Overriding Interests: Binding Effect Without Registration

Overriding Interests in Registered Land

Statutory Basis

• Certain interests bind a registered proprietor even though they do not appear on the register: Land Registration Act 2002, Schedules 1 and 3.
• Schedule 1: interests that override on first registration.
• Schedule 3: interests that override on a registered disposition (i.e., a subsequent transfer or mortgage of registered land). Schedule 3 is the most exam-relevant.

Key Overriding Interests — Schedule 3 LRA 2002

1. Legal Leases Not Exceeding 7 Years

• Sch 3, para 1 LRA 2002: a legal lease granted for a term of 7 years or fewer overrides automatically without registration, subject to exceptions for certain future leases and discontinuous leases.

2. Interests of Persons in Actual Occupation

• Sch 3, para 2 LRA 2002: an interest belonging to a person in actual occupation overrides, unless:
• (a) inquiry was made of that person and the interest was not disclosed when it reasonably could have been; or
• (b) the occupation was not obvious on a reasonably careful inspection of the land and the disponee did not have actual knowledge of the interest at the time of the disposition.
• 'Actual occupation' is a question of fact: **Williams & Glyn's Bank v Boland [1981] AC 487** (a wife in actual occupation by virtue of her beneficial interest under a trust had an overriding interest binding the mortgagee bank).
• Actual occupation must exist at the time of the disposition: **Abbey National Building Society v Cann [1991] 1 AC 56** (occupation must be present at the moment of completion, not merely shortly before or after).
• The interest must be a proprietary right (e.g., a beneficial interest under a trust, an estate contract); a contractual licence does not suffice as it is personal only: **Ashburn Anstalt v Arnold [1989] Ch 1**.

3. Legal Easements and Profits

• Sch 3, para 3 LRA 2002: a legal easement or profit à prendre overrides only if at least one of the following conditions is met:
• (a) it was known to the disponee at the time of the disposition;
• (b) it would have been obvious on a reasonably careful inspection of the land over which it is exercisable; or
• (c) it has been exercised in the period of one year ending on the day of the disposition.
• Equitable easements do not fall within Sch 3, para 3 and must be protected by notice on the register to bind a disponee.

Reduction of Overriding Interests

• A key policy aim of the LRA 2002 was to reduce the categories of overriding interest and promote the 'mirror principle'. Accordingly, rights previously overriding under the Land Registration Act 1925 (e.g., certain squatters' rights) were abolished or restricted. Adverse possession rights accrued under the old regime had transitional protection but no new automatic override arises under the 2002 Act framework.

Common Traps

• A person in actual occupation only gains an overriding interest if they hold an underlying proprietary interest — mere occupation or a personal right is insufficient.
• The 'inquiry and non-disclosure' exception (Sch 3, para 2(b)(i)) protects a disponee who asked but was not told; it does not protect a disponee who made no inquiry at all.
• Legal easements under Sch 3, para 3 do not override automatically — at least one additional statutory condition must be satisfied.
• Occupation must subsist at the moment of the registered disposition (Cann); a person who has moved out before completion cannot claim the benefit of para 2.

Exam tip: For para 2 questions, run through all elements in sequence: (1) Does the claimant hold a proprietary interest? (2) Were they in actual occupation at the time of the disposition (Cann)? (3) Does either exception apply to defeat the override (inquiry/non-disclosure, or non-obvious occupation without the disponee's actual knowledge)?