¶ … changes brought about by the Land Registration Act 2002, with particular focus on adverse possession, do enough to protect purchasers from overriding interests? Interests in land that cannot be registered as separate titles are either overriding interests or interests which need protection on the register. Overriding interests are enforceable without being protected on the register and bind a registered proprietor and his transferee despite the fact he does not know of their existence. This means overriding interests effectively detract from the principle that the register should be a mirror of the title. Under the old regime of the Land Registration Act 1925, overriding interests were listed in section 70 (1) which states these to be "all incumbrances, interests, rights, and power not entered on the register but subject to which dispositions are to take effect."

If however, an overriding interest appears on the register (as in Re Dance Way, West Town, Hayling Island) then its protection under this category is superfluous. It will cease to bind as an overriding interest and its protection is then the protection of a minor interest on the register.

The grounds for reform of overriding interests contained in the Land Registration Act 2002 ("LRA 2002"), arose as a result of criticism of the category of overriding interests under the Land Registration Act 1925. Overriding interests caused uncertainty and have been the subject of several reports attempting to deal with the problems, culminating in the LRA 2002.

As illustrated in Overseas Investment Services Ltd. v Sim Cobuild Construction Ltd. judicial opinion was also one for change. In this case Peter Gibson LJ stated, "as overriding interests constitute an exception [to the mirror of title principle] the court should in my opinion, bet be astute to give a wide meaning to any item constituting an overriding interest."

The LRA 2002 aims to create an electronically-based conveyancing system where it will be possible to investigate title online with minimum additional enquiries. A major obstacle to achieving this is the existence of overriding interests.. The LRA 2002 has therefore reduced the circumstances in which overriding interests can exist. The policy behind the Act is that interests should only have overriding status where protection against buyers is needed, but where it is neither reasonable to expect nor sensible to require any entry on the register. With the advent of electronic conveyancing the circumstances in which overriding interests can arise will be reduced. This is because expressly created rights will only be created through simultaneous registration.

In addition to electronic conveyancing, the LRA 2002 adopts four approaches for handling the problems associated with overriding interests, which are:

1. The abolition of certain rights which can exist as overriding interests, including the liability to repair the chancel of a church. Abolition follows the Court of Appeal decision in Aston Cantlow Parochial Church Council v Wallbank which held that chancel repair liability contravenes the European Convention on Human Rights and is therefore unenforceable. The LRA 2002 also affects the rights of those acquired by squatters under adverse possession. It introduces an entirely new scheme of adverse possession for registered land, although there are limited transitional provisions to protect squatter's vested rights. For three years after the Act comes into force (ie the 12-year limitation period had expired) will continue to have overriding interest even if he or she is not in actual occupation. The squatter will have three years to protect their position by registering their rights Furthermore, on first registration the legal estate is vested in the first registered proprietor subject to interests acquired under the Limitation Act 1980 of which he or she has notice at the time of registration.

2. The phasing out after ten years of several existing categories of overriding interest, including ancient rights of franchises, manorial rights, crown rents, rights concerning embankments and sea walls, and corn rents

3. The narrowing down and clarification of the scope of some previous categories that remain as overriding interests. The most important being easements and profits under the old s. 70 (1) (a) of the Land Registration Act 1925 and the rights of persons in actual occupation or in receipt of rents and profits under the old s. 70 (1) (g) of the 1925 Act

4. A requirement that when overriding interests come to light they are, as far as possible, entered on the register. In addition, a new requirement exists where a person who applies for registration, must disclose any overriding...

Five of the 14 categories will disappear after ten years. In the case of legal easements and profits, the rights of persons in actual occupation and short leases (seven years or less), the substantive requirements for what amounts to an overriding interest will be different depending on whether it is a first registration or a subsequent registrable disposition for valuable consideration. The LRA 2002 recognises this distinction by listing those interests which override first registration in schedule 1 and those interests which override registered dispositions in schedule 3.
Unregistered interests which override first registration

As discussed above, these are set out in schedule 1 of the LRA 2002. When a person becomes the first registered proprietor of land on first registration, they take the estate subject to certain interests, including interests the burden of which is entered on the register (s 11 (4) (a)) and interests the burden of which is not entered on the register but which fall within any of the paragraphs of Schedule 1 (s 11 (4) (b) overriding interests).

Short leases

Subject to exceptions (discussed below) a leasehold estate that has been granted for a term not exceeding seven years from the date of grant, overrides first registration. This replicates the position under the Land Registration Act 1925 s. 70 (1)(k) except for the reduction in the duration of short leases from 21 years to 7. It is also likely in the future, that the Lord Chancellor will reduce the period to 3 years. The reason for excluding short leases from having their own registered titles is to prevent the register from becoming cluttered with leases that are subject to expire shortly. Instead, a notice of the short lease should be entered on the register of the title out of which it has been granted.

There are however, exceptions to this rule and the following types of leases are incapable of being considered overriding interests, even in instances where they are for 7 years of less, and must be registered with their own titles:

(a) a reversionary lease granted out of unregistered land to take effect in possession more than three months after the date of the grant of the lease (this is new and they are excluded because they may be difficult to discover)

(b) a lease granted out of an unregistered legal estate under the right to buy provisions of Pt V of the Housing Act 1985 (there is no change here from the previous law)

(c) a lease granted by a private sector landlord out of an unregistered legal estate to a person who was formally a secure tenant and has a preserved right to buy under the Housing Act 1985 (again there is no change here from the previous law)

Interests of persons in actual occupation

The discussion which follows relates to the overriding status of occupier's rights on first registration. Occupier's rights in relation to registered dispositions will be considered later in this essay.

The interests of persons in actual occupation have historically been the most problematic of all overriding interests resulting in considerable amounts of litigation. Prior to the LRA 2002, the relevant section of the 1925 Land Registration Act was s.70(1)(g) which read, "the rights of every person in actual occupation of the land or in receipt of rents or profits thereof, save where enquiry is made of such person and the rights are not disclosed."

The LRA 2002 deals with unregistered interests which override first registration in Schedule 1, paragraph 2, which defines the interests of persons in actual occupation as "An interest belonging to a person in actual occupation, so far as relating to land of which he is in actual occupation except for an interest under a settlement under the Settled Land Act 1925."

The Law Commission concluded in its report that it remained necessary to protect the rights of those in actual occupation. This is predicated assuming such persons will often not have appreciated the need to take further steps to protect their rights against purchasers by lodging a caution against first registration. This is especially the case for informally created rights (for example a matrimonial homes right of occupation which may be protected by a class F land charge registration)

It should be noted that the LRA 2002, unlike the old law, does not give overriding status to those who are only in receipt of rents and profits. This is a change from s 70 (1) (g) and was made with the idea that…