The recent Court of Appeal decision in Baker v Craggs  reverses the decision of the lower court which had meant that having sold a property, the original owner could create new rights over the property which would bind the new owner of the property.
Mr and Mrs Charlton were selling two adjoining properties ‘A’ and ‘B’. They sold Property A to Mr Craggs in January 2012. The transfer of this property did not reserve a right of way over Property A in favour of Property B. On completion of the sale, Mr Craggs’ solicitor applied to register him as the new owner at the Land Registry but due to the plan attached to the transfer not being correct, the Land Registry asked for it to be rectified. The new plan was not sent the Land Registry within the time given, and Mr Craggs' application to be registered as the owner of the property was cancelled.
In the meantime, Mr and Mrs Charlton sold Property B to Mr and Mrs Baker. The transfer of the new property included a right of way over Property A even though Mr and Mrs Charlton had no right to do so, as Property A had been sold. Mr and Mrs Baker’s solicitor applied to register them as the new owner at the Land Registry. As the application for Property A had been cancelled, it meant that Property B was registered first.
When Property A was finally registered, it was shown as being subject to the right of way in favour of Property B.
Mr and Mrs Baker said that they had a right of way because they had paid the purchase price for their land to two people. The legal concept of overreaching meant Mr Craggs’ interest was transferred from the land to the purchase money paid to Mr and Mrs Charlton. The Court of Appeal had to decide if this was correct and whether the right of way should remain registered against Property A’s title.
The Court of Appeal held that the right of way shouldn’t remain registered against Property A’s title, because the concept of overreaching does not apply to easements and only to legal estates in land. The Court of Appeal’s reversal of the lower court’s decision means that a Seller cannot grant rights over land that they have previously sold to another party.
The decision of the lower court was widely derided on the basis that it would seem unfair that having sold a property, a former owner could continue to create new rights over that property that would bind the new owner. The Court of Appeal’s reversal of this decision is therefore likely to be welcomed by many.
The case provides a useful reminder that documents and plans should be correct before completion takes place, and that Sellers should carefully consider what rights they may need themselves in the future when selling part of their land.
For more information on this or similar issues, please contact Isabel Alterton-Sell in the Property Development team.