OVERIDDING INTERESTS.
THEY ARE LISTED IN SCHEDULES 1 AND 3 OF THE LRA 2002
OVERIDDING INTERESTS: THEY ARE NOT FOUND ON THE REGISTER OF THE ESTATE THEY AFFECT.
THEY CREATE COMOLICATIONS FOR PEOPLE DEALING WITH THE TITLE.
SCHEDULE 1 AND SCHEDULE 3.
Interests of persons in actual occupation
SCHEDULE 1
2An interest belonging to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for an interest under a settlement under the Settled Land Act 1925 (c. 18).
SCHEDULE 3
Interests of persons in actual occupation
2An interest belonging at the time of the disposition( at the time of completion) to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for—
(a)an interest under a settlement under the Settled Land Act 1925 (c. 18);
(b)an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;
(c)an interest—
(i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and
(ii)of which the person to whom the disposition is made does not have actual knowledge at that time;
(d)a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition.
SCHEDULE 1 first registration does not include a registrable disposition.
There may be a voluntary registration according to section 3 of the LRA 2002. At this point in time the land is registered but the no registrable disposition has been created out of the legal estate according to ss 27. Therefore it does not make any difference whether the interest is discovered or not by the already existing registered land owner. What MATTERS IS WHETHER THE PERSON CLAIMING THE PROPRIETARY RIGHT AT THAT TIME IS IN ACTUAL OCCUPATION AT THE TIME OF THE FIRST REGISTRATION. IN CONTRAST WITH SCHEDULE WHERE THE INTEREST WONT BIND THE NEW PURCHASER UNLESS IT BELONGS AT THE TIME OF THE DISPOSITION ( COMPLETION OF THE SALE).
So if actual occupation was before sale but not at the time of completion will not count and SCHEDULE 3 will not apply and the interest will not be binding on the registered disposition for value.
AN INTEREST UNDER A TRUST OF LAND WILL NOT BIND WHEN THE TRSUTEES HAVE BEEN AUTHORIZED EITHER BY THE TRUST DOCUMENT OR THE BENEFICIARIES TO CONVEY THE LEGAL ESTATE.
This authorization may be done in various ways and includes:
a) overreaching according to LPA 1925 S 2 (1) ii, 27. because the trustees are considered by statute to have power to overreach the beneficial interests.
b) If there is no overreaching but there is evidence ( easier shown in an express trust than an implied) that the trustee has a power to convey the legal estate either by mortgage or sale of the land or othrwhise. ( no breach of trust occurs because of the powers so the trustees are authorized to convey the legal estate)
c) When there is no authority to convey the legal estate by the trustee’s but the beneficiaries under the trust of land have given their implied or expressed consent to the conveyance. ( by signing a consent form or if the mortgage by the implied trustee was the only way to purchase the house and therefore give rise to their overriding interest so that there is an implied consent. ( see Henning)
– Also goes for subsequent mortgages when there is subrogation but only for the amount consented for the first authorized mortgage.
d) If there is no such power contained in the trust , the trustee acts in breach of trust and the Beneficiaries ratify the breach according to agency principles. eg., they accept and use the mortgage or sale money for their own purposes.
ESTOPPEL
Estoppel slightly defers from authorization in that is said to apply in cases where for example when the occupier has knowledge of the mortgage but approval is neither saught nor given. ( seeUlster Bank Ltd v Shanks)
IF THERE IS AN UNAUTHORIZED BREACH OF TRUST THE OVERRIDING INTEREST WILL NOT BIND AND THE PURCHASER IS PROTECTED IF:
(a)an interest under a settlement under the Settled Land Act 1925 (c. 18);
(b)an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;
(c)an interest—
(i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and
(ii)of which the person to whom the disposition is made does not have actual knowledge at that time;
(d)a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition.
What may be considered as actual occupation: living in a house counts as actual occupation, regardless of whether the proprietor is living there as well.
His agents may be considered to be occupying the place .like in the case where the builders were we the authority of the wife occupying the house, but I can’t send someone on my behalf, like my cousin to occupy the house for me, it has been held.
TIME OF THE OCCUPATION IS AT THE TIME OF COMPLETION OF THE SALE AND NOT AT THE TIME OF REGISTRATION.
The reason for this is that the purchaser makes enquiries about the house before he purchases the house. Moreover its unfair for a buyer to have completed the purchase only for an overriding interest to arise after, then the house would have been of no use to him while he has already committed himself or herself by paying for the land.
