A bank lends £280,000 against a house registered in the sole name of Mr A. His partner, who paid a third of the purchase price years earlier, is living there and knows nothing about the loan. Mr A defaults. The bank wants possession. Who wins?
If your instinct was "it depends whether she was in actual occupation", you are halfway there. If your next thought was "and whether the bank made inquiry, and whether the money was paid to two trustees, and when the occupation had to exist" — you are thinking like someone who will do well in FLK2. Land Law questions in SQE1 rarely ask you to define a term. They drop you into a dispute between two people with competing claims and ask which one prevails. That is a priority question, and priority is the spine of the entire subject.
This article takes the parts of Land Law that candidates most often fumble under time pressure — priority in registered title, Schedule 3, unregistered land, leases and mortgages — and gives you a working method for each.
Start with the interest: is it legal or equitable?
Before you can rank two interests, you must know what each of them is. Section 1(1) of the Law of Property Act 1925 allows only two legal estates: the fee simple absolute in possession and the term of years absolute. Section 1(2) lists the interests capable of being legal — easements and profits equivalent to one of those estates, charges by way of legal mortgage, and rights of entry. Everything else, by section 1(3), takes effect in equity only.
"Capable of being legal" is not the same as "legal". Three further hurdles matter:
- A deed is normally required (LPA 1925, s.52), and a valid deed must comply with section 1 of the Law of Property (Miscellaneous Provisions) Act 1989 — clear on its face that it is a deed, signed, witnessed, delivered.
- A contract to create or transfer an interest in land must be in writing, contain all agreed terms and be signed by both parties (LP(MP)A 1989, s.2). Fail that and there is no contract at all — not merely an unenforceable one.
- Registration completes the picture. Under section 27 of the Land Registration Act 2002, certain dispositions — transfers, legal charges, leases granted for more than seven years, express legal easements — do not operate at law until registered.
A neat exam trap: an attempted legal grant that fails the formality can still bite in equity. A specifically enforceable contract to grant a seven-year lease creates an equitable lease (the principle in Walsh v Lonsdale). A mortgage that never reaches the register may still take effect as an equitable charge. So when the facts say "the deed was never registered", do not stop — ask what survives in equity, then run the priority rules on that.
Exam habit worth building: for every interest in the fact pattern, write two letters in the margin — L or E. Half the wrong answers in Land Law MCQs come from applying the equitable rules to a legal interest, or vice versa.
Registered land priority: sections 28 and 29 of the LRA 2002
The default rule in section 28 is chronological: interests rank in order of creation, and it makes no difference whether the later interest is registered. Most candidates forget section 28 exists because the exception swallows it so often.
That exception is section 29. Where there is a registrable disposition made for valuable consideration and it is duly registered, the disponee takes free of pre-existing interests unless the interest is either (a) protected on the register by a notice, or (b) an overriding interest falling within Schedule 3.
Break section 29 into four checks and apply them in this order:
- Registrable disposition? A transfer of the registered estate or the grant of a legal charge will do. A gift of an equitable interest will not.
- Valuable consideration? Gifts and transfers by will fall outside section 29 — so the recipient takes subject to everything under section 28. Nominal consideration is expressly excluded.
- Registered? If the disposition was never completed by registration, section 29 cannot help.
- Any notice or overriding interest? Only now do you look at the burden.
Remember also the beneficial interests under a trust of land. These cannot be protected by notice; the correct entry is a restriction. Their real protection lies elsewhere — in occupation, or in the absence of overreaching.
Schedule 3: overriding interests that beat a buyer
Three paragraphs of Schedule 3 do nearly all the work in FLK2.
Paragraph 1 — legal leases of seven years or less. They override automatically. This is why the short residential or commercial letting that appears nowhere on the register still binds the purchaser.
Paragraph 2 — interests of persons in actual occupation. Two conditions: the claimant must have a proprietary interest (a licence will not do), and must be in actual occupation of the land to which the interest relates. Then check the exceptions. The interest does not override where inquiry was made of the occupier and the interest was not disclosed when it reasonably could have been, or where the occupation would not have been obvious on a reasonably careful inspection and the buyer had no actual knowledge of it.
Timing is where marks are lost. In Abbey National Building Society v Cann the House of Lords held that occupation must exist at the date of the disposition, and that where purchase and mortgage are part of a single transaction there is no moment in which the borrower holds the property free of the lender's charge. Williams & Glyn's Bank v Boland confirms that a spouse or partner with a beneficial share can be in actual occupation in their own right, notwithstanding the legal owner living there too.
And then the great neutraliser: overreaching. Under sections 2 and 27 LPA 1925, if capital money is paid to at least two trustees or a trust corporation, the beneficial interests are swept off the land and attach to the proceeds. City of London Building Society v Flegg is the case to cite. An overreached interest has nothing left to override with — which is why, in the scenario at the top of this article, the single-name registered proprietor is the fact that really decides the outcome.
Unregistered land: land charges and the doctrine of notice
Unregistered title still appears in FLK2, and it runs on a different engine. Legal interests bind the world with almost no exception. Equitable interests split into two groups.
Most of them are registrable as land charges under the Land Charges Act 1972 against the name of the estate owner: restrictive covenants and equitable easements created after 1925 (Class D), estate contracts and options (Class C(iv)), puisne mortgages (Class C(i)), and home rights (Class F). Registration is deemed actual notice. Non-registration is fatal — and brutally so. In Midland Bank Trust Co Ltd v Green an unregistered option to purchase was held void against a purchaser for money or money's worth even though she paid far below market value and knew all about it. Motive was irrelevant.
What is left over — principally beneficial interests under a trust — is governed by overreaching first and, failing that, the old doctrine of notice: is the buyer a bona fide purchaser of a legal estate for value without notice, actual, constructive or imputed? Kingsnorth Finance Co Ltd v Tizard shows how constructive notice is judged: a lender that inspected by pre-arranged appointment on a Sunday afternoon, when the occupier had been conveniently removed, was fixed with notice of what a proper inspection would have revealed.
Leases and mortgages: the two relationships that generate disputes
For leases, Street v Mountford remains the starting point: exclusive possession, for a term, at a rent, gives a tenancy regardless of the label the parties used. Courts look at substance, and sham clauses inserted to defeat the tenancy are disregarded (Antoniades v Villiers). The term must be certain in duration — an indefinite grant "for the duration of the road widening" failed in Prudential Assurance Co Ltd v London Residuary Body.
On covenants, the dividing line is 1 January 1996. Leases granted on or after that date fall under the Landlord and Tenant (Covenants) Act 1995: an assigning tenant is released from the covenants, though a landlord may require an authorised guarantee agreement. Leases granted before that date carry the old privity of contract regime, under which the original tenant can remain liable for the whole term. Check the grant date before anything else.
For mortgages, three points repay revision. The right to redeem cannot be rendered illusory, and unconscionable collateral advantages or clogs on the equity of redemption may be struck down. Undue influence in surety cases follows Royal Bank of Scotland plc v Etridge (No 2): where a person offers their home as security for another's debts, the lender is put on inquiry and must ensure independent legal advice is given, or risk the charge being set aside. And on enforcement, the power of sale arises under section 101 LPA 1925 once the mortgage is by deed and the legal date for redemption has passed, but becomes exercisable only in the circumstances in section 103. Proceeds are then applied in the statutory order under section 105 — prior incumbrances, expenses, the mortgage debt, then any surplus to the next incumbrancer or the borrower.
A four-step method for any FLK2 priority question
Under exam conditions you have roughly a minute and a half per question. You need a routine, not a debate.
- Is the title registered or unregistered? Everything branches from here.
- Identify each competing interest and classify it as legal or equitable, checking formalities and registration.
- Ask whether the later party is a purchaser for valuable consideration who has registered — or, in unregistered land, a purchaser of a legal estate for value.
- Run the protection route: notice on the register, Schedule 3, overreaching; or land charge registration and the doctrine of notice.
Practise this on ten questions and it becomes automatic. Practise it on none and you will read four plausible options and pick the one that sounds fairest — which, in Land Law, is rarely the one that is right.
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