Registered Land: Enforcement of interests

Question 1

What is the Land Registration Act 2002 and what does it govern?

Answer 1

The Land Registration Act 2002 (LRA 2002) is a law that governs the enforcement of interests over registered land. It is administered by the Land Registry, which maintains an electronic register of all registered land in England and Wales.

Question 2

What is the significance of actual occupation in determining overriding interests?

Answer 2

Actual occupation is significant in determining overriding interests because if a person is in actual occupation of the land, their equitable interest may override a disposition. The court held that B was in actual occupation based on the fact that her belongings remained, her absence was involuntary, and her regular visits demonstrated a continuing intention to return.

Question 3

What are the three categories of interest/estate under the LRA 2002 that interact with sections 28 and 29?

Answer 3

The three categories of interest/estate under the LRA 2002 that interact with sections 28 and 29 are: 1) Registrable disposition, 2) Interests that must be protected by the entry of either a notice or a restriction, and 3) Overriding interests.

Question 4

What are the exceptions to actual occupation as an overriding interest?

Answer 4

There are two exceptions to actual occupation as an overriding interest. The first exception is when the holder of the interest fails to disclose it when asked before the disposition. The second exception is when the occupation would not have been obvious on a reasonably careful inspection of the land and the person to whom the disposition is made does not have actual knowledge of the interest at the time.

Question 5

When might a restriction be entered in property law?

Answer 5

A restriction may be entered when the registered proprietor of the land is bankrupt. In such a situation, the trustee in bankruptcy may enter a restriction to ensure that no disposition of the land may be registered without the trustee’s consent.

Question 6

How can beneficiaries be protected if their interests are not overreached and they are in actual occupation of the land?

Answer 6

If beneficiaries are not overreached and are in actual occupation of the land, they may have overriding interests under LRA Schedule 3 para 2. This means that their interests will still be binding on new owners of the land.

Question 7

What are the three categories under the Land Registration Act 2002?

Answer 7

The Land Registration Act 2002 places all estates and interests in land into one of three categories: Registrable dispositions, Interests protected by entry, and Overriding interests.

Question 8

What is the purpose of overreaching in property law?

Answer 8

Overreaching is a concept in property law that aims to strike a balance between protecting the buyer or lender from pre-existing trust interests and protecting the beneficiary’s position. It operates by detaching the beneficiary’s equitable interest from the land and transferring it into the money paid by the buyer or lender.

Question 9

What is the purpose of overreaching in relation to beneficial interests behind a trust?

Answer 9

Overreaching is a concept that moves the beneficiaries’ equitable interest from land into money. It ensures that a buyer or lender takes the land free of beneficial interests and protects the beneficiaries by giving them an interest in the money. Overreaching applies to both registered and unregistered land.

Question 10

How are equitable interests in land protected under the LRA 2002?

Answer 10

Equitable interests in land must be protected by the entry of a notice in the Charges Register of the burdened land. If an interest is protected this way, it will bind subsequent purchasers. However, some interests, such as beneficial interests under trusts and short legal leases for a term of three years or less, cannot be protected by notice.

Question 11

How does overreaching work in property law?

Answer 11

Overreaching works by ensuring that the capital money (purchase price or mortgage advance) is paid to at least two trustees. This payment detaches the beneficiary’s equitable interest from the land and transfers it into the money, allowing the buyer or lender to hold the property free from any interest held by the beneficiary.

Question 12

What are the requirements for an implied legal easement to be binding as an overriding interest?

Answer 12

For an implied legal easement to be binding as an overriding interest, it must meet one of the following requirements: (a) the new owner knew about it, (b) the new owner did not know about it, but it was obvious on a reasonable inspection of the land, or (c) it has been exercised within the 12 months immediately before the disposition.

Question 13

What is the basic rule of priority under the Land Registration Act 2002?

Answer 13

The basic rule of priority, as stated in the Land Registration Act 2002, is that an interest of any kind will take priority over later dispositions. For example, if a man has a registered freehold estate and grants an easement to one neighbor, then enters a covenant with another neighbor, and then sells the freehold to a woman, the woman will take the freehold subject to the pre-existing easement and covenant.

Question 14

What are overriding interests and why are they contentious?

Answer 14

Overriding interests are interests that will bind a purchaser for value, whether a buyer or lender, even though they have not been protected by registration. Their recognition has been contentious because they undermine the integrity of the register. However, they were retained in limited form in the Land Registration Act 2002.

Question 15

What is the difference between a notice and the doctrine of notice under the LRA 2002?

Answer 15

A notice, in the context of the LRA 2002, is intended to bring a relevant equitable interest to the attention of a purchaser. It notifies them that the interest will be binding if the purchaser proceeds. The doctrine of notice, on the other hand, is relevant only to unregistered land and is not to be confused with a notice under the LRA 2002.

Question 16

Why is it important for a purchaser to inspect and raise enquiries about overriding interests?

Answer 16

It is important for a purchaser to inspect and raise enquiries about overriding interests because these interests may bind the purchaser even though they do not appear on the registered title. By conducting inspections and raising enquiries, the purchaser can discover the existence of any overriding interests and make informed decisions.

Question 17

What is the exception to the basic rule of priority under the Land Registration Act 2002?

Answer 17

The exception to the basic rule of priority is provided by Section 29 of the Land Registration Act 2002. This exception applies when there is a disposition of a registered estate for valuable consideration. In such cases, the basic rule of priority does not apply, and an interest that is not properly protected will be postponed, meaning a new owner would not be bound by it.

Question 18

What happens to a beneficiary’s interest in land after overreaching?

Answer 18

After overreaching, a beneficiary’s interest in land is transferred into the money (purchase price or mortgage advance). For example, if a beneficiary has a 25% beneficial interest in land, after overreaching, they will have a 25% beneficial interest in the proceeds of sale. The trustees may distribute the money or reinvest it elsewhere, depending on the terms of the trust.

Question 19

Why do overriding interests still require inspections and enquiries beyond looking at the registers of title?

Answer 19

Overriding interests provide a safety net of protection for those who are not able to, have not, or cannot reasonably be expected to take steps to protect their interests in land. This means that inspections and enquiries beyond simply looking at the registers of title will still be needed.

Question 20

What is a registrable disposition under the Land Registration Act 2002?

Answer 20

A registrable disposition is a transaction that must be completed by registration, such as the sale of land (transfer) or the grant of a legal mortgage. It must involve a registered estate (freehold or leasehold) and must be for valuable consideration, meaning for money.

Question 21

When does overreaching not work in property law?

Answer 21

Overreaching does not work if the money is paid to only one trustee. In such cases, the beneficiary’s interest will not be overreached and will remain in the land. If the beneficiary is in actual occupation of the trust land, their interests will bind a purchaser as overriding interests.

Question 22

What is the purpose of a restriction in the Proprietorship register under the LRA 2002?

Answer 22

A restriction in the Proprietorship register is the appropriate way to protect an interest that is not intended to last indefinitely. It is used to protect interests that are not intended to last beyond a change of ownership.

Question 23

What is the purpose of a restriction on a registered title?

Answer 23

A restriction on a registered title serves as an instruction or alert to the purchaser. It restricts what the owner can do with the land and ensures certain actions, such as the discharge of a mortgage, occur before a sale.

Question 24

What is the impact of failing to properly register a legal mortgage under the LRA 2002?

Answer 24

ANSWER

The grant of a legal mortgage, also known as a legal charge, must be completed by registration. Failure to properly register the mortgage has a significant impact on the lender’s powers to repossess and sell the mortgaged land.

Question 25

What happens when a new owner of land is a donee?

Answer 25

When the new owner of land is a donee, meaning they have been gifted or have inherited the land, they will take the land subject to all pre-existing interests, irrespective of whether they have been protected by registration.

Question 26

What is the purpose of a landlord’s right of entry, also known as a right of forfeiture, under the LRA 2002?

Answer 26

ANSWER

A landlord’s right of entry, also known as a right of forfeiture, is a registrable disposition under the LRA 2002. It is a powerful right that allows a landlord to bring a legal estate or lease to an end. It has drastic consequences for the tenant and must meet a high degree of formality.

Question 27

What is the effect of overreaching on the buyer or lender in property law?

Answer 27

Overreaching operates to detach the beneficiary’s equitable interest from the land, allowing the buyer or lender to hold the property free from any interest held by the beneficiary. The buyer or lender still has an interest under a trust, but it is an interest in the money paid rather than in the land itself.

Question 28

What is the definition of actual occupation in relation to overriding interests?

Answer 28

Actual occupation refers to a person being physically present on the land and having a degree of permanence and continuity of presence. The intentions and wishes of the person, the length of absence from the property, and the reason for it are among the relevant factors considered. There is no single test for determining actual occupation.

Question 29

What is the significance of protecting equitable interests by entry of a notice or restriction under the LRA 2002?

Answer 29

Protecting equitable interests by entry of a notice or restriction ensures that these interests are enforceable against a new owner of the burdened registered land. It provides notice to subsequent purchasers and binds them to the protected interests.

Question 30

What is a restrictive covenant and how is it protected?

Answer 30

A restrictive covenant is an equitable interest that restricts the use of land. It is protected by the entry of a notice under LRA 2002, Section 32. This ensures that the covenant is binding on a new owner of the land.

Question 31

What is the purpose of entering a restriction when the registered proprietor of the land is bankrupt?

Answer 31

Entering a restriction when the registered proprietor of the land is bankrupt ensures that no disposition of the land may be registered without the trustee in bankruptcy’s consent. This prevents any sale from taking place without the trustee’s knowledge and allows the trustee to ensure that the sale proceeds are paid directly to them.

Question 32

What is the difference between an implied equitable easement and an implied legal easement?

Answer 32

An implied equitable easement is only equitable in nature and would not be overriding. On the other hand, an implied legal easement will only be overriding if there is physical evidence of the right or if it has been exercised in the 12 months prior to completion of the sale.

Question 33

To which of the follow scenarios would the basic rule of priority apply?

An interest has not been properly protected in accordance with the rule under the LRA 2002

A man gift their land to a woman

A man sells their land to a woman

Answer 33

A man gift their land to a woman

This is correct. The basic rule of priority applies whenever there is not ‘a disposition of a registered estate for valuable consideration’ which this is not. The woman is being gifted the land, she is a ‘donee’ and not a purchaser for valuable consideration. The basic rule of priority in s 28 of the LRA 2002 will therefore apply and the woman will take the land subject to all pre-existing interests.

Question 34

A woman is the owner of a registered freehold estate (the ‘Land’). The woman grants to a man an interest in the Land. The man does not protect the interest in accordance with the relevant rule under the LRA 2002.

Two years ago, the woman gifted the Land to their friend.

A year later, the friend sold the Land to a buyer.

Last month, the buyer died. Their daughter inherited the Land.

Assuming the man never protects his interest. Who on the facts will be bound by the man’s interest during their period ownership of the Land?

All parties - the woman, the friend, the buyer and the buyer’s daughter

The woman and the friend only

The woman, the friend and the buyer’s daughter

The woman only

Answer 34

The woman and the friend only

This is correct. The woman granted the interest over the Land and is therefore bound by it (often under the ordinary rules of contract law). The enforcement rules are only relevant to subsequent owners of the Land. The friend is bound under the basic rule of priority as the friend is a donee.
The buyer and the buyer’s daughter will not be bound. The buyer is a purchaser for valuable consideration and therefore s 29 LRA 2002 will apply. Because the man has failed to protect the interest in accordance with the relevant registration rule, the buyer will not be bound by it. Although the buyer’s daughter is a donee, rather than a purchaser for valuable consideration, and the basic rule of priority will therefore apply, the man’s interest has been ‘lost’ when the Land was sold to the buyer. It will not resurrect itself.

Question 35

Which of the following options is a ‘registrable disposition’ to which s 29 will apply?

Transfer /grant of a legal estate / grant of a legal mortgage

Sale of a freehold estate only

Contract to transfer the freehold estate

Grant of a easement or restrictive covenant

Answer 35

Transfer /grant of a legal estate / grant of a legal mortgage

This is correct. A registrable disposition is a transaction which must be completed by registration I.e., the transactions that must be completed by registration under LRA 2002, s 27(2) but it really is most applicable on transfer of a legal estate or the grant of a legal mortgage or legal lease.

Question 36

What is the term given to interests which MUST be registered in order to be legal interests in land?

Answer 36

Registrable dispositions

Question 37

Which one of the following is NOT a registrable disposition under the Land Registration Act 2002?

Grant of a landlord’s right of entry

Grant of a legal easement

Creation of mortgage or charge

Transfer of freehold

Creation of a restrictive covenant

Answer 37

Creation of a restrictive covenant

Question 38

Which one of the following equitable interests CANNOT be protected by entering a notice in the charges register?

Contract for the purchase of the freehold

Interest in a trust of land

Equitable easements

Restrictive covenants

Estate contracts

Answer 38

Interest in a trust of land

Question 39

Which of the following statements is the best explanation of restrictions?

A restriction imposes conditions which must be complied with before a disposition of land can be registered.

A restriction protects an interest in a trust of land by requiring the purchaser to overreach the interest.

A restriction makes the relevant interest binding as a new owner of the land.

Answer 39

A restriction imposes conditions which must be complied with before a disposition of land can be registered.

Question 40

To whats system of land ownership does the doctrine of overreaching apply?

Registered land only

Both registered and unregistered land

Unregistered land only

Answer 40

Both registered and unregistered land

Question 41

Which of the following statements correctly explains what happens if a beneficial interest behind a trust is not overreached?

The interest remains in the land, but will not necessarily be binding

The interest disappears and is lost forever

The interest will be binding on a new owner of the land

Answer 41

The interest remains in the land, but will not necessarily be binding

This is correct. If an interest is not overreached, it remains in the land. It is not automatically binding on a purchaser though, it will depend if the holder of the interest is in ‘actual occupation’.

Question 42

A woman has the benefit of a right of way which is a legal easement over a man’s land implied under the rule in Wheeldon v Burrows. The woman uses the right of way on a monthly basis. The man has just sold the burdened land to a buyer. Can the woman enforce the easement against the buyer?

The woman cannot enforce it against the buyer as the woman is not in actual occupation of the burdened land

The woman can enforce it against the buyer as implied easements are automatically binding as overriding interests

The woman can enforce it against the buyer as it is an overriding interest

The woman cannot enforce it against the buyer as a legal easement is a registrable disposition and it has not been properly registered on the facts

Answer 42

The woman can enforce it against the buyer as it is an overriding interest

Correct. Schedule 3, para 3 states thatimplied legal easements can be overriding interests provided that they are obvious from a reasonable inspection of the burdened land (which this probably is) OR that they have been exercised within the 12 months immediately prior to the sale (which this definitely has been).
Express legal easements are registrable disposition under s 27 LRA 2002.