The Three Principles of Registration
The Land Registration Act 2002 (LRA 2002) governs the system of registered land in England and Wales. The system is built on three fundamental principles:
The mirror principle: The register should reflect all interests affecting the land — it should be a "mirror" of the title. In practice, this ideal is compromised by overriding interests, which bind without appearing on the register.
The curtain principle: Certain interests (particularly equitable interests under trusts) are kept behind a "curtain" and do not appear on the register. A purchaser need not investigate behind the curtain; they take free of such interests provided they pay the purchase money to at least two trustees (overreaching under ss.2 and 27 Law of Property Act 1925).
The insurance principle: The accuracy of the register is guaranteed by the state. If a person suffers loss due to an error in the register, they may claim an indemnity under Schedule 8 LRA 2002.
Registrable Dispositions and Priority
Under s.27 LRA 2002, certain dispositions of registered land must be completed by registration to operate at law. These include: transfers of the registered estate; grants of leases exceeding seven years; express grants of legal easements; and legal charges (mortgages). Until registration, such dispositions take effect only in equity (s.27(1)).
The basic priority rule under s.29 provides that a registrable disposition of a registered estate for valuable consideration, when completed by registration, takes effect subject only to: (1) interests entered on the register (by notice); (2) overriding interests under Schedule 3; and (3) interests of which the disponee has actual knowledge (in limited circumstances).
This means that a purchaser for value who registers their disposition takes free of any interest that is neither protected by a notice on the register nor an overriding interest. Unprotected minor interests are defeated.
Overriding Interests: Schedule 3
Overriding interests are interests that bind a purchaser despite not appearing on the register. They represent the most significant qualification to the mirror principle. Schedule 3 LRA 2002 lists the overriding interests that bind on a registrable disposition for value:
Paragraph 1 — Short leases: Leases granted for a term not exceeding seven years are overriding interests (with certain exceptions for reversionary leases and discontinuous leases).
Paragraph 2 — Interests of persons in actual occupation: This is the most litigated category. An interest belonging to a person in actual occupation of the land at the time of the disposition overrides, unless: (a) the interest belongs to a person whose occupation would not have been obvious on a reasonably careful inspection and the disponee did not have actual knowledge of it; or (b) the person failed to disclose the interest when reasonably expected to do so.
Paragraph 3 — Legal easements and profits: Legal easements and profits a prendre that are not registered override a registered disposition, unless they would not have been obvious on a reasonably careful inspection and the disponee did not have actual knowledge.
Actual Occupation
The concept of actual occupation under Schedule 3, paragraph 2 has been extensively litigated. In Williams & Glyn's Bank v Boland [1981] AC 487, the House of Lords held that a wife who contributed to the purchase price and lived in the matrimonial home was in actual occupation, and her beneficial interest overrode the bank's charge. Lord Wilberforce stated that "actual occupation" should be given its ordinary meaning — physical presence on the land.
Actual occupation requires a degree of permanence and continuity. In Link Lending v Bustard [2010] EWCA Civ 424, a person involuntarily absent from the property (detained in a psychiatric hospital) was held to be in actual occupation because her personal belongings remained there and she intended to return.
In Thomas v Clydesdale Bank [2010] EWHC 2755, the court held that a person who had never physically occupied the property could not claim actual occupation merely because building works were being carried out on their behalf.
The LRA 2002 introduced the qualification that occupation must be obvious on a reasonably careful inspection (Sch.3, para.2(c)(i)). This reversed the effect of cases like Boland to some extent, requiring the purchaser to make reasonable inquiries but not exhaustive ones.
Alteration and Indemnity
The register may be altered under Schedule 4 LRA 2002 to correct mistakes, bring the register up to date, or give effect to certain interests. "Rectification" is a specific type of alteration that corrects a mistake and prejudicially affects the title of a registered proprietor.
A registered proprietor who is in possession is protected: the register will not be rectified against them unless they have caused or substantially contributed to the mistake by fraud or lack of proper care, or it would be unjust not to rectify (Sch.4, para.6(2)).
Where a person suffers loss by reason of rectification (or the refusal to rectify), they may claim an indemnity under Schedule 8. The indemnity is reduced if the claimant's own fraud or lack of proper care contributed to the loss.
Key Cases
| Case | Key Principle |
|---|---|
| Williams & Glyn's Bank v Boland(1981) | Beneficial interest of person in actual occupation overrides registered charge |
| Link Lending v Bustard(2010) | Involuntary absence does not necessarily end actual occupation |
| City of London BS v Flegg(1988) | Overreaching defeats overriding interests where purchase money paid to two trustees |
| Chaudhary v Yavuz(2011) | Equitable easement not an overriding interest unless person in actual occupation |
| Swift 1st v Chief Land Registrar(2015) | Indemnity available for loss caused by fraudulent registration |
Exam Tips
Exam Tip
For land registration problems, always follow this structure: (1) identify the interest (legal or equitable?); (2) is it a registrable disposition requiring completion by registration? (3) if not registered, is it protected by a notice? (4) if not, is it an overriding interest under Schedule 3? (5) could overreaching apply? This systematic approach ensures you cover all the priority rules.
Common Mistake
Students frequently confuse overriding interests with overreaching. Overriding interests bind despite not being on the register (Schedule 3). Overreaching is the mechanism by which equitable interests under a trust are swept off the land and attach to the purchase money instead (ss.2 and 27 LPA 1925). Crucially, overreaching can defeat an overriding interest — as demonstrated in Flegg.