Understanding The Principle Of Overriding Interests And Its Role In Registered Land

On completion of Land Law , students should be able to

Give a legal definition of land and explain the rights of estate owners above and below the surface of their land;

Differentiate between estates and interests in land, explaining how they may be acquired, protected and transferred in the context of registered title;

Explain and apply relevant legal principles relating to co-ownership, adverse possession and registration of title in order to resolve competing claims to land;

Construct a cogent legal argument which is justified by reference to relevant authority;

Evaluate areas of land law under consideration.

The Concept of Overriding Interests

Overriding interest is referred to an English land law concept which provides information regarding the general rule of registered conveyancing in which the interests and rights of owners of a piece of land are written. The information regarding these owners is included on the register entry for the land. In case this registry is not maintained, then it becomes difficult to identify the interest of anyone who purchases land. If these interests of the land are not applied to the purchaser, then the rights of the land are likely to be lost. An exception of this rule is the principle of overriding interests. Overriding interests did not have to be registered in order to bind the owners into a legal relationship. The objective of this essay is to understand the principle of overriding interest and its importance. This essay will critically evaluate the role of overriding interest principle while dealing with registered land. Relevant legislation will be evaluated in this essay to understand this topic.

The English concept of overriding interests must be disclosed by the applicant on registerable disposition regarding a registered estate, and they must be disclosed on the first registration. The Land Registration Act 2002 and the Land Registration Rules 2003 are the key regulations which have a significant impact on the principle of overriding interests. There is a set procedure which is necessary to be followed by the parties which are included in these regulations. However, in order to understand the role of overriding interests in relation to registered land, it is important to thoroughly understand the concept of overriding interests. The overriding interests are referred to those interests on land which are subject to the registered title; however, they do not appear in the register. This principle is binding upon both parties which include registered proprietor and a person who has acquired an interest in the property. Although this concept has been a part of the registration system which was implemented by the government in the United Kingdom, however, this term itself has first been introduced in the Land Registration Act 1925.

In order to understand the role of overriding interests in the case of registered lands, the policies given in the Land Registration Act 2002 are necessary to be evaluated. Section 29 (2) (a) (ii) of this act gives priority to the concept of overriding interests even though these interests are not protected as per the register itself. Furthermore, the information and details regarding the concept of overriding interests are given in schedule 3 of the Act. These regulations were previously included in the Land Registration Act 1925 under section 70 which has since been replaced. The Law Commission joined together with HM Land Registry in order to start a joint program which was focused on updating and reforming the statue law which provides provisions regarding the procedural registration of land. During this process, the inherent problems which arise involved within the transactional process. One of the key issues was relating to the purchaser who realised after purchasing land that the title of the land is conflicting in which third parties are claiming for ownership. Scenarios like this are too frequent in which the entire transaction can be considered as void which resulted in creating challenges for the parties.

The Role of Overriding Interests in Relation to Registered Land

In these cases, the rights which are acquired by the parties are referred to overriding interests on the land which are not written in the land registry. The overriding interests are included by the Royal Commission, the House of Lords and the House of Commons which joined together to create the Law of Property Act 1925. In this act, the principle of overriding interests was included which provided that there are classes of interests which would be unreasonable to expect certain interests to be registered which are referred as overriding interests. The examples of overriding interests include rights of parties in actual occupation, right of light, right to support from adjoining buildings, tenancies of less than seven years, and public right to way. After the introduction of the Law of Property Act 2002, the right for making a claim for chancel repairs by the historic parish church was included in the overriding interests. The existence of the principle of overriding interests is a standard question relating to a transaction. As per the provisions, this principle must be confirmed, denied or ‘not known’ by the parties while registering a land.

This information is included in the standard property information from which used across England and Wales. The aim of making amendments in the Land Registration Act 2002 is focused towards ensuring that cases involving the issue of overriding interests are reduced. This act aims to replace as many overriding interest entries with registry entries. All these policies are focused on keeping with the overall objective which is to keep the register as complete as possible. In order to achieve this objective, the government has reduced some elements which are overriding and many are abolished as well. As per the new provisions, the parties must disclose an overriding interest while an application is made for first registration or registrable disposition of a registered estate. During this process, the parties did not have to carry out any special investigation while claiming for overriding interests; however, the parties need to explain to the client regarding what interests should be disclosed.

Furthermore, it is important to distinguish the difference between minor interests from overriding interests. The minor interest of registered land is referred to all proprietary interest on a property which is not capable of substantive registration, mortgages by registered charge or overriding interests. The rights which generally come under the category of minor rights include estate contracts, over-reachable interests, unpaid vendor’s liens, home rights, restrictive contracts, trust for sale or trusts for land. The procedure included in the Land Registration Act 1925 regarding the imposition of overriding interests on registered lands was too complex and costly which resulted in increasing the number of delays in the transactions and casting uncertainty over the legal system. Due to this uncertainty, a direct consequence was the lack of accountability which leads to high outcries of unjustness. Therefore, the government made some significant changes in the Land of Property Act 2002 in order to properly identify the principle of overriding interest along with reducing these cases in the country.

Schedule 3 Para 2 of the Land Registration Act 2002 has replaced section 70 (1) (g) of the Land Registration Act 1925. The litigation process and policies given in section 70 of the act still remained very much relevant under Para 2 of the modern Land Registration Act 2002. As per these provisions, actual occupation on the land is important at the relevant time for making a claim for regarding overlaps of two different claims. There must be two elements present which include an interest in the land, and such interest must be overreached. This principle as further highlighted by the court in the case of National Provincial Bank of Ainsworth in which the court rejected the right of wife cannot claim overriding interests on the property based on mere personal right which she received as per the agreement in the judicial separation. The second element provides that the interest must not be overreached. This element was highlighted by the court in the judgement of Williams & Glyn’s Bank v Boland and HSBC Bank v Dyche cases. In these cases, it was held that the concept of overriding interests is highly relevant when there is a sole legal proprietor so that capital money is not paid to two trustees.

In conclusion, the principle of overriding interest is a key part of the English system which recognises the right of parties on land which is not included in the land registry. These rights override with the rights of the owners of the registered property based on which the party can claim for rights even when the name is not included in the land registry. This principle was included in the previous act which has since been amended by the government. The objective of these amendments are focused towards changes policies to create a strong land registry by eliminating most overriding claims which resulted in achieving the overall objective of the act which is to complete a record of title as complete as possible. Thus, evaluation of the principle of overriding interest is important to ensure that the parties have a right on their land and the interest of innocent parties is protected.

Articles/Books/Reports

Bogusz B and Sexton R, Complete Land law: Text, cases, and materials (Oxford University Press, 2015).

Bray J, Key Cases Land Law (Routledge 2013).

Clarke S and Greer S, Land Law Directions (Oxford University Press, 2012).

Gardner S and MacKenzie E, An introduction to Land Law (Bloomsbury Publishing, 2015).

McFarlane B, Hopkins N and Nield S, Land law: text, cases, and materials (Oxford University Press, 2015).

Merwe CVD and Verbeke AL, Time Limited Interests in Land (Cambridge University Press, 2012).

Cases

HSBC Bank v Dyche [2009] EWHC 2954

National Provincial Bank of Ainsworth [1965] AC 1175

Williams & Glyn’s Bank v Boland [1981] AC 487

Legislation

Law of Property Act 1925

Law of Property Act 2002

Land Registration Act 1925

Land Registration Act 2002

Others

Legislation, Land Registration Act 2002 (2018) <https://www.legislation.gov.uk/ukpga/2002/9/section/29>.