1. Registration of title Part 2

2. Priority rules in registered land Question of priority: what impact does a disposition of registered land have on various sorts of pre-existing interests in or over that land? LRA 2002 establishes exactly what types of proprietary interest affect the transferee when they become registered as owner 2

3. LRA 2002 REPLACES the doctrine of notice

4. Registration is key

5. If you do not register your interest = lose priority

6. There must be exceptions

7. The importance of overreaching Overreaching = where certain equitable rights in land otherwise protected in system of registration are “swept off” the land and transferred to purchase money on occasion of sale

8. Overreaching Beneficial interests kept off the register Curtain principle 8

9. Legal Equitable/ beneficial 9

10. Overreaching If two essential statutory criteria met, equitable ownership is removed from the land 10

11. Overreaching Transferred to proceeds of sale 11

12. City of London Building Society v Flegg [1988] AC 54 ‘The whole philosophy of the LPA 1925 … was that a purchaser of a legal estate (which includes a mortgagee) should not be concerned with the beneficial interests of the [co-owners] which where shifted to the proceeds of sale.’ 12

13. State Bank of India v Sood [1997] Ch 276 ‘A principal objective of the 1925 property legislation was to simplify conveyancing and the proof of title to land. To this end equitable interests were to be kept off the title to the legal estate and could be overreached on a conveyance to and could be overreached on a conveyance to a purchaser who took free from them.’ 13

14. House purchased in name of Mr & Mrs Maxwell-Brown Purchase money partly provided by Mr & Mrs Flegg Mr & Mrs Flegg Mrs Maxwell-Brown’s parents Mr & Mrs Flegg enjoy a share of the equitable ownership in the house Mr & Mrs M-B suffer financial difficulty; execute charge/mortgage of £37,500 to City of London BS Mr & Mrs Flegg knew nothing of mortgage & thus didn’t consent Mr & Mrs M-B default on mortgage repayments 14 City of London Building Society v Flegg [1988] AC 54

15. ‘If, then, one asks what were the subsisting rights of Mr and Mrs Flegg … the answer must, in my judgment, be that they were rights which, vis-à-vis the [mortgagee] were eo instanti (at the same moment) with the creation of the charge, overreached and therefore subsisted only in relation to the equity of redemption.’ 15 City of London Building Society v Flegg [1988] AC 54

16. Flegg demonstrates common dilemma in land law Court– choice to make between two different victims Special features of land make dilemma even tougher: – Fleggs: social importance of land & uniqueness – City of London BS: substantial loan, limited availability & social importance 16 City of London Building Society v Flegg [1988] AC 54

17. Overreaching Overreaching exists primarily to protect purchasers 17

18. Statutory conditions for overreaching Right must be capable of being overreached LPA 1925 s2(3) 18

19. Statutory conditions for overreaching The sale must be made by those persons and in those circumstances that constitute an overreaching transaction LPA 1925 s2(1) 19

20. There must be a conveyance Statutory conditions for overreaching 20

21. Overreaching will only operate in favour of a person who is a purchaser of a legal estate or a mortgagee Statutory conditions for overreaching 21

22. Statutory conditions for overreaching: LPA 1925 s2(1)(ii) 2 Conveyances overreaching certain equitable interests and powers. (1)A conveyance to a purchaser of a legal estate in land shall overreach any equitable interest or power affecting that estate, whether or not he has notice thereof, if— (ii)the conveyance is made by [trustees of land] and the equitable interest or power is at the date of the conveyance capable of being overreached by such trustees under the provisions of subsection (2) of this section or independently of that subsection, and [the requirements of section 27 of this Act respecting the payment of capital money arising on such a conveyance] are complied with 22

23. Application of capital monies Statutory conditions for overreaching 23

24. LPA 1925 s27 Statutory conditions for overreaching 24

25. LPA 1925 s27 Purchaser not to be concerned with the trusts of the proceeds of sale which are to be paid to two or more trustees or a trust corporation. (1)A purchaser of a legal estate from trustees of land shall not be concerned with the trusts affecting the land or the proceeds of sale of the land whether or not those trusts are declared by the same instrument as that by which the trust of land is created. (2) Notwithstanding anything to the contrary in the instrument (if any) creating a [trust] of land or in [any trust affecting the net proceeds of sale of the land if it is sold], the proceeds of sale or other capital money shall not be paid to or applied by the direction of fewer than two persons as [trustees] except where the trustee is a trust corporation, but this subsection does not affect the right of a sole personal representative as such to give valid receipts for, or direct the application of, proceeds of sale or other capital money, nor, except where capital money arises on the transaction, render it necessary to have more than one trustee. 25

26. Also note: capital monies need not arise from transaction: (State Bank of India v Sood [1997] Ch 276)

27. Overreaching beats overriding: rules on overriding interests will only kick in if interest has not been overreached 27

28. But where overreaching does not occur … must turn to priority rules governing registered land

29. Priority rules governing registered land The ‘basic priority rule’ LRA 2002 s28 29

30. Basic priority rule (LRA 2002 s28 (1)) ‘Except as provided by sections 29 and 30 [LRA 2002] the priority of an estate affecting a registered estate or charge is not affected by a disposition of he estate or charge’ 30

31. Priority rules governing registered land The ‘special priority rule’ LRA 2002 s29 Priority governing registered dispositions: estates 31

32. Special priority rule (s29 (1) LRA 2002) ‘If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration’ 32

33. Registrable dispositions LRA 2002 s27 Where land is already registered, those dispositions that must be registered to operate at law (s27 (1)) 33

34. Special priority rule (s29 (2) LRA 2002) ‘For the purposes of subsection (1), the priority of an interest is protected – (a)in any case, if the interest– (i)is a registered charge or the subject of a notice in the register (ii)falls within any of the paragraphs of Schedule 3, or (iii) appears from the register to be excepted from the effect of registration (b) in the case of a disposition of a leasehold estate, if the burden of the interest is incident to the estate 34

35. LRA 2002 s29 (4) leases

36. Priority of overriding interests

37. LRA 2002 Schedule 3 14 categories of ‘unregistered interests which override registered dispositions’

38. LRA 2002 reduces number of overriding interests in comparison to LRA 1925

39. LRA 2002 Schedule 3

40. LRA 2002 sch 3 Leasehold estates in land 1 A leasehold estate in land granted for a term not exceeding seven years from the date of the grant, except for— (a) a lease the grant of which falls within section 4(1)(d), (e) or (f); (b) a lease the grant of which constitutes a registrable disposition. 40

41. LRA 2002 sch 3 Interests of persons in actual occupation 2 An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for— (a) an interest under a settlement under the Settled Land Act 1925 (c. 18); (b) an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) an interest— (i) which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and (ii) of which the person to whom the disposition is made does not have actual knowledge at that time; (d) a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition. 41

42. LRA 2002 sch 3 Easements and profits a prendre 3(1)A legal easement or profit a prendre, except for an easement, or a profit a prendre which is not registered under the Commons Registration Act 1965 (c. 64), which at the time of the disposition— (a)is not within the actual knowledge of the person to whom the disposition is made, and (b)would not have been obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable. (2)The exception in sub-paragraph (1) does not apply if the person entitled to the easement or profit proves that it has been exercised in the period of one year ending with the day of the disposition. 42

43. Interests of persons in actual occupation

44. Case law on 1925 Act remains relevant (but is sometimes different) 44

45. Must hold a property interest in the land 45

46. National Provincial Bank v Ainsworth [1965] AC 1175

47. ‘To suppose that the [old overriding interests provision, LRA 1925 s70 (1) (g)] makes any right, of howsoever a personal character, which a person in occupation may have, an overriding interest by which a purchaser is bound, would involve two consequences: … 47

48. ‘… first that this Act is, in this respect, bringing about a substantive change in real property law by making personal rights bind purchasers: second, that there is a difference as to the nature of the rights by which a purchaser may be bound between registered and unregistered land; for purely personal rights including the wife's right to stay in the house (if my analysis of this is correct) cannot affect purchasers of unregistered land even with notice … 48

49. ‘… One may have to accept that there is a difference between unregistered land and registered land as regards what kind of notice binds a purchaser, or what kind of enquiries a purchaser has to make. But there is no warrant in the terms of this paragraph or elsewhere in the Act for supposing that the nature of the rights which are to bind a purchaser is to be different, excluding personal rights in one case, including them in another.’ (at 1261) 49

50. Scott v Southern Pacific Mortgages [2014] UKSC 52 Mrs Scott sold home for less than market price Given cash sum and promised could stay in property under “lease” Purchaser acting as agent for North East Property Buyers Purchase financed with mortgage from Southern Pacific Mortgages NEPB – perpetrated fraud, ran off with money & failed to pay mortgage SPM wanted to repossess & sell house; Mrs Scott only learns of mortgage now 50

51. Scott & SPM both innocent victims (common dilemma again) Question: who has priority? Scott under alleged lease, or mortgage? In order to determine priority, did Scott have a proprietary interest? No proprietary interest = no priority 51 Scott v Southern Pacific Mortgages [2014] UKSC 52

52. Once overreached, an interest cannot be the subject of an overriding interest

53. City of London Building Society v Flegg [1988] AC 54 53

54. ‘I cannot for my part accept that, once what I may call the parent interest, by which alone the occupation can be justified, has been overreached and thus subordinated to a legal estate properly created by the trustees under their statutory powers, it can, in relation to the proprietor of the legal estate so created, be any longer said to be a right "for the time being subsisting." Section 70(l)(g) protects only the rights in reference to the land of the occupier whatever they are at the material time - in the instant case the right to enjoy in specie the rents and profits of the land held in trust for him. Once the beneficiary's rights have been shifted from the land to capital monies in the hands of the trustees, there is no longer an interest in the land to which the occupation can be referred or which it can protect. If the trustees sell in accordance with the statutory provisions and so overreach the beneficial interests in reference to the land, nothing remains to which a right of occupation can attach’ 54

55. Once overreached, an interest cannot be overriding

56. Actual occupation

57. Owner of interest must have been in actual occupation at date of disposition

58. LRA 2002 sch 3 Interests of persons in actual occupation 2An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for— (a)an interest under a settlement under the Settled Land Act 1925 (c. 18); (b)an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c)an interest— (i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and (ii)of which the person to whom the disposition is made does not have actual knowledge at that time; (d)a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition. 58

59. Formula in para (c) (i) Proprietary interest + actual occupation obvious on a reasonably careful inspection = overriding interest 59

60. Formula in para (c) (ii) Proprietary interest + non- obvious actual occupation +(but) actual knowledge at that time = overriding interest 60

61. Old law: ‘actual occupation’ is a question of fact, not law 61

62. Williams & Glynn’s Bank v Boland [1981] UKHL 4 ‘are ordinary words of plain English, and should in my opinion, be interpreted as such … Given occupation, i.e. presence on the land, I do not think that the word ‘actual’ was intended to introduce any additional qualification, certainly not to suggest that possession must be ‘adverse’: it merely emphasises that what is required is physical presence, not entitlement in law’ 62

63. Abbey National Building Society v Cann [1991] ‘There is the serious question of what, in law, can amount to ‘actual occupation’. In Boland, Lord Wilberforce observed that these words should be interpreted for what they are, that is to say, ordinary words of plain English. But even plain English may contain a variety of shades of meaning’ 63

64. There must be sufficient physical presence But residence is not required

65. Lloyd’s Bank v Rossett [1989]

66. Before we begin: framework 3 “boxes” for dealing with common problems in land law: – “substance” box: what elements are required for that right to substantively exist? Considers the nature of a party’s right, and asks if that right counts as a property right. – “formalities” box: this will tell you if you have been able to validly create, either at law or equity, the right you have just identified in substance. This box concerns the means by which/how a party can acquire that right in question. – “registration/priority” box: does that right take priority over another competing right because it has been validly registered? 66

67. Claiming actual occupation through a representative

68. Strand Securities v Caswell [1965] Ch 958

69. Symbolic occupation while temporarily absent

70. Chhokar v Chhokar [1984] FLR 313

71. ‘ On 19 th Feb, the date of completion, the husband made special arrangements to have the net proceeds of sale in cash in his hands. He paid his debts and then he set off for India. That was the last the wife saw of him for two years. The wife and the baby were discharged from hospital on 22 nd February. They went home. They found the locks had been changed … on 1 st March 1979 Mr Parmar registered the conveyance to him at the Land Registry. The wife at that date was not in the house because he had put her out, but some of her furniture was there. I have to consider whether she was in actual occupation the day of registration of the conveyance. I have no difficulty in deciding that she was in actual occupation. Her interest, accordingly, in the house is an overriding interest’ 71

72. Shades into (and substantially overlaps with) continuity of actual occupation

73. Link Lending v Bustard [2010] EWCA Civ 424

74. LRA 2002 sch 3 Interests of persons in actual occupation 2An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for— (a)an interest under a settlement under the Settled Land Act 1925 (c. 18); (b)an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c)an interest— (i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and (ii)of which the person to whom the disposition is made does not have actual knowledge at that time; (d)a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition. 74

75. In certain circumstances, symbolic occupation alone not necessarily enough

76. Must be a continuing intention to occupy (as per Link Lending)

77. Date to establish actual occupation

78. The registration gap

79. Time lag between execution of a registrable disposition & later registration at Land Registry

80. Abbey National Building Society v Cann [1991] 1 AC 56 80 George Cann purchases house (registered in George’s sole name). Daisy Cann (mother) provides some of purchase money. Completion: Aug 13 Daisy Cann entitled to share of equitable ownership ; arises on purchase Land held on trust George took out mortgage with building society. Did not tell mum. Registered: September 13 th Time lag/registration gap Court: Daisy Cann has no overriding interest

81. LRA 2002 Sch 3?

82. LRA 2002 sch 3 Interests of persons in actual occupation 2 An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for— (a)an interest under a settlement under the Settled Land Act 1925 (c. 18); (b)an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c)an interest— (i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and (ii)of which the person to whom the disposition is made does not have actual knowledge at that time; (d)a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition. 82

83. 27 Dispositions required to be registered (1) If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met. (2) In the case of a registered estate, the following are the dispositions which are required to be completed by registration— (a) a transfer, (b)where the registered estate is an estate in land, the grant of a term of years absolute— (i)for a term of more than seven years from the date of the grant, (ii)to take effect in possession after the end of the period of three months beginning with the date of the grant, … and (f)the grant of a legal charge. 83 LRA 2002 s27: registrable dispositions

84. Thompson v Foy [2009] EWHC 1076: both dates (albeit obiter)

85. Mrs Scott: sale & lease back transaction NEPB financed purchase with loan from SPM; perpetrated fraud SPM wanted to sell house with vacant possession Mrs Scott: no proprietary interest in land, so no OI/priority 2 other issues to consider: – If any equitable interest (proprietary right) of Mrs Scott arose later, would Cann apply to mean it is the date of disposition/execution (1 st date) to determine priority? YES: CANN APPLIES TO LRA 2002 – If Mrs Scott had acquired an equitable interest (proprietary right) at exchange of contracts/when sale & lease back originally agreed, could Cann be extended to give proprity even in that case? Strictly speaking, did not need to be considered 85 Scott v Southern Pacific Mortgages [2014] UKSC 52

86. Issues we cannot cover Was occupation obvious on a reasonably careful inspection? (Sch 3 para 2 (c)(i)) Did the transferee have ‘actual knowledge’ of that right? (Sch 3 para 2 (c)(ii)) Failure to disclose the right when could reasonably have been expected to do so (Sch 3 para 2 (b)) 86