From midnight on 12 October 2013, certain third party rights over land will no longer have automatic protection under the Land Registration Act 2002.
As that deadline approaches, developers and landowners should be aware of moves being made by beneficiaries of these rights to register their interests at the Land Registry.
The registration of adverse rights has the potential to stifle development or onward sales. Landowners and developers therefore need to keep in mind the risks associated with registration of such "overriding interests" over the weeks and months ahead.
Background - what is an overriding interest?
The intention of the Land Registration Act 2002 (the 2002 Act) was that:
- the register of title for registered land in England and Wales should be a complete and accurate record of all title matters affecting the property
- the need for purchasers of land to make additional title investigations should be kept to a minimum
Overriding interests are the exception to these principles.
An overriding interest is an unregistered interest in land, which binds a purchaser of that land through statute. Examples include short leases and certain kinds of easement.
To quote the Law Commission report on which the 2002 Act is based, some of the categories of overriding interest are "relics from past times and are of an unusual character". It was therefore concluded that some of these rights should be phased out.
The Government sought to encourage those with the benefit of such rights to register them at the Land Registry. Given the size of the task, the 2002 Act proposed a 10-year period for registration. That 10-year period expires in October of this year.
What interests are affected?
Not all overriding interests will lose their protected status on 13 October. Overriding interests that are affected and will lose protected status include:
- Franchises arising from a royal grant (e.g. a franchise to hold a market)
- Manorial rights (e.g. some, but not all, rights to mines and minerals and certain shooting and fishing rights)
- Crown rents
- Non-statutory liability for embankments or river or sea walls
- Corn rents
- Chancel repair liability
If you require any advice in relation to the other overriding interests which will retain their protected status following 13 October 2013, please contact one of our experts (details below).
How can affected overriding interests be protected?
Any beneficiary of an affected overriding interest that wants to secure the automatic protection of their rights has until midnight on 12 October 2013 to register either:
- a notice against the title of the affected land at the Land Registry in respect of the overriding interest (where the land is registered); or
- a caution against the first registration of the affected land (where the land is unregistered).
What happens if an affected overriding interest is not registered by 12 October 2013?
Failure to enter notice of an affected overriding interest against registered land before the deadline could have serious consequences. It means that a purchaser who registers a transfer of the affected land for valuable consideration after the deadline (but before a notice is registered against the title) will not be bound by the interest.
Failure to protect an overriding interest against unregistered land before the deadline will not necessarily lead to the loss of the overriding interest. However, if the affected land is subsequently registered, there is a risk that the interest will not be noted on the title register.
For example, if unregistered land is first registered after 12 October 2013 and no notice of the affected overriding interest is entered on the title at that time then the interest will not bind the owner or any subsequent purchaser of the relevant land. In this situation it would not be possible for the beneficiary of an affected overriding interest to subsequently register a notice to protect it.
Landowners may therefore wish to voluntarily register their land interests as soon as possible after the deadline has passed, in order to defeat any potential claim.
Can an affected overriding interest be protected after 12 October 2013?
Yes, in some circumstances, but only where there has been no transfer of the land in question for valuable consideration since 12 October 2013. A fee may also be payable to the Land Registry after this date (currently such registrations can be free).
As a landowner do I have a right to object to the registration of an affected overriding interest?
It is possible, both before and after the deadline, to challenge the evidence provided to the Land Registry by the beneficiary of an overriding interest. As you would expect however, each application and any challenge made to it will be considered by the Land Registry on its own merits.
The Land Registry has set up specialist teams to deal with the issues surrounding overriding interests. We therefore expect any applications and/or objections to be scrutinized very carefully.
If you are concerned about the legal merits behind such an application or objection or indeed a registration that has already been completed, do please contact us (details below).
As a landowner, do I have the right to be notified about the registration of an affected overriding interest against my land before such registration is completed?
Not necessarily. The current Land Registry guidance suggests that the Land Registry may complete an application to note one of these affected overriding interests without notifying the registered proprietor until after the registration is complete.
How will the registration of an overriding interest affect my development proposals?
Each case will need careful investigation, but where a proposed development will prevent the lawful exercise or enjoyment of a properly protected overriding interest, the beneficiary may be entitled to seek damages or an injunction against the developer/landowner in question.
It is therefore important that the risk of any such claim is considered very carefully as part of any development proposals.
Developers and landowners may want to consider:
- if a defective title indemnity insurance policy is available on commercially acceptable terms in relation to the risk that such rights are enforced at a later date; or
- approaching the beneficiary of the relevant overriding interest to secure a release of the relevant right(s). (This step must not be taken if/whilst insurance remains an option).