Land Registry Requistions: Baker v Craggs  EWHC 3250
Many conveyancers will have received requisitions from Land Registry after submitting an application for registration. Eventually, if the requisition is not answered adequately, the application will be cancelled. A new application for registration will then have to be submitted. But what then happens to transactions affecting the property being transferred which are made after the initial transfer is made but before the second application for registration is submitted? A recent case shows a surprising result.
The case involved two sales of parts of a farm in Somerset made by a Mr and Mrs Charlton. The first sale to Mr Craggs completed on 17 January 2012. It transferred parts of the farm, including the farm yard, (‘the Farm’) to Mr Craggs and included the grant of a right of way over the driveway.
Mr Craggs’ pre-completion search gave a priority period up to 28 February 2012. The transfer was lodged for registration on 10 February, but Land Registry raised a requisition. The route of the right of way granted was not shown on the plan and thus it needed amending and initialling by the Charltons. Despite an extension of the time for compliance with the requisition, the Charltons’ solicitors had still not returned the plan and the application was cancelled. A fresh application was submitted, with an amended plan, on 16 May.
In the meantime, however, the Charltons, on 20 February, transferred the farmhouse and a barn to Mr and Mrs Baker. The transfer purported to grant the Bakers a right of way over the yard that had been included in the transfer to Mr Craggs. The Bakers were duly entered on the register as proprietors on 14 March 2012. The property was stated in the Register as having the benefit of the right of way over the yard. Subsequently, when Mr Craggs was registered as the proprietor of the Farm, it was registered as subject to the right of way over the yard.
A dispute then arose between the Bakers and Mr Craggs over the right of way and proceedings were eventually commenced. It was agreed that had Mr Craggs’ initial application for registration of the transfer to him been in order, the grant to the Bakers of a right of way over the yard would have been ineffective. But, the initial application was cancelled and had to be re-submitted; did that make a difference?
Newey J. held that although the Charltons remained the legal owners pending registration of Mr Craggs’ transfer, he owned the equitable interest in the property. Further, he was in actual occupation of the Farm and so normally his rights would be binding on any subsequent purchaser of the legal estate as overriding interests. So he would have taken free of the right of way purportedly granted to the Bakers, despite the need for his application to be registered to be resubmitted. However, the sale to the Bakers was made by Mr and Mrs Charlton i.e. it was a sale by two trustees. And under s. 27 of the Law of Property Act 1925, a sale by trustees (provided the purchase price is paid to all the trustees being at least two in number), overreaches equitable interests affecting the land. Mr Craggs’ equitable interest was thus overreached – and so the grant of the easement was effective and binding upon him.
This was an unusual twist on the problems caused by the ‘registration gap’ between completion and registration. Mr Craggs was unlucky that the sale to the Bakers was by two trustees – had it been by a sole owner, he would have taken free from the easement as his rights would not have been overreached. But the case does emphasise the fact that had the conveyancers included a correctly drawn plan at the outset so that the initial application was not cancelled, Mr Craggs would have taken free from the easement without any argument. He would have been able to benefit from the protection of the priority period given by the pre-completion search.