Following are the most common third-party rights on a registered land.
1. Registered Charges
2. Unregistered Interests that Override a Registered Disposition
3. Interests that must be protected by an Entry in the Register
1. Registered Charges
The interest of the lender is most commonly protected by making a note of it in the charges register of the mortgaged land. In instances, where it is found that the land is mortgaged more than once, priority will be given to the mortgage that was registered first.
2. Unregistered Interests that Override a Registered Disposition:
According to the Land Registration Act 1925, there existed several rights that are binding on the proprietor and override the interests that are registered in the register. Such rights are called ‘overriding interests’ and are binding even though they do not appear on the register, and irrespective of the fact that the proprietor did not have notice of them. This term is not used in the amended LRA Act of 2002, but it is still widely used in practice. The LRA 2002 introduced sweeping changes to the manner in which such interests are held. According to the changes, the LRA makes a distinction between the unregistered interests that will override a first registration and those that override the final settlement of land already registered. Each of these is considered below in detail:
-
Unregistered interests that override a first registration:
There are 15 different interests that can override a first registration. The most common of these include, leases for a period of seven years or less, interests that belong to a person who has actually occupied the land, a legal easement, and a local land charge. According to Sch 1 of the LRA 2002, the fact that whether the interest is binding on the proprietor or not, can be determined only by the rules related to the purchase of that unregistered land. The first registration should also make note of this position.
-
Unregistered interests that override an already registered disposition:
Sch 3 of the LRA 2002 discusses this aspect. Here again, there are 15 different types of interests, but the most common among these are; legal leases for seven years or less, interests of a person who has actually occupied the land, certain legal easements and profits, and local land charges. Of the four, the second interest (interests of people who have actually occupied the land) has the most case laws that are valid even after the 2002 amendment. As of October 2003, rights of a person who has actually occupied the property will override except when;
There is a settlement under the Settlement Land Act,
The interest is of a person on whom enquiry was made prior to the disposition, but he failed to disclose his right even when there could be a reasonable expectation to do so,
The interest is of a person whose occupation could not have been obviously understood even after a reasonable inspection of the land during disposition and the person to whom the disposition was made had no knowledge of the interest at the time of the disposition, and
The interest is a lease which is due to take effect three months after the date of the grant of lease and which was not effected during the disposition.
But, just because a person is in occupation of the land does not mean that the person can claim an interest in the title. In order to successfully do so, there should be a proprietary right of the person. If this is so, then such proprietary interest will have an overriding effect.
This is commonly observed in properties that are held under a trust, for instance when a partner/cohabitee/spouse holds the title in trust for himself and his partner. Ideally, the partner/cohabite/spouse’s partner should have been protected by way of a restriction, but if this was not done, his or her rights shall have an overriding interest if the partner is in occupation of the property.
Although the law protects the rights of the occupier, it should be noted that such an interest should have been ideally protected by a restriction. Thus, it is a fall-back option. An overriding interest in a trust can always be overreached by a disposition by a minimum of two trustees. Also, rights under the FLA 1996 can be overridden.
Easements and Profits
Before the amendment of 2002, all legal easements and a few equitable easements could be overridden under the Land Registration Act 1925. But after the amendment, it is made clear that equitable easements and easements that are expressly granted or granted on or after October 13th 2003 shall not be overridden. Easements or profits that are created impliedly or by long use can be overridden unless:
- The easement was not with the knowledge of the person to whom the disposition was made,
- The easement is not obvious even on a reasonably careful examination, unless it has been applied within 12 months of the day of disposition.
But, it is understood that there always exist transitional provisions. Thus, any easement or profit with an overriding interest immediately before 13th October, 2003 shall retain its status.
Ensuring that Unregistered Interests Are Registered:
When making a new application for registration or disposition, the applicant must, under the provisions of the Land Registration Act, 2003 provide details about any interests that would possibly override the disposition. Such an interest will cease to override on entry, although it shall remain binding because of the registration.
3. Interests that must be protected by an Entry in the Register
Any interest on a registered estate must be protected, so as to bind successors to the estate. Prior to the 2002 amendment, such interests were called ‘minor interests’ and were protected by entries in the register. There are four methods through which minor interest is protected; viz. Cautions, Inhibitions, Restrictions, and Notices. The first two are abolished under the 2002 LRA amendment. But, this applies only to future registrations and is not applicable to those that already exist. A restriction is applicable, only if it prevents a disposition from being registered without confirming the conditions that are laid down in the restriction. As of now, Notice is the only appropriate method of protecting interests that are intended to be binding on future owners of the estate. Notice again is split into two types.
It is possible to recognise the interest that need to be protected by a process of elimination. It is to be determined if the interest is a registered charge, and if it is not, would it come within the list of overriding interests that bind even though there is no entry on the register. If this is not the case, then the entry should be protected by an entry in the register. Coming back to the different types of register, let us look at each of them in detail:
Cautions:
An entry of interest in the property can be made in the register only with the permission of the registered proprietor. But, sometimes such a proprietor may dispute the claim and refuse to give consent. In such an instance, the applicant can be allowed to issue a ‘Caution’, instead of making an entry in the proprietorship register. But, such a caution is only temporary and the owner of the interest will have to establish his rights within a sufficient period of time. The registered proprietor can also make an application to ‘warn off’ the Caution. Thus, the registrar would warn the owner of the interest that he would need to justify his claim or the caution shall be removed. If the claim is justified, the caution is then protected permanently by an entry in the register.
As said earlier, a Caution is no longer in practice after 2003, but the ones already entered remain ‘until warned off’.
Inhibitions
These were used only under certain circumstances like a court injunction or insolvency of the registered proprietor to prevent a disposition. Thus, when a proprietor files for insolvency, an injunction is brought forward to prevent a disposition that is in breach of the insolvency laws. As with the case of cautions, no new injunctions can be registered, but the ones that exist shall remain.
Notices
This is the most common method of protecting easements and interests. In fact, prior to the 2002 amendment, most interests were protected only with a notice, and with the permission of the registered proprietor (caution was used only when the proprietor denied the interest). It appears in the charges register and is of two types; viz. agreed and unilateral.
While agreed notices need the consent of the proprietor, unilateral notices do not and are a replacement for Caution. However, some interests like a spouse or partner’s home rights can be entered as an agreed notice, even though the proprietor has not consented to this. As for unilateral notices, the registrar is required to inform the registered proprietor. In fact, the same procedure that was followed under the LRA 1925 shall be followed, but the terminology changes. Thus, as per the Registry Practice Guide 19, a ‘cancellation’ (instead of warn off) of the notice is made when the registered proprietor makes an application to do so.
On receipt of the application for cancellation, officials at the Land Registry office shall notify the owner of the interest that an application has been made and he has 15 business days to prove his claim. The registry has to then ascertain if the claims are valid, and if found so; make an entry in the register. However, the details of the entry do not change unless the owner of the interest has made an application to do so. And if the beneficiary of the interest does not respond, the unilateral notice is cancelled.
And if the owner of the interest requests to withdraw the notice, he can do so with an application. His notice shall now be ‘withdrawn’ (the proper terminology used).
Restriction on the Proprietorship Register
Whenever an entry of restriction is made in the register, it should be complied with, or else the disposition shall not be registered. Common examples of such restrictions include instances where;
- A property is held under a trust of land,
- A strict settlement,
- The proprietor is a limited company,
- The proprietor is a charity organization held under the Charities Act 1993,
Or any other situation where a property is co-owned as tenants in common. When such a situation occurs, the register makes a note that no disposition where Capital money is raised shall be made by a sole proprietor unless authorised by the court. Restrictions under LRA 2002 play the same role as Inhibitions under LRA 1925.
Photo courtesy: seiser+seiser
