Land Flashcards
1
Q
What is real property?
A
Land or interest in land
2
Q
What is personal property?
A
Chattels/fixtures.
Classes:
- choses in possession - movable things eg car
- chose in action - rights which do not have physical existence.
3
Q
What is land?
A
LPA 25 - corporeal hereditaments (tangibles) (surface, buildings, trees fixtures) and incorporeal hereditaments (intangible) (rights etc)
4
Q
What are limitations on airspace?
A
Limited to such height as is necessary for ordinary use and enjoyment of land and structures on it.
5
Q
What are the limitations on things in the ground?
A
Not mines and minerals - regulated by statute.
Gold and treasure belongs to Crown.
6
Q
Do landowners own wild animals on their land?
A
No, right to hunt them though
7
Q
What passes on sale of land?
A
Fixtures pass. Fittings don’t.
8
Q
How does court determine if fitting or fixture?
A
2 tests
1) degree of annexation. Greater degree of attachment, more likely to be fixture. If removal will cause damage, fixture.
2) purpose of annexation. Looks at whether item brought onto make permanent improvement, if so, fixture regardless of annexation. If temporary less likely to be fixture.
9
Q
If there is a conflict between degree and purpose of annexation tests, what prevails?
A
Purpose of annexation
10
Q
What is commonhold? How is commonhold created?
A
- freeehold estate must be registered as freehold estate in commonhold land
New form of land ownership. Similar to leasehold. Makes easier to ensure positive to be covenants complied with.
- land must be specified in memorandum of commonhold association as land in relation to which association is to exercise functions and
- must be commonhold community statement which makes provisions for rights and duties of association and unit holders.
11
Q
What are 2 legal estates?
A
- freehold
- leasehold
12
Q
What are legal interests?
A
Set out by statute. Need to be created by deed.
1) mortgages
2) easements
3) rent charges
4) profits à prendre (in gross and appurtenant)
5) rights of entry
13
Q
What are equitable interests?
A
Where attempt to make legal interest but deed formalities not met.
- equitable mortgages - contract for land needed (writing, signed & terms included)
- restrictive covenants
- positive covenants
- estate contracts - option to purchase or pre emption. Contract for land needed.
- equitable leases
- failed legal interests
- equitable easements
- beneficial interests under a trust
14
Q
What is require for creation of legal interest?
A
Valid deed to create or transfer legal interests and estates in land (not short legal leases and implied legal easements).
Document must be:
- in writing
- state on face of it that it is a deed
- be signed by grantor in presence of witness who attests signature and
- be delivered (showing intention to be bound usually by dating or sealing)
15
Q
How are equitable interests created?
A
Contracts for land for:
- failed legal interests
- estate contracts
- equitable mortgages
- equatable leases
Requirements:
1) general requirements of contract, offer, acceptance, consideration, intention, capacity.
2) in writing
3) contain all agreed terms
4) signed by all or someone with authority
If don’t meet, unenforceable.
16
Q
How can covenants and equitable easements be created?
A
Require only writing signed by grantor.
17
Q
What is proprietary estoppel?
A
Can intervene to grant a remedy where would be unfair to permit party to lose or gain advantage and rights.
18
Q
What are the requirements of proprietary estoppel?
A
- assurance that C would have an interest in land. Can be active or passive.
- C must have shown reasonable reliance on assurance (changed position)
- C must have acted to detriment
- must be unconscionable to permit party to gain or lose proprietary rights having regard to all circumstances.
19
Q
If a claimant established proprietary estoppel, what will court do?
A
Consider what appropriate remedy is. Factors into claimants expectations, detriment suffered, what is proportionate.
Remedies can be transfer of freehold, granting lease, right to occupy, compensation or no remedy at all.
20
Q
How does the seller prove to the buyer that they own the estate in unregistered land?
A
By deducing title
Production of documents commencing with good root and demonstrating unbroken chain of ownership to current owner
Minimum period 15 years.
21
Q
What are the requirements of a good root of title?
A
- at least 15 years old
- deal with whole equitable and legal interest
- contain adequate description of the property
- do nothing to cast doubt on the title
22
Q
What will the seller send to the buyer solicitor in unregistered land?
A
Epitome of title - chronological list of documents with copy of each document attached.
23
Q
In unregistered land, when does equitable title pass?
A
Passed on exchange, buyer becomes equitable owner. Buyer has insurable interest and so should insure from exchange.
24
Q
In unregistered land, when does legal title pass?
A
On completion. Application for first registration must be made within 2 months of completion
25
How are third party interests discovered in unregistered land?
By investigating title, searches, physical inspection.
26
In unregistered land, how are legal interests protected?
Buyer will purchase subject to any legal interest whether or not buyer aware of them.
Legal interests binding on buyer irrespective of notice.
27
In unregistered land, how are equitable interests protected?
Most should be registered at land charges register. Constitutes actual notice to all persons and makes it binding on subsequent owners. Must be registered against estate owners name not address.
Class C (i) - puisne mortgage
Class C (iii) - general editable charge (equitable mortgage)
Class C (iv) - estate contract
Class D (ii) - restrictive covenants
Class D (iii) - equitable easements
Class F - non owning spouses statutory right of occupation under FLA 1996
28
In unregistered land, how is a beneficial interest under a trust protected?
Determined by the doctrine of notice.
Purchaser bound unless can show equity’s darling. Bona fide purchaser for valuable consideration of legal estate without notice
29
What is considered notice?
3 ways
Actual notice - actual knowledge of interest
Constructive notice - if had made reasonable enquiries would have discovered.
Imputed notice - notice given to agent of buyer deemed to be notice to buyer.
30
What are interests that override first registration?
- lease granted for 7 years or less
- legal easement
- local land charge
- interest belonging to person in actual occupation
31
What is the significance of interests which overrides first registration?
Automatically binding when unregistered title becomes registered at HMLR.
If buyer aware of overriding interest on application for first registration, need to disclose to HMLR. Interest will then be protected by register and no longer overriding
32
What is adverse possession?
When title to land is acquired by possession rather than by protection of documents.
33
In unregistered land, how long does land have to be occupied by another for the owner to lose right to recover?
12 years
Owner retains legal title but holds legal estate on trust for squatter who can apply for registration in owners place.
34
What does the applicant have to show for an adverse possession claim?
- they have actual physical possession of land
- possession is exclusive to applicant and
- possession without permission of land owner
35
What is an event that triggers first registration?
- conveyance of sale
- an assent
- deed of gift
- grant of lease for less than 7 years
- grant of first legal mortgage
- assignment on sale of a lease which has unexpired term exceeding 7 years
Application for first registration must be made within 2 months of date of triggering event
36
What happens if buyer fails to register transfer of legal estate on first registration?
Transfer becomes void, legal estate reverts to seller.
With leases and mortgages, disposition takes effect as contract, legal estate will revert to original transferor who holds on trust as bare trustee.
Bare trustee = only duty is to follow instructions of beneficiary.
37
Who has the cost of remedying failure to register?
Party in default. Also liable to indemnify the other party in respect of any liability incurred and arising from failure to register.
38
What classes of title can the land registry award?
Absolute freehold - takes legal estate together with all interests disorient for benefit of that estate. Subject only to interest which overriding first registration and overriding interests under LRA 2002
Possessory title - where ownership based on possession not documentary evidence. Might be granted where deeds lost. Possibility of someone coming with better claim.
Good leasehold title - guarentee doesn’t extend to freehold estate or superior leasehold title. Freehold title not been produced to HMLR. Can be upgraded.
Absolute leasehold title - where inspected all titles
39
What is a caution against first registration?
Informs party with interest in unregistered land that land about to be registered so that their interest can be investigated.
Caution has own title number, register and plan.
40
How can a caution be cancelled?
Owner of estate against which caution lodged, can apply to registrar for caution to be cancelled. If that happens, registrar must notify cautioner that wok be cancelled unless objection made within prescribed period.
41
What happens to caution when properly about to be registered?
Cautioner will be informed of the fact and given specified period to object or give notice that don’t intent to object.
Early warning of registration.
42
When does title pass in registered land?
Title passes on completion
43
What is contained in the property register?
- postal address
- legal estate held
- if leasehold, lease details
- any rights which benefit
44
What is contained in the proprietorship register?
- class of title
- name of owner
- may be a restriction on title
45
What does the charges register contain?
- details of encumbrances
- charges
- restrictive covenants
46
How are 3rd party interests protected in registered land?
By notices or restrictions on the register
Charges
- legal mortgage
- legal easements (burden on charges, benefit on property register)
Notices
- equitable mortgages, covenants, equitable easements, estate contracts, matrimonial home rights - notice on charges register
Restrictions
- BUITs
47
What is the effect of entering a notice on the register?
Failure means interest will not bind purchaser for valuable consideration. But will be binding on someone who is gifted property or inherits it.
48
How can a notice be cancelled?
Registered proprietor can apply for it to be cancelled. Registrar will inform party with benefit of notice to respond within prescribed period and if not, will be cancelled.
Application for notice must be made with reasonable cause.
49
What’s an overriding interest?
Interest that is capable of binding a buyer dispute the fact that it doesn’t appear on the register of title.
50
What are overriding interests?
- legal lease for 7 years or less
- implied legal easements or profits à prendre (if meet certain requirements)
- interests of persons in actual occupation
- occupation rights of spouse
51
When can an implied easement or profit be overriding?
- purchaser has actual knowledge of easement or profit
- easement or profit is obvious on reasonably careful inspection of the land or
- easement or profit has been exercised within 1 year of the date of disposition
52
When will an interest of persons in actual occupation not be overriding?
- occupier failed to disclose their occupation upon reasonable enquiry or
- occupation was not obvious on reasonable inspection of the land at time of the disposition and buyer did not have actual knowledge of the interest.
53
What constitutes actual occupation?
Question of fact, common sense.
Court takes into account
- degree of permanence and continuity of presence
- intentions and wishes of person concerned
- length of any absences and reason for absence
- nature of property
- personal circumstances
54
In registered land, how does adverse possession work?
Period = 10 years
After this period, squatter acquired right to apply for registration. Owner doesn’t lose right to recover.
55
What must applicant for adverse possession show?
- actual physical possession of land
- possession is exclusive to applicant
- possession of land is without permission of landowner
56
What happens if a squatter makes an application for title in registered land?
- registered proprietor given opportunity to object
57
In an application for adverse possession in registered land, what happens if registered proprietor objects?
- application likely to be rejected.
- in limited circumstances, may be successful. For example where would be unfair for owner to dispossess applicant and applicant should be registered as owner, if applicant entitled to be owner or reasonable mistake as to boundaries
58
How can a joint tenancy in equity be severed?
- written notice (must show intention to sever and be sufficiently served)
- treating share as separate (eg contracting to sell it)
- by dealing with equitable interest (disposing, leasing or mortgaging interest)
- mutual agreement
- course of dealings (shared intent can be found in course of dealings)
- forfeiture (is one JT killed the other right to survivorship doesn’t apply)
- bankruptcy (interest transferred to trustee)
59
How do courts determine whether parties created joint tenancy in equity or tenancy in common?
Starting point = intention.
If cannot find intention, presumes equity follows the law and reflects legal interests - JT
60
How can a solicitor acting for a buyer ensure that the buyer takes free from an interest of an equitable owner under a trust?
Overreaching
Transfers beneficial interest from land to the money paid for the land regardless of wishes of B.
61
How does overreaching happen?
Automatically if purchase money paid to 2 or more trustees or a trust corporation.
If only 1 trustee, 2nd trustee appointed to overreach beneficial interest if non owning party
Alternatively buyer may obtain written release from B (generally done by singing contact)
62
How can disagreements between co-owners be resolved?
S14 TLATA 1996
- allows trustee or person with interest to apply to court for order in relation to trustee duties. Includes order to sell or do something without others consent.
- can also declare nature or extent of persons interest in property
63
What does the court take into account when considering an application under s14 TALATA?
S 15 sets out factors
- intentions of person who create trust
- purposes of which trust property subject is held
- welfare of any minor who occupied or might reasonably be expected to occupy any land subject to trust as his home and
- interests of any secured creditor of any beneficiary
64
What is courts approach where relationships break down?
1st consider is there any declaration of trust? If there is conclusive.
If 2 owners, presumed legal and equitable joint tenancy and challenger to prove different common intention
Common intention can be shown or implied.
If can’t infer common intention, Court will give each party proportion considers fair having regard to whole course of dealings. Must consider all circumstances.
65
What is a licence?
Person right to use the land in some way. Can cover lots of rights.
Grantor = licensor
Person taking benefit = licensee
66
What is a lease?
Estate in land. Can be equitable or legal. Gives tenant right to occupy for fixed period.
67
What are essential characteristics of a lease?
Certainty of term
Exclusive possession
Appropriate formalities
Rules of contract law also required.
If essential characteristics not present, not lease, licence. No statutory protections/rights.
68
In relation to a lease, what is certainty of term?
Lease must make clear when term of tenancy begins and ends. If term uncertain, void for uncertainty. eg lease for life or until war ends void.
If start date uncertain, void.
69
In relation to a lease, what is exclusive possession?
Lease gives tenant right to exclude all others from premises, including LL.
Multiple occupants can have exclusive possession in eyes of law. For all tenants interest to be considered a lease, must all be granted at same time, in same document and each party granted same interest and right of possession. Makes them joint tenants. - 4 unities, time, title, interest and possession.
LL may seek to avoid joint tenancy by making tenants sign separate agreements at different times, court will look at whether each tenant would have entered into only if others did too.
70
What’s a sham clause in a lease?
May arise where LL includes a clause in the lease to allow others to join to try and avoid granting a tenancy.
71
What are some common types of lease?
Fixed term tenancies - can be less than a year or a year. May include break clause allowing early termination or clause to increase rent (cannot increase without).
Reversionary leases - where tenant takes possession in future. Valid unless period between lease being entered into and tenant moving in exceeds 21 years.
Periodic tenancies
Express periodic tenancy - defined by period of time, eg yearly tenancy. Lasts fixed period, when expires, continues again for same period until one brings to end by serving notice. If no provision containing period of notice, notice period must be as long as period of tenancy.
Implied periodic tenancy - if no written agreement, may be implied providing that tenant gone into possession and started paying rent. Period = period rent calculated.
Tenancies at will - may result when owner allows prospective buyer to take possession before written agreement to sell. Personal arrangement.
Contractual periodic tenancies - if prospective buyer begins to pay rent may be treated as creating periodic tenancy unless clear evidence parties intent tenancy at will to continue.
72
What are formalities for creating a legal lease?
All legal leases over 3 years must be created by deed.
Short legal lease of 3 years or less can be created orally without any formalities if:
- tenant takes possession of leased premises immediately and
- it is at the best rent which can be reasonably obtained without a fine (market value and no upfront lump sum or premium)
All legal leases over 7 years must be registered.
73
What are the formalities for creating an equitable lease?
If lease not created by deed and not within provision of short term leases may still be enforced through equity if it is in writing incorporating all terms expressly agreed and signed by both (complying with contract for land)
74
What if an equitable lease doesn’t comply with formalities?
If not created by deed and not within provision for short term leases, and doesn’t comply with contract for land, not a lease, licence.
75
How should equitable lease be registered?
Unregistered land - Class C (iv) land charge
Registered land - notice on charges register
76
How is legal lease registered?
Unregistered land - legal interests bind the world
Registered land - leases over 7 years must be registered, less than 7 years are overriding interests and bind without registration
77
What are covenants typically contained in a lease?
Express covenants contained
- term
- payment of rent (amount and when payable) may include rent review clause
- quiet enjoyment
- repair - who responsible for repair.
- use of premises
- alteration of premises
- insurance
- service charge
78
What controls can the LL use in relation to covenants regarding alterations?
Can be a qualified covenant - eg without LL prior written consent
Can be an absolute bar - eg prohibit entirely. T can still seek consent but LL doesn’t have to agree. P
79
What covenants are implied into residential leases?
Implied by statute and cannot be excluded by express terms.
Structure and exterior
Standard of repair - regard must be had to age character and prospective lift of house and locality
Repair within reasonable time - once LL put on notice, must effect repair within reasonable time.
80
What are remedies available to LL for non payment of rent?
Commercial rent arrears recovery available in commercial premises to recover rent. Takes control of tenants goods and sell them.
Forfeiture - right of LL to re-enter premises and bring lease to early end due to result by T. Statutory protection available to T and T has right to settle arrears and apply for relief from forfeiture to avoid losing property. Must contain express provision.
81
What remedies are available for breach of repairing covenant?
Damages - general purpose to compensate innocent party and put in same position would have been. Available as of right
Specific performance - equitable remedy, compels to perform obligations. Discretionary not available as of right
Self help - innocent party has option to carry out repairs and claim cost back from defaulting party. Lease may contain self help clause which enabled LL to enter premises and make repairs if T breached covenant to maintain or repair. Jervis v Harris Clause - LL can recover costs from at as debt. More straightforward action than damages action.
Forfeiture - if T in default, LL may wish to forfeit. LL must serve notice on T under s146 LPA. Intended to warn tenant and allow time for rectification of breach.
Debt action
Pursue Guarantors and/or rent deposit
82
What is require for a commercial rent arrears recovery?
Applies to new and existing commercial leases from 6 April 2014 whether or not referred to in lease.
LL must give at 7 days notice, after this time bailiff or enforcement agent can enter property to seize tenants goods
Premises must be wholly commercial
Can’t be used for service charge arrears
83
What does a s146 notice do and what must a s146 notice contain?
Notice served by LL on T to forfeit the lease.
S146 notice must:
- specify breach
- require breach to be remedied within reasonable time (if capable of remedy) and
- require tenant to pay compensation to LL for breach if required by LL
84
Will a forfeiture clause be implied into lease?
No, must be expressly included to allow this remedy.
85
What is an authorised guarentee agreement?
LL can require outgoing tenant to enter into a AGA (written obligation) in which outgoing tenant will act as guarantor for immediate successor in title.
86
What leases can include a provision to require lessee to provide an AGA on assignment?
Commercial lease may rejected condition
Residential lease may not include. Up to court to decide if LL imposed conditions lawfully.
87
When does assignors liability under AGA end?
On assignment to a new lessee.
88
What happens if a tenant tries to create a sublease that is as long or longer than their lease?
No now lease crested, transaction will operate as assignment of grantors own lease.
89
Are covenants in head lease enforceable by head LL against sub tenant?
No.
90
Does a tenant have the right to assign?
Yes unless prohibited by the lease. May contain restriction
91
What restrictions can be imposed on a tenants right to assign?
Maybe an absolute covenant - rare
Might be qualified covenant, subject to conditions. LL must give consent or meet conditions in lease.
LL may not unreasonably withhold consent or delayed. If tenant gives LL written request, LL must within reasonable time give consent or written reasons for their refusal. Conditions must also be reasonable.
92
How is a lease assigned?
By deed. Even if made orally. Will transfer even if covenant against assignment breached.
93
What happens if LL refused to consent to assignment?
Assignment will be effective but breach of covenant.
If T feels LL’s reasons were unreasonable, best course is to seek declaration from court that reasons were unreasonable.
94
What happens to sub lease when head lease assigned?
Incoming tenant of head lease will be bound by covenants in head lease. Incoming tenant will take subject to head lease and become new all of sub tenant under terms of sublease.
95
How is a lease terminated?
Expiry - at end of period
Termination by notice - written notice of requisite length. Length is at least 1 full period expiring at end of period.
Surrender and merger - if fixed term and no break clause, neither may bring to and end unilaterally before term expired. May mutually agree to bring to an end
If agreed tenant will give up possession to LL - surrender
If agreed LL will transfer reversion to tenant - merger
FH & LH interest fuse. Should be by deed. If not in deed but written contract, can be enforced in equity through an order for specific performance. If no written contract but LL accepts possession at T’s request, will be ‘estopped’
Forfeiture - if tenant contains forfeiture clause and tenant in breach of covenant, LL might be able to claim possession
Frustration - fault of neither party, renders impossible to perform. Land needs to be destroyed not building.
96
What happens to a sublease if headlease brought to an end?
If bought to end by expiry, NTQ or forfeiture, sublease ends aswell.
If brought to an end by surrender or merger, position difference.
Surrender - sublease won’t come to an end. ST will become T of HLL on terms of sublease
Merger - new owner of combined estate holds subject to sublease. Possession of ST will be as above
97
What is an easement?
Right which benefits dominant tenement. Land that is burdened is servient tenement.
98
What are the essential characteristics of an easement?
- must be dominant and servient tenement
- easement must confer a benefit on dominant tenement
- dominant tenement and servient tenement must be in separate ownership
- right must be capable of being an easement and described sufficiently to identify it
99
What is a profit à prendre?
Right to take something from land belonging to another.
Can be appurtenant (attached to land)
Can be gross (transferable in own right)
100
What counts as being capable of being an easement?
Must benefit the land, personal right not enough.
List not closed.
101
What are requirements for legal easement or profit?
- must be created by deed
- must be for indefinite duration or fixed period (easement granted for life not legal as not fixed period)
If no deed, ineffective at law. May be recognised in equity.
102
What are the requirements for an equitable easement or profit?
- be in writing
- signed by both parties
- contains all agreed terms
103
How can easements be created?
- express grant or reservation
- implied grant or reservation (necessity, common intention, ancillary easement, existing use)
- prescription
- by statute
104
How is an express easement expressly granted/reserved?
Express grant or reservation - landowner selling part of land own grants rights over land for the benefit of it. If rights over their land needed, will reserve rights for benefit of retained land. Rights stated in transfer. Might be in separate deed however.
By statute, a conveyance of land includes all liberties, privileges, easements, rights and advantages. Will pass even if not mentioned.
105
How is an easement implied by necessity?
No express easement created but land is landlocked, only right of way can be implied by necessity. Easement must be necessary eg right of way over land to property.
106
What is a common intention easement?
Implied to give effect to what parties intended.
To arise:
- must be a common intention on how the land was to be used and
- if must be impossible to give effect to the common intention without the easement
107
What is an ancillary easement?
Asides from realities of circumstances, allows for fulfilment of other interest. Eg right of way to take water from spring implies ancillary right of way to that spring
108
How are easements implied by existing use? Rule in Wheeldon v Burrows.
Apply where both dominant and servient land were previously held by one common owner
On sale of part of landholding, those easements will pass which:
- are continuous (in regular use by seller at date of transfer) and apparent (obvious in reasonable inspection)
- necessary to the reasonable enjoyment of land acquired (enhances property, doesn’t need to be necessary) and
- has been, and were at the date of the conveyance used by seller for benefit of the land being sold.
109
What easements are implied by statute?
Only grant necessary rights for benefit of land being sold. Doesn’t apply to reservation of rights by seller. Implies easements into conveyance so only applies where transfer deed.
- right must be continuous and apparent and
- grant of easement can be excluded by express wording in conveyance
110
Will reservation of easements be implied?
No as seller had control to reserve them if needed for full enjoyment.
2 exceptions
- easements by necessity
- intended easements
111
Are implied easements legal or equitable?
Either, depends what deed implied into. If deed, legal. If contract for land, equitable.
112
What are the requirements for an easement to be created by prescription?
Recognise even if no written evidence if been exercised over long period of time.
Requirements:
Must show they have
- used the benefit unchallenged for over 20 years and
- used the benefit as of right (did not ask permission or make payment)
113
How are easements by prescription crested?
Methods
- prescription at common law - rebuttable presumption of immemorial use from 20 years as of right
- by loss modern grant - courts recognise that if can show actual enjoyment for 20 years, court willing to pretend that there was a grant that is now lost
- by prescription act 1832 - based in 20 or 40 years use.
114
Are easements by prescription legal or equitable?
If arise by common law or lost modern grant, legal.
115
How to protect easements in registered land?
Registered land
- creation is registrable disposition, benefit on property register of dominant tenement, burden on charges register of servient tenement.
- if not registered, not legally created. Will take affect in equity only.
- if equitable, won’t override will need to be protected by notice on charges register
- if legal can override if purchaser has actual knowledge, obvious on reasonable inspection or exercised in last year
116
How to protect easements in unregistered land?
If legal, legal rights bind the world
If equitable, Class D (iii) land charge
117
Are covenants enforceable between original parties and successors in title?
Covenants enforceable against original contracting parties. Privity of contract.
Successors in title, depends on whether benefit and burden both pass together either at common law or in equity.
118
When will the burden and benefit of the covenant pass in equity?
Burden
- negative in nature
- accommodates dominant tenement (touches and concerns land)
- burden intended to run with the land and
- successor in title has notice of covenant (class d (ii) land charge or notice in charges register)
Benefit
- touches and concerns the land
- one of following must apply
- annexation (benefit of covenant attached to land, occurs automatically unless expressly excluded)
- express assignment (benefit expressly sssigned when benefited land sold) or
- building schemes
119
When will the burden and benefit of the covenant pass in equity?
Burden
- negative in nature
- accommodates dominant tenement (touches and concerns land)
- burden intended to run with the land and
- successor in title has notice of covenant (class d (ii) land charge or notice in charges register)
Benefit
- touches and concerns the land
- one of following must apply
- annexation (benefit of covenant attached to land, occurs automatically unless expressly excluded)
- express assignment (benefit expressly sssigned when benefited land sold) or
- building schemes
120
How does the burden and benefit of a covenant pass at common law?
Generally, burden doesn’t pass at common law, positive covenant only binds original covenanter. Original Covenanter liable so can enforce covenant against original Covenanter. Some exceptions however:
- chain of indemnity covenants, original Covenanter and each successor of servient tenement obtain indemnity covenantor from next buyer. Original Covenantor remains liable but can seek to recover damages from successor. Unreliable if break in chain
Mutual benefit and burden rule - person cannot enjoy benefit without burden, benefit and burden must be relevant. Exercise of benefit may be conditional of compliance with positive covenant.
Benefit - passed to covnantee’s successors in title as long as
- touched and concerns land
- intended to run with the land
- at time made, Covenantee held legal estate in land to be benefited
- assignee of original covenantee now holds legal estate (tenant can’t enforce)
Successor can enforce burden of covenant against original covenantor only.
121
How is a legal mortgage made?
By deed. Must be clear on face it’s a deed, signed by mortgagor/borrower, be attested (witnessed) and delivered (dated)
122
How is an equitable mortgage made?
Can be of either legal estate or equitable interest
Created by:
- agreement for mortgage to take effect in equity only. May be useful for short term law. Must be in writing and signed by borrower.
- contract to create legal mortgage. Must comply with requirements for contract for land. May be due to defective attempt to make legal mortgage
- where mortgagor owns equitable interest only
123
How are mortgages protected?
Registered land
- legal mortgages, registrable disposition must be completed by registration for lender to be able to exercise power of sale.
- equitable mortgages, protected by placing notice on register:
Unregistered land
- legal mortgages lender will have title deeds. Any mortgage not protected by deeds must be protected by Class C (i) land charge.
- equitable mortgage of legal estate, Class C (iii) land charge. If equitable mortgage of equitable interest, lender should give notice to trustees.
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What terms may be void/unfair in a mortgage agreement?
- right to redeem (pay off) and regain all rights over property. Agreement will include redemption date which is earliest date can be repaid in full, usually 6 months after start of mortgage. If term makes this right illusory, will be void.
- option to purchase. If term gives lender option to purchase, will be void. Lender and borrower can enter into a separate agreement but must not be tied to loan agreement.
- collateral advantage. Agreement may give lender additional advantage aside from repayment, eg agreement only to buy lenders product. Not void but if fetters borrows right to redeem, will be void if extends beyond date of redemption.
- unconscionable terms. Void if court considers unconscionable terms (mortally reprehensible, improper or unreasonable). Eg high rates of interest. Court will look at circumstances and imbalance of bargaining power and manner in which imposed
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What is the status of tenants rights when a mortgage is involved?
Date of tenancy is key point.
- tenancy created before mortgage created. In unregistered land, will bind lender. If land registered and does not exceed 7 years, overriding interest and lender bound. If over 7 years, should be registered with own title. If not done, will not be treated as OI until tenant goes into occupation.
- equitable tenancy in unregistered land, must be protected by class c (iv) estate contract. If not void against lender. Once tenant goes into possession and pays rent, periodic tenancy inferred (legal lease) will bind
- equitable tenancy of registered land, if doesn’t exceed 7 years, not OI. Once goes into occupation, interest overrides lender.
Tenancy’s granted after mortgage created
- mortgage deed normally prohibits without lenders consent. Lender not bound by unauthorised tenancy.
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How are occupiers rights affected by lenders rights?
If property owned in name of one party but someone else living at property who has interest in property, court might be willing to allow to stay in property, defeating lenders right to repossess.
If mortgage advance paid to one trustee, rights not overreached. If paid to 2, overreached.
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What must a lender do if there is a risk of undue influence?
Lender must take reasonable steps to satisfy itself that the practical inoculations of proposed transaction has been understood by wife in a meaningful way.
Should ensure:
- independent legal advice
- certificate of confirmation from solicitor
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What are the lenders remedies to enforce security?
- Sue for debt. Can sue once date for repayment passed.
- Take possession. If borrower defaults, if includes a house, lender can only seek through courts. Lender in possession has managerial powers, must exercise to high standard.
- Foreclose. Right to redeem extinguished, lender becomes owner. Right to foreclose doesn’t arise until after date for repayment passers takes place by court ordered lender registered as owner. Rarely used.
- Sell to recover what’s owed. Can sell without application to court, provided created by deed and date to redeem passed.
- right to appoint receiver as agent of mortgagor more used in commercial. Recover can manage or sell.
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When may a lender exercise power to sell?
Only after date for redemption passed (usually 6 months).
Only exercisable if one or more satisfied:
- interest payments more than 2 months in arrears or
- written request for repayment of capital and 3 months passed without payment or
- breach of some other term of mortgage.
If one or more met, power to sell arises automatically.
Effect of sale - subject to any prior mortgage, free from interests over which that lender has priority. Proceeds should be used in strict order.
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What is the priority of mortgages in a registered estate?
If shortfall from sale proceeds, priority is vital.
Legal mortgage of registered legal estate
- earlier mortgage has priority over later.
Equitable mortgage if registered legal estate
- depends on if protected in correct way. If registered, earlier mortgage will have priority over later mortgages, including legal mortgages.
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What is the order of priority in an unregistered legal estate?
Legal mortgage in unregistered land
- possession of title deeds, that lender has priority over others.
Other mortgages
- depends on date registered as land charges
- rank according to date of registration
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What is postponement?
Where lenders agree to vary priority of charges. Must be made by deed and reflected by register entry.
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What happens if lender lends more money?
Charge may secure any further advances and added to original mortgage so secured. May use up equity up to detriment of subsequent lenders
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What happens if second lender uses power of sale?
Must pay of lender with priority first, only entitled to be paid if have surplus.
