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Overriding Interests in Registered Land



S.29(2)(a)(ii) Land Registration Act 2002 gives priority to overriding interests even though they are not protected on the register. The categories of overriding interests are set out in Sch 3 of the Act which replaced the overriding interests which existed under s.70 Land Registration Act 1925. Overriding interest include leases under 7 years, legal easements and profits a prendres, public rights of way, local land charges, mines and minerals, franchises, manorial rights, a right to rent reserved to the Crown, non statutory rights in respect of an embankment or sea or river wall, right to payment in lieu of a tithe, a right in respect to the repair of a church. In addition, under Para 2 Sch 3, any interest belonging to a person in actual occupation.
Overriding interests under para 2 of Sch 3
Para 2 Sch 3 replaced s.70(1)(g) of the Land Registration Act 1925. S.70 (1)(g) was subject to much litigation which remains relevant when considering Para 2. To enjoy overriding status there must be an interest in land, the interest must not be overreached, there must be actual occupation at the relevant time.
Interest in land
To have overriding status, the interest must be a proprietary interest:
Personal rights such as a licence do not confer overriding status
Strand Securities v Caswell [1965] Ch 958      Case summary
Not overreached
Overreaching operates to transfer the rights from the land to the proceeds of sale. There is therefore no longer any interest in land capable of being protected by actual occupation. This position was stated in:
Overriding interests will therefore be highly relevant where there is a sole legal proprietor so that capital moneys are not paid to two trustees:  
HSBC Bank v Dyche [2009] EWHC 2954  Case summary
Actual occupation
Under Para 2 of Sch 3 an interest may become overriding in two situations:
1. Where the person claiming the interest is in actual occupation and that occupation would be obvious on a reasonable inspection or
2. Where the person claiming the interest is in actual occupation and the person to whom the disposition is made has actual knowledge of the interest
In both situations actual occupation is required. There is no statutory definition of the term actual occupation. Case law concerning actual occupation under s.70(1)(g) Land Registration Act 1925 can be used to help determine the meaning, however, LRA 2002 introduced a new feature of obvious occupation.
Actual occupation  is an issue of fact to be determined by circumstances of individual cases:
Actual occupation requires some degree of permanence and continuity:
The degree of physical presence required will depend on the nature of the land:
Epps v Esso Petroleum [1973] 1 WLR 1071  Case summary
Obiter statements suggest that occupation by a representative may be sufficient:
Strand Securities v Caswell [1965] Ch 958      Case summary
There is no requirement that the occupation must be inconsistent with the title of the vendor (Wife as a shadow of husband's occupation) see:
Bird v Syme- Thomson [1991] 1 WLR 440   Case summary
Hodgson v Marks [1971] Ch 892     Case summary
Caunce v Caunce [1969] 1 WLR 286
Although the shadow theory may be relevant with regards children:
Hypo-Mortgage Services v Robinson [1997] 2 FLR 71
Temporary lapses in occupation
A person receiving long term compulsory residential medical care may still be regarded as in actual occupation:
Link Lending v Bustard [2010] EWCA Civ 424
Shorter stays in hospital may also be so regarded:
Chhokar v Chhokar [1984] FLR 313
Whilst occupation of part of the land was sufficient under s.70(1)(g):
Wallcite v Ferishurst [1999] Ch 355
This is no longer possible under the wording of Para 2 Sch 3
Relevant time of occupation
Abbey National Building Society v Cann [1991] 1 AC 56 established that the relevant time for actual occupation under s.70(1)(g) was the date of completion of the transaction rather than the date of registration thereby avoiding the potential problem of later occupation occurring during the 'registration gap' which the purchaser had no way of protecting themselves. However, the wording of Sch 3 para 2 has cast doubt on whether this is still the position:
Thompson v Foy [2009] EWHC 1076
Obvious occupation
Thomas v Clydesdale Bank [2010] EWHC 2755
Failure to disclose rights
Hodgson v Marks [1971] Ch 892    Case summary
Winkworth v Edward Baron Developments [1986] 1 WLR 1512
Actual knowledge:
Chhokar v Chhokar [1984] FLR 313


Overriding interests in registered land