Ms Bustard was in actual occupation under Schedule 3, Paragraph 2 of the Land Registration Act 2002, which allows certain unregistered interests to bind purchasers if the holder is in actual occupation.
The court considered:
Her intention to return
The involuntary nature and reason for her absence
The length of absence
The persistence and continuity of her connection to the property (e.g., belongings, regular visits)
Significance:
The case confirms that actual occupation does not require full-time residence. Courts adopt a flexible, fact-based approach, especially where absence is involuntary and the person maintains a strong, ongoing link to the property.
Thomas v Clydesdale Bank Plc [2010] EWHC 2755 (QB)
Question: How did Thomas v Clydesdale Bank Plc contribute to the understanding of “actual occupation”?
Facts:
The property was legally owned by Ms Thomas’s partner. Though uninhabitable and under renovation, Ms Thomas regularly attended the property to plan and supervise building works. She and her partner intended for her and her children to live there once renovations were complete.
Held:
The court held that Ms Thomas had a realistic prospect of showing actual occupation under Schedule 3, Paragraph 2 of the Land Registration Act 2002.
Key findings included:
She was present almost daily
She had a clear intention to reside
Her supervision of renovations was sufficient to constitute occupation in the context of an uninhabitable property
Significance:
The case shows that the meaning of actual occupation is context-dependent. In cases of properties under renovation, courts recognize non-residential presence (e.g. overseeing work) as sufficient occupation. Permanent residence is not required where the nature of the property makes that impractical.
Chaudhary v Yavuz [2011] EWCA Civ 1314
Question: What did Chaudhary v Yavuz clarify regarding “actual occupation” and easements?
Facts: A metal staircase provided access over a seller’s retained land to the buyer’s property. The buyer argued this was an overriding interest by virtue of actual occupation (of the staircase).
Held: While the staircase was obvious, the Court of Appeal held that the easement itself (a right of way) could not be an interest capable of “actual occupation” for the purposes of Schedule 3, paragraph 2. “Actual occupation” implies physical presence on the land itself, not just use of a feature on it.
Relevance: This case limits the scope of Schedule 3, paragraph 2 for certain types of interests (like easements) and reiterates that “actual occupation” requires a degree of physical presence on the land to be protected.
Knights Construction v Roberto Mac [2011] 2 EGLR 123
Question: What did Knights Construction v Roberto Mac illustrate about rectification of the register and the protection of a proprietor in possession?
Facts: The Salvation Army mistakenly registered freehold land belonging to KC, and then sold it to RM (who purchased in good faith without fraud). RM was never in possession of the disputed land; it remained occupied by KC.
Held: KC was entitled to rectification of RM’s title to exclude the disputed land. RM was entitled to compensation from the Land Registry. The court held it was “unjust” not to rectify because RM was not in possession, and KC was the true owner in possession.
Relevance: This case highlights the application of Schedule 4, paragraph 3(2) LRA 2002. It shows that if the registered proprietor is not in possession of the land, rectification is more likely to be ordered, even against an innocent purchaser, with compensation as the remedy.
Gold Harp Properties Ltd v MacLeod [2014] EWCA Civ 1084
Question: What principle regarding rectification and priority was established in Gold Harp Properties Ltd v MacLeod?
Facts: A valid lease was mistakenly deleted from the register. A new, later lease was subsequently registered. When the original lease was restored through rectification, the question was whether it should regain its original priority.
Held: The Court of Appeal held that when the register is rectified to correct a mistake, the priority of the original interest that was mistakenly removed should be restored. This can change the priority for the future (Sch. 4, para 8 LRA 2002).
Relevance: This case demonstrates that rectification can alter the priority of interests retrospectively, supporting the idea of correcting the “mirror” of the register even if it means disrupting later registered interests that relied on the mistaken register.
Why Register Land Title?
Question: What are the primary reasons for having a system of land title registration?
Complexity of Rights: Land can have an “extensive bundle of rights,” making investigation of unregistered title difficult and time-consuming.
Clarity and Speed: Registration allows prospective purchasers to consult a clear, state-backed register to quickly ascertain title and interests.
Reduced Risk: Transactions proceed with more speed and less risk due to the certainty provided by the register.
Policy Aims: Supports a “world-leading property market” (HM Land Registry Strategy 22+).
Principles of Land Registration (Ruoff)
Question: What are the three core principles of land registration, as articulated by T.B.F. Ruoff, and how do they ideally function?
Mirror Principle: The register should reflect all rights and interests concerning a title of registered land, providing a complete picture.
Insurance Principle: The accuracy of the register is guaranteed by the state; inaccuracies will be altered/rectified, and adversely affected persons compensated.
Curtain Principle: Purchasers need not be concerned with interests that do not appear on the register (e.g., beneficial interests under a trust), as they exist “behind the curtain.”
The Land Registration Act 2002 (LRA 2002)
Question: What was the fundamental objective of the LRA 2002, and what key aims did it pursue?
Fundamental Objective: For the register to be a “complete and accurate reflection of the state of the title… so that it is possible to investigate title to land on line, with the absolute minimum of additional enquiries and inspections” (Law Com. No. 271, para 1.5).
Aims:
Further simplification of conveyancing.
Transparent land rights.
Protection of vulnerable interests.
(Eventually) e-conveyancing and ending the “registration gap.”
The Three Registers
Question: Briefly describe the purpose of each of the three registers maintained by the Land Registry.
Property Register: Describes the land and the estate comprised in the title (e.g., freehold at 15 Spring Street, Sheffield).
Proprietorship Register: Specifies the class of title, identifies the owner (e.g., Jake), and contains entries affecting the right of disposal (e.g., restrictions).
Charges Register: Contains any charges and other interests that affect the land (e.g., a mortgage to Hallamshire Bank, restrictive covenants, express easements).
Substantive Registration (s.2 LRA 2002)
Question: What types of estates and interests are subject to ‘substantive registration’ with their own title numbers under s.2 LRA 2002?
Legal freeholds (e.g., Jake’s title to 15 Spring Street).
Legal leaseholds:
May be registered if “granted for a term of which more than seven years are unexpired” (s.3(3)).
Must be registered on any transfer or grant of a leasehold for “more than seven years from the date of the grant” (s.4(1)(c)(i)).
Profits, rentcharges, and franchises (though less relevant for general problem questions).
Owner’s Powers and Title by Registration
Question: How does the LRA 2002 define a registered proprietor’s powers, and what is the significance of s.58(1) LRA 2002?
Owner’s Powers (s.23(1) LRA 2002): A registered proprietor has the “power to make a disposition of any kind permitted by the general law” and “power to charge the estate at law with the payment of money.”
Entitled to Exercise (s.24 LRA 2002): A person is entitled to exercise these powers if they are the registered proprietor or entitled to be registered.
Title by Registration (s.58(1) LRA 2002): This is the “statutory magic.” “If, on the entry of a person in the register as the proprietor of a legal estate, the legal estate would not otherwise be vested in him, it shall be deemed to be vested in him as a result of the registration.” This means registration itself confers title, even if there was an underlying defect (e.g., fraud by a previous owner).
Protecting Interests: Notices and Restrictions
Question: How can registrable interests be protected on the Land Register, and what is the difference between a ‘notice’ and a ‘restriction’?
Notice (s.32 LRA 2002): This protects the priority of a third-party interest (e.g., restrictive covenant, express easement) against a “disposition for value” (a purchase). Notices appear in the Charges Register and indicate the existence of an adverse interest.
Restriction (s.40 LRA 2002): This regulates how changes can be made to the register. It appears in the Proprietorship Register and often requires certain conditions to be met (e.g., consent of a named person, or sale by two trustees to allow overreaching) before a disposition can be registered. Legal mortgages are often protected by a restriction in addition to a notice.
Non-Registrable Interests (s.33 LRA 2002)
Question: What are two significant types of interests that cannot be entered on the register using a notice under s.33 LRA 2002? Why are they excluded?
Leases granted for 3 years or less: These are typically short, informal arrangements and burdening the register with them would be impractical. They can still be legal leases (s.54(2) LPA 1925).
Interests under a trust of land: These are excluded to uphold the “curtain principle” and to facilitate overreaching. The purchaser is not meant to be concerned with who benefits from the trust, only with the legal title holders.
The Basic Priority Rule (s.28 LRA 2002)
Question: Explain the “Basic Rule” of priority under s.28 LRA 2002 and its implications.
Rule: “Except as provided by sections 29 and 30, the priority of an interest affecting a registered estate or charge is not affected by a disposition of the estate or charge.”
Meaning: An earlier interest generally takes priority over a later one.
Implication: This rule applies by default, but it is displaced when a purchaser for valuable consideration is involved in a registered disposition (where s.29 applies). It protects existing interests against later unregistered dispositions or gifts.
The Special Priority Rule (s.29 LRA 2002)
Question: When does the “Special Rule” of priority under s.29 LRA 2002 apply, and what is its effect on existing interests?
When it applies:
This rule applies when someone buys or takes a mortgage over registered land for money (not as a gift).
What it means:
The buyer or lender gets the land without being affected by any earlier rights or interests — unless:
Those rights are listed on the land register (like a notice or mortgage), or
They are special rights that don’t need to be registered (called overriding interests).
Why this matters:
It protects buyers and lenders by making sure they’re not surprised by hidden rights, helping land transactions stay safe and reliable.
The “Crack in the Mirror” - Overriding Interests
Question: What are “overriding interests,” and why are they sometimes referred to as a “crack in the mirror”? Which Schedule of the LRA 2002 is most relevant for purchasers?
Definition: Interests that are enforceable against a new purchaser of land despite not appearing on the Register.
“Crack in the Mirror”: They contradict the mirror principle because the register does not provide a complete picture of all binding interests.
Relevant Schedule: Schedule 3 LRA 2002 deals with interests which override a registered disposition of land (e.g., a sale to Kitty). Schedule 1 deals with first registration.
Schedule 3, Paragraph 2 - Actual Occupation
Question: What is the specific wording of Schedule 3, paragraph 2 LRA 2002, and why is it crucial in cases like Ian’s?
Wording: “An interest belonging to a person in actual occupation of the land.”
Cruciality: This provision protects a person’s proprietary interest (which often cannot be registered, like a beneficial interest under a trust) if they are in actual occupation. It serves as a vital safeguard for those with genuine, but unregistered, rights who are physically present on the land.
Defining “Actual Occupation” - Case Law
Question: What constitutes “actual occupation” for Schedule 3, paragraph 2 LRA 2002, according to key case law?
Fact-Specific: It’s a question of fact in each case, requiring a degree of permanence and continuity
Chhokar v Chhokar [1984] FLR 313: Temporary absence (e.g., in hospital) does not preclude actual occupation, especially if belongings remain.
Link Lending Ltd v Bustard [2010] EWCA Civ 424: Actual occupation can exist without physical presence if there is a continuing intention to occupy, coupled with visits, maintenance of property, and presence of belongings (e.g., resident in a care home).
Thomas v Clydesdale Bank Plc [2010] EWHC 2755 (QB): Physical presence is required, but it doesn’t have to be residential. Substantial work on a property (e.g., building, design) can constitute actual occupation.
Chaudhary v Yavuz [2011] EWCA 1314: Reaffirmed that actual occupation requires “physical presence.” A metal staircase in itself was not sufficient.
Beneficial Interests Under a Trust
Question: How are beneficial interests under a trust typically created, and why are they considered “proprietary interests” in land?
Creation: Often arise informally, e.g., when a person contributes to the purchase price or mortgage payments of a property titled in someone else’s name (Pettitt v Pettitt [1970] AC 777). This creates a constructive or resulting trust.
Proprietary Nature: Although not a legal estate, a beneficial interest under a trust is an equitable proprietary interest. This means it is a right in the land itself, not just a personal right against the legal owner. This is crucial because proprietary rights can, potentially, bind third parties like purchasers.
Overreaching (LPA 1925)
Question: Explain the concept of ‘overreaching’ and its statutory basis. How does it relate to the ‘curtain principle’?
🔑 Overreaching – Simplified Explanation
What is it?
Overreaching is a legal process that removes equitable (beneficial) interests from land and transfers them to the money made from selling the land. This means the buyer gets the land free from those interests.
🏡 How it works:
When land is held on trust (e.g., parents holding property on trust for their children), the beneficiaries (like the children) have equitable interests in the land.
If that land is sold and the purchase money is paid to at least two trustees, then:
✅ The beneficiaries’ interests are “overreached” —
⟶ They no longer affect the land
⟶ They attach to the money instead
So, the buyer takes the land clean, and the beneficiaries must claim their rights from the money, not the land.
⚖️ Legal Basis:
LPA 1925, s.2(1): Lists the types of rights that can be overreached (e.g., beneficial interests under a trust).
s.2(2): Overreaching happens when sale money is paid to at least two trustees or a trust corporation.
s.27: After the sale, any trust continues over the proceeds, not the land — but the buyer doesn’t need to worry about this.
🧱 Why is this important?
It’s a key feature of the land system: it allows land to be bought and sold easily without buyers needing to investigate complicated trust arrangements.
It supports the curtain principle — hiding trust details from buyers.
As long as payment is made to the right people (two trustees), the purchaser is protected.
🚫 What overreaching does not apply to:
Overreaching only works when legal estates (like freeholds or leases) are sold.
It does not apply when other rights (like easements) are created.
Case: Baker v Craggs [2018] EWCA Civ 1126 — showed that not all interests are overreached; overreaching needs the proper legal steps.
⚠️ Effect on Beneficiaries:
Once overreaching happens:
The beneficiaries can’t claim anything from the land anymore.
Their only claim is against the trustees, who now hold the sale money on trust for them.
✅ Summary:
If a purchaser pays two or more trustees for land held on trust, the equitable interests are overreached — removed from the land and transferred to the sale proceeds.
The buyer gets clean legal title, and the beneficiaries must go after the money, not the land.
Failure of Overreaching
Question: In what common scenario does overreaching often fail, and what is the consequence for a purchaser?
Failure Scenario: Overreaching fails when the purchase money is paid to only one trustee. This often happens in informal trusts of the family home where only one cohabitee is the legal owner (the sole trustee).
Consequence: If overreaching does not occur, the beneficial interest remains attached to the land. If the beneficiary is also in actual occupation, their beneficial interest can become an overriding interest under Schedule 3, paragraph 2 LRA 2002, binding a purchaser.
