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Overriding Interests and how they can impact on a purchaser of a residential property

Posted on Tuesday, 11th April 2017 by
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Overriding Interests…. what are they?

Overriding interests and how they impact on a purchaser of a residential property:

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 upon the sale, 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. The purchasers solicitor would need to enquire about these rights specifically as the system in place meant that the rights were not registered against the title documents of a property.

Understandably this caused significant issues for buyers. In the case of Williams & Glyn’s Bank v Boland [1980] 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 per 12 October 2002, the Land Registry is now trying to register overriding interests onto the Title of the property. This means that they will be easier to access and buyers will be aware of them without the need for 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..

Why not give our conveyancing team a call, Helen Sanderson is a solicitor in our Leicester office.

 

By Nabeel Ahmed

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The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.

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