A recent case has demonstrated the importance of inspecting the boundaries of a property before buying it.
Solicitors will generally advise a client buying a property to carry out an inspection beforehand, to check that nothing unusual is revealed. Typical issues that might be spotted are boundaries that do not follow the Land Registry's title plan and gaps in a fence suggesting that third parties are using the property as a short cut. But in an extreme case, like this one, the potential buyer might even spot that someone else is claiming ownership of part of the property.
The case, Trevallion v Watmore, concerned two adjoining properties in Sandown, Isle of Wight. Mr and Mrs Trevallion owned a lengthy (1000 year-long) underlease of 46 Melville Street that had been granted in 1954. That underlease was acquired before compulsory first registration on sale applied to the Isle of Wight and so it was not recorded at the Land Registry.
The premises demised by the lease were an irregular shape and included a triangular piece of land at the end of the garden of the adjoining property, 52 Melville Street. There was a six-foot-high fence between number 52 and the triangular area, which the Trevallions used to store canoes and other paraphernalia.
Miss Watmore and Mr Bell bought the adjoining property, 52 Melville Street, in 2013. The registered title plan included the triangular area at the foot of the garden but did not mention the neighbours' underlease. As a result, Miss Watmore did not realise that the triangular area was used by her new neighbours as a storage area until after completion of the purchase. Although she had looked at the garden before the purchase, the triangular area and the fence, were concealed by a fuchsia bush. This was described by the judge as a 'splendid shrub', and had perhaps been intended to conceal the storage area behind it. A dispute had been ongoing since 2013 as to who was entitled to this area.
The legal issues
The answer to the question of who was entitled to the triangular area turned on the provisions of the Land Registration Act 2002 and the complexities of 'overriding interests'. An overriding interest is a property interest that is binding on an owner of registered land even though it is not mentioned on the register. The reason for their existence is often historic and they can sometimes be difficult to discover, which is why they are protected in this way. They also add some flexibility to the land registration system, ensuring that not every transaction has to be documented formally.
The judge had to decide whether the Trevallions' underlease constituted an overriding interest when Miss Watmore and Mr Bell had bought number 52 in 2013. The categories of overriding interest are listed in Schedule 3 to the Land Registration Act 2002. Paragraph 2 provides that 'an interest belonging to a person in actual occupation' is an overriding interest, unless it '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 the buyer 'did not have actual knowledge at the time of the disposition'. So broadly, if a person has a property interest, and that person's occupation is known, or reasonably obvious, then it will bind a buyer.
It was easily established that Miss Watmore did not have actual knowledge of the Trevallions' occupation of the triangle when she and Mr Bell bought number 52. So would their occupation have been 'obvious on a reasonably careful inspection'? Miss Watmore had carried out a cursory inspection of the garden on her visits, but that was irrelevant. The 2002 Act refers to a 'reasonably careful inspection' rather than any actual inspection that had been carried out. The judge had inspected the garden of number 52 on her site visit and held that it would have been obvious, if the boundaries had been inspected, that they did not follow the rectangular lines of the Land Registry title plan. Accordingly the Trevallions' underlease took effect as an overriding interest, with the result that their occupation took precedence.
A graphic demonstration
This case is a graphic demonstration of the importance of inspecting a property - whether residential or commercial - before buying it. If Miss Watmore had peered behind the luxurious fuchsia bush when visiting the property, she would have spotted the fence, and the neighbours' occupation of the triangular area, and she would have been in a position to ask questions about it before committing to buy number 52. If she had then proceeded with the purchase, at least she would have known what she was acquiring, and would have had an opportunity to renegotiate the price.
Trevallion v Watmore (Land Registration division of the Property Chamber (First-tier Tribunal), 30 June 2016)