1

UNREGISTERED LAND

Jan Cookson

THE ISSUE OF PRIORITY – A REMINDER

sold to Philip

Jan ownedGreenacre

Bob ownsBlueacre. Jangave him an

easement of a right of way

over Greenacre

LOCAL SHOPS

THE ISSUE OF PRIORITY BEFORE 1926

THE ISSUE OF PRIORITY BEFORE 1926

1. Legal Rights

2. Equitable Rights

- who is bound?

- who is bound?- who is not bound?

• Bona fide

• Purchaser for Value

• Of the Legal Estate

• Without notice of the equitable right

Note: ‘purchaser for value’ includes a mortgagee

Jan grants Bank a mortgage

Jan owns Greenacre

Bob has a right

of way overGreenacre

What happens in the following situation?

Jan sells to Philip who is a bona-fide purchaser of the legalestate without notice of Bob’s equitable right

Philip sells to Eve who knows about Bob’s equitable right

Answer: Wilkes v Spooner [1911] 2 KB 473

Jan owns Greenacre

Bob has a right

of way overGreenacre

Note: the bona-fide

Purchaser rule is

usually referred to as

THE DOCTRINE OF NOTICE

TYPES OF NOTICE

1. ACTUAL2. CONSTRUCTIVE3. IMPUTED

CONSTRUCTIVE NOTICE

s.199(1)(ii) LPA 25A purchaser will have notice of any interest if

“…it…would have come to his knowledge if such enquiries and inspections had been made as ought reasonably to have been made by him”

What does ‘enquiries and inspections’ include?• title documents•land

Kingsnorth Finance Co.Ltd v Tizard

[1986] 1 WLR 783]

• the case illustrates the meaning of constructive and imputed notice

• it also sheds light on what amounts to ‘actual occupation’, which will be relevant in registered land

Kingsnorth Trust v. Tizard

• Was the mortgagee bound by Mrs T’s equitable interest under a trust?

• The surveyor had constructive notice of her interest – why?

• The mortgagee had imputed notice of her interest – why?

Kingsnorth Trust v. Tizard

• Applying the doctrine of notice

Was the mortgagee:

• bona fide?

• a purchaser for value?

• of a legal estate?

• without notice of Mrs T’s interest?

Kingsnorth Trust v. Tizard

• The meaning of occupation

• Judge Finlay: physical presence “does not connote continuous and uninterrupted presence … Nor, do I consider that the requisite ‘presence’ is negatived by regular and repeated absence” (at p.59).

THE 1925 LEGISLATIONLAND REGISTRATION ACT 1925* DEALS WITH WHAT IS CALLED

REGISTERED LAND LAND*now LRA 2002

LAND WHICH IS NOT REGISTERED LAND IS CALLED UNREGISTERED LAND LAND

THE LAND CHARGES ACT 1925* DEALS WITH EQUITABLE RIGHTS IN UNREGISTERED LAND

*now LCA 1972

THE ISSUE OF PRIORITY AFTER 1925 IN UNREGISTERED LAND

THE ISSUE OF PRIORITYAFTER 1925 IN UNREGISTERED LAND

1. Legal rights (-1)

2. Equitable (+1 legal) rights which are registrable as Land Charges under the LCA 25 (now LCA 72)

3 The right of a beneficiary under a trust who is not also a legal owner – this is subject to overreaching

4. Equitable rights to which the Doctrine of Notice still applies

1. LEGAL RIGHTS [EXCEPT 1]

still BIND THE WORLD

2. EQUITABLE RIGHTS (+1 LEGAL)

WHICH ARE REGISTRABLE AS LAND CHARGES under LCA 1925

(now 72)

2. EQUITABLE RIGHTS (+1 LEGAL) THAT ARE REGISTRABLE AS LAND CHARGESUNDER LCA 72 (FORMERLY LCA 25)

• Only rights listed in s.2 Land Charges

Act (LCA)1972 can be registered

• Those listed are divided into Classes A-F

■Class C(i) = Puisne mortgage [the one legal right]

■Class C(iii) = General equitable charge

■Class C(iv) = Estate contract

■Class D(ii) = Restrictive covenant made on/after 1/1/926

■Class D(iii) = Equitable easement made on/after 1/1/1926

■Class F = Home rights – Matrimonial & Civil Partner’s Home rights (under Family Law Act 1996 as amended by the Civil Partnership Act 2004)

IMPORTANT LAND CHARGES IN s.2 LCA 72Note especially:-

HOW IS A LAND CHARGE REGISTERED

1. WHO REGISTERS IT?

2. WHO IS IT REGISTERED AGAINST? s.3(1) LCA 72:

3. WHAT HAPPENS IF IT IS REGISTERED AGAINST

THE WRONG NAME? see next slides

REGISTERING AGAINST WRONG NAME 1 - SEARCH AGAINST CORRECT NAME

Diligent Finance Co. Ltd v Alleyne (1971) 23 P & CR 346

■Estate owner = Erskine Owen Alleyne■Wife registered a Class F land charge against Erskine Alleyne■Mortgage Co. searched register correctly

against Erskine Owen Alleyne

Held?

REGISTERING AGAINST WRONG NAME 2. -SEARCH AGAINST WRONG NAME

Oak Cooperative Building Society v Blackburn [1968] Ch 730

■ Owner: Francis David Blackburn

■ Estate contract (Class C(iv) land charge) registered against: Frank David Blackburn

■Mortgage Company searched against: Francis Davis Blackburn

Held?

THE EFFECT OF REGISTERING A REGISTRABLE RIGHT AS A LAND

CHARGE ( AGAINST RIGHT NAME)

s.198 LPA 25:“registration shall be deemed to

constitute actual notice” to all persons dealing with the land

THE EFFECT OF NOT REGISTERING A REGISTRABLE RIGHT

THE EFFECT OF NOT REGISTERING A REGISTRABLE RIGHT – 1.

C(iv), D(i) (ii) & (iii)

s.4(6) LCA 72

The interest will be void against which type of

purchaser?

THE EFFECT OF NOT REGISTERING A REGISTRABLE RIGHT– 2.

C(i)-(iii) & F

S.4(5) and 4(8) LCA 72

The interest will be void against which type of

Purchaser?

An exercise – s.4 LCA 1972

Dillon fails to register his

restrictive covenant – will it bind Ed?

• (1) Ed buys the fee simple absolute in possession from Ali for £200,000.

• (2) Ed inherits the property from Ali.

4 GENERAL POINTS ON REGISTRATION OF

RIGHTS AS LAND CHARGES • The definition of a purchaser will include a mortgagee

• All unregistered land charges will remain enforceable if they are not void

• All unregistered land charges remain enforceable against the person who granted them

• The doctrine of notice has NO application

KNOWLEDGE OF AN UNREGISTERED RIGHT THAT SHOULD HAVE BEEN REGISTERED IS IRRELEVANT

s.199(1) LPA 25

A purchaser shall not be prejudicially affected by notice of anything that is capable of registration as a land charge but which is void or not enforceable against

him by reason of non-registration

Midland Bank v Green [1981] AC 513

AN EXPLANATION OF

PUISNE MORTGAGE – CLASS C(i)(pronounced ‘puny’ mortgage)

• the one legal right that has to be registered as a land charge

• What is a puisne mortgage?

A GENERAL EQUITABLE CHARGE – CLASS C(iii)

• s.2(4) LCA 72

A beneficial interest under a trust CANNOT be registered under this class

= a contract to create or transfer a legal estate

A N ESTATE CONTRACT – CLASS C(iv)

EgJan contracts to sell her legal estate in Greenacre to Philip

- under this contract Jan has to sell and Philip has to buy

AN ESTATE CONTRACT – CLASS C(iv) (cont’d)

There are also 2 more types of contract to create/ transfer a legal estate that are called estate contracts

AN OPTION A RIGHT

OF PRE-EMPTION

An exercise – land charges

Which of the following are registerable as land charges, and if registerable, which category?

1. Paul gives Mary an option to purchase his house in the next 10 years

2. Jackie grants Sue a right of way for 10 years by deed

3. Esme is married to Tom and Tom is the legal estate owner of their matrimonial home

4. In 1995 Sam sells part of his estate to Alan, who promises to only use the land for grazing cattle

5. Nikki and Pete buy a house together, each paying ½ of the price. The legal estate is transferred into Nikki’s sole name.

THE RIGHT OF A BENEFICIARY UNDER A TRUST WHO IS NOT

ALSO A LEGAL OWNER

IS SUBJECT TO

OVERREACHING

Pinkacre sold to Philip. Only Mike need sign

the sale deed, as the legal owner This will transfer Mike’s legal and beneficial interest.But… Vicky’s interest is then left, that could bind Philip.

Legal owner/Trustee

MIKE____________

MIKE AND VICKY

Equitable/Beneficial owners

The situation that overreaching is concerned with

1. Philip must pay the purchase money to

a minimum of 2 trustees (ie legal owners) or a

trust corporation who must then give him a valid

receipt for this money.

When this happens, the beneficial interest is

moved off the land & into the money from the

sale.

What must be done for overreaching to occur -

s.2 and s.27(2) LPA 25 as amended

Additional points

• If there is only 1 trustee, a second one must be appointed.

• Overreaching is effective, even if the purchaser knows about the beneficial interest

• A lender who provides a post-acquisition mortgage,

is in exactly the same position as a purchaser, and can use overreaching in exactly the same way.

4) EQUITABLE RIGHTS TO WHICH THE DOCTRINE OF NOTICE

(STILL) APPLIES

EQUITABLE RIGHTS TO WHICHTHE DOCTRINE OF NOTICE (STILL) APPLIES

= ONLY to equitable interests which cannot be registered as a land charge =

1. Rights of a beneficiary under a trust WHERE OVERREACHING HAS FAILED

2. Restrictive covenants and equitable easements created before 1/1/1926

Summary

EXERCISEON PRIORITY IN UNREGISTERED LAND

• 1. Alan owns Green Gables (a large house with extensive grounds). He builds a cottage in part of the grounds and sells it to Bill in fee simple. In the conveyance to Bill he imposes a restrictive covenant to prevent Bill from carrying on a business on the land.

• If Bill sells the cottage to Cath, will she be bound by the covenant?

• 2. Assume that Alan holds Green Gables on trust for his adult daughters, Ethel and Freda. If David buys Green Gables from Alan, will he be bound by the daughters’ interests in the property?