The Land Registration Act 2002 protects parties in actual occupation of registered land, even though their interests are unregistered. It is therefore important to understand what constitutes “actual occupation” for the purposes of the legislation. Link Lending Ltd v Bustard (by her litigation friend) [2010] EWCA Civ 424; [2010] PLSCS 116 provides useful guidance for practitioners.
A homeowner executed a transfer to a third party while suffering from a mental disability. She argued that: (i) the transfer was voidable; (ii) this gave rise to an equity in her favour; (iii) her interest was protected by actual occupation, even though she was being cared for in a residential home; and (iv) this took precedence over a legal charge created by the transferee. The homeowner relied on her wish to return home, which was denied by an order under the Mental Health Act 1983, and on the fact that her furniture remained in the house. She also visited the property periodically. No one lived in the property and regular outgoings were paid through her bank account.
The Land Registration Act 2002 protects parties in actual occupation of registered land, even though their interests are unregistered. It is therefore important to understand what constitutes “actual occupation” for the purposes of the legislation. Link Lending Ltd v Bustard (by her litigation friend) [2010] EWCA Civ 424; [2010] PLSCS 116 provides useful guidance for practitioners.
A homeowner executed a transfer to a third party while suffering from a mental disability. She argued that: (i) the transfer was voidable; (ii) this gave rise to an equity in her favour; (iii) her interest was protected by actual occupation, even though she was being cared for in a residential home; and (iv) this took precedence over a legal charge created by the transferee. The homeowner relied on her wish to return home, which was denied by an order under the Mental Health Act 1983, and on the fact that her furniture remained in the house. She also visited the property periodically. No one lived in the property and regular outgoings were paid through her bank account.
The Court of Appeal upheld her claim. It ruled that the words “actual occupation” are ordinary, plain words and should be interpreted accordingly. The word “actual” emphasises that physical presence is needed. The mere presence of furniture will not usually count as actual occupation, but the personal presence of the person claiming to occupy is not essential; a caretaker can occupy on behalf of his employer. Importantly, if a person claims to have been in actual occupation of land at a particular time, even though he was not physically present at the time, he will usually have to show that his occupation was manifested and accompanied by a continuing intention to occupy.
The court ruled that the homeowner remained in actual occupation of her home. The special feature in this case was that her absence was involuntary. She had always intended to return home as soon as she was able to do so, and her absence from the house did not constitute a lack of evidence that she was in actual occupation. Consequently, the lender’s claim for possession was dismissed and it was left to pursue a personal action against its fraudulent borrower.
Where land is registered, an occupier’s interest will not override a disposition if the fact that the occupier was in occupation would not have been obvious on a reasonably careful inspection of the land, unless the party taking the disposition actually knew of the claimant’s interest. This decision indicates that detecting occupation is not always easy.
The lender’s surveyor had conducted a “drive-by” inspection and did not try to argue that it had made “a reasonably careful inspection” of the land. Would a physical inspection have revealed the occupier’s presence in this particular case? One suspects not.
Prospective buyers or lenders that detect the existence of occupiers should question them. Rights that are not disclosed when an occupier could reasonably have been expected to disclose them will lose priority against the disponee.
Allyson Colby is a property law consultant
