Registered land: priorities and overriding interests

Priority questions in registered land ask a deceptively simple thing: when land is sold or mortgaged, does an existing third-party interest bind the buyer or lender? The answer is found in the Land Registration Act 2002 (LRA 2002).

The starting rule

Under section 29, a registered disposition of a registered estate for valuable consideration takes priority over any interest affecting the estate immediately before the disposition, unless the interest is protected. In broad terms an interest is protected if it is:

• entered on the register (typically by notice, or a restriction affecting how the disposition is dealt with), or
• an interest that overrides a registered disposition under Schedule 3.

Registered dispositions must be completed by registration to take effect at law (section 27), so the sequence of events matters.

Overriding interests: occupiers

Paragraph 2 of Schedule 3 protects the interest of a person in actual occupation of the land, provided the interest belongs to them. It does not apply to an interest in land of which the person is not in actual occupation at the time of the disposition. Nor does it apply in the circumstances set out in the paragraph, including where:

• the person's occupation would not have been obvious on a reasonably careful inspection of the land and the purchaser did not have actual knowledge of the interest, or
• the person was asked about their rights before the disposition and failed to disclose them when they could reasonably have been expected to.

The concept pre-dates the 2002 Act. Williams & Glyn's Bank Ltd v Boland [1981] AC 487 held that a beneficial co-owner in actual occupation could bind a lender; later cases refine what counts as occupation. In Link Lending Ltd v Bustard [2010] EWCA Civ 424 a person who was temporarily absent for medical reasons was held to remain in actual occupation, because the question depends on the degree of permanence and continuity of presence and the intention to return. Chaudhary v Yavuz [2011] EWCA Civ 1314 shows that the claimant must be in actual occupation of the land over which the right is claimed, not merely nearby.

Other Schedule 3 categories

Schedule 3 also preserves certain short leases and some legal easements and profits. Check the current wording of each paragraph, because some categories have conditions attached.

Exam approach

1. Identify the registered disposition and whether it was for valuable consideration.
2. List the third-party interests, and ask for each: is it entered on the register?
3. If not, does it fall within Schedule 3? For paragraph 2, ask: whose interest is it, were they in actual occupation at the date of disposition, and do any of the exceptions apply?
4. Conclude who takes priority.

Draw a timeline of the facts. Questions regularly turn on a date, such as when the occupier moved in, or when a notice was entered.

General educational information only. It is not legal advice, it does not predict any exam result, and UK SQE Course is not affiliated with or endorsed by the Solicitors Regulation Authority. Check the SRA website for current exam information.