Overriding interests Lecture

The general rule in registered immovable is that all interests and rights over a piece of land have to be written on the register entry for that land. Otherwise, when anyone buys that piece of land, the interests will not apply to the purchaser, and the rights will be lost.

Overriding interests are the exception to the general rule above  Major exception to principle that purchaser need not be concerned with interests that are not entered on the register  No requirement to register  Notice irrelevant

Examples: Land Registration Act 2002 Schedules 1 and 3 Land Registration Act 2002  Tenancies/leases of less than seven years  Rights of people in actual occupation, perhaps unaware of their legal rights  Public right od way, as it was not clear who should be made to register them  Rights to support from adjoining buildings or structures  Rights to light

 Overriding interests are a major hazard for any purchaser of a registered title. Such interests do not appear on the register, yet a purchaser is bound by overriding interests affecting the title purchased whether he knew about them or not.

 to constitute an overriding interest there should be an actual occupation along with an interest in the property, which is claimed to be occupied.  Every type of property right in land can be an overriding interest provided there is actual occupation at the relevant time by its owner.

Chhokar v Chhokar and another [1984] FLR 313 a husband, who was seeking to deprive his wife of her equitable interest in the matrimonial home, completed the sale of his property to his accomplice while his wife was in hospital. The husband than absconded with the proceeds of sale, and on her return from hospital the wife was excluded from the house by the purchaser, so that she was not present on the property when he was register as proprietor. Noting that the wife's furniture was in the house on the date of registration, Court of Appeal said that it had no difficulty in holding that she was in occupation at that date, and went on to describe her right in the property as an overriding interest which bound the purchaser.

Abbey National Building Society v Cann House of Lords clarified about what amounts to ‘actual occupation' and on what date a person must be in ‘actual occupation' to have an overriding interest under s. 70(1)(g) binding upon a purchaser/ mortgagee. Was it the date of completion of the sale or mortgage, or was it the (inevitably later) date of registration

 In cases of temporary absence the presence of the occupier's belongings on the premises and the continuing intention to return may help to establish actual occupation, and in such cases the courts take into account whether the occupier had a continuing intention to return, and whether his or her belongings remained in the property.

Strand Securities v Caswell [1965] Ch 958 Caswell took a 39- year lease of a London flat. As the lease was for over 21 years, it should have been registered. Caswell did not register the lease. The practical effect of this failure to register the lease was that it took effect only as an equitable lease. The hause was sold to Strand, who would be bound by Caswell's lease only if it was an overriding interest within s. 70(1)(g). Caswell kept some furniture and clothing at the flat but did not personally live there. The permanent occupant of the flat was his step-daughter. He let her live there rent-free, as her marriage had broken down. She occupied the flat as a licensee (that is, as someone with permission – a license – to do so). The protection given by law to licensees can vary considerably according to the individual's circumstance, but the general principle, which applied in this case, is that this type of agreement can be terminated at any time and give the licensee no right in the land.

 The Court of Appeal rejected the tenant's claim that he had an overriding interest under s 70 (1)(g), because although he had rights in the property (the lease) he was not in occupation. The presence of his belongings at the property did not amount to occupation for the purpose of the Act.  The stepdaughter was of course in occupation of the property, but unfortunately she did not have any recognized property interest in the flat and so had no rights which were capable of being overriding.  It is very important to understand that it is not the actual occupation that constitutes the overriding interest. There must be a recognized interest in the land of some kind and this interest is than protected as an overriding interest by the fact of actual occupation.

 The court did suggest that, had she occupied the flat at the request of her stepfather and in order to look after it for him, he might have been regarded as being in the occupation through an agent. However, on the facts as they stood, she was clearly there because of her own needs and not as Mr. Caswell's Agent.

person in receipt of the rents and profits – overriding interest S 70(1)(g) LPA 1925 also provide that a person in receipt of the rents and profits can also have an overriding interest. So if Caswell had charged his step-daughter a rent (even a nominal rent) he would have been ‘in receipt of rents' and therefore would have had an overriding interest under s. 70(1)(g). However, on the facts as she was living in the flat rent free, therefore Caswell was not a person in receipt of rents and profit to claim an overriding interest.