The recent case of Baker v. Craggs has highlighted a real problem with the land registration process in England and Wales - the ability for a seller to create interests over property even after it has been sold. This can arise because until the transfer is registered at the land registry the seller remains the legal owner of land and the buyer has beneficial ownership rights only.

In this case the buyer, Mr Craggs, purchased a number of farm buildings including a stable yard which formed part of a larger area of farm land. Unfortunately for Mr Craggs the transfer plan was not land registry compliant and the application for registration was rejected by the land registry. Whilst this was being resolved the seller sold further land at the farm to Mr and Mrs Baker and in the transfer included (by mistake) a right of way over the stable yard that had already been sold. When Mr Craggs eventually managed to register his property the transfer to Mr and Mrs Baker had been registered first; including the right of way over the stable yard.

When the case went the court the judge held that the right of way was valid and binding. The fact that Mr Craggs was in occupation of his adjoining property and thus had an overriding interest was irrelevant as the interest had been "overreached" because the transfer to Mr and Mrs Baker had been signed by two transferors.

Whilst this decision may be technically correct based on current law it is none the less alarming and will cause understandable concern to buyers. The solicitors acting for Mr Craggs could have protected his position by ensuring that he continued to have the benefit of a priority search whilst the plan issue was resolved and their failure to do so will no doubt render them liable to compensate him. That may be of little comfort to Mr Craggs though whose yard will remain subject to the right of way.