Part A:
Beneficial interests refer to advantages deriving from a trust in interest of the beneficiary who happens to be Talia. The Hague Convention acknowledges that a trust can be created inter vivos when assets have been placed under control of a trustee for the beneficiary. Although the property may be solely under Barney's name who agrees to sell to Alpha, concerns may arise due to existing overriding interests which can "… bind anyone taking under a registered disposition" this includes a purchaser of "valuable consideration". This in hindsight means if the property were to be sold without Talia's knowledge or agreement then she could have the right to recover. Overriding interests were first introduced by the Land Registration Act 1925 which was heavily criticised for its distortion of the mirror principle, hence was repealed and replaced in 2002. Overriding interests include leases under 7 years, legal easements, and any interest belonging to a person in actual occupation. Although overriding interests do not appear on the register due to the curtain principle, they do, nonetheless, bind any person who acquires an interest in land.
Prima facie to the facts provided it can be distinguished that the overriding interest would be on the basis of actual occupation, since Talia divides her time living with her mother and living in the basement flat. Alpha should be aware that a beneficial interest coupled with actual occupation equates to an overriding interest which is set out in Schedule 3 of the Land Registration Act. The bill confirms that subject to one exception, interest belonging to a person in actual occupation, overrides first registration. It is important to identify whether Talia's actual occupation claim would suffice as an overriding interest. Since there is no statutory definition for 'actual occupation', case law is used to determine the meaning. Boland set the foundation with Lord Denning stating each case should be looked at individually to identify actual occupation. Furthermore, Lord Oliver asserted that occupation requires "some degree of permanence and continuity."
Although Talia divides her time between two places, as long as the property shows signs of residence it would amount to actual occupation; namely things such as furniture or personal belongings. Chhokar illustrated actual occupation was not lost by temporary absence as belongings portrayed occupation permanence, showing an intention to return. However, in Stockholm a fourteen month absence regardless of belongings being left in the property was held to be prolonged absence and did not amount to actual occupation. Courts would turn to facts presented to assess whether Talia's absence is prolonged enough to not to actual occupation. Taking into account Talia divides her time, it can be assumed this would not be prolonged absence. However, even if Talia is spending more time away her claim may still be successful. Link Lending v Bustard and Chhokar show courts approach to take into account pivotal reasons when judging temporary lapses in occupation. Therefore, all is not lost, if for instance, Talia is spending lengthy times away from the apartment as long as she provides it is for a valid reason; namely, medical reasons.
This does not mean courts will decide Talia is in actual occupation. Courts look at each case on an individual basis. Rosset confirmed that for overriding interest to be established under actual occupation the person had to be present at the location. According to LRA, Talia's interest would be overriding if firstly, the person is in actual occupation and secondly if the actual occupation would be obvious on reasonable inspection . The inspection should be made by Alpha as Lord Denning highlights "it is up to every purchaser before he buys to make enquiry…" failing to do so will be at their "own risk".
It must be noted that the house is a three-bedroom property however Talia only occupies the basement flat. This implies Talia has partial occupation, which is insufficient under the LRA 2002. The new provision provides that the 'interest only had overriding status for that part.' Meaning Talia has an overriding interest in the apartment but not the entire house.
Talia may have the ability to prevent Barney from selling the house through promissory estoppel on grounds she had contributed towards the house in some way such as paying for decorations or on the grounds of actual occupation. For this Talia would need to be able fulfil the requirements of reliance, detriment and unconscionability.
To avoid this, Alpha could claim Talia's rights are overreached which would circumnavigate overriding interests. Overreaching enables land to be sold free of the beneficiaries' interests. If Alpha pays the purchase price to both Barney and Talia, it would overreach the beneficial interest that Talia holds even though she is in actual occupation of the premises. This was demonstrated in Flegg where the property was sold free of interests provided there was payment and consideration to all parties.
To sum up, Alpha will have no issues with purchasing the property as it seems Talia only has an overriding interest in relation to the apartment of the property – provided that she is in actual occupation there.
Part B:
An easement is the right "annexed to land to utilise other land of different ownership in a particular manner". Given the facts it is obvious there is an easement for Habib to use 6 Plough Lanes cobbled path as a right of way. This is confirmed in Borman whereby a right of way was capable of being an easement. The question here is, whether this easement is binding on Alpha. As it is obvious there is an easement, it is safe to say all requirements set by Evershed MR have been satisfied, therefore, attention turns to the method used to create the easement.
To be a legal easement; it must have been created through a deed under the Law of Property Act 1925 Section 52. According to LRA section 3, paragraph 3 an implied legal easement is binding on a purchaser and overriding if it (i) is registered under the Commons Registration Act 1965 , (ii) if the purchaser knows of it, (iii) it is obvious on a reasonable inspection of land, (iv) has been used within one year before the disposition. In this case, the purchaser Alpha is aware of the easement and if has made an inspection should see if the path is being used regularly and should inspect whether there is an alternative route like in Nickerson v Barraclough . Taking this into account, Alpha will be bound by the easement and would need to allow Habib to use the right of way. However, if upon inspection Alpha finds the path is not being used and when asking around finds out it has not been used for within one year of disposition then the easement may fail.
It may be an express legal easement which again would be registered and created under deed. However, if it is an express legal easement then the easement, may not amount to an overriding interest. For instance, if the easement has been expressly granted on or after 13 October 2003, it will be seen as an equitable interest.
If the right of way is assumed to be created by an implied grant then it will bind Alpha as long it complies with s3, paragraph 1-3 of the LRA 2003.
Part C:
The LRA 2002 came into effect on 13th October 2003 and it sought to reduce the number of overriding interests , by re-classifying the "interests that's override" and replacing them with register entries. The Act has made notable changes to provisions regarding actual occupation and easements. For instance, actual occupation has been redefined under Section 3. In regard to easements, schedule one ensures all legal easements are included because first registration should neither enhance or restrict proprietary rights. Overall, the 2002 act aimed to put an 'end to the supremacy possession as basis for a successful claim to ownership of land' according to Sukhninder Panesar , however further reforms may still be needed.
One thing to be noted is that the term 'actual occupation' is still not defined in the statue and the meaning is still determined using case law under s.70(1)(g) LRA 1925. Proving uncertainties have not fully been resolved. It is however, evident the 2003 Act Schedule 3 para2(a), 2(b) and 2(c) have lent a hand for courts to judge when actual occupation can be an overriding interest. It does this by departing from the restrictive approach, ensuring both third parties and the purchaser have a safety net to rely on. For instance, the transferee is not bound by 'undiscoverable' overriding interest. Schedule 3 excludes actual overriding statues from overriding statues in certain situations, protecting the purchasers from interests they had no 'actual knowledge' of. At the same time, the third party is protected as the purchaser is bound pro tanto and is denied the opportunity of walking away or denying overriding interests if they are aware.
Legal Easements are also restricted under LRA 2003. Under Schedule three, the policy highlights that only discoverable rights should be overriding. Therefore, for something to be a legal easement there is a qualifying list. This makes it fair for the purchaser who will not be bound by an invalid easement. However, Dixon notes while the judiciary seeks to ensure fairness in the act, they focus on the legal and equitable character of the easement rather than the manner of their creation.
The reforms to the LRA have been somewhat successful and to some extent have improved land law. This is by protecting both third party interests and reducing the scope of overriding interests to protect the buyers. However, there is still further need for development in this area as the Law Commission published a 600-page report with recommended changes.