“registration Gap” Update19th June 2018

The Court of Appeal provides a lucky escape to a landowner.

The Court of Appeal in Baker v Craggs [2018] EWCA Civ 1126, provided a landowner with a lucky escape by finding that a right of way granted to a third party over his newly purchased land was ineffective. The right in question was created during the period between the sale to the landowner and his registration as owner at the Land Registry (the Registration Gap).

 

Facts of the case

Mr and Mrs Charlton (“the Charltons”) sold land to Mr Craggs but failed within the transfer to reserve a right of way over the land in favour of their retained land. Mr Craggs’ solicitor applied to register the transfer but the plan attached to it was incomplete resulting in the registration application being cancelled. As a result of the cancellation, a new application had to be made to register Mr Craggs’ ownership of the property.

During the intervening period, the Charltons sold another part of their land to Mr and Mrs Baker (“the Bakers”). This transfer included the grant of a right of way over Mr Craggs’ land without Mr Craggs’ knowledge or consent. The Bakers’ transfer was registered with the benefit of the right of way before completion of Mr Craggs’ re-submitted registration application.

 

High Court Decision

The High Court decided that the right of way should remain on Mr Craggs’ title. The starting point for the Court was that Mr Craggs was in occupation and therefore had an interest in the property that was capable of overriding the Bakers’ right to have the right of way registered. However, the High Court ruled that because the Bakers had paid the purchase moneys to two people, the effect of this was to trump Mr Craggs’ overriding interest and take priority to it, known as “Overreaching”. The High Court held that overreaching in this instance allowed the right of way to be registered.

 

Court of Appeal Decision

Mr Craggs appealed. The issue was whether the doctrine of Overreaching was capable of operating where:

1. the conveyance alleged to have an overreaching effect was the grant of an easement over land; and

2. the interest said to have been overreached was an interest in the servient tenement which the original owners (the Charltons) had previously contracted to sell to a third party (Mr Cragg).

The Court of Appeal overruled the earlier decision finding that overreaching applies only to the sale and purchase of freehold and leasehold titles in land. It does not apply to the creation of rights (such as a right of way) over other land. Accordingly, the doctrine of overreaching could only apply where a legal interest in land was conveyed to a purchaser. In this instance the Bakers’ interest was equitable only and could not overreach Mr Craggs’ right to be registered as proprietor of the property free from the right of way, in particular as Mr Craggs was in actual occupation. This was because a bare trust arose on completion of Mr Craggs’s purchase and the equitable interest in the property under that trust was protected by his actual occupation. The right of way in favour of the Bakers, therefore, should therefore be removed from Mr Craggs’ title.

 

Conclusion

Mr Craggs was lucky. It was only that fact that he was in occupation that saved him. Had he delayed moving in, his property might still be subject to the right way.

Whilst the decision is likely to be welcomed by property practitioners, it does not address the fundamental issue that a person is not regarded as the legal owner of a property until registered as owner at the Land Registry. No number of judicial sleights of hand can resolve this issue.

The Law Commission is currently preparing a response to a consultation on the reform of the law relating to land registration that is due to be published later this year. We shall therefore wait to see whether the response to that consultation will address the issues that still remain with the registration gap.