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Land - Enforcement of Third Pary Interests Against a Purchaser -…
Land - Enforcement of Third Pary Interests Against a Purchaser - Registered Land
Compulsory First Registration - s.4 LRA 2002 (October 2002)
Triggering events
Sale, gift or assent (inheritance) of freehold - s.4(a)
Grant of lease for 7+ years
Assignment of lease with more than 7+ years to run
First legal mortgage of freehold, or leasehold with more than 7 years to run - s.4(g)
Title for registered land
Should include all the information a purchaser needs - transparent and accessible
Key details relevant to the property
Owner ("Reigstered Proprieter") - goes in proprietorship register under "Title absolute"
Extent of land (plan attached) - goes in property register
Benefits enjoyed by the land - go in description
Burdens attached to the land - go in charges register
3 groups of rights under LRA 2002
Registrable dispositions (things that must be substantively registered to be binding)
Broadly equivalent to legal estates and interests - must register to acquire properly - then will bind anyone who takes the burdened land
s.27 LRA 2002 - "substantive registration"
s.27(2)
Transfers of freehold or leasehold - (2)(a)
New lease for 7+ years - (2)(b)(i)
Express easement for a freehold or leasehold term - (2)(e)
Landlord's right of entry
Legal charge/mortgage - (2)(f)
Interests which must be protected - either by...
s.32 Notice
Broadly equitable interests - don't need to be substantively registered to be created, but do need to be protected down the line against third parties
Basical equitable interests, for example...
Restrictive covenant
Easements for an uncertain term
Legal easements are automatically entered into the register - s.27 (a)(e)
Estate contract of any kind, for example...
Agreement to create lease in the future
Interests which cannot be protected by Notice are listed in s.33
s.23 LRA 2002 - the effect of not entering a Notice
Basic rule of priority in s.28 does not apply (usually interests rank in the order they are created)
s.29(1) - purchaser for value takes the land free of interest
Purchaser for valued includes lender and buyer
Person who acquiries land without paying e.g. inheritance, is still bound
De Lusignan v Johnson (1973) - if don't enter a Notice, interests not protected even if a buyer knows
Wilkes v Spooner (1911) - if the interest is lost, it is gone forever
s.40 restriction
Bankruptcy
Co-ownership and Trusts - usually found only in express trusts
In trust will alert buyer to trust's existence
Intended to restrict entries on register - not intended to last
Overreaching - enables buyer or lender to take land free of beneficial interests
Overriding interests (do not have to be registered or protected in any way to be binding)
Schedule 3 LRA 2002
Implied legal easements - para 3
Legal leases for 7 years or less - para 1
Legal leases for more than three years and up to seven are overriding interests - can be protected by notice but don't have to be
Equitable leases should be protected by notice - may also be overriding if follow Sch 3 para 2 requirements
Interests of people in actual occupation - para 2
Beneficiaries under a trust (implied)
Equitable lessees
Need both interest in land and actual occupation - William & Glyn's Bank v Boland
What is "actual occupation"?
Link Lending v Bustard (2010) - no single test for determining - Mrs Bustard was in a mental hospital but still held to be in actual occupation
Takes into account degree of permanence, continuity of presence, intentions and wishes, length of absence and reasonf for it, nature of property and personal circumstance
Abbey National v Cann (1991) - degree of permanence needed - occupation by proxy can only be successful if party is an employee
Chhokar v Chhokar (1984) - in hospital having baby - still held to be in actual occupdation
Lloyds Bank v Rosset - relevant date is completion
Stockholm Finance Ltd v Garden Holdings Inc (1995) - things were there but only visited once a year - held to not be in actual occupation
Strand Securities v Caswell (1965) - can't combine one person's interest with another's actual occupation
Actual occupation not decisive of an overriding interest - need interest in land AND actual occupatuon - conditions in Sched 3 para 2 must be met
Holder must disclose interest on reasonable enquiry or...
Holder's occupation must be obvious on reasonable inspection of the property and buyer/lender must know of it
Interest is usually a beneficial interest behind a trust but could an equitable lease for instance - Webb v Pollmount (1966)
Could not be an equitable easement - Chaudhary v Yavuz (2012) - can't be in occupation under easement - interest not strong enough
If interest stems from a beneficial interest behind a trust is can be overreached by paying the purchaser money to at least two trustees
Option to purchase - does not need to be causal connection between right protected and occupation
Binds buyer even if there was no reference to it in registered title
Provide protection for those who need it most - Peter Birks
Overreaching - ss2 and 27 LPA 1925
Only applies to the beneficial interests behind a trust - not to any other type of interest in land
Detaches the equitable interest from the land and transfers it into money
Money can be purchase money or mortgage loan
Must be paid to at least two trustees/legal owners
Protects the buyer/lender who takes land free of beneficial interests
Protects the beneficiary as they still have interest in the sale proceeds
Applies to registered and unregsitered land
Overreaching fails
Williams & Glyn's Bak v Boland (1981)
Husband had legal title - wife in occupation had equitable interest
Husband mortgaged house to bank - interest not overreaced - it remain in the land - bank should have insisted on paying to a second trustee
Wife's interest was an overriding one
Overreaching succeeds
City of London Building Society v Flegg
Maxwell-Browns had legal title and mortgaged the house to building society - their parents were in occupation and had equitable interests
Fleggs interests were overreached and transferred to money - bank took house free of interests
Loan money had been paid to two trustees - Fleggs had to look to them for money - actual occupation is not an interest in itself
Land law does not protect fraudulent trustees - should enter restriction to make sure trustees don't have full rein
LRA 2002 cannot be used as an instrument for fraud