LRA 2002 Schedule 3 PDF

Preview

Summary

LRA 2002 Schedule 3...

Description

LRA 2002 Schedule 3 Schedule 3 lists nine rights in rem which take priority over a newly granted/transferred right in rem Priority is achieved by the rights listed in Schedule 3 despite the fact that they are unregistered (i.e. they are not noted on the Charges Register of the estate in land which they burden) Overriding interests are interests which bind a purchaser even though not apparent from looking at the register. The idea of the 1925 legislators had been that they would be the type of interest apparent from inspecting the land. However, case law between 1926 - 2003 interpreted the 1925 Act to encompass certain interests which were difficult to discover. One of the reasons for the 2002 reforms was to reduce the number of third party interests which would qualify as “overriding”. Schedule 3, paragraph 1 1. A leasehold estate in land granted for a term not exceeding seven years from the date of the grant, except for – (a) A lease the grant of which falls within section 4(1)(d), (e) or (f) (b) A lease the grant of which constitutes a registrable disposition Covers legal leases of seven years or less but those exceptional leases for 7 years or less which are required to be substantively registered (listed in section 4) are excluded. The most important of these exceptions are leases which only take effect more than 3 months from the date of the grant and also discontinuous leases (e.g. timeshares). Schedule 3, paragraph 2 2. An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for (a) … (b) An interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) An interest i. Which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and ii. Of which the person to whom the disposition is made does not have actual knowledge at that time… Covers interests of a person in actual occupation. This will be examined in much more detail below. Schedule 3, paragraph 3 (1) A legal easement…except for an easement…which at the time of the disposition – (a) Is not within the actual knowledge of the person to whom the disposition is made, and (b) Would not have been obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable. (2) The exception in sub-paragraph (1) does not apply if the person entitled to the easement or profit proves that it has been exercised in the period of one year ending with the day of the disposition This only deals with legal easements and profits. Equitable easements are specifically excluded.

Actual Occupation: An interest belonging at the time of the disposition to a person in actual occupation…. (sch 3, para 2) The Traditional Case Law and Approach Physical presence “These words are ordinary words of plain English, and should, in my opinion, be interpreted as such.” “Given occupation, i.e., presence on the land, I do not think that the word “actual” was intended to introduce any additional qualification….it merely emphasises that what is required is physical presence, not some entitlement in law.” Williams & Glyn’s Bank Ltd v Boland per Lord Wilberforce Adapting to different property “I accept that in ordinary speech one normally does equate occupation in relation to a house with living there. If a person is intending to move into a house but has not yet done so, he would not normally be regarded as having gone into occupation. That is the normal position, with a house which is fit for living in. But that does not provide the answer in the present case, where the house was semi-derelict.” “…what constitutes occupation will depend upon the nature and state of the property in question.” Lloyds Bank v Rosset per Nicholls LJ “…the paragraph applies to all types of land, and the acts which constitute actual occupation of a dwelling house, a garage or woodland cannot all be the same.” Lloyds Bank v Rosset per Mustill LJ “It is perhaps dangerous to suggest any test for what is essentially a question of fact, for ‘occupation’ is a concept which may have different connotations according to the nature and purpose of the property which is claimed to be occupied.” Abbey National v Cann per Lord Oliver

Occupation by an agent “I can detect nothing in the context in which the expression ‘actual occupation’ is used…to suggest that the physical presence of an employee or agent cannot be regarded as the presence of the employer or principal when determining whether the employer or principal is in actual occupation.” Lloyds Bank v Rosset per Nicholls LJ “In order to constitute ‘occupation’ there must be occupation in person or by someone occupying as an agent for the purposes of the proprietor…This position is clear from the judgments in Strand Securities Ltd v Caswell; thus occupation may be enjoyed through a resident caretaker put in the property by a tenant to look after it for him but occupation by a friend for her own purposes with the leave and licence of the tenant is no ‘actual occupation’” Lloyds Bank v Rosset per Purchas LJ

“Fleeting presence” insufficient “[Actual occupation] does, in my judgment, involve some degree of permanence and continuity which would rule out mere fleeing presence. A prospective tenant or purchaser who is allowed, as a matter of indulgence, to go into property in order to plan decorations or measure furnishings would not, in ordinary parlance, be said to be occupying it, even though he might be there for hours at a time.” Abbey National Building Society v Cann per Lord Oliver The meaning of actual occupation under the 2002 act was considered at length in Thompson v Foy (2009) and later developed further in Link Lending Ltd v Bustard (2010) Thompson v Foy [2009]1 P & CR 16 Lewison J tasked with determining whether Mrs Thompson was in “actual occupation” of Valley View (residential property) at a time when she was not physically present at Valley View Lewison J made five observations about the meaning of “actual occupation”, the last of which was: “If the person said to be in actual occupation at any particular time is not physically present on the land at that time, it will usually be necessary to show that his occupation was manifested and accompanied by a continuing intention to occupy.” The Judgement At the relevant time, Mrs Thompson had decided she would not be returning to Valley View; her lack of physical presence could not be remedied by a continuing intention to occupy Lewison J therefore held that Mrs Thompson was not in actual occupation Yet had there been a continuing intention to occupy, Lewison J would have reached the opposite conclusion

Link Lending v Bustard [2010] EWCA Civ 424 The Court of Appeal was tasked with determining whether Ms Bustard was in “actual occupation” of residential property at a time at which she had been physically absent from the property (because sectioned under the Mental Health Act) for a year. Mummery LJ constructed a framework for assessing actual occupation, under which he held the following to be relevant: “…the degree of permanence and continuity of presence of the person concerned, the intentions and wishes of that person, the length of absence from the property and the reason for it and the nature of the property and personal circumstances of the person…” “In this case the new and special feature is in the psychiatric problems of the person claiming actual occupation. The judge was, in my view, justified in ruling, at the conclusion of a careful and detailed judgment, that Ms Bustard was a person in actual occupation of the Property. His conclusion was supported by evidence of a sufficient degree of continuity and permanence of occupation, of involuntary

residence elsewhere, which was satisfactorily explained by objective reasons, and of a persistent intention to return home when possible, as manifested by her regular visits to the Property.” per Mummery LJ Objeactively Obvious Occupation Schedule 3, paragraph 2 2. An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for (a) … (b) An interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) An interest i. Which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and ii. Of which the person to whom the disposition is made does not have actual knowledge at that time… Time of the Occupation Schedule 3, paragraph 2 2. An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for (a) … (b) An interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) An interest i. Which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and ii. Of which the person to whom the disposition is made does not have actual knowledge at that time… When must the right holder be in actual occupation? • It is clear from paragraph 2 that the “interest” (right in rem) must exist at the time of the “disposition” (the completion of the transaction by transfer and payment of purchase money) • Lord Oliver in Abbey National v Cann held that the actual occupation supporting the right in rem must also exist at the time of disposition (completion) • Lewison J in Thompson v Foy reserved judgment on whether there must also be actual occupation at the time of registration What kind of rights does paragraph 2 protect? Rights in rem which entail occupation In theory, paragraph 2 provides a mechanism whereby any right in rem can override. However, its practical impact is limited by the requirements that the right in rem must belong to a person in actual occupation of the burdened land and relate to the land occupied. Paragraph 2 therefore operates to protect only those rights in rem which entail occupation of the burdened land (e.g. lease; beneficial interest under trust) More often than not, rights in rem which arise in a disorganised fashion

When a right in rem is expressly granted, the grantor/grantee will ordinarily proceed to register it (if possible: LRA 2002 s.33) against the estate it burdens. However, some rights in rem arise in a disorganised fashion i.e. they are acquired in circumstances where the parties do not realise, or have only a vague idea, that they are dealing in legal rights. The rights acquired in such circumstances will not be registered, so if they are to bind disponees they will do so by virtue of Schedule 3. Rights of this kind include those generated by the doctrine of proprietary estoppel (the “estoppel equity”) or under a constructive trust (beneficial interest under trust). Rights in rem which cannot be protected by registration LRA s.33 contains a list of “excluded interests” which cannot be registered against the estate burden. The most important of the excluded interests are the beneficial interest under trust and leasehold for a term of three years or fewer. If these interests are to bind a disponee of land, they will do so by virtue of Schedule 3, paragraph 1 (lease) paragraph 2 (beneficial interest under trust)...