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Registered land and overriding interests — SQE1 Land question

A worked single-best-answer question on registered land and overriding interests, with why each wrong option is wrong — the way SQE1 traps candidates.

Registered land and overriding interests

Harold is the sole registered proprietor of a freehold house. His wife, Ingrid, paid one third of the purchase price when the house was bought ten years ago and has lived there ever since. Harold recently borrowed £150,000 from Lomond Bank plc, secured by a registered legal charge over the house. The bank's valuer inspected the property but the bank made no enquiries of Ingrid, who was at home. No restriction or notice protects Ingrid's interest. Harold has defaulted and the bank seeks possession.

Is Lomond Bank bound by Ingrid's beneficial interest?

  1. ANo, because an equitable interest that is not protected on the register cannot bind a registered chargee.
  2. BNo, because the bank paid the loan money to the registered proprietor and so overreached Ingrid's interest.
  3. CYes, because Ingrid's interest overrides the registered charge as the interest of a person in actual occupation, and it was not overreached as the loan money was paid to a single proprietor.
  4. DNo, because Ingrid's occupation would not have been obvious on a reasonably careful inspection.
  5. EYes, but only because the bank had actual knowledge that Ingrid had contributed to the price.
Show answer and reasoning
C is the best answer. Under the Land Registration Act 2002, s 29 and Sch 3, para 2, the interest of a person in actual occupation overrides a registered disposition, unless enquiry was made and the person failed to disclose it, or the occupation was not obvious on a reasonably careful inspection and the disponee had no actual knowledge. The bank made no enquiry of Ingrid, and because the money was paid to a sole proprietor her interest was not overreached (Williams & Glyn's Bank v Boland).

Rule: A beneficial interest of a person in actual occupation overrides a registered disposition unless overreached or one of the Sch 3, para 2 exceptions applies.

  • A An unprotected interest can still bind a registered disponee as an overriding interest under Sch 3, para 2. (wrong rule)
  • B Overreaching requires payment to at least two trustees or a trust corporation; payment to Harold alone is not enough. (wrong rule)
  • D Ingrid lived at the house and was at home, so her occupation would have been obvious, and the bank made no enquiry of her. (right rule, wrong facts)
  • E Actual knowledge is not required where occupation is obvious; the interest overrides because of actual occupation. (answers a different question)

Source: Land Registration Act 2002, s 29 and Sch 3, para 2; Williams & Glyn's Bank Ltd v Boland [1981] AC 487

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