Land Registration case highlights the importance of applying to register titles within the priority period8th February 2017
The Land Registration Gap
The High Court in Baker v. Craggs (2016) has held that a purchaser of land was bound by an easement granted by the sellers, despite it being granted without the purchaser’s knowledge after the date of the transfer.
The facts in Baker v. Craggs (2016)
On 17 January 2012, the owners of the farm (“the Sellers”) completed a transfer of part of the farm land and outbuildings (“the Farm Land”) to Mr. Craggs (“Craggs”). Shortly after, the Sellers sold a remaining barn to the Bakers (“the Bakers”), which completed on 20 February 2012 and included the grant of a right of way over the Farm Land.
The application to register the transfer of the Farm Land by Craggs was cancelled and his solicitors did not submit a renewed application within their priority period. When the registration of the transfer to the Bakers was completed, it was registered with the right of way over the Farm Land. Subsequently, when the application to register Craggs was finally completed it was registered subject to the right of way in favour of the Bakers.
The High Court decision in Baker v. Craggs (2016)
The “Registration Gap” is a term used to describe the period between the dating of a transfer and its registration at the Land Registry. As a result of section 17 (1) of the Land Registration Act 2002 (“the Act”), the Sellers of the Farm Land remained the legal owner of the Farm Land until completion of the registration of the transfer to Craggs. Craggs held no more than an equitable interest in the Farm Land until his title was registered.
Under section 29 of the Act the transfer of the barn to the Bakers was subject to interests affecting the same immediately prior to that transfer, insofar as they were protected by registration or which constituted an overriding interest. An overriding interest is one to which a registered title is subject even though it does not appear on the register. Craggs interest was an overriding interest.
Unfortunately for Craggs, overriding interests can be “overreached.” The Court held statutory requirements for overreaching are contained in section 2 of the Law of Property Act 1925. The provisions of section 2 had been satisfied as:
- The grant of an easement amounted to the conveyance of a legal estate;
- The Farm Land was held on trust for Craggs; and
- The proceeds of the barn sale were paid to two trustees, the Sellers.
As a result, Craggs interest had been overreached and the Farm Land was subject to the right of way.
This case highlights the difficulties the Registration Gap can create and the importance of making applications to register titles within the prescribed priority period. If the application to register the transfer of the Farm Land to Craggs was made within the priority period, the right of way granted to the Bakers would not have been registered.
For further information, please contact the Real Estate Disputes Team at Hamlins.