A lucky escape

Thanks to a lucky escape on a legal technicality, a landowner now owns his property free from a right of way created by former owners

The right was created in the period between the sale to the landowner and his registration as owner of the property at HM Land Registry.

This was the outcome of a Court of Appeal hearing in the case of Baker v Craggs. The Court of Appeal has overturned the High Court decision which we reported in our article The Gap Widens in December 2017.

The case illustrates the problems that can arise as a result of the registration gap where a person is not regarded as the legal owner of a property until HM Land Registry has registered them as the owner.

Summary of the facts

Mr and Mrs Charlton sold land to Mr Craggs. His solicitor applied to register him as the new owner. Unfortunately, the plan attached to the transfer of the property was incomplete and HM Land Registry cancelled Mr Craggs' application to be registered as the owner of the property when the problem was not corrected within the required timeframe. As a result of the cancellation, a new application had to be made to register Mr Craggs' ownership of the property.

During the intervening period, Mr and Mrs Charlton sold another part of their property to Mr and Mrs Baker. The transfer of the new property included the grant of a right of way over Mr Craggs' property without Mr Craggs' knowledge or consent. The Bakers' solicitors were successful in having title to the new property registered with the benefit of the right of way over Mr Craggs' land.

When the High Court was asked to decide whether the right of way should remain on Mr Craggs' title, it decided that it should. The starting point was that Mr Craggs was in occupation of his property. He therefore had an interest in the property that was capable of overriding the Bakers' right to have the right of way registered. However, the court ruled that because the Bakers had paid the purchase moneys to two people, the effect of this was to trump Mr Craggs' overriding interest and take priority to it. The technical term is called overreaching. Overreaching allowed the right of way to be registered.

Court of Appeal

The Court of Appeal has overruled the finding of the judge in the court below. Mr Craggs' overriding interest could not be trumped by the fact that the Bakers had paid their purchase moneys to two people. The Court of Appeal said overreaching applies only to the sale and purchase of freehold and leasehold titles in land. It does not apply to the creation of rights (such as a right of way) over other land. Because Mr Craggs was in occupation of the property, his rights of occupation took priority. The right of way in favour of the Bakers, therefore, should be removed from Mr Craggs' title.

Conclusion

Mr Craggs was lucky. It was only that fact that he was in occupation of the property that saved him. Had he delayed moving in by a week or two, his property might still be subject to the right way.
Helpful though the Court of Appeal's decision is, it does not address the fundamental issue that a person is not regarded as the legal owner of a property until HM Land Registry has completed the registration of that person as an owner. No number of judicial sleights of hand can resolve this issue.

The Law Commission is currently preparing a response to a consultation on the reform of the law relating to land registration that is due to be published later this year. We wait to see whether the response to that consultation will address the issues that still remain with the registration gap.

Baker v Craggs [2018] EWCA Civ 1126