Practice Guide 15 – Overriding interests and their disclosure

Updated: April 2012

Update

This edition of the guide replaces the October 2011 edition. Sections 4.2 and 5.5 have been updated to refer to relevant social housing tenancies, as introduced by the Localism Act 2011.

Scope of this guide

This guide describes the law relating to overriding interests, and how it has changed under the Land Registration Act 2002. This includes what they are, when you have to disclose them and what happens to some of them if they have not been registered within 10 years. The guide is intended principally for use by conveyancers, and references to ‘you’ should be interpreted accordingly. Land Registry staff will also refer to it.

1 Introduction

1.1 Scope and use of this guide

This guide explains Land Registry’s approach to overriding interests which applicants must disclose on registrable dispositions of the registered estate, and on first registration. It gives details of the effect of the Land Registration Act 2002 and the Land Registration Rules 2003 on overriding interests, and sets out the procedures you need to follow in disclosing these interests.

Potential applicants who are not legally qualified and who need further guidance on the disclosure procedure should contact their local Land Registry office or Land Registry Head Office.

1.2 Abbreviations and terms used

In this guide:

‘disclosable overriding interest’ means an overriding interest which has to be disclosed under rr.28 or 57, LRR 2003

‘LRA 1925’ means the Land Registration Act 1925

‘LRA 2002’ means the Land Registration Act 2002

‘LRR 2003’ means the Land Registration Rules 2003

‘overriding interests’ are unregistered interests which override first registration, or registered dispositions as listed in Schedules 1 and 3, LRA 2002. The interests are described in detail in section 5 Overriding interests in more detail¹

‘registered disposition’ means a registrable disposition which has been completed by registration

‘registrable disposition’ means a disposition which is required to be completed by registration under s.27, LRA 2002²

‘relevant social housing tenancy’ means a flexible tenancy within the meaning of s.107A, Housing Act 1985 or an assured tenancy of a dwelling in England granted by a private registered provider of social housing other than a long tenancy or a shared ownership lease (see s.132(1), LRA 2002 as amended by s.157, Localism Act 2011).

References to numbered sections and schedules are to those in LRA 2002 and references to numbered rules are to the LRR 2003, unless otherwise stated.

¹ The LRA 2002 does not use or define the term ‘overriding interest’. But it is used in this guide as a convenient label for all the interests described in Schedules 1 and 3.

² This is the definition of ‘registrable disposition’ contained in s.132, LRA 2002.

2 Overriding interests

2.1 What are overriding interests?

Overriding interests are interests to which a registered title is subject, even though they do not appear in the register. They are binding both in the registered proprietor and on a person who acquires an interest in the property.

They have always been a feature of the registration system, though the term itself was first introduced in the LRA 1925.

2.2 Effect of the LRA 2002 on overriding interests

The LRA 2002 seeks to reduce the number of overriding interests, and to replace as many as possible of them with register entries. This is in keeping with its overall objective of making the register as complete a record of title as possible.

It does this by:

• reducing the scope of some overriding interests

• providing for the eventual abolition of others

• requiring people applying for registration to provide information about unregistered interests, so that they can be noted in the register

• providing that, once an interest has been noted in the register, it loses its overriding status forever, even if the register entry is cancelled.

In addition the LRA 2002 distinguishes, for the first time, between interests that override first registration and those that override subsequent registrable dispositions.

It, therefore, contains two separate lists of interests with overriding status.

Schedule 1 lists those that override first registration³. Schedule 3 lists those that override registered dispositions⁴. Schedule 12 contains important transitional provisions.

³ They do so by virtue of s.11(4) or 12(4).

⁴ They do so by virtue of s.29(2) or 30(2).

Background information on the types of overriding interest mentioned in the LRA 2002 are given in section 5 Overriding interests in more detail. Details of those which must be disclosed by applicants are in section 4 Disclosable overriding interests.

3 Reducing the number of overriding interests

The LRA 2002 contains a number of mechanisms by which overriding interests will be brought on to the register. These are:

• certain interests will lose their overriding status at midnight on 12 October 2013⁵

• a general power for Land Registry (subject to service of notice)⁶ to note overriding interests that come to, or are brought to, our attention⁷. This might include, for example, noting the burden of a legal easement on a registered title, or making a building estate subject to an interest disclosed on an application relating to a single plot

• the duty of applicants to disclose overriding interests affecting the land. See section 4 Disclosable overriding interests.

⁵ S.117.

⁶ R.89.

⁷ S.37.

4 Disclosable overriding interests

4.1 When must you disclose an overriding interest?

You must disclose overriding interests when making an application for first registration or for registration of a registrable disposition of the registered estate.

You must disclose any such interest (unless it is an interest of a kind mentioned in section 4.2 What interests should not be disclosed?) that is within the actual knowledge of the person applying for registration. There is no need to carry out any special investigation, although you might need to explain to your client what interests should be disclosed.

4.2 What interests should not be disclosed?

Do not disclose interests of the kinds mentioned in ss.33 and 90(4), LRA 2002, and in rr.28(2) and 57(2) LRR 2003. These are:

• an interest under a trust of land

• an interest under a settlement under the Settled Land Act 1925

• a lease granted for a term of three years or less, unless it is of a kind that has to be registered

• a Public – Private Partnership (PPP) lease⁸

• an interest capable of being registered under the Commons Registration Act 1965

• an interest in any coal or coal mine

• a local land charge

• a public right

• a lease with less than one year to run

• a restrictive covenant between lessor and lessee so far as relating to the demised premises

• any interest apparent from the deeds and documents accompanying an application for first registration

• a lease granted under the terms of a relevant social housing tenancy (see ss.4(5A) and 132(1), LRA 2002, as amended by s.157(3), Localism Act 2011).

Registrable dispositions are not overriding interests and should not be disclosed.

⁸ PPP Leases are made overriding interests by s.90, LRA 2002. They are leases of parts of the London Transport railway system granted under public-private partnership agreements.

4.3 How to disclose an interest to Land Registry

4.3.1 Dispositions of registered estates

Disclosable overriding interests are referred to in panel 11 of form AP1. You should complete this panel on any application to register a registrable disposition, where there are overriding interests to disclose.

If there are interests to disclose, you must lodge an additional form, form DI⁹.

⁹ Rr.28 and 57.

You must also lodge documentary evidence¹⁰ of the interest where such evidence exists. A certified copy of the document will usually be sufficient.

¹⁰ R.57(4).

4.3.2 First registrations

You should complete panel 11 of form FR1, where there are overriding interests to disclose. However, you only need to disclose interests on form DI if they are not apparent from an examination of the title deeds and documents¹¹.

¹¹ R.28(2)(b).

For example, you will not need to complete a form DI for a lease having overriding status if a certified copy of the lease is enclosed with the title deeds.

However, you will need to disclose on form DI interests for which no documentary evidence exists, such as a right acquired by prescription or a customary right.

5 Overriding interests in more detail

5.1 Short leases

Leases of land¹² that do not have to be registered are overriding interests¹³. This means most, but not all, leases granted for a term of seven years or less. The registration requirements are slightly different for leases out of registered¹⁴ and unregistered¹⁵ titles, see Practice Guide 25 – Leases – When to register for more details.

¹² As opposed to leases of rentcharges, profits, franchises, manors or easements.

¹³ This is the effect of Schedule 1, paragraph 1 and Schedule 3, paragraph 1. See also s.90(5).

¹⁴ S.27(2)(b).

¹⁵ S.4(1)(d), (e) and (f).

Under the LRA 1925¹⁶, any lease granted for a term of 21 years or less was an overriding interest. Any such lease existing on 13 October 2003 will continue to have overriding status, until it is noted in the register¹⁷.

¹⁶ S.70(1)(k) of the LRA 1925.

¹⁷ Schedule 12, paragraph 12.

5.2 Interests of persons in actual occupation

This item is more narrowly defined than its equivalent in the LRA 1925¹⁸, and there are different provisions for first registrations and for dispositions of registered land¹⁹.

• The basic provision protects "an interest belonging to a person in actual occupation, so far as relating to land of which he is in actual occupation".

• Note that, if a person only occupies part of the land, the interest only has overriding status for that part. This is a new provision.

• In the case of dispositions only, an interest is not protected if inquiry was made of the person claiming it before the disposition took place, and they failed to disclose it when they could reasonably have been expected to do so²⁰. Unlike the present law, this exception does not apply on first registration.

• In the case of dispositions only, an interest is not protected if it is not obvious, on a reasonably careful inspection of the land, that the person claiming it is occupying the land. This is a new provision. It does not apply on first registration, and it does not apply if the person taking the disposition actually knows about the claimant’s interest²¹.

• Interests belonging to persons receiving rents and profits, but not actually occupying the land, are no longer protected. There is a transitional provision which gives limited protection against dispositions, but not against first registration, to any such interests that exist when LRA 2002 comes into force²².

¹⁸ S.70(1)(g) of the LRA 1925.

¹⁹ Schedule 1, paragraph 2 and Schedule 3, paragraph 2 respectively.

²⁰ Schedule 3, paragraph 2(b).

²¹ Schedule 3, paragraph 2(c).

²² Schedule 12, paragraph 8.

Certain kinds of interest can never be overriding interests under this heading. They are:

• an interest under a settlement under the Settled Land Act 1925²³. However, an interest under a trust of land can have overriding status, if it otherwise qualifies

• a pending land action, a writ or order affecting land issued or made by a court for the purpose of enforcing a judgment or recognisance, an order appointing a receiver or sequestrator, or a deed of arrangement²⁴

• a spouse or civil partner’s right of occupation under the Family Law Act 1996²⁵ as amended by the Civil Partnership Act 2004

• in the case of dispositions only, a lease granted to take effect in possession more than three months ahead, and which has not taken effect in possession at the time of the disposition. This reflects the requirement to register such a lease²⁶

• rights of tenants arising from a desire notice under the Leasehold Reform Act 1967²⁷

• in the case of dispositions only, exercise of the Preserved Right to Buy²⁸

• rights under an access order made under the Access to Neighbouring Land Act 199229

• rights of tenants under the Leasehold Reform, Housing and Urban Development Act 1992³⁰

• rights arising from a request to a landlord for the grant of an overriding lease under the Landlord & Tenant (Covenants) Act 1995³¹.

²³ Schedule 1, paragraph 2 and Schedule 3, paragraph 2(a).

²⁴ S.87(3).

²⁵ Family Law Act 1996, s 31(10), as amended by Schedule 11, paragraph 34 of the Act.

²⁶ Schedule 3, paragraph 2(d).

²⁷ Schedule 11, paragraph 8(2)(a).

²⁸ Schedule 11, paragraph 18(10).

²⁹ Schedule 11, paragraph 26(4).

³⁰ Schedule 11, paragraph 30(3).

³¹ Schedule 11, paragraph 33(4).

5.3 Easements and profits a prendre

On first registration, any legal easement or profit a prendre is an overriding interest³².

On registrable dispositions, the position for legal easements and profits a prendre was the same as for first registrations until 12 October 2006³³. Since 13 October 2006, there have been some exceptions. An unregistered legal easement or profit will now only override registered dispositions if it is:

• obvious on a reasonably careful inspection of the land

• known to the person to whom the disposition is made

• exercised within the year before the disposition, or

• (if a profit) registered under the Commons Registration Act 1965³⁴.

³² Schedule 1, paragraph 3.

³³ This is the combined effect of Schedule 3, paragraph 3 and Schedule 12, paragraph 10.

³⁴ Schedule 3, paragraph 3.

A transitional provision³⁵ relates to an easement or profit which was an overriding interest in relation to a registered estate immediately before the LRA 2002 came into force. If the easement or profit concerned would not otherwise fall within paragraph 3 of Schedule 3, that paragraph will take effect as if the interest concerned were not excluded from it.

³⁵ Schedule 12, paragraph 9.

Under the LRA 1925, it was possible for an equitable easement or profit to be an overriding interest if it was openly exercised and enjoyed³⁶. This is no longer the case under the LRA 2002. One effect of this transitional provision is, therefore, to preserve the overriding status of existing equitable easements and profits of this kind. But it can only affect land which is already registered; only legal easements or profits can now override first registration.

³⁶ Celsteel Limited v Alton House Holdings Limited [1985] 1 WLR 204; Thatcher v Douglas (1996) 146 NLJ 282.

5.4 Chancel repair liability

Chancel repair liability is the liability of the owner of land to pay for the repair of the chancel of a parish church. In England, the parochial church council, and, in Wales, the Representative Body of the Church in Wales, has the right to collect the money. A right in respect of the repair of a chancel is an overriding interest³⁷.

There may be liability where land was formerly attached to a rectory. Such former rectorial land is not necessarily close to a church building. Owners affected include private persons, ecclesiastical corporations, universities and colleges and other corporate bodies. These owners are known as lay-rectors.

There have been arguments that chancel repair liability is not an interest in land that can be protected by notice. If chancel repair liability is not such an interest then it is difficult to see how it could be an overriding interest or the subject of a notice. However, Land Registry operates currently on the basis that it does constitute such an interest.

A number of companies offer chancel repair liability searches stating whether the land is within a parish that continues to have a potential chancel repair liability. Land Registry takes the view that a chancel repair liability search in these terms does not give rise to a disclosable overriding interest. If such a search report is listed in Form DI, it is not our practice to enter a notice in respect of chancel repair liability. These searches must, however, be distinguished from, in particular, a search of the records of the Tithe Redemption Commission in the National Archives; liability revealed by such a search would appear to be a disclosable overriding interest and so could well be the subject of a notice if such a report were listed in Form DI.

³⁷ Schedule 1, paragraph 16, and Schedule 3, paragraph 16; both inserted by Land Registration Act 2002 (Transitional Provisions) (No 2) Order 2003.

5.5 Other interests

• Relevant social housing tenancies.

• A customary right.

• A public right.

• A local land charge.

• An interest in any coal or coal mine, the rights attached to any such interest, and the rights of any person under ss. 38, 49 or 51, Coal Industry Act 1994.

• In the case of land to which title was registered before 1898, rights to mines and minerals (and incidental rights) created before 1898.

• In the case of land to which title was registered before 1898 and 1925 inclusive, rights to mines and minerals (and incidental rights) created before the date of registration of the title.

• PPP leases³⁸.

• Chancel repair liability.

³⁸ See footnote 8.

5.6 Interests which lose automatic protection in 2013³⁹

• A franchise.

• A manorial right.

• A right to rent which was reserved to the Crown on the granting of any freehold estate (whether or not the right is still vested in the Crown).

• A non-statutory right in respect of an embankment or sea or river wall.

• A right to payment in lieu of tithe. The only surviving such rights are thought to be certain payments usually called corn rents.

These interests will lose their automatic protection at midnight on 12 October 2013 unless they are entered in the register. For further information on how these interests can be protected in the register other than on disclosure; see Practice Guide 66 – Overriding interests losing automatic protection in 2013.

³⁹ Schedules 1 and 3, paragraphs 10 to 14 and 16.

5.7 Adverse possession

Rights acquired, before the LRA 2002 came into force, under the Limitation Act 1980 or under s.75 LRA 1925, had overriding status for three years⁴⁰. From 13 October 2006, they will only be protected if the claimant is in actual occupation of the land⁴¹, or, on first registration, if the proprietor has notice of them⁴². So anyone who has acquired title but is only in receipt of rents or profits, or who has acquired title and then been dispossessed, will need to apply for registration.

⁴⁰ Schedule 12, paragraphs 7 and 11.

⁴¹ Under paragraph 2 of either Schedule 1 or Schedule 3, and subject to the exceptions in those paragraphs. The transitional provision in Schedule 12, paragraph 8, which applies only to dispositions, may sometimes be relevant as well.

⁴² Ss.11(4)(c) and 12(4)(d).

6 Enquiries and suggestions

If you have a particular concern which is not covered by this guide, please contact Land Registry in advance of the transaction – see Contact details. If the transaction is particularly complex, it may be better if you make your enquiry in writing at the Land Registry office which will process your application.

If you have any comments or suggestions about our guides, please send them to:

Central Operations Group
Land Registry
Trafalgar House
1 Bedford Park
Croydon
CR0 2AQ

(DX 8888 Croydon 3)

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