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Priority in Registered Land

 

The underlying principal of a system of land registration is that a person seeking to acquire an interest in land need only check the register to determine if the land is subject to any adverse interests. A person possessing an interest in land needs to take action to protect that interest by entering it on the register. Generally a purchaser will take free of any interests not on the register, however this is not absolute. Determining priority of competing interests in registered land will vary depending on the type of interest involved.
 
 
S.28 Land Registration Act 2002 sets out the basic rule that priority between interests in registered land are determined by the order of creation. An earlier interest will prima facie be given priority over a later. However, this basic rule is subject to s.29 and s.30 Land Registration Act 2002 and thus only comes into play where these do not apply.
 
By virtue of s.29 Land Registration Act 2002 a registered disposition for valuable consideration will take priority over unprotected interests. Protected interests include a registered charge, or those subject to a notice on the register, overriding interests or those excepted from the effect of registration (s.29(2)(a) Land Registration Act 2002).
 
 
 
 
Requirements for a registered disposition to take priority
 
For s.29 to become effective there must be:
 
1. Valuable consideration
2. A registrable disposition
3. Registration
 
1. Valuable consideration
 
The disposition must be for valuable consideration in order to take priority. This excludes for example gifts and succession on death. S. 132(1) Land Registration Act 2002 excludes marriage consideration and nominal consideration from valuable consideration.
 
 
£1 was held to be nominal consideration:
 
 
Peffer v Rigg [1977] 1 WLR 285    Case summary
 
Payment of £500 for a farm worth £40,000 was not considered nominal:
 
 
 
 
 
2. Registrable disposition
 
 
The disposition must be registrable. Registrable dispositions are set out in s.27 Land Registration  Act 2002. This excludes equitable mortgages. There are special provisions for leases under s.29(4). A forged transfer does not qualify as a disposition:
 
Malory Enterprises Ltd v Cheshire Homes  [2002] EWCA Civ 151
 
 
 
 
3. Registration
 
Priority is only given once the disposition has been registered. The transaction must be completed using the required formality (s.25 Land Registration Act 2002) prior to registration.
 
 
Notice of unprotected interests
 
Notice is generally considered irrelevant in relation to unprotected interests, however, obiter comments in Peffer v Rigg [1977] 1 WLR 285 suggested a requirement of good faith could be imported to the Land Registration Act 1925. This was never followed and was criticised for undermining the philosophy of registration and such an interpretation is not possible under the Land Registration Act 2002.   
 
 
 
Equitable interests behind a trust
 
In many instances the question of priority will not arise in relation to equitable interests behind a trust since overreaching will operate to transfer the interest to the proceeds of sale. It is only where the capital moneys are paid to a single trustee that the issue of priority will arise. Where this is the case the beneficial interest may rank as an overriding interest if the occupational requirements are satisfied.
 
 
 
 

Priority in Registered Land