Overriding Interests

In theory, when a buyer purchases land, the buyer need only review the title register and the deeds it refers to, in order to get a full picture of all of the above private law matters that they will buy the land subject to. This should be the case, in principle, even if there are matters which the buyer ‘knows about’ in the ordinary sense of the phrase, but where such matters are not registered on the title then the buyer should be deemed not to have ‘notice’ of them and so, take the land and title to it free from such matters which were not registered.

However, the current system of land registration does not fully align with the theory and there are a small class of interests in land which will bind and consequently, a buyer of land will take subject to them, even though they do not appear on the title register (and regardless of whether the buyer ‘knew’ about them or not). These interests are known as Overriding Interests.

Given the fact that Overriding Interests are contrary to one of the fundamental concepts of land registration, it is no surprise that the Land Registry has, since 2002, been working hard to reduce their number and to limit their effect. However, Overriding Interest have not been eradicated (yet) and so it is important to understand what they are and how to deal with them, wherever you are buying or selling land in England and Wales.

What are the Overriding Interests?

The full list of all the Overriding Interests is found at Schedules 1 & 3 of the 2002 Act. Many of these are incredibly specific and would not be relevant in the vast majority of property transactions (as an example, one such Overriding Interest concerns non-statutory rights in respect of embankments and sea / river walls!).

However, there are, broadly speaking, three types of Overriding Interests that have the potential to affect a wide range of land transactions in England and Wales. They are:-

• Leases that are for a term of less than 7 years;

• Easements and Profits a Pendre (that is, in simple terms, rights benefitting one parcel of land over an adjoining parcel of land); and

• An interest in land which is held by a person in actual occupation of the land (even where the interest on its own would not be an Overriding Interest).

The full details of all the defining characteristics of these Overriding Interests is very complex (and what counts as an Overriding Interest also depends on whether the land in question is already registered or if it an unregistered parcel of land that requires registration following a transaction).

What Should You Do About Overriding Interests?

The approach to be taken on Overriding Interests depends heavily on your role in a transaction, whether you are a buyer or seller of the land in question.

Buyers – Inspect and Question

Fortunately the main Overriding Interests discussed above will usually be apparent on inspection of the property. This is particularly the case with short leases and with persons in actual occupation. It is trickier when considering easements and similar ‘non-physical’ rights over land, but even then, many of these interests will leave physical clues (for example, are there any tracks or evidence that someone has been exercising a right of way over the land?).

When inspecting the property, you should be looking for any signs that a third party is occupying the property, whether someone is physically present at the time of inspection or their possessions are to be found there, or that someone is using the land contrary to its use by the owner. You should be inspecting the property you are intending to purchase, carefully, both before you exchange contracts with the seller and commit to buying the land, and also before you formally complete the purchase.

Should any such signs be found, a buyer should not hesitate to raise enquiries with the seller, via their solicitors, asking them to clarify fully what the seller knows about the situation and ‘flush out’ any potential Overriding Interests. Nowadays there are industry standard ‘disclosable overriding interest questionnaires’ to assist and ensure all such matters are suitably queried.

Sellers – Draft and Disclose

Sellers will be keen to make sure that the buyer understands and agrees to buy the land subject to (and will not later raise a dispute over) any Overriding Interests. The sale contract and transfer deed will usually make this expressly clear and also that the buyer has been given full opportunity to carry out inspections of the land (as discussed above).

In turn, a buyer’s solicitor will usually raise thorough enquiries (again as mentioned above) so that, although a buyer would take land subject to an Overriding Interest, if they suffer loss as a result of not being given the ‘full picture’ by the seller, they can rely on any misrepresentation or misstatement made in the replies to their enquiries in order to claim for that loss.

Therefore, in addition to suitable drafting in the transactional documents, sellers should reply to any enquiries received from the buyer diligently and disclose to the buyer as much information as they hold relating to any potential Overriding Interests, thereby reducing the risk of future dispute.

How Can We Help?

At Ward Gethin Archer, our experienced team of commercial property practitioners would be pleased to have a chat if you are thinking of selling land which may be subject to Overriding Interests, to make sure they pass to any proposed buyer without future dispute, or if you have identified property you are interested in acquiring that may be subject to Overriding Interests, we can help evaluate such interests and carry out the necessary due diligence to get that full picture prior to buying.