UK: Closing The Registration Gap

Last Updated: 1 August 2018
Article by Emma Broad and Danuka Amirthalingam

In late 2016 the High Court decided that a purchaser was bound by an easement granted by his sellers, without his permission, after he had purchased his land from them. That decision caused considerable unease. Accordingly, it will come as a relief to many that the Court of Appeal has overturned the previous decision in Baker v. Craggs and, in the process, confirmed that the grant of an easement is not capable of triggering the overreaching provisions of the Law of Property Act 1925 (LPA 1925).


The Charltons owned a farm in Somerset. On 17 January 2012 they completed a transfer of part of the farm land and outbuildings (the Farm Land) to Mr Craggs. Subsequently the Charltons contracted to sell one of the remaining barns to the Bakers including, by mistake, a right of way over the Farm Land. The transfer of the barn to the Bakers (including the grant of the right of way) completed on 20 February 2012.

Mr Craggs' application to register his transfer at the Land Registry was cancelled and his solicitors were unable to submit a fresh application within the priority period. The transfer to the Bakers was accordingly registered first together with the right of way over the Farm Land. When Mr Craggs finally completed registration of his transfer it was registered subject to the right of way in favour of the Bakers.

The dispute in this case was whether or not that right of way bound the Farm Land that had been acquired by Mr Craggs.

Reminder of High Court decision

At first instance the High Court held that the Farm Land was bound by the easement.

By virtue of section 27(1) of the Land Registration Act 2002 (the 2002 Act) legal title to registered land only passes to a buyer upon completion of the registration formalities. The period between the dating of a transfer and its registration at the Land Registry is known as the registration gap. During the registration gap, the Charltons held the legal title to the Farm Land on trust for Mr Craggs, who in turn held no more than an equitable interest.

Under section 29 of the 2002 Act the registration of the transfer of the barn to the Bakers for valuable consideration was subject only to interests affecting the same immediately prior to that transfer which were either protected by registration or which constituted overriding interests. Paragraph 2 of Schedule 3 of the 2002 Act provides that "an interest belonging at the time of disposition to a person in actual occupation" can amount to an overriding interest. On the facts the court held that Mr Craggs had been in actual occupation of the property as at the date of the Baker transfer and so, given his equitable interest in the Farm Land, he had an overriding interest.

Overriding interests can, however, be overreached. Overreaching is the process by which certain interests in land can be converted into interests in the money or assets exchanged for that land, such that the relevant land becomes free of that interest. Unfortunately for Mr Craggs, the High Court held that statutory requirements for overreaching, as set out in section 2(1)(ii) of the LPA 1925, had been satisfied:

  • the grant of an easement amounted to the conveyance of a legal estate;
  • the Farm Land was held on trust for Mr Craggs; and
  • the proceeds of the sale of the barn to the Bakers, which included the grant of the right of way, were paid to two trustees, namely the sellers, Mr and Mrs Charlton.

While estate contracts, such as a contract for the sale of land, are excluded from the effects of overreaching, the court held that Mr Craggs' sale contract had merged on the completion of the transfer of the Farm Land so that he no longer had the benefit of an estate contract at the time the Bakers were granted the right of way. Accordingly, while Mr Craggs had had the benefit of an overriding interest, that interest had been overreached leaving the Farm Land bound by the right of way.

The appeal to the Court of Appeal

The appeal focused on one specific issue – whether the High Court's conclusions on overreaching were correct. The Court of Appeal concluded that the doctrine of overreaching had no part to play in the resolution of the problem.

In the Court of Appeal's view:

  • the issue was one of priorities. The grant of the easement over the Farm Land in favour of the Bakers could not prevail over Mr Craggs' right to be registered as proprietor of the Farm Land free of the easement because Mr Craggs had an overriding interest in the Farm Land at the date the easement in favour of the Bakers was granted;
  • the doctrine of overreaching was not engaged because:

    • under the LPA 1925 overreaching requires a conveyance to a purchaser of a legal estate in land. On its correct interpretation the only legal estates in land that can exist under the LPA 1925 are freehold and leasehold interests. The grant of a charge by way of legal mortgage also has overreaching effect by virtue of s.87 of the LPA 1925. As such, the grant of an easement did not satisfy this statutory requirement;
    • even if the grant of an easement triggered the overreaching mechanism, under section 2(1) of the LPA 1925 this would only overreach "any equitable interest ... affecting that estate", which would mean in this case an equitable interest in the easement. It was difficult to see how this could apply given that the easement had no prior existence before it was granted and the equitable interest Mr Craggs had was not in the land being sold to the Bakers; and
    • there was another key objection to the application of overreaching in this case – the conceptual impossibility of identifying any part of the proceeds of sale of the land sold to the Bakers to which Mr Craggs' equitable interest could be attached should it have been overreached.


The Court of Appeal's decision is a welcome clarification of the law in this area. The previous decision in this case had caused considerable unease as it set a precedent for a purchaser to be bound by an interest created after he had completed his purchase but prior to him registering the same at the Land Registry.

Unfortunately this does not mean that the registration gap is no longer an issue. Parties who are in the process of registering their transactions at the Land Registry but who are not yet the registered proprietor will still encounter difficulties. For example, recent case law has illustrated that they may be precluded from successfully exercising break clauses in leases or serving certain statutory notices where the action must be taken by the "legal" owner as opposed to the beneficial owner (a party only obtains legal title upon successful registration). To eliminate the problems we need to remove the registration gap itself (i.e. the time between completing a transaction and registering it at the Land Registry) that in turn is dependent on electronic conveyancing becoming the norm: something that we hope is in the not too distant future.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

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