The Land Registration Act 2002 - Case Study Example

Since the Land Registration Act 2002 LRA it has been argued that rights over property have become much easier to deal with and to ascertain. Whilst this is true for registrable interests such as leases over seven years, certain overriding interests are unregistrable. Broadly speaking, any third party interests against registered land will either be deemed an overriding interest, or a minor interest. An overriding interest will be binding on the purchaser, whereas a minor interest will only be binding on purchasers if it is protected by an entry on the register. It is stated, in this case, that the property is registered; therefore, the relevant legislation is the LRA, although the original concept of overriding interests was established in the Land Registration Act 1925. Under the 1925 Act, certain overriding interests would only continue until the point at which the land is registered. As Shambles has now been registered, the rules relating to third party interests contained in the LRA must be referred to. The first issue to be considered by Lance is that of Porter's ex- partner, Rina, who has been living in the property for a period of at least five years. On the assumption that Shambles became registered to Porter, after 1st October, 2003 and where the LRA is in force, then the rights attached to Rina will be in accordance with the LRA. The overriding interest of actual occupation existed under the 1925 Act in s70(1)(g). Whilst this old right still exists, it is now subject to the new law as contained in the LRA. Essentially, the overriding interest and the right of a third party in actual occupation will exist where there is actual occupation, at the relevant time, by the owner. This is important, in this case, due to the fact that there may be some debate as to whether or not Rina is, in fact, an actual owner, i.e. legally or beneficially entitled to the property. As Rina is an estranged partner of Porter, Rina may have a valid argument that she has an equitable entitlement to at least part of the property. Recent case law has suggested that, where both parties have contributed in some way to the property, even if it is registered in only one person's name, the court will determine the shares of the property to be held by each party, based on the course of dealings between them1. With this in mind, it would be necessary to consider the relationship between Rina and Porter and whether she could legitimately claim an equitable interest in the property (Abbey & Richards, 2007). On the assumption that Rina can show an equitable interest, she would potentially be able to rely on the actual occupation interest as stated in Schedule 3, Para 2 of the LRA. This right would exist, provided it was not an interest under the Settled Land Act 1925, it was not a deliberate failure to disclose the right and the occupation would have been obvious on a reasonably careful inspection of the land in question at the time of the disposition. Under the provisions in the LRA, there is no precise definition of actual occupation; however, case law previously heard under the 1925 Act is thought to be current and relevant under the LRA2. Under the LRA, Rina will only forfeit the overriding status of her interest, if she would have been reasonably expected to declare her right to Lance. As Lance undertook his own conveyancing, it is unlikely that sufficiently detailed questioning was undertaken in relation to any adults in actual occupation. Moreover, in the absence of such questioning, it is therefore highly likely that Rina will not have sacrificed her overriding status, based on failure to disclose reasonably. Furthermore, as Rina lived in the main property and has done so for 5 years, her presences and actual occupation would be reasonably noticeable to anyone who had made an inspection of the property. The facts suggest that Lance did not actually inspect the property, at all, due to his location in London and had he made a reasonable inspection, he would have been aware of Rina's occupation, prior to purchasing the property. It is also worth noting that, as Rina occupies only part of the land; she is said to have only an overriding interest in respect of that part of the land which she occupies, i.e. the main house of Shambles3. Based on the above analysis, it is likely that Rina will be deemed to have an overriding interest based on her actual occupation of the main property and that Lance will be bound by this interest. This is provided that Rina can suitably show that she has an equitable interest in the property and that she could not have been reasonably expected to declare this interest to Lance, during the enquiries made by Lance, prior to the purchase of the property. A second issue exists for Lance in relation to the use of the property by Barry to walk across, a practice that he has been involved in for over 22 years. Barry used the area of the land towards the back of the property and adjoining his own land, merely as a route of access on an occasional basis. Essentially, this operates as an easement for the use of part of the land by the owner of the servient land (in this case the adjoining property owned by Barry). A right to use a path is considered to be a positive easement, as it allows Barry the right to do something to the land and is therefore potentially enforceable as an overriding interest under the LRA (Dixon, 2002). In order for an easement to exist, there must be dominant and servient land (i.e. the Shambles estate and the property belonging to Barry); the right must be part of the dominant land (i.e. the path across the Shambles property); the owners of the two pieces of land must be different and the right must be capable of being the subject matter of a grant4. Any easement arising after 2002 will be a minor interest and will have to be registered to be binding on a purchaser. In this case, the easement has existed for over 22 years and therefore could potentially be binding on a purchaser, notwithstanding the fact that, if it had arisen more recently, it would not be binding. Therefore, this easement will remain governed by the 1925 Act5. For a valid easement to exist, there is a need for it to have been created either by implication or by prescription. In this case, the easement would have been created by prescription, i.e. through the conduct of the owner of the dominant land. This would mean that the easement had been created by the fact that Porter had allowed the use of the path for such a long period of time. It is possible for an easement to exist at common law by prescription, if the right has existed for so long that it is seen as having existed since time immemorial. Case law suggests that this means for a period of twenty years or more, therefore, covering the right of way established by Barry, over the last 22 years6. Other requirements include the need for the use of the land to be capable of existing as an easement, that it has been used without interruption, and that it has been used without force and without being secretive and without the actual permission of the owner of the dominant land. Whilst it has been argued that equitable easements such as those enjoyed by Barry should have been entered on the register at first registration under the LRA, recent cases have suggested that this is not the case and that an equitable easement would remain an overriding interest, in accordance with the 1925 Act7. Pulling all of this together, it is concluded that Barry, due to the fact that he has been using the path without objection and openly for a period of 22 years, would have an easement over Shambles that is enforceable against Lance as the purchaser of Shambles. This is based on the fact that the easement came into existence prior to the LRA 2002 and has been in existence for over twenty years, thus making it a common law easement by prescription. Both Barry and Lance could be mistaken in believing that the deed executed six months previously between Barry and Porter required Porter to maintain the boundary wall between the two properties. This deed is stated to be binding on all successors, i.e. in this case, Lance. This is considered to be a positive covenant, as it requires Porter or his successors to maintain the wall; it is not simply a case of allowing something to happen passively to the wall or a restriction in the way the wall is used. Whilst restrictive covenants may run with the land and be binding on third parties, provided certain conditions are met such as that they run with the land, this is not the case for positive covenants placing a duty on the covenantor to face some expenditure or to put in some time to the maintenance of the wall (Chapelle, 2007). Where this type of positive covenant exists, it is necessary for certain formalities to be met in order for the covenant to be enforceable on third parties and successors, i.e. Lance. Therefore, in order for Barry to be able to rely upon the deed that was entered into between himself and Porter, he would have to show that the formalities had been met. As the deed was entered into six months ago, it would be subject to the LRA, then Barry would need to show that the formalities were complied with as per the LRA, rather than the 1925 Act. Based on the fact that this is a registered property and that it is a positive covenant in nature, then it does not run with the land. This has been confirmed by numerous cases8. During the purchase process, Lance should have studied the register and if Barry had entered a notice on the register stating the existence of the covenant, then he would be bound by the requirements of the covenant. There is no evidence that this has been done and due to the fact that Lance undertook his own conveyancing process, it is unlikely that the full enquiries have been undertaken. Based on this fact, unless there is a notice on the register, then Lance would not be bound by the terms of the deed and would not be required to maintain the boundary wall. A further set of issues exist in relation to Niki and her presence in the bungalow that is at the bottom of the garden of the original property. Niki lived in the property rent-free when caring for Porter's mother, but has since entered into a 25-year lease with Porter for the occupation of the bungalow. It is noted that this happened two years ago and would therefore have been subject to the LRA, although Niki was in occupation for several years prior to the entering into of the lease. The documentation relating to the 25-year lease was completed and signed by both parties. However, it is stated that, after the lease was signed, it was simply put in the desk drawer, suggesting that it has not been duly registered with the Land Registry. In accordance with section 27(2)(b)(i), LRA, it is necessary for any lease of seven years or more to be registered. Prior to this, and under the 1925 Act, leases of more than 21 years had to be registered. Therefore, either way, it would have been necessary for the lease to have been registered in order for it to be a legal interest for Niki. It is assumed in this scenario that the lease has not been registered, but it is not void completely and may still work as an overriding interest in equity by a person in actual occupation. As Niki is only in occupation of the bungalow, then this would be the area over which she would potentially be claiming an overriding interest and she would not be able to claim that she had any right over the main property (Schedule 2, Para 3 of the LRA). Niki lives in the property and therefore it is likely that she will be able to show that she is in actual occupation and, as a result, would have an overriding interest rather than a minor interest in accordance with Schedule 2, Para 3. It is worth noting that, had Shambles in its entirety been unregistered, then the existence of an equitable lease would not be binding on the purchaser, in this case, Lance (Dixon, 2005), even if he had been made aware of the lease due to the fact that he had paid good value for the lease9. In any event, in this case, the lease is over part of a registered property; therefore, although it has not been registered with the Land Registry, Niki may still be able to claim that she has an overriding interest, by virtue of the fact that she is in actual occupation10. Much of the case law under the 1925 Act in relation to actual occupation remains relevant for the purpose of this analysis. This overriding interest will only be valid if Niki can show that she is in actual occupation. In order to be in 'actual occupation', it is necessary to show that she was, in fact, in occupation on a regular basis and not in some fleeting manner11. Interestingly, it should be noted that Rina cannot claim an overriding interest over the bungalow, as a rent is being paid by Niki for its occupation and therefore neither she (nor Porter) could be seen as in actual occupation of the bungalow. As previously stated in relation to actual occupation, it is necessary not only for the individual claiming an overriding interest to be in occupation, but also that their state of occupation, on reasonable inspection, would have been reasonably obvious (Smith, 2007). If any enquiries were made in relation to the bungalow and its occupation but these answers were not forthcoming, the overriding interest would not be valid, provided, of course, that Niki could have been reasonably expected to reveal her interest. Again, it is not clear as to what enquiries were made by Lance. However, it is noted that Lance undertook his own conveyancing and did not inspect the property thoroughly, suggesting that he would not have seen the bungalow and Niki's occupation in the bungalow, which would have been reasonably obvious had he carried out such an inspection. Although the property comprises 4 acres, this is not so large that it would not be deemed reasonable to have inspected the whole land for additional occupied buildings such as the bungalow. In conclusion, it is suggested that Rina has an overriding interest based on actual occupation, provided that she can show that she had some sort of equitable interest, e.g. by contributing to the property financially in some way. Barry would be able to rely on the easement to cross the land and to continue to use the path, as he has done for the last 22 years. Barry would not, however, be able to enforce the positive covenant to repair the boundary wall, unless, of course, this interest had been noted at the Land Registry. Niki, having not registered her lease would have to rely on the overriding interest of actual occupation on the bungalow in order to enforce her rights. Bibliography Abbey, R. & Richards, M., 2007. A Practical Approach to Conveyancing. 9th ed. Oxford University Press, p. 84. Chappelle, D., 2007. Land Law, The Foundation Studies in Law Series. 8th ed. Pearson Education, p. 461. Dixon, M., 2002. Land Law, Cavendish Q & A Series. 4th ed. Routledge Cavendish, p. 39. Dixon, M., 2005. Modern Land Law. 5th ed. Routledge Cavendish, p. 51. Smith, R.J., 2007. Introduction to Land Law Case Navigator. Pearson Education, p. 124. Oxley v Hiscock [2004] EWCA Civ 546 Williams and Glyn's Bank Ltd v Boland [1980] 2 All ER 408 Ferrishurst v Wallcite [1999] 1 All ER 977 Re Ellenborough Park [1956] Ch 131 Angus v Dalton (1877) 3 QBD 85 Thatcher v Douglas (1996) 146 NLJ 282 Rhone v Stephens [1994] 2 AC 310. Midland Bank Trust v Green [1981] 2 WLR 28 Strand Securities v Caswell [1965] 1 Ch 958 Law of Property Act 1925 s. 70(1)(a) Law of Property Act 1925 s. 70(1)(g) Land Registration Act 2002 Read More