Registration of title and protection of interests - Powers of a registered owner and registrable dispositions

Learning Outcomes

This article examines the extent of the powers held by the owner of a registered estate under the Land Registration Act 2002 (LRA 2002). It also explains the concept of registrable dispositions and their effect on the title and priority of interests. For the SQE1 assessments, you will need to understand the scope of a registered proprietor's powers, the types of transactions that constitute registrable dispositions, and the consequences of registration (or lack thereof) for the creation and protection of legal estates and interests. This knowledge will enable you to advise clients and apply the relevant rules to SQE1 scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the practical implications of the powers conferred upon registered proprietors and the process and effect of registrable dispositions. It is essential to appreciate how these transactions interact with the principles of registered land, including the concept of priority and the protection of third-party interests.

As you work through this article, remember to pay particular attention in your revision to:

  • The scope of a registered proprietor's powers under the LRA 2002.
  • The types of dispositions that must be completed by registration to operate at law.
  • The legal effect of registration, including the principle of conclusiveness.
  • The consequences of failing to register a registrable disposition.
  • The basic rules of priority concerning registered dispositions.

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. Under the LRA 2002, which of the following dispositions MUST be completed by registration to operate at law?
    1. Grant of a lease for 5 years.
    2. Transfer of a registered freehold estate.
    3. Creation of an equitable mortgage.
    4. Grant of an implied legal easement.
  2. A purchases a registered freehold property from B for £300,000. A completes the purchase but fails to register the transfer for three months. During this period, B fraudulently grants a legal charge over the same property to C Bank, which registers its charge immediately. Which statement best describes A's position?
    1. A automatically obtains legal title upon completion of the purchase.
    2. A obtains only an equitable interest until the transfer is registered.
    3. C Bank's registered charge will not bind A because A completed the purchase first.
    4. A's failure to register means B remains the legal owner indefinitely.
  3. What is the primary effect of section 58 LRA 2002 regarding the register?
    1. It guarantees compensation for any errors.
    2. It confirms that the register is conclusive evidence of title.
    3. It lists all overriding interests.
    4. It specifies the time limit for registration.

Introduction

The Land Registration Act 2002 (LRA 2002) governs the system of registered land in England and Wales. A fundamental aspect of this system is the definition and scope of the powers held by the person registered as the proprietor of an estate (the registered proprietor). The Act also specifies certain dealings with registered land, known as registrable dispositions, which must be completed by registration to take full legal effect. Understanding these concepts is essential for advising on property transactions and assessing the priority of competing interests.

Powers of a Registered Proprietor

Section 23 LRA 2002 confers broad powers on the registered proprietor of an estate, allowing them to deal with the land as if they were the absolute owner. These powers are often referred to as 'owner's powers'.

Key Term: Owner's Powers
The powers vested in the registered proprietor of an estate or charge, enabling them to make dispositions (such as sales, leases, or mortgages) as if they held full ownership rights, subject to any limitations imposed by the LRA 2002 or entries on the register.

These powers include the ability to sell, lease, mortgage (charge), and grant easements over the registered estate. This facilitates dealings with registered land by providing clarity and authority to the registered proprietor.

However, these powers are not entirely unlimited. Section 26 LRA 2002 confirms that the registered proprietor's right to exercise owner's powers is subject to any limitations reflected on the register (such as restrictions) or imposed by statute (e.g., relating to trusts or bankruptcy). Furthermore, any disposition made by the registered proprietor is subject to the priority rules established by the LRA 2002, meaning existing protected interests or overriding interests may bind the proprietor or subsequent purchasers.

Worked Example 1.1

Fatima is the registered proprietor of a freehold property. She grants her neighbour, Ben, an equitable easement to use a path across her garden, but Ben fails to protect it by entering a notice on the register. Fatima then sells the property to Chen, who pays valuable consideration and registers the transfer. Chen was unaware of the informal arrangement between Fatima and Ben. Is Chen bound by Ben's equitable easement?

Answer:
No. Fatima, as registered proprietor, had the power to sell the property (s 23 LRA 2002). Chen, as a purchaser for valuable consideration who completed the disposition by registration, takes the property free of Ben’s unprotected equitable easement under the priority rules in s 29 LRA 2002. Ben's interest was not protected by registration and, assuming it does not qualify as an overriding interest, loses its priority.

Exam Warning

Do not assume that because someone is registered as proprietor, they can override all existing third-party rights. Their powers are subject to the LRA 2002, including the rules on priority (s 29) and the existence of overriding interests (Schedule 3). Always check how an interest is protected.

Registrable Dispositions

Section 27 LRA 2002 lists the dispositions of registered land that must be completed by registration to operate at law. These are critical transactions that alter the legal status of the registered title.

Key Term: Registrable Disposition
A transaction relating to a registered estate or charge which is required by s 27 LRA 2002 to be completed by registration to operate at law.

  • The most common registrable dispositions include:
  • A transfer of a registered freehold or leasehold estate.
  • The grant of a lease for a term of more than seven years out of a registered estate.
  • The express grant or reservation of a legal easement or profit à prendre out of a registered estate.
  • The grant of a legal charge (mortgage) over a registered estate.

Legal Effect of Registration

The primary legal effect of completing a registrable disposition by registration is twofold. Firstly, under s 27(1) LRA 2002, the disposition only takes effect at law when it is registered. Until registration, it generally takes effect only in equity (assuming it satisfies the requirements for an equitable interest, such as being contained in a valid contract).

Secondly, section 58 LRA 2002 provides that registration vests the legal estate in the registered proprietor. This underpins the principle of 'title by registration' and the conclusiveness of the register.

Key Term: Conclusiveness
The principle, established by s 58 LRA 2002, that the register is deemed to provide conclusive evidence of the title held by the registered proprietor, even if there was a flaw in the transaction that led to the registration.

Consequences of Non-Registration

If a disposition listed under s 27 LRA 2002 is not completed by registration, it does not operate at law. For example, if a person is granted a legal lease for 10 years by deed but fails to register it, they will only acquire an equitable lease (assuming the deed constitutes a valid contract satisfying s 2 LP(MP)A 1989).

Worked Example 1.2

David grants his neighbour, Sarah, a legal easement by deed allowing her access over his registered land. Sarah pays David £1,000 for the easement. However, Sarah neglects to register the easement against David's title. David subsequently sells his land to Peter, who registers the transfer. Is Peter bound by Sarah's easement?

Answer:
The express grant of a legal easement is a registrable disposition under s 27(2)(d) LRA 2002. As Sarah failed to complete the grant by registration, the easement does not operate at law (s 27(1)). It may exist as an equitable easement if the deed constitutes a valid contract. However, as it was not protected by registration (e.g., by a notice) before Peter registered his transfer for value, Peter takes free of the easement under s 29 LRA 2002, unless it qualifies as an overriding interest under Schedule 3, para 3 (which requires the easement to be legal, or meet other conditions such as being obvious on inspection or known to Peter).

Impact on Priority

Registration is essential for establishing priority between competing interests. Section 29 LRA 2002 states that a registered disposition made for valuable consideration takes priority over any pre-existing interests affecting the estate, unless those interests are either protected by an entry on the register (e.g., a notice or restriction) or fall within the category of overriding interests defined in Schedule 3 LRA 2002.

Key Term: Valuable Consideration
For the purposes of s 29 LRA 2002 priority rules, this means consideration in money or money's worth, but excludes a nominal consideration in money (s 132(1) LRA 2002). Marriage consideration is also excluded.

This means that a purchaser for valuable consideration who registers their disposition will generally defeat unprotected third-party rights, reinforcing the importance of registration for those holding such interests.

Revision Tip

Focus on the relationship between ss 27, 29, and 58 LRA 2002. Section 27 dictates what must be registered for legal effect, s 58 confirms the conclusiveness of that registration, and s 29 determines the priority consequences against unprotected interests when a registered disposition is made for value.

Key Point Checklist

This article has covered the following key knowledge points:

  • Registered proprietors possess wide powers to deal with their land (owner's powers) under s 23 LRA 2002, subject to statutory limits and register entries.
  • Certain transactions involving registered land are 'registrable dispositions' under s 27 LRA 2002 (e.g., transfers, leases > 7 years, legal charges, express legal easements).
  • A registrable disposition must be completed by registration to take effect at law (s 27(1) LRA 2002); otherwise, it generally operates only in equity.
  • Registration vests the legal estate and provides conclusive evidence of title (s 58 LRA 2002).
  • A registered disposition for valuable consideration generally takes priority over unprotected, pre-existing interests, unless they are overriding interests (s 29 LRA 2002).

Key Terms and Concepts

  • Owner's Powers
  • Registrable Disposition
  • Conclusiveness
  • Valuable Consideration
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