Certain Overriding Interests to Lose Status

Our Commercial Litigators Helen Porter and Kirsten Edberg review the upcoming changes regarding overriding interests within the law of property. 

On 12 October 2013, the ten year transitional period under the Land Registration Act 2002 (‘the Act’) will draw to a close and a small number of interests in land will lose their status as ‘overriding interests’.

An ‘overriding interest’ is an interest that binds an owner or purchaser of land, despite no record of the interest appearing on the registered title.  Common overriding interests include short leases, certain easements and rights of people in actual occupation of the land.

In a Law Commission Report (No 271), the interests were described as: ‘All are relics from past times and are of an unusual character. Most of them can no longer be created. Those who have the benefit of such rights ought to be aware of them. These characteristics make them obvious and sensible candidates to be phased out. If such rights are to bind those who acquire registered land, they should be protected in the register’.

Whilst the interests may very well be somewhat unusual, it is important to be aware of those that will lose status and what the effect will be on both the owner of the land and the person who claims the interest.

Which overriding interests are affected?

The interests affected by the changes are:

• A franchise – a grant from the Crown in the form of charter or letters patent.  It can also be established by prescription, presupposing the grant has been lost.  The most common example of a franchise is a right to hold a market or fair.
• A manorial right – rights retained by the lord of the manor when the land became freehold (such as the right to minerals on the land or to hunt, shoot and fish).
• Crown rents.
• Non-statutory rights in respect of an embankment or sea or river wall – a liability that results in the owner of the land adjacent to the sea or a river having an obligation to repair walls or embankments.
• A right to payment in lieu of a tithe (commonly called corn rents, although not all corn rents fall within this category).
• Chancel repair liability – an obligation to contribute towards the repair of the chancel of a parish church.

What are the consequences of the change?

After 12 October 2013, the interests listed above will lose their overriding status. However, this does not mean that they no longer exist.

If you are the owner of land affected by one of the interests, you will still be subject to that interest as it had overriding status at the time you acquired the land.  However, if you sell the land, your buyer will acquire the land free from the interest unless the person with the benefit has protected the interest at the Land Registry.

Registration

If you have the benefit of one of the overriding interests set out above, you must therefore register a notice of interest against the land by 12 October 2013, otherwise you risk losing the benefit.

Although you can still register a notice after 12 October 2013, it will only be effective if ownership of the land has not changed since that date.  (As an added incentive, there will be no charge for such notices registered up until 12 October 2013, after which time a fee will likely be payable).

If you are considering buying or selling land and you are concerned about overriding interests, contact Helen Porter or the Warner Goodman Commercial Team on 023 8071 7717 or email helenporter@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.