Leases contain a smorgasbord of rights and obligations, some of which are fairly standard and others which can be very specific to the premises in question.
These can include important landlord obligations to maintain a building, give the tenant quiet enjoyment or provide rights of way. Protecting these rights is of significant importance to tenants.
This is where the phrase ‘overriding interest’ comes in. Essentially this refers to an interest in land (such as a lease or easement) that whilst not recorded on a property’s title register will still bind a purchaser, even if the purchaser wasn’t aware of it. There are many interests that are classed as overriding interests but here we shall focus on leases.
The main distinction for a lease (but please note there are many more) is that leases with a term of 7 years or less are classed as overriding interests and will not require registration to bind a purchaser. By extension leases with a term of over 7 years are not overriding interests and must be registered at HM Land Registry.
So to the crux of the matter, why are we discussing such a simple point? Well, as you have probably guessed by now there is a quirk and it relates to easements within leases. An easement is a right to do something on another person’s land, such as a right of way or a right to run services.
Pre 13 October 2013 if a lease did not need to be registered at HM Land Registry then neither did any easements within it. However, post 13 October 2013 this changed and rules now require any easements within leases to be registered in order to bind a purchaser (i.e. they will not be classed as overriding interests). This applies even if the lease itself does not need to be registered, such as those with a term of 7 years or less.
As a very basic example you have a right of way over your landlord’s property allowing you to reach the door of your rented premises. If your landlord sells its property to a buyer who doesn’t know that you have this right, and you have not registered your right, you could very well lose the ability to access your premises.
So just when you thought the term of your lease had saved you some post-completion admin it pulls you back in. However, on the plus side the more interests that are noted on title registers the more accurately they should reflect all the rights over the land.
Practical points to remember:
- As a tenant – Be alive to the rights contained within leases, these are important and you should protect them as best you can even when the lease itself does not need to be registered.
- As a purchaser – Do not underestimate the importance of a thorough inspection of land and buildings and keep an eye out for any occupation or apparent rights of way.
- Always consider registering or noting any interests you acquire in land – if it is on the title register a purchaser cannot claim they were not aware of it.
- Finally – If in doubt consult the useful guidance produced by HM Land Registry and/ or a solicitor.