Keagan Van Wijk
Alpha wants to buy 6 Plough Lane, Uxbridge, a 3-bedroomed house with a separate flat in the basement. Title to the freehold of the whole property is registered in Barney’s sole name. Talia, Barney’s partner, owns a beneficial interest in 6 Plough Lane. A year ago, Barney and Talia fell out with each other. Since then, Talia has been dividing her time between living with her mother and living in the separate basement flat.
In the back garden of 6 Plough Lane is a cobbled path. At one end of the path there is a gate opening into the garden of the neighbouring house, 8 Plough Lane, owned by Habib. The other end of the path leads to the high street. Habib has a right of way (easement) over the path.
a. Advise Alpha in relation to Talia’s beneficial interest in 6 Plough Lane and the consequences this may have on her purchase of the property. (50%)
b. Advise Alpha whether she is bound by Habib’s right of way (easement) over the path in the back garden of 6 Plough Lane. (20%)
Title to 6 Plough Lane (the Home) is registered, so Talia’s beneficial interest in the Home may amount to an unregistered interest which overrides a registered disposition (overriding interest) and could be binding on Alpha after the purchase of the Home.
Schedule 3 Paragraph 2 of the Land Registration Act 2002 (LRA) sets out that a person may have an overriding interest if said person had a proprietary right in the land was in actual occupation of the land at the time of the disposition, subject to statutory exceptions.
Talia’s beneficial interest is not required to be registered and is even specifically excluded from being capable of registration. Talia’s unregistered interest will have priority over registered dispositions if she has an overriding interest. There is precedent holding that an equitable interest coupled with actual occupation will override.
Talia’s potential overriding interest will only relate to the basement because this is where she is in occupation, and this does not extend to the entirety of the Home, marking a reversal of Wallcite Ltd v Ferrishurst Ltd. Talia must have the beneficial interest at the time of the disposition in order for it to be considered as overriding. Alpha cannot overreach Talia’s interest in this scenario because the proceeds of sale must go to trustees, which is not apparent in this scenario as Barney is the sole legal owner.
The test for actual occupation is objective, however there is “no single test” for it. Talia divides her time between living with her mother and in the basement of the Home. Talia does not have to reside at the Home and her occupation can differ from Barney’s occupation. The results so far indicate Talia may be entitled to live in the basement even after Alpha’s purchase.
There is no requirement for Talia to have an uninterrupted physical presence in the Home, and she will not cease to be in actual occupation because of a temporary or repeated absence. In these circumstances, it would be necessary for Talia to show an intention to occupy and she has some degree of permanence that is more than a fleeting presence. This can be established through keeping personal belongings at the Home, although this by itself is not enough. The degree of permanence, length of absence and personal circumstances are all relevant, but there should also be visible signs of occupation on inspection.
Talia’s repeated return to the Home could indicate her intention to reside there, which could be reinforced by the potential presence of Talia’s personal belongings at the Home. Talia and Barney had a falling out so Talia may not always want to be around Barney, but she still keeps returning to the Home. This could support that Talia is in actual occupation and therefore has an overriding interest. Talia’s unregistered interest may override Alpha’s registered one which would ultimately reduce the value of Alpha’s interest.
However, Talia could also not be in actual occupation if her absence was ‘so prolonged that the notion of her […] actual occupation becomes unsupportable’, where even her genuine intention to occupy coupled with the presence of her personal belongings would be insufficient. This would allow Alpha to take the land free from Talia’s overriding interest.
Ultimately though, actual occupation is a question of fact and it is likely that her repeated return and the possibility of her personal belongings being in the Home would be enough to establish actual occupation. Therefore, Talia is likely to have an overriding interest and be entitled to live in the basement after Alpha’s purchase.
However, if Alpha made an inquiry to Talia directly and she failed to inform Alpha of her interest where reasonably expected to, Talia’s interest would not override.
There is also a two-part exception where the effect of Talia’s actual occupation will not apply. Talia’s actual occupation will not override where her occupation would not be obvious on a reasonably careful inspection of the land and where Talia’s interest is not within Alpha’s actual knowledge. The first is an objective test, while the latter is subjective. Alpha does not have to physically inspect the land, rather Talia’s occupation should have been obvious had there been inspection. It is for the courts to decide whether Talia’s occupation was sufficiently obvious, where evidence of Talia’s belongings and physical presence will either increase or decrease the likelihood of this.
If it can be established that Talia is in actual occupation of the Home she will have an overriding interest. The implication for Alpha is that her purchase of the Home will still be subject to Talia’s overriding interest which would allow Talia to remain in occupation of the basement.
Habib’s easement over the path in the back garden of the Home may be enforceable. This depends on how the easement was formed and subsequently whether it is registered or unregistered.
Any easement expressly created after 13 October 2003 is only capable of being binding if registered as a notice. If it was a legal easement, it would have to have been executed as a deed and subsequently registered, therefore binding Alpha.
As a result, all equitable easements are required to be registered in order for it to be enforceable, whether they are expressly created or not. Equitable easements are capable of registration because they are not one of the ‘Excluded Interests’.
If Habib’s easement was registered prior to 13 October 2003 as a ‘Minor Interest’ it will continue to bind Alpha and if the easement is registered post this date, Alpha will be bound by Habib’s right of way over the path in the back garden as these protected registered interests are not affected by a disposition of an estate.
Even if the easement is unregistered, Alpha may still be bound as it may be enforceable as an overriding interest. Schedule 3 Paragraph 3 of the LRA allows only for unregistered legal easements to override registered dispositions subject to certain restrictions.
If Habib’s easement was qualified as an overriding prior to the LRA’s enforcement it continues to override and will therefore bind Alpha.
If Alpha had actual knowledge of the Habib’s easement or where the easement would be obvious to Alpha on a reasonable inspection of the land it will be overriding. In the current scenario, Alpha may argue the easement was not obvious as it was in the back garden, however Habib may argue that a path running through your garden would be obvious to identify. Additionally, if Habib can prove the easement was used within the last year, his interest will succeed as an overriding interest and subsequently be binding on Alpha.
Written by Keagan Van Wijk