Property Law

Enforcement of third-party interests against a purchaser – Unregistered land | Land Law – SQE1 & SQE2 Exam

Loader Loading...
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

 

Enforcement of third-party interests against a purchaser – Unregistered land
Structure thoughts…
1. Type of right
2. Legal / Equitable interest?
3. Formalities
4. Protected so as to be enforceable?
Legal interests in unregistered land
• Generally automatically enforceable against a purchaser – ‘legal rights
bind the whole world’ (Mercer v Liverpool, St Helen’s and South Lancs
Railway Co)
• Exception – puisne mortgage = legal mortgage not protected by deposit of
title deeds (usually where previous mortgage already has the title deeds)
– need entry on Land Charges Register
Equitable interests in unregistered land
3 categories:
1. EIs (+ puisne motgage) subject to protection under Land Charges Act
1972
2. EIs subject to overreaching (trusts of land)
3. EIs which do not fall into 1 or 2 and are thus still subject to the doctrine of
notice
© Liam Porritt 2020 2
Interests subject to protection under LCA 1972
• Entry of a land charge effectively constitutes actual notice (LPA 1925 s
198(1))
• Puisne Mortgage – LCA 1972, s 2(4)(i)
o Class C(i) land charge
o Mortgage where title deeds cannot be taken, as already an existing
mortgagee (lender) who has these
• General Equitable Charge – LCA 1972, s 2(4)(iii)
o Class C(iii) land charge
o Residuary class covering e.g. equitable mortgages not protected by
deposit of title deeds
o May arise where failure to comply with formalities, e.g. no deed as
required by LPA 1925, s 52(1)
• Estate contract – LCA 1972, s 2(4)(iv)
o Class C(iv) land charge
o Includes option to purchase and right of preemption
o EI provided valid s 2 LP(MP)A 1989 + specifically enforceable
o Right of preemption
§ Registered land – EI as soon as created (LRA 2002, s 115)
§ Unregistered land – EI from date it becomes exercisable
(Pritchard v Briggs) ~ so, remains a ‘mere spes’ as long as
grantor decides not to sell the land
• Restrictive covenant created 1926 onwards – LCA 1972, s 2(5)(ii)
o Class D(ii) land charge
o Does not include covenants between landlord and tenant
• Equitable easements created 1926 onwards – LCA 1972, s 2(5)(iii)
o Class D(iii) land charge
o Remember:
§ Intended legal easement not created by valid deed
§ Easement for neither fee simple absolute in possession or
term of years absolute
• Spousal right to occupy – LCA 1972, s 2(7)
o Class F land charge
o Family Law Act 1996 – spouse or civil partner has right against
owning spouse or civil partner to occupy matrimonial home
o If charge entered, impossible for legally owning spouse / civil
partner to give vacant possession to a purchaser until charge
cancelled
o NB statutory right to occupation, not an interest in land (so if not
protected, cannot bind as an overriding interest)
© Liam Porritt 2020 3
Incorrect entry
• Entered against correct name(s) of estate owner(s) at time of creation of
land charge (LCA 1972, s 3(1))
o Name as on title deeds (Standard Property Investment plc v British
Plastics Federation), not as on birth certificate
o Missing a middle name – nullity (Diligent Finance Co Ltd v Alleyne)
Searches
• Once search made, an official certificate of search gives 15 working days’
protection against subsequent charges, so if completion within this time,
buyer takes free from interests made after this
Non-entry of a land charge
• Failure to enter:
o Puisne mortgage (Class C(i))
o General equitable charge, e.g. equitable mortgage (Class C(iii))
o Spousal right to occupy (Class F)
= void against purchaser for value (inc. marriage consideration) of any
interest in land (e.g. equitable purchaser included) (LCA 1972, s 4(5) –
class C + 4(8) – class F)
o Unprotected interests remain binding against donee purchaser (i.e.
no consideration)
• Failure to enter:
o Estate contract (Class C(iv))
o Restrictive covenant, 1926 onwards (Class D(ii))
o Equitable easement, 1926 onwards (Class D(iii))
= void against purchaser of legal estate for money or money’s worth
(not marriage consideration) (LCA 1972, s 4(6))
o Unprotected interests remain binding against purchaser of EI;
purchaser of legal estate for marriage consideration + a donee
• Midland Bank Trust Co Ltd v Green – entry onto the register, or failure to
do so, is conclusive, irrespective of the actual knowledge of the purchaser
© Liam Porritt 2020 4
Interests subject to overreaching
• LPA 1925 s 2 – same application to unregistered as registered land
• LPA 1925, 2 27 – purchase monies must be paid to at least two trustees /
a trust corporation
o If not overreached, may take land subject to beneficiaries’
interests, depending on doctrine of notice
Interests subject to doctrine of notice
1. Interests excluded from LCA 1972
a. Pre-1926 equitable easements and restrictive covenants
b. Restrictive covenants between lessor and lessee
2. Beneficial interest under a trust that has not been overreached
(incapable of overreaching or just has not been)
3. Interests arising by estoppel (Ives Investments Ltd v High)
4. Mere equities – claims to equitable remedies (e.g. right to cancel a deed
for equitable fraud)
5. Interests not included in LC 1972 – equitable right of re-entry (Shiloh
Spinners v Harding)
The doctrine of notice
• The above 5 interests enforceable against anyone except ‘Equity’s Darling’
o Bona fide – buyer acting in good faith
o Purchaser – acquires interest other than by operation of law
o Value – money or money’s worth or future marriage
o Legal estate
§ Freehold
§ Leasehold
§ Charge by way of legal mortgage, LPA s 87
o Without notice
§ Actual
§ Constructive
§ Imputed
© Liam Porritt 2020 5
Notice
• Actual notice – purchaser knows of EI
• Constructive notice, LPA 1925, s 199(1)(ii)(a)
o Failure to pursue a line of enquiry which ought reasonably to
have been made – buyer is caveat emptor
§ Investigation of title deeds
§ Inspection of the land
• Tracks suggesting right of way
• Occupiers of land
o Where purchaser deals with someone other than legal owner,
must ask if they have an interest (Hunt v Luck)
o Where purchaser deals with legal owner, must pursue lines of
enquiry where evidence of reasonably possible interest in the
property (Kingsnorth Finance v Tizard)
§ Agent (inspector of property) becomes aware that Mr
Tizard is married upon inspection (told by Mr Tizard), and
thus the plaintiff is deemed to have imputed knowledge of
his wife, and should have made further enquiries – Plaintiff
thus had constructive notice, imputed through their agent.
• Imputed notice, LPA 1925, s 199(1)(ii)(b)
o Knowlegde of agent = knowledge of buyer (Kingsnorth Finance v
Tizard)
Equity’s Darling = EI void
• Once EI void, it cannot be revived by giving notice to a subsequent buyer
(Wilkes v Spooner)
o This would mean that Equity’s Darling could not get as much for
the land as he paid for it

Share:

Leave a Reply

%d bloggers like this: