The Land Registry created ‘Overriding Interests’ by way of the Land Registry Act 1925. The reason for this creation was to allow for unregistered rights and interests affecting a property to be accounted for.
These interests can be in favour of a seller or third party. Therefore, this can be problematic on the sale as the sellers’ interests can be binding on a buyer despite ownership changing hands.
Whilst the term is not specifically defined, examples range from short leases affecting a property through to rights of ways or chancel repair maintenance costs. It is essential that the purchaser’s solicitor enquires about these rights specifically from the outset of the transaction. The previous system in place meant that overriding interests were not registered against the property.
Understandably this caused significant issues for buyers. In the case of Williams & Glyn’s Bank v Boland  a sole owner defaulted on his mortgage payments which resulted in his Lender seeking possession via a possession order. The wife of the sole owner was deemed to have a beneficial interest of actual occupation due to her contribution towards the purchase price and her occupation in the ‘matrimonial home’. The Courts ruled that her right was more than just a ‘minor interest’ therefore she had a beneficial interest to occupy the property.
As a result of the varying decisions and issues caused, the Land Registry updated the law via The Land Registry Act 2002.
What has changed as a result of The Land Registration Act 2002?
As of 12 October 2002, the Land Registry is now trying to register overriding interests onto the Title of the property. This will allow buyers to have knowledge prior to purchase and this will eliminate the need of extensive enquiries which can be time consuming and expensive.
The Land Registry’s intention is for the Title documents of a property to be a ‘mirror image’ of the actual position. There are now two lists contained in Schedule 1 and 3 of the 2002 Act which define the overriding interests required for registration along with those which are non-registerable.
Buyers should seek legal advice when dealing with overriding interests as they are required to register any relevant interests with the Land Registry upon completion of their purchase. A buyer’s legal advisor will carry out the necessary investigations as to whether a seller or third party has any overriding interests over the property.