Registration of title and protection of interests - The rule...

Learning Outcomes

This article explains the statutory priority scheme and protection of interests in registered land under the LRA 2002, including:

• Identification and comparison of the basic priority rule in section 28 and the special priority rule in section 29, and how to decide which rule applies in SQE1-style problem questions
• The range of registrable dispositions, why completion by registration is essential to obtain section 29 protection, and the consequences of late or missing registration
• The nature and scope of overriding interests under Schedule 3 LRA 2002, with emphasis on when they bind a purchaser despite contrary entries (or omissions) on the register
• Detailed analysis of actual occupation, focusing on timing, visibility on inspection, enquiry of occupiers, and the statutory exceptions that prevent an occupier’s right from overriding
• Strategic use of notices and restrictions to protect third‑party rights, and the exam impact of failing to obtain appropriate protection on the charges or proprietorship registers
• The concept and operation of overreaching, including how payment to two trustees defeats beneficial interests, its interaction with actual occupation, and how to spot overreaching in multi‑party conveyancing scenarios

SQE1 Syllabus

For SQE1, you are required to understand the registration of title and protection of interests in registered land under the LRA 2002, with a focus on the following syllabus points:

• the effect of registration and the statutory rules for priority of interests in registered land (LRA 2002, ss 28–29)
• registrable dispositions and the need for completion by registration (LRA 2002, s 27)
• the concept and categories of overriding interests (Schedule 3 LRA 2002)
• the requirements for protection of third-party interests, including notices and restrictions
• the significance of actual occupation and its impact on priority
• the role of overreaching in protecting purchasers from beneficial interests
• how to apply these rules to determine which interests bind a purchaser

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 effect of section 29 of the Land Registration Act 2002 on a purchaser for valuable consideration who registers their disposition?
2. Which of the following is an overriding interest under Schedule 3 LRA 2002? a) a legal lease for 10 years b) a restrictive covenant protected by notice c) a right of a person in actual occupation d) a puisne mortgage
3. True or false? An unregistered equitable easement created after 13 October 2003 will always bind a purchaser of registered land.
4. In what circumstances will a beneficial interest under a trust override a registered disposition?

Introduction

The Land Registration Act 2002 (LRA 2002) sets out the rules for determining which interests in registered land take priority and bind a purchaser. Understanding these rules is essential for advising clients on the security of their title and the enforceability of third-party rights. This article explains the statutory priority rules, the role of registration, and the operation of overriding interests, with a focus on the requirements for protection and the practical consequences for purchasers and third parties.

The Mirror, Curtain, and Insurance Principles

The LRA 2002 is built on three main principles:

Key Term: mirror principle
The register should reflect all rights and interests affecting the land, so a purchaser can rely on the register as a complete record.

Key Term: curtain principle
Certain equitable interests (such as those under a trust) are kept off the register and do not need to be investigated by a purchaser, provided overreaching applies.

Key Term: insurance principle
The state guarantees the accuracy of the register and provides compensation (indemnity) for loss caused by mistakes in registration.

These principles underpin the modern approach to priority: bind purchasers primarily through entries on the register or, exceptionally, through clearly defined overriding interests. Traditional concepts such as the doctrine of notice are not used to determine priority in registered land; instead, the LRA’s statutory scheme applies.

Statutory Priority Rules: Sections 28 and 29 LRA 2002

The LRA 2002 sets out two main rules for priority of interests in registered land.

Key Term: basic priority rule (s 28 LRA 2002)
Interests rank in order of creation: earlier interests have priority over later ones, regardless of registration.

Key Term: special priority rule (s 29 LRA 2002)
A purchaser for valuable consideration who registers their disposition takes the land free of all pre‑existing interests except those protected on the register or overriding interests.

Section 28 applies to non‑purchasers (e.g. donees, devisees) and means that all prior interests bind the new owner. Section 29 protects purchasers for value who register their disposition, giving them priority over unprotected interests.

Key Term: valuable consideration
Money or money’s worth given for a disposition (not a gift). It need not be full market value, but there must be consideration.

Key Term: registrable disposition
A disposition that must be completed by registration to take effect at law (e.g. transfer of a registered estate, grant of a legal lease over seven years, grant of a legal charge).

The protection under section 29 only bites if the disposition is both for valuable consideration and completed by registration. If the purchaser fails to register a registrable disposition, the special priority rule will not apply, and the transferee may hold only an equitable interest, vulnerable to later dealings by the registered proprietor.

A practical consequence is that section 29 can defeat an unprotected equitable interest even if the purchaser has actual knowledge of it. Priority turns on protection via notice or overriding status, not on notice.

Protection of Third-Party Interests

To ensure that an interest binds a purchaser under section 29, it must be either:

• protected by a notice on the register (e.g. restrictive covenants, equitable easements, options), or
• qualify as an overriding interest under Schedule 3 LRA 2002.

Key Term: notice
An entry in the charges register protecting a third‑party interest so it binds a purchaser.

Key Term: restriction
An entry in the proprietorship register limiting the registered proprietor's ability to deal with the land, often used to protect beneficial interests under a trust.

Key Term: minor interest
A registrable third‑party right protected by entering a notice; if unprotected, it generally loses priority against a registered disposition for value.

Notices come in two forms:

Key Term: agreed notice
A notice entered with the registered proprietor’s consent or where the applicant supplies evidence satisfying the registrar.

Key Term: unilateral notice
A notice entered without the registered proprietor’s consent; the proprietor can seek cancellation, and the claimant must justify the entry to keep it.

Unjustified notices risk liability for damages (LRA 2002, s 77).

Worked Example 1.1

Olivia grants an option to purchase her registered freehold to Noah in January. In March, she sells and transfers the land to Liam, who pays valuable consideration and registers the transfer. Noah did not enter a notice on the register. Can Noah enforce his option against Liam?

Answer:
No. Under section 29, Liam takes free of Noah's unprotected option, as it was not protected by notice and is not an overriding interest.

Overriding Interests: Schedule 3 LRA 2002

Some interests bind a purchaser even if not protected on the register. These are called overriding interests.

Key Term: overriding interest
A right or interest that binds a purchaser of registered land even if not entered on the register, as listed in Schedule 3 LRA 2002.

The main categories are:

• legal leases granted for seven years or less
• legal easements and profits à prendre (if known to the purchaser, obvious on inspection, or used within the last year)
• rights of persons in actual occupation

Important nuances:

• Expressly created legal easements over registered estates must be completed by registration to be legal; unregistered express easements will take effect only in equity and will not override.
• Legal easements that arise by implication or prescription, or easements burdening unregistered interests, may have overriding status if the Schedule 3 conditions are met.
• Equitable easements are minor interests; they do not override and must be protected by notice.

Key Term: legal lease (≤7 years)
A legal lease for seven years or less binds as an overriding interest without registration.

Key Term: legal easement
A right benefiting land that is capable of existing at law; in registered land, express legal easements must be registered to take effect as legal.

Actual Occupation

The most significant overriding interest is the right of a person in actual occupation.

Key Term: actual occupation
Physical presence on the land that is sufficiently permanent and apparent, giving the occupier's proprietary interest overriding status if certain conditions are met.

To override, the person must:

• have a proprietary interest (e.g. beneficial interest under a trust, equitable lease, proprietary estoppel right), and
• be in actual occupation at the time of the disposition.

The occupation must be obvious on a reasonably careful inspection or known to the purchaser; otherwise, the interest will not override unless the purchaser made reasonable enquiry and the occupier failed to disclose the interest when reasonably expected to do so.

Timing is critical: the relevant time is the date of the disposition (generally completion of the transfer or grant). Temporary absence may still count as occupation where continuity of presence and intention to return are shown.

Authorities: occupation can be established by presence and belongings (e.g. short‑term hospital stay or holiday does not necessarily defeat occupation), but mere storage and payment of bills without actual presence may be insufficient. Occupation by someone else will not usually count unless that person occupies on behalf of the owner rather than for their own purposes.

Worked Example 1.2

Daniel is the sole registered proprietor of Blueacre. His sister Emma has a beneficial interest under a trust and lives in the property. Daniel mortgages Blueacre to a bank without Emma's knowledge. Daniel defaults, and the bank seeks possession. Is Emma's interest binding on the bank?

Answer:
Yes, if Emma was in actual occupation at the time of the mortgage and her occupation was obvious or known to the bank, her interest overrides the bank's charge.

Exam Warning

Purchasers must make careful enquiries and inspect the property. If a person in occupation fails to disclose their interest when asked, their overriding status may be lost.

Additional practical points on actual occupation:

• It is judged at the time the disposition is completed; moving in after completion will not suffice.
• The “scintilla temporis” argument (that one can create occupation between completion and registration) has been rejected; the focus is completion.
• Examples of sufficient occupation include continuous visits, presence of furnishings and personal effects, payment of outgoings, and a settled intention to return during temporary absence.
• Indicators of insufficient occupation include long‑term absence without evidence of intention to return, or a third party’s occupation for their own purposes rather than on the claimant’s behalf.

Worked Example 1.3

Priya agreed a written, signed contract for a five‑year lease of a flat in registered land. The lease was not executed by deed, so she holds an equitable lease. She moved in and was clearly in occupation. The landlord sells the freehold to Zahid, who pays value and registers the transfer. No notice of Priya’s equitable lease was entered. Does Priya bind Zahid?

Answer:
Yes, if Priya’s equitable lease is coupled with her actual occupation at the date of Zahid’s purchase, it can override under Schedule 3, paragraph 2, unless her occupation was not obvious on reasonably careful inspection and Zahid lacked actual knowledge, or Zahid made reasonable enquiry and she failed to disclose her right. If the exceptions apply, Priya would not override, so the facts on inspection and enquiry are critical.

The Role of Overreaching

Overreaching allows a purchaser to take free of certain equitable interests (such as beneficial interests under a trust) if the purchase money is paid to at least two trustees.

Key Term: overreaching
The process by which equitable interests under a trust are removed from the land and transferred to the purchase money when paid to two trustees.

If overreaching occurs, the equitable interest does not override and the purchaser is not bound. This is true even where the beneficiary is in actual occupation. Overreaching applies to both registered and unregistered land, and to sales and mortgages under which capital money arises (including certain overdraft facilities secured by mortgage). In registered land, a restriction (often Form A) can be entered to flag that capital money must be paid to two trustees or authorised by the court before registration of a disposition.

Worked Example 1.4

Sophie and Tom are trustees of registered land held on trust for their parents. They sell the land to a buyer, who pays the purchase price to both trustees. Do the parents' equitable interests bind the buyer?

Answer:
No. The parents' interests are overreached and attach to the purchase money, so the buyer takes free of them.

Worked Example 1.5

Ben is the sole registered proprietor of a house occupied by him and his partner, Rosa, who has a beneficial interest by contributing to the purchase and bills. Ben sells to Harper for value. Harper pays the price to Ben alone, and registers the transfer. Rosa was in actual occupation at completion. Is Harper bound?

Answer:
Yes. Overreaching did not occur because the price was paid to only one trustee. Rosa’s beneficial interest, combined with her actual occupation, overrides Harper’s registered disposition unless an exception applies (e.g. non‑obvious occupation and no actual knowledge, or failure to disclose on enquiry).

Protection by Notice and Restriction

Most third‑party interests should be protected by entering a notice or restriction on the register.

• A notice protects the priority of most interests (e.g. restrictive covenants, equitable easements, options).
• A restriction is used to control dispositions, often to ensure overreaching occurs or to protect a beneficiary's interest under a trust.

Notices are entered in the charges register; restrictions are entered in the proprietorship register. A restriction does not itself confer priority over a purchaser; it controls registration of dispositions unless specified steps (e.g. payment to two trustees) are taken.

If an interest is not protected and does not override, it will be lost against a purchaser for value who registers their disposition.

Key Term: unilateral notice
A notice entered without the proprietor’s consent; the proprietor can apply for cancellation, and the claimant must justify the claim to maintain the entry.

Key Term: agreed notice
A notice entered with consent or where sufficient evidence is provided; less vulnerable to cancellation.

Worked Example 1.6

Maya claims an option to purchase Blackacre. She enters a unilateral notice against the title. The registered proprietor applies to cancel it. Maya does not respond to the registrar’s notification within the time limit. What happens?

Answer:
The unilateral notice is cancelled. Maya’s option will not bind a purchaser unless she applies again and secures protection, or it otherwise qualifies as an overriding interest (which options do not). An unjustified or improper notice can expose the applicant to damages under section 77 LRA 2002.

Worked Example 1.7

Jamal receives Blackacre by gift from his aunt and is registered as proprietor. An earlier equitable easement was created over Blackacre but not protected by notice. Does Jamal take free?

Answer:
No. Section 28 applies to non‑purchasers. Jamal takes subject to prior interests, even if they were not protected by notice, provided they were validly created. A purchaser for value would have had the benefit of section 29, but as a donee, Jamal is bound by earlier interests.

Registrable Dispositions and the Need for Registration

The LRA 2002 requires registration to complete certain dispositions and secure legal status:

• transfers of registered estates
• grants of legal leases for more than seven years
• grants of legal charges (mortgages)
• express legal easements over registered land

Failure to complete by registration means the disposition operates only in equity and will not qualify for the section 29 special priority rule. For easements, express grants over registered estates must be registered to be legal; otherwise they take effect only as equitable easements and must be protected by notice to bind purchasers.

Key Term: registrable disposition
A disposition which must be completed by registration to take effect at law.

Legal Easements as Overriding Interests

Under Schedule 3, paragraph 3, legal easements override a registered disposition in limited circumstances:

• the easement is registered under the Commons Act (rare), or
• it was known to the purchaser, or
• it would have been obvious on a reasonably careful inspection, or
• it has been exercised within the year prior to the disposition.

This captures easements arising by implication or prescription. Equitable easements do not override and must be protected by notice.

Worked Example 1.8

For twenty years, Greta has openly used a track over Hugh’s registered land to reach the highway. The route is visibly worn. Hugh sells to Iris, who does not inspect the land. Greta’s use continued within the last year. No notice is on the register. Does Greta bind Iris?

Answer:
Yes. Greta has acquired a legal easement by prescription. It was obvious on reasonably careful inspection and used within the last year, so it overrides Iris’s registered disposition under Schedule 3, paragraph 3.

Actual Occupation: Practical Guidance

When assessing whether an occupier’s interest overrides:

• Check the nature of the interest: equitable interests (e.g. constructive or resulting trust rights, equitable leases, proprietary estoppel) can be proprietary and capable of overriding when coupled with actual occupation.
• Assess occupation at the time of the disposition: consider presence, belongings, continuity, intention to return, and whether occupation is apparent.
• Consider the purchaser’s knowledge and enquiries: if occupation would not be obvious on inspection and the purchaser lacks actual knowledge, the interest will not override. If reasonable enquiry is made and the occupier fails to disclose the interest when expected to do so, overriding status is lost.
• Remember that occupation by third parties generally does not count unless they occupy on behalf of the claimant.

Examples of sufficient occupation include short‑term absences for hospitalisation or holidays where belongings remain in situ and there is a settled intention to return. A long‑term absence with minimal connection to the property and no evidence of intention to return may fail.

Bringing It Together: Priority Checklist

When advising on whether an interest binds a purchaser of registered land:

• Identify the nature of the interest (legal/equitable/statutory).
• Determine whether it is a registrable disposition and whether registration has been completed.
• Check for protection by notice (charges register) or restriction (proprietorship register).
• Consider whether the interest qualifies as an overriding interest under Schedule 3 (short legal lease; legal easement/profit; actual occupation).
• Assess whether overreaching has occurred (payment to at least two trustees) in relation to trust interests.
• Apply section 28 or section 29 depending on whether the acquirer is a purchaser for value and has registered the disposition.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• The LRA 2002 sets out statutory rules for priority of interests in registered land.
• Section 28 applies the basic rule: earlier interests have priority over later ones.
• Section 29 gives special protection to purchasers for value who register their disposition.
• Purchaser protection under section 29 depends on registration and valuable consideration.
• Most interests must be protected by notice or restriction to bind a purchaser.
• Overriding interests (Schedule 3) bind even if not registered, including actual occupation and certain legal easements and short legal leases.
• Overreaching removes certain equitable interests if purchase money is paid to two trustees (or a trust corporation).
• Express legal easements over registered land must be registered to be legal; implied or prescriptive legal easements may override if Schedule 3 conditions are met.
• Equitable easements and other equitable rights do not override and must be protected by notice to bind a purchaser.
• Actual occupation is assessed at the time of disposition with defined exceptions; temporary absence can still constitute occupation.
• Restrictions control registration of dispositions and can be used to ensure overreaching occurs.

Key Terms and Concepts

• mirror principle
• curtain principle
• insurance principle
• basic priority rule (s 28 LRA 2002)
• special priority rule (s 29 LRA 2002)
• registrable disposition
• valuable consideration
• minor interest
• notice
• agreed notice
• unilateral notice
• restriction
• overriding interest
• legal lease (≤7 years)
• legal easement
• actual occupation
• overreaching