Facts
Mr Boland was the sole registered proprietor of the family home. Mrs Boland had contributed substantially to its purchase, so she had a beneficial interest in it under a trust. Without telling her, Mr Boland mortgaged the house to Williams & Glyn's Bank to secure his business debts. The bank made no inquiries of Mrs Boland.
When Mr Boland defaulted, the bank sought possession of the house. Mrs Boland argued that her interest bound the bank.
Issues
- Was Mrs Boland's beneficial interest capable of being an overriding interest under s 70(1)(g) of the Land Registration Act 1925, which protected the rights of every person in actual occupation of the land?
- Was she in actual occupation, given that her husband, the legal owner, also lived there?
Decision
The House of Lords dismissed the bank's appeal. Mrs Boland's interest was an overriding interest and bound the bank. Lord Wilberforce gave the leading speech.
Reasoning
A right capable of overriding. The bank argued that, under the old law, a beneficiary under a trust for sale only had an interest in the proceeds of sale, not in the land itself (the doctrine of conversion). The House of Lords rejected this. For the purposes of the Act, Mrs Boland's interest was an interest in land, and she was entitled to occupy it.
Actual occupation. Lord Wilberforce said "actual occupation" should be given its ordinary meaning. It's a matter of fact: physical presence, not a legal entitlement. A wife living in the house with her husband is plainly in actual occupation of it. Her occupation wasn't merely a shadow of her husband's.
Protecting occupiers. The purpose of the provision was to protect people in occupation, whose rights might not appear on the register. A buyer or lender can protect itself by inspecting the property and asking the people who live there about their rights. The bank didn't, so it took subject to Mrs Boland's interest.
Why it matters
Boland showed how vulnerable lenders and buyers could be to unregistered interests of people living in a property, and it changed conveyancing practice. Lenders now routinely ask adult occupiers to sign occupier consent forms, agreeing that their interest ranks behind the mortgage.
The decision is also limited by other doctrines:
- Overreaching. If capital money is paid to at least two trustees, beneficial interests under the trust are overreached and move into the proceeds (ss 2 and 27 of the Law of Property Act 1925). In City of London Building Society v Flegg [1988] AC 54, occupiers' interests were overreached because the mortgage money was paid to two registered proprietors.
- Timing. In Abbey National Building Society v Cann [1991] 1 AC 56, the occupier had to be in actual occupation at the time of completion, and a purchase mortgage took priority over interests arising from the same purchase.
The rule now appears in Schedule 3, paragraph 2 of the Land Registration Act 2002, which adds that an interest won't override if the occupier didn't disclose it when asked and could reasonably have been expected to, or if the occupation wasn't obvious on a reasonably careful inspection and the buyer didn't actually know about it.
How it comes up in exams
For priority problems involving registered land:
- Does the occupier have a proprietary interest (not just a personal permission)?
- Are they in actual occupation at the relevant time (Boland; Link Lending Ltd v Bustard [2010] EWCA Civ 424)?
- Do any exceptions in Schedule 3, paragraph 2 apply?
- Has the interest been overreached by payment to two trustees (Flegg)?
In property practice, this is why you check who lives in the property and get occupiers' written consent to the sale or mortgage.
Frequently asked questions
What was decided in Williams & Glyn's Bank v Boland?
The House of Lords held that Mrs Boland's beneficial interest in the family home, together with her actual occupation, was an overriding interest under the Land Registration Act 1925. It bound the bank, so the bank couldn't get possession against her.
What is an overriding interest?
An interest that binds a buyer or mortgagee of registered land even though it doesn't appear on the register. The interests of people in actual occupation are the most important example.
How could the bank have protected itself?
By asking Mrs Boland about her interest and getting her consent, or by advancing the money to two trustees so that her interest was overreached, as in City of London Building Society v Flegg [1988] AC 54.
What is the current law on actual occupation?
Schedule 3, paragraph 2 of the Land Registration Act 2002. An occupier's interest overrides unless they failed to disclose it when asked and could reasonably have been expected to, or their occupation wasn't obvious on a reasonably careful inspection and the buyer didn't actually know about the interest.