Land law: The Land Registration Act

Extract

[...] As a result, Schedule paragraph 3of the LRA 2002 now provides that a legal easement or profit is only binding if purchaser had “actual knowledge” of the easement or profit on the date of the land and transfer in his favour or evidence of the easement or profit is (b)“apparent on reasonable inspection”. Whilst these provisions in Schedule 3 appear to redress the balance between third party rights and purchasers in registered land, the new rules are complicated and it has been argued that in reality only very few easements and profits will be excluded from being overriding interests (Cooke). [...]

[...] This is in direct contrast to the provision with unregistered land (Megarry& Wade) and as such, the House of Lords in the William case asserted that the Hunt v Luck ([1902] 1 Ch 428) rule of equitable notice was not the same as the section provisions regarding rights of persons in actual occupation. Moreover, it was held that rights under section 70(1) of the 1925 Act covered all proprietary interests in land, which widened the ambit of protection for third party rights in registered titles outside the remit of equitable notice for unregistered land. [...]

[...] From the outset, the statement is inherently flawed in being dogmatic and fails to account for the fact that whilst the enforceability of a third party right on a purchaser will vary depending on whether the title is registered or unregistered, ultimately the determinant factor will be the nature of the right being protected irrespective of whether it is legal or equitable. For example, if we consider overriding interests in particular, these represent a major point of contention for purchasers of registered title (Megarry and Wade). Again, the general rule is that overriding interests will bind a purchaser of registered title regardless of notice (Smith). The previous legislative framework governing registered land was the Land Registration Act 1925, which listed overriding interests in section 70(1). [...]

[...] With regard to easements, under the previous 1925 Land Registration Act, section 70(1) provided the following: A legal profit was an overriding interest. An equitable profit was an overriding interest. A legal easement was an overriding interest.”(Sexton 125) With regard to unregistered title, legal easements are binding under the general rule however this is comparable to the registered system, with the easement being an overriding interest. Accordingly, the system for protection of legal rights vis-à-vis the purchaser is the same whether title is registered or unregistered , which again suggests that the protection of rights whether legal or equitable ultimately depends on the nature of the right (Smith), thereby highlighting the inherent flaw and the dogmatic nature of the above statement. [...]

[...] This further undermines the veracity of the statement that third party equitable rights are better protected under registered titles as the onus is on the third party to register the right in contrast to easements already in existence. As regards legal easements, these were only binding as overriding interests until 2006. In the consultation process leading up to the implementation of the LRA 2002, the Law Commission expressed concerns regarding purchasers who buy a piece of land and then discover that it is subject to easements or profits, which have not been exercised. [...]