Registration of title and protection of interests - Dealing with minor interests on the register

Learning Outcomes

After studying this article, you will be able to explain what minor interests are in the context of registered land, distinguish between notices, restrictions, and overriding interests, and apply the correct rules for protecting and prioritising equitable rights. You will also be able to identify the consequences of failing to protect a minor interest and answer SQE1-style questions on this topic.

SQE1 Syllabus

For SQE1, you are required to understand how minor (equitable) interests in registered land are protected and prioritised. As you revise this article, focus on:

• the distinction between legal and equitable (minor) interests in registered land
• the function and effect of notices and restrictions on the register
• the concept of overriding interests, especially those arising from actual occupation
• the consequences of failing to protect a minor interest by registration
• how to advise on the enforceability of minor interests against purchasers and mortgagees

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the main purpose of entering a notice on the register in respect of a minor interest?
   1. To create a legal estate
   2. To protect the priority of an equitable right
   3. To prevent any dealings with the land
   4. To guarantee compensation for loss
2. Which of the following is an example of an overriding interest?
   1. A registered charge
   2. A restrictive covenant protected by notice
   3. An equitable leaseholder in actual occupation
   4. A beneficial interest under a trust with no occupation
3. If a minor interest is not protected by a notice on the register, what is the likely consequence when the land is sold to a purchaser for value?
   1. The interest is automatically upgraded to a legal estate
   2. The interest will override the purchaser in all cases
   3. The interest may be lost unless it qualifies as an overriding interest
   4. The interest is always enforceable against the purchaser

4. True or false? A restriction on the register can prevent registration of a transfer unless certain conditions are met.

Introduction

When dealing with registered land, it is essential to understand how minor interests—usually equitable rights—are protected and prioritised. The Land Registration Act 2002 sets out a system for recording, protecting, and enforcing these interests. If a minor interest is not properly protected, it may be lost on a sale or mortgage of the land. This article explains the key mechanisms: notices, restrictions, and overriding interests, and how they interact in practice.

Minor Interests in Registered Land

Minor interests are typically equitable rights that do not amount to a legal estate or charge but still affect the use or enjoyment of land. Examples include restrictive covenants, equitable leases, equitable easements, and beneficial interests under a trust.

Key Term: minor interest
An equitable right in registered land that is not a legal estate or charge but can be protected by entry of a notice or restriction on the register.

Key Term: notice
An entry in the charges register of a registered title that protects the priority of a minor interest, making it binding on future purchasers.

Key Term: restriction
An entry in the proprietorship register that limits the ability to register certain dispositions of the land unless specified conditions are met, often used to protect interests under a trust.

Key Term: overriding interest
A right that binds a purchaser of registered land even if it is not entered on the register, such as the rights of a person in actual occupation.

Protecting Minor Interests: Notices

A notice is the main method for protecting most minor interests. Entry of a notice in the charges register ensures that the interest will bind a purchaser for value. There are two types of notice:

• Agreed notice: Entered with the consent of the registered proprietor or where the applicant can prove the interest.
• Unilateral notice: Entered without the proprietor's consent, but the proprietor is notified and can object.

Not all interests can be protected by notice. For example, beneficial interests under a trust must be protected by a restriction, not a notice.

Worked Example 1.1

Scenario: Olivia has the benefit of an equitable easement over her neighbour's registered land. She wants to ensure her right is protected if the land is sold.

Answer:
Olivia should apply to enter a notice on the charges register of the neighbour's title. This will protect her equitable easement and ensure it binds a purchaser for value.

Restrictions: Controlling Dealings with the Land

A restriction is entered in the proprietorship register and prevents registration of a disposition unless certain requirements are met. Restrictions are commonly used to protect the interests of beneficiaries under a trust of land, ensuring that purchase money is paid to at least two trustees so that overreaching can occur.

Worked Example 1.2

Scenario: A property is held on trust for Alice and Ben. The register contains a restriction requiring that no transfer is registered unless signed by two trustees.

Answer:
The restriction ensures that any sale proceeds are paid to two trustees, allowing overreaching of Alice and Ben's beneficial interests. The purchaser will then take the land free of those interests.

Overriding Interests: Actual Occupation

Some interests can bind a purchaser even if not protected by notice or restriction. These are called overriding interests. The most important for SQE1 is the right of a person in actual occupation.

Key Term: actual occupation
Physical presence on the land that is sufficiently obvious to a purchaser, giving rise to an overriding interest if coupled with a proprietary right.

If a person with an equitable interest is in actual occupation at the time of completion, their interest may override a purchaser, even if it is not protected by notice. However, if the purchaser makes proper enquiries and the occupier fails to disclose their interest, the overriding status may be lost.

Worked Example 1.3

Scenario: Sarah has a beneficial interest under a trust and is living in the property. The legal owner sells the property to a purchaser for value. No notice or restriction is on the register.

Answer:
Sarah's interest may override the purchaser if she is in actual occupation and her occupation is obvious on inspection. If the purchaser makes enquiries and Sarah fails to disclose her interest, she may lose overriding status.

Exam Warning

If a minor interest is not protected by notice and does not qualify as an overriding interest, it will be lost on a sale to a purchaser for value. Always check whether the interest is protected and whether the person claiming it is in actual occupation.

Consequences of Failing to Protect a Minor Interest

If a minor interest is not protected by notice, it will not bind a purchaser for value unless it qualifies as an overriding interest. If the interest is not overriding, it will be lost on a sale or mortgage. This can have serious consequences for the holder of the interest.

Revision Tip

Always advise clients to protect their equitable interests by entering a notice or restriction on the register. Do not rely on overriding status unless the person is in actual occupation.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• Minor interests are equitable rights in registered land that are not legal estates or charges.
• Most minor interests are protected by entering a notice in the charges register.
• Restrictions are used to control dealings with the land, especially to protect beneficiaries under a trust.
• Some interests can override registration if the holder is in actual occupation.
• If a minor interest is not protected by notice and does not override, it will be lost on a sale to a purchaser for value.
• Purchasers should always check the register for notices and restrictions and make enquiries about occupation.

Key Terms and Concepts

• minor interest
• notice
• restriction
• overriding interest
• actual occupation