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Enforcement of Interests - Coggle Diagram

- - - - must be in writing (no oral land contract),
      - contain all expressly agreed terms (either by terms or reference to other docs, or Law society standard conditions of sale incorporated by reference)
      - signed by both parties (if docs exchanged, can be two separate signed identical docs)
  - - - Coatsworth v Johnson- contract for a lease was completed but lease was not done by deed. Court refused to grant equitable lease as the tenant breached a contract term, so specific performance remedy was unavailable
    - - As an estate contract is proprietary right in land it is capable of binding and being enforceable against third parties
      - To be binding on third party purchasers (subsequent freeholders) the contract must be protected (unless someone is gifted or inherits the land- they will still be bound regardless) and process of protection depends on if registered or unreg land
      - remedies for breach of land contract
        
        Either party will be entitled to a remedy should the other breach
        
        Damages- common law remedy and available as of right. Usual measure is loss C suffered as a result of breach inc legal fees and loss of bargain
        
        equitable remedies
        
        specific performance- court order compelling defaulting party to carry out possible contractual obligations including transferring land to the buyer
        
        Injunction- prohibitory injunction e.g. prohibiting them selling land to someone else
        
        Equitable remedies are discretionary- not available as of right. Equitable principles apply like taking into account conduct of both parties, delays
  - - - The document then trying to create the legal interest/estate may not be a valid deed. Then an equitable interest arises providing (document complies with LP(MP)A 1989 S2 and remedy of specific performance available (this creates an equitable lease- would be a legal lease if the lease was not defective)
- - - - In order to achieve an accurate register, some transactions listed in S27(2) called registrable dispositions, must be completed by registration
      - S27(1) These dispositions do not operate at law until registration is completed. Called compulsory registration
      - Dispositions include legal estates (S27(2), transfer of existing registered freehold or leasehold estate (S27(2)(a)), grant of a new lease for more than 7 years S27(2)(b))
      - Express grant or reservation of an easement is a ‘registrable disposition’ per S27(2)(d) LRA 2002. Once formalities have been met, deed must be submitted for registration will be legal once properly registered. Will appear on property register of dominant land and charges register of burdened land. Will bind a purchaser for valuable consideration S29(2) LRA 2002
      - Legal charge is also a ‘registrable disposition’ S27(2)(f) LRA 2002. Once formalities complied with and deed registered it will be legal and appears on charges reg.
      - Known as right of forfeiture is a ‘registrable disposition’ per S27(2)( e). Created by deed and registered- not legal until registered. It is a right to bring a lease to an end
    - - equitable interests protected by entry and overreaching
        
        Equitable interests (like contract) can be created and exist without any registration requirement. Whether or not it is binding and enforceable on third party purchaser of burdened land will depend on whether protected by entry either by notice or restriction
        
        All equitable interests (other than trust) must be protected by entry of a notice in charges register of burdened land S32 LRA 2002. If protected it will bind subsequent purchasers such as buyers or lenders S29(2) LRA 2002. A new donee owner would auto be bound regardless of protection under basic rule of priority S28 LRA 2002
        
        Interests which must be protected by way of entry of notice S32 LRA 2002
        
        Notice is to show purchaser what they will be bound by but does not guarantee the interest has been properly created (which it must also be to be binding)
        
        Interests which may be protected by entry of a restriction- S40 LRA 2002
        
        Restriction in proprietorship reg is the way to protect an interest not intended to last indefinitely. Conditions are imposed on purchaser to be fulfilled.
        
        Restriction may also be entered when proprietor of land is bankrupt. Trustee in bankruptcy may enter a restriction that no disposition of land is to registered without trustee in bankruptcy’s consent. Ensures proceeds are paid direct to the trustee.
    - - Applies to interests in trusts of land: beneficiaries in a trust of land (which can be protected by restriction to ensure overreaching occuers) and short legal leases for term of three years or less (which are binding as overring interests)
      - Some interests must be protected by a notice to be enforceable against a purchaser, others can be, but do not have to be. E.G. legal leases granted for more than three years and up to 7 years can be protected by notice or will be binding as overriding interest
      - Governed by S2 and 27 LPA 1925 an applies equally to unreg or reg land
      - Trusts
        
        A purchaser (buyer or lender) of land subject to a trust will need to ensure it will not take the land subject to any equitable interest a beneficiary of the trust has. To ensure it takes the land free of any equitable interest of a beneficiary it must overreach the interest
        
        how overreaching occurs
        
        A purchaser must make sure the capital money (pp or mort advance is paid to at least two trustees. Money must not be paid directly to beneficiaries, unless they are also trustees. This has effect of transferring equitable interest from the land to the monies paid)
        
        Restriction will require purchaser pay monies to two trustees. This triggers overreaching, and ensures a purchaser/lender will take the land free of the trust interest
        
        key cases:
        
        Key case: City of London BS v Flegg- implied trust was created when flegg contributed money to Maxwell-brown’s purchase. Maxwell-brown’s contribution was only via borrowed money. Legal title held only by maxwell-browns. Without Flegg’s knowledge they remortgage d the property for their business, which failed. When payment defaulted and lender sought repossession, the Fleggs could not stop the lender enforcing the mortgage. Fleggs originally had interests in the land due to their contribution. When Maxwell-browns borrowed more money, the building society had ‘paid off’ the two trustees (maxwell-browns). Then the flegg’s interest was transferred to the money, which had now gone. Fleggs had to move out and any claim they had was against the maxwell-brown only. If maxwell-browns had been honest trusteed, they qould have handed over the flegg’s amount of money which represented their interest
        
        case: Williams & Glyn’s bank v Boland- house in sole name of Mr Boland had big contributions by Mrs boland. She had equitable interest under implied trust. Her husband is sole trustee. Without her knowledge or consent =, Mr Boland remortgaged the property to the bankand the bank paid money to Mr Boland. When bank sought possession, the bank had not overreached her interest because they had paid money to just one trustee. Bank should have insisted a second trustee was appointed (Mrs Bowland) to overreach any potential beneficial interest she had. As there was no overreaching, mrs boland’s interest remained in the land itself and bound the bank because she was in actual occupation. Bank was unable to repossess and sell.
      - Interests which bind a purchaser for value, whether a buyer is a buyer or lender, even though they have not been protected by registration
      - Introduced by LPA 1925 and kept in limited form in LRA 2002
      - If there is a registrable disposition, the new registered proprietor will take the land subject to any overriding interests
      - Where land is already registered, list of overriding interests in LRA 2002 Schedule 3:
        
        Para 1- legal leases granted for a term of seven years or less
        
        Exception at Schedule 3 Para 1 (b) a lease granted of which constitutes a registrable disposition (Legal leases for more than 7 years as a note will need to be added to freehold title)
        
        Reasons less than 7 years does not have to be registered and will be binding as an overriding interest: too many short leases are made so would be impractical, unreasonable to register short leases as often legal advice is not entered into
        
        (equitable leases to do not fall under this section but may fall under sch 3 para 2- equitable interests held by people in occupation)
        
        Para 2- equitable interests held by people in actual occupation of the land, subject to exceptions
        
        An interest belonging at the time of the disposition to a person in actual occupation, relating to the land in actual occupation
        
        Effect- enforces equitable trust interests which have not been overreached. In order for an interest to be binding under this para- there must be an interest in land AND the holder must be in actual occupation of the land which the interest relates
        
        Link Lending v Bustard- said case law under provision in S70(1)(g) LRA 1925 can assist as not defined in 2002 LRA but cases have shown reluctance to accept a single test, but gave some factors to consider: degree of permanence and continuity of presence, intentions and wishes of that person, length of absence from property and reason, nature of property and personal circumstances of the person
        
        Williams & Glyn’s Bank v Boland- degree of physical presence
        
        Abbey National v Cann- permanence and continuity
        
        Thompson v foy- actual occupation at the time of transfer deed and possibly also at time of registration to claim an overriding interest
        
        Chhokar v Chhokar- not defeated by holidays, hospital stays or business trips
        
        Stockholm Finance Ltd v Garden Holdings Inc- protracted periods of absence in a second home elsewhere will make an argument for actual occupation unsupportable
        
        Must be proprietary right in land rather than a personal right: Proprietary rights examples: equitable trusts of land, equitable leases, options to purchase
        
        Two situations where there will be actual occupation but the interest will still not be an overriding interest:
        
        Sched 3 Para 2 (b): An interest of a person whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to have done so (if solicitor or buyer asks about something and they fail to disclose the right then this will not bind as an overriding interest)
        
        Sched 3 Para 2 (c): (i) an interest which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition and (ii) of which the person to whom the disposition is made does not have actual knowledge at the time (occupation of interest owner must not be obvious, interest purchaser must not know- both must be present to not bind as overriding interest)
        
        Para 3- implied legal easements or profits a prendre, if conditions are met
        
        implied legal easement will be binding as overriding interest if (a) owner knew about it or (b) new owner did not know about it but was obvious on reasonable inspection of the land or (c) it has been exercised in the last 12 months immediately before the disposition (most implied legal easements will be binding as overriding interests as highly likely they will have been used in last 12 months
- - - - ‘legal interests bind the world’ from Mercer v Liverpool st helen’s and south lancs railway co
      - Before 1926, where a person held legal interest over land, they would be able to enforce against anyone who came to own or occupy the land, even if owners did not know or could not have known
    - - Not automatically binding on a successor in title to the land affected
      - Equity would only intervene and enforce against a successor where the successor’s conscience has been effected, making it just for them to take the land subject to interest. Usually this was where purchaser is aware of interest upon purchase or should have been aware.
      - Where successor was bona fide (good faith) purchaser for value of a legal estate in the land without notice of prior interest (‘equity’s darling’) would take the land free from that interest
        
        creates doctrine of notice- This meant buyers had to make extensive investigations and enquiries to flush out any equitable interests that burdened the land
        
        break down: bona fide (good faith), purchaser (any person who acquires an interest in the land by an operation of law), legal estate (freehold/leasehold/legal charge), without notice (without 3 kinds of notice)
        
        3 kinds of notice:
        
        actual- purchaser actually knows of the equitable interest
        
        imputed- notice received by buyer's agent (e.g. buyer solicitor)
        
        constructive- fail to pursue a line of enquiry which ought to have reasonably been made
        
        Obligations of a purchaser to make enquiries is limited to making a proper investigation of the title deeds and proper inspection of the land
        
        2 more items...
        
        problems with doctrine of notice
        
        Buyer perspective- buyer has to satisfy all requirements of bona fide purchaser for value of legal estate without notice to take free from the interest, extenstive investigations are needed, time consuming, expensive and may not guarantee discovery of interests
        
        Owner perspective- interest is fragile as can be void forever if a bona fide purchaser for value of a legal estate without notice purchases the land- through no fault of the owner
        
        An equitable interest is void when a purchaser gets the property without notice and this cannot be revived, otherwise, equity’s darlign cannot get the full value it paid on sale back on a subsequent sale
  - - - Same as pre 1926- legal right created by deed or legal lease will continue to bind the world. No need to be registered or notice to be served on anyone
      - Exception: puisne mortgage (second legal mortgage) which must be registered as a land charge
    - - Majority will need to be protected by land charge under Land Charges Act (LCA) 1972
        
        Land Charges
        
        Majority of equitable interests after 1926 will need this protection
        
        Legal interest (second legal mortgage) will also need protecting as the first legal lender will have protection of depositing of title deeds with them, Not possible for second. Second legal mortgage lender must protect themselves by entry of a land charge
        
        INSERT PICTURE
        
        effect: Interest will bind a purchaser under LPA 1925 S198 irrespesctive of purchaser’s knowledge. Entry of a charge however does not ensure validity of interest
        
        if no charge done: S4 LCA 1972- non-protection of an interest will make it void against a purchaser, but not against a done (gift or inheritance). Midland Bank Trust Co Ltd v Green shows this rule still applies for purchases of nominal amount and purchaser’s knowledge is irrelevant
        
        Land Charge is entered against name of land owner at time right is created S3(1) LCA 1972 and as per name in deeds, not birth certificate, etc. if the name is not as per the title deeds in the charge, the protection is void
        
        A search must be made of the register against full names of estate owners as spelt in the deeds, for period dating back to their period of ownership or back to 1 January 1926 if not known
      - Not all equitable interests can be protected by this so doctrine of notice still applies for: equitable easements and restrictive covenants created before 1926, equitable interests in a trust of land that have not been overreached
      - Spouse’s matrimonial right of occupation is not an interest in land. It is statutory right, for non-owning spouses, to occupy the family home unfer Family Law Act 1996