Registration of title and protection of interests - Methods ...

Learning Outcomes

This article explains the protection and enforcement of third-party interests in registered land under the Land Registration Act 2002, including:

• the core principles of the LRA 2002 as they relate to third-party interests in registered land and how they underpin the registration system tested in SQE1 questions
• the categories of registrable dispositions, overriding interests, and protected interests (notices and restrictions), with emphasis on identifying in MCQs whether an interest must be registered, protected by notice, or can override
• the priority and enforceability rules, including the distinction between the basic and special priority rules (ss 28–29) and how ss 28–29 operate on dispositions for value and non-value, and what amounts to valuable consideration
• the practical steps a practitioner or candidate should identify to protect an interest on the register and the exam consequences of failing to protect, such as loss of priority against a purchaser
• the selection and correct drafting or identification of appropriate protective entries (notice or restriction), the statutory exclusions from notices (s 33), and when a Form A restriction is required to safeguard beneficiaries under a trust
• the circumstances in which interests obtain overriding status under Schedule 3, the limits and exceptions to actual occupation, and how exam questions may test disclosure and inspection
• the operation of overreaching of equitable interests, the statutory framework (LPA 1925, ss 2 and 27), and its interaction with restrictions and purchasers for value in problem-style questions.

SQE1 Syllabus

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

• the three core principles of land registration: mirror, curtain, and insurance principles
• the categories of registrable dispositions, overriding interests, and protected interests (notices and restrictions)
• how to protect and enforce third-party interests, including the use of notices and restrictions
• the rules of priority and the consequences of failing to register or protect an interest
• the significance of actual occupation and the requirements for overriding status
• the process and effect of overreaching in registered land.
• the distinction between the basic and special priority rules (LRA 2002, ss 28–29) and what counts as valuable consideration
• the difference between agreed and unilateral notices, how they are entered and how unilateral notices can be cancelled (LRA 2002, ss 32, 36, 77)
• interests excluded from protection by notice (LRA 2002, s 33) and the proper use of restrictions (including Form A) to protect beneficiaries under a trust
• legal easements: when express easements must be completed by registration (s 27(2)(d)) and when implied/prescriptive easements can override a disposition (Sch 3, para 3).

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 an overriding interest, and how does it differ from a notice in the context of registered land?
2. Which interests must be protected by entry of a notice on the register to bind a purchaser for value?
3. What is the effect of actual occupation by a person with a proprietary interest at the time of a registered disposition?
4. How does overreaching operate to protect a purchaser from certain equitable interests?

Introduction

The Land Registration Act 2002 (LRA 2002) sets out the modern framework for the registration of title to land in England and Wales and the protection of third-party interests. For SQE1, you must be able to identify the main categories of interests in registered land, understand how they are protected, and apply the rules that determine whether a purchaser is bound by a third-party right.

The LRA 2002 is built on three main principles:

Key Term: mirror principle
The register should reflect, as far as possible, the totality of rights and interests affecting a registered title, so that a purchaser can rely on the register as a complete statement of title.

Key Term: curtain principle
Certain equitable interests, especially those under trusts, are kept "behind the curtain" of the register. Purchasers deal only with the registered legal owner and are not concerned with hidden equitable interests, provided statutory requirements are met.

Key Term: insurance principle
The state guarantees the accuracy of the register. If a person suffers loss due to a mistake or omission in the register, they may be entitled to compensation (indemnity).

These principles work alongside statutory categories and priority rules to decide which rights bind a transferee of a registered estate. Two provisions are central to priority on a registered disposition: the basic rule in s 28 (where no value is given, the transferee takes subject to prior interests) and the special rule in s 29 (a disposition for valuable consideration, when registered, takes free of prior interests unless they are protected on the register or override). Knowledge of an unprotected interest does not save it under s 29; what matters is the register and any overriding status.

Categories of Interests in Registered Land

Registered land law divides interests into four main categories:

1. Registrable dispositions – interests that must be registered to be legal and to bind third parties (e.g., transfers of freehold or leasehold, legal charges, express legal easements).
2. Overriding interests – certain rights that bind a purchaser even if not entered on the register, provided they meet statutory criteria.
3. Protected interests (notices) – interests that are not registrable dispositions or overriding interests but can be protected by entry of a notice on the register.
4. Restrictions – entries in the register that regulate how the registered proprietor can deal with the land, often to protect beneficiaries under a trust.

Registrable Dispositions

Certain transactions must be registered to take effect at law and to bind a purchaser. These include:

• transfers of freehold or leasehold estates
• the grant of a legal lease for more than seven years
• the grant of a legal charge (mortgage)
• the express grant or reservation of a legal easement.

These appear in LRA 2002, s 27(2). For example:

• s 27(2)(a) — transfer of a registered freehold or leasehold estate
• s 27(2)(b)(i) — grant of a legal lease for a term of more than seven years
• s 27(2)(f) — grant of a charge by way of legal mortgage over a registered estate
• s 27(2)(d) — express grant or reservation of a legal easement or profit.

If a registrable disposition is not registered, it will only take effect in equity and may lose priority to later registered interests. Under s 27(1), a registrable disposition “does not operate at law” until registered, so the transferee has an equitable interest until completion of registration. Priority against later dispositions then depends on protection entered and the application of ss 28–29.

Key Term: registrable disposition
A transaction that must be completed by registration to be legal and to bind a purchaser (e.g., transfer of a registered estate, legal charge, express legal easement).

Overriding Interests

Overriding interests are rights that bind a purchaser even though they are not entered on the register. The main types are:

• legal leases granted for seven years or less (Schedule 3, para 1)
• interests of persons in actual occupation (Schedule 3, para 2)
• certain legal easements and profits created by implication or prescription (Schedule 3, para 3).

Key Term: overriding interest
A right that binds a purchaser of registered land even if not entered on the register, provided it falls within a statutory category (e.g., actual occupation, short legal lease).

The scope of these categories is carefully limited to support the mirror principle. For actual occupation, overriding status applies only if the right-holder is in actual occupation at the time of the disposition (and, under Abbey National v Cann, still subsisting at registration) and subject to two exceptions:

• the occupier fails to disclose their right on reasonable inquiry
• the occupation was not obvious on reasonable inspection and the purchaser lacked actual knowledge of the right.

For legal easements, only certain easements override a registered disposition: typically implied or prescriptive legal easements (or those created out of an unregistrable estate), and then only if the purchaser knows of them, they are obvious on reasonably careful inspection, or they have been exercised within the year before the disposition. Express legal easements granted on or after 13 October 2003 must be completed by registration against the servient title and will not be overriding.

Protected Interests: Notices

Interests that are not registrable dispositions or overriding interests can be protected by entry of a notice in the charges register. Examples include:

• equitable easements and profits
• restrictive covenants
• equitable mortgages
• estate contracts (options, rights of pre-emption)
• home rights.

A notice does not guarantee the validity of the interest but ensures that it will bind a purchaser for value if properly registered. Notices are entered either as agreed notices (usually with the proprietor’s consent or with supporting evidence) or unilateral notices (without the proprietor’s consent, subject to the proprietor’s right to seek cancellation). Agreed notices are applied for on AN1 and usually require evidence (e.g., a copy option agreement); unilateral notices are applied for on UN1 and can be cancelled if the beneficiary fails to establish the claim when challenged (LRA 2002, s 36).

The statute also excludes certain interests from protection by notice. Under s 33 LRA 2002, an interest under a trust of land and short legal leases are not the subject of a notice; a beneficiary under a trust of land is properly protected by a restriction (see below), and a short legal lease already overrides under Sch 3, para 1. Local land charges are not noted under the LRA 2002 because they are recorded in a separate register.

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

Restrictions

A restriction is an entry in the proprietorship register that limits how the registered proprietor can deal with the land. Restrictions are commonly used to protect the interests of beneficiaries under a trust and to ensure that overreaching occurs on a sale. Typical forms include Form A (standard wording recording that the legal estate is held by joint proprietors and no disposition by a sole proprietor is to be registered unless authorised by court order) and tailored restrictions requiring, for example, a certificate of compliance or the consent of a named party.

Key Term: restriction
An entry in the proprietorship register that prevents registration of a disposition unless specified conditions are met (e.g., payment to two trustees).

Restrictions are applied for on Form RX1; the wording may be in a prescribed form or approved by the Land Registry. For trusts of land, the function is to prevent registration of a disposition unless overreaching can occur (e.g., purchase money paid to two trustees or a trust corporation), thereby moving the beneficiaries’ interests from the land into the proceeds of sale (LPA 1925, ss 2 and 27).

Priority Rules and Protection of Interests

The LRA 2002 sets out rules for determining which interests bind a purchaser. The key rules are:

• A purchaser for value takes subject to:
  • registered charges
  • interests protected by notice
  • overriding interests.
• Unprotected interests (notices not entered) will be lost against a purchaser for value unless they qualify as overriding interests.
• Overreaching can remove certain equitable interests from the land and transfer them to the sale proceeds if the purchase money is paid to at least two trustees.

Under s 29, a registered disposition for valuable consideration takes free of any prior proprietary interest that is not a registered charge, a protected registrable interest (by notice) or an overriding interest under Schedule 3. In contrast, s 28 (the basic rule) applies where no value is given (e.g., by gift or inheritance) so that the transferee takes subject to all existing interests, whether or not protected. The concept of “value” is wide and covers money or money’s worth.

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

Worked Example 1.1

A is the registered proprietor of a house. B has a beneficial interest under a trust and is in actual occupation. A sells to C, who pays the purchase price to A and a second trustee. Is C bound by B's interest?

Answer:
No. Overreaching has occurred because the purchase money was paid to two trustees. B's interest is transferred to the proceeds of sale and does not bind C.

Worked Example 1.2

D is the registered proprietor of land. E has an equitable easement, protected by a notice in the charges register. D sells to F, a purchaser for value. Is F bound by E's easement?

Answer:
Yes. The notice ensures that E's equitable easement binds F.

Worked Example 1.3

G is the registered proprietor of a flat. H has a beneficial interest under a trust but is not in actual occupation. G sells to I, who pays the purchase price to G alone. Is I bound by H's interest?

Answer:
Yes, if H's interest is not overreached and does not qualify as an overriding interest, I may be bound if H is in actual occupation. If H is not in occupation, I may take free of the interest.

Worked Example 1.4

J has granted K an option to purchase (an estate contract). K enters a unilateral notice. J sells to L, a purchaser for value. L applies to cancel the unilateral notice. K fails to respond to the Registrar’s notice within the prescribed time. Does K’s option bind L?

Answer:
No. A unilateral notice protects priority if maintained. If the beneficiary fails to establish the claim on a cancellation application (LRA 2002, s 36), the notice is cancelled and the unprotected option will be postponed under s 29 on L’s registered disposition for value.

Worked Example 1.5

M purchases registered land. N claims an equitable interest and is living at the property. The conveyancer asked occupiers whether they had any rights; N was present and said nothing. Will N’s interest override?

Answer:
Not if N failed to disclose the right when reasonably expected to do so on inquiry. An otherwise overriding right under Sch 3, para 2 can be defeated where inquiry was made and the occupier did not disclose the right when they reasonably should have.

Worked Example 1.6

O has enjoyed a right of way by prescription across P’s land for over 20 years. The path is visible and used regularly. P sells to Q for value. The easement was never expressly granted or registered. Does the easement bind Q?

Answer:
Likely yes. A legal easement acquired by prescription can have overriding status on a disposition under Sch 3, para 3 where it is obvious on inspection or has been exercised within the preceding year. Because the route is visible and has been used recently, Q will be bound.

Worked Example 1.7

R and S hold property on trust for themselves and T. The proprietorship register contains a restriction requiring that “no disposition by a sole proprietor of the registered estate under which capital money arises is to be registered unless authorised by an order of the court.” R sells alone to U who pays R only. Is U bound by T’s equitable interest?

Answer:
Yes. The Form A restriction warns the Registrar not to register a disposition by a sole proprietor under which capital money arises unless appropriate. U’s purchase from a sole trustee fails to overreach; T’s interest remains on the land and may override if coupled with actual occupation.

Worked Example 1.8

V has the benefit of a restrictive covenant against using land for business. The burden is not noted on the charges register. W purchases for value and starts trading. Can V enforce?

Answer:
Not against W unless the restrictive covenant was protected by a notice. Restrictive covenants (freehold) take effect in equity and must be protected by entry of a notice to bind a purchaser for value. Without a notice, s 29 will postpone V’s covenant against W.

Worked Example 1.9

X purchases a registered estate under a gift from Y’s will. Before the gift, Y granted a right of pre-emption to Z which was not noted and does not override. Does Z’s right bind X?

Answer:
Yes. Section 28 (basic rule) means a transferee not for value (e.g., by gift or under a will) takes subject to prior interests irrespective of their protection, unless overreached or extinguished. Z’s right remains effective against X.

Protecting Third-Party Interests: Practical Steps

To ensure an interest is protected and enforceable against a purchaser, the correct method must be used:

• Register registrable dispositions (e.g., transfers, legal charges, express legal easements). Failure to complete by registration leaves the right equitable and vulnerable under s 29 on later dispositions for value.
• Enter a notice for other interests (e.g., equitable easements, restrictive covenants, estate contracts, equitable mortgages, home rights). Use AN1 (agreed notice) with supporting evidence or UN1 (unilateral notice). A unilateral notice can be cancelled if not established (s 36). Misuse of notices may give rise to damages (s 77).
• Ensure beneficiaries under a trust are protected by a restriction in the proprietorship register. For co-owned land, the Form A restriction is standard. Tailored wording can require a certificate by the conveyancer that overreaching conditions have been met (purchase money to two trustees/trust corporation).
• If relying on actual occupation, ensure the occupation is evident and subsists at the time of disposition (and at registration). Occupation should be obvious on inspection, and the occupier must disclose their interest on reasonable inquiry.

Choosing between a notice and restriction is critical. Interests that affect priority (equitable rights) ordinarily need a notice; interests regulating how dispositions occur (e.g., trust interests) are protected by a restriction because beneficial interests under a trust of land cannot be the subject of a notice (s 33). Short legal leases (7 years or less) do not need a notice because they override (Sch 3, para 1). Express legal easements must be completed by registration against the servient title (s 27(2)(d)) and should also be reflected as a benefit on the dominant title’s property register.

When acting for a purchaser or lender, always:

• obtain up-to-date official copies of the register (property, proprietorship, charges)
• check the charges register for notices of third-party rights and registered charges
• check the proprietorship register for restrictions and deal with compliance (consents, certificates)
• inspect the property and make inquiries about occupation to identify potential overriding interests
• where there is a trust, arrange for payment to two trustees or a trust corporation to secure overreaching.

Exam Warning

If an interest is not protected by registration (notice or restriction) and does not qualify as an overriding interest, it will be lost against a purchaser for value. Do not assume that actual knowledge by the purchaser is enough—statutory protection is required.

Revision Tip

Always check the register for notices and restrictions and make enquiries about occupiers to uncover possible overriding interests.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• The LRA 2002 is based on the mirror, curtain, and insurance principles.
• Registrable dispositions must be registered to be legal and to bind a purchaser.
• Overriding interests bind a purchaser even if not entered on the register, provided statutory criteria are met.
• Protected interests (notices) must be entered on the register to bind a purchaser for value.
• Restrictions regulate dealings with the land and protect beneficiaries under a trust.
• Overreaching removes certain equitable interests from the land if purchase money is paid to two trustees.
• Failure to protect an interest by registration or occupation may result in loss of priority against a purchaser.
• Under s 29, priority depends on the register: a disposition for value takes free of prior interests unless they are registered charges, protected interests by notice, or overriding interests.
• Actual occupation is fact-sensitive: occupation must subsist at disposition (and at registration), must be obvious on inspection or disclosed on inquiry, and is subject to statutory exceptions.
• Express legal easements granted on or after 13 October 2003 require registration against the servient title; implied/prescriptive legal easements may override a disposition if statutory conditions are met.
• Notices come in two forms: agreed (with evidence or consent) and unilateral (subject to cancellation if not established). Misuse can attract damages.
• Interests excluded from notice (e.g., beneficiaries under a trust of land) are properly protected by restrictions.

Key Terms and Concepts

• mirror principle
• curtain principle
• insurance principle
• registrable disposition
• overriding interest
• notice
• restriction
• overreaching