The Land Registration Act 2002 protects the interests of persons in actual occupation of registered land. This often causes problems for those buying, renting or lending against the security of registered land because the interests of persons in actual occupation are not recorded on the registers of title kept by the Land Registry.
However, as long as appropriate enquiries are made of occupiers and their rights are not disclosed, disponees can proceed, safe in the knowledge that their interest will have priority, unless it would have been unreasonable to expect such rights to be disclosed, or the disponee was aware of the true position.
It is self-evident that a disponee will make enquiries before entering into a transaction only if it is aware that someone is in occupation. Consequently, the legislation does not protect the rights of persons whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition. Importantly, the occupation must be obvious, not the existence of an interest.
Decisions under the Land Registration Act 1925 established that whether someone is in occupation is a question of fact, which depends on all the circumstances. However, the word “actual” appears to emphasise that physical presence is required: Williams & Glyn’s Bank Ltd v Boland [1981] AC 487, at p504.
In Link Lending Ltd v Hussein [2009] PLSCS 271, the court had to decide whether a previous proprietor remained in actual occupation of her house after executing a transfer to a third party while suffering from a mental illness, even though she was being cared for in a residential home. She claimed that: (i) the transfer was voidable; (ii) she had an equity in the house, which was protected by actual occupation; and (iii) her interest took priority over a legal charge created by the transferee.
She relied on her desire to return to the property (which was denied by an order under the Mental Health Act 1983) and on the fact that her furniture and some personal effects remained in the house. She also visited periodically. No one else lived there, and regular outgoings were settled from her account through arrangements with social services.
The county court judge upheld her claim. In his judgment, she continued to occupy the house, even though she was for the time being resident elsewhere; her occupation was manifested and accompanied by a continuing intention to occupy: Thompson v Foy [2009] EWHC 1076 (Ch); [2009] 22 EG 119 (CS). Consequently, the lender’s claim for possession was dismissed and it was left to pursue a personal action against the transferee.
Many will sympathise with the occupier in this case. None the less, lenders will be concerned by the decision. The presence of furniture does not usually count as actual occupation (Strand Securities Ltd v Caswell [1965] Ch 958) and it is difficult to see how else the lender might have been alerted to the occupier’s presence.
Allyson Colby is a property law consultant