ux2 unreg

Question 1

Pre 1926 legal estates and interests “bind the world”, regardless of whether..

Answer 1

a purchaser has notice of them or not.

Question 2

Pre 1926 equitable interests (including covenants and easements) bind everyone except..

Answer 2

…Equity’s Darling.

Question 3

Legal estates and interests created after 1926 will “bind the world” - and therefore a purchaser - irrespective…

Answer 3

..of notice.

Question 4

Whether or not an equitable interest created after 1926 will bind a purchaser will depend upon whether that interest is…

Answer 4

..capable of registration as a Land Charge (LCA 1972). They must be registered to be binding.

Question 5

Equitable interests not capable of registration** as a Land Charge bind everyone..

Answer 5

..Equity’s Darling

Question 6

What is registerable?

Answer 6

Equitable lease will be C(iv) land charge
Restrictive covenant will be D(ii) land charge
Option to buy freehold will be C(iv) land charge
Non-legal owning spouse’s/civil partner’s right to occupy (FLA 1996) F land charge
Contract for sale of land will be C(iv) land charge

Question 7

What is not on the Land Charges Register and therefore ‘binds the world’?

Answer 7

Legal mortgage where lender has the title deeds – binds the world
Legal easement (however created) – binds the world
Legal lease for 10 years – binds the world
Equitable interest under a trust of land – binds everyone except equity’s darling but can be over-reached by purchaser

Question 8

If the interest is a registerable land charge - in order for their third party right to be binding it must register the interest in accordance with…

Answer 8

..section 2(4) of the Land Charges Act 1972.

Question 9

The land charge must be registered against the name of the current owner of the burdened land as per..

Answer 9

..section 3(1) of the Land Charges Act and that must take place before completion of the sale to the purchaser as per section 4(6) of the Land Charges Act 1972 in order to bind the purchaser.

Question 10

Over-reaching only applies to what kind of interests?

Answer 10

Trust interests

Question 11

In order to overreach a trust interest a buyer must pay the purchase monies to all the surviving trustees, being a minimum of ..

Answer 11

..two or a trust corporation (City of London v Flegg).

Question 12

In order to bind a purchaser, the land charge must be registered by the date of completion of the sale. In unregistered land, this means the date of the..

Answer 12

..conveyance when the purchaser becomes the legal owner of the land.

Question 13

Sellers of unregistered titles prove their ownership by sending their purchasers copies of their title deeds showing an unbroken chain of ownership going back at least….

Answer 13

…15 years.

Question 14

The Land Charges Act 1972 does not cover..

Answer 14

…(a) equitable interests arising under a trust or the rights arising under implied trusts

(b) most legal interests (eg legal leases, legal easements, legal mortgages protected by title deeds); and
(c) pre-1926 equitable interests (including restrictive covenants and equitable easements created before 1 January 1926).

Question 15

A legal interest (not registerable) would…

Answer 15

A legal interest in the unregistered system will bind the world, so it will bind the purchaser.

Question 16

If it is an equitable interest under a trust…

Answer 16

… has the buyer over-reached? If so he takes free

If buyer has not over-reached, he is bound unless he is equity’s darling.

Question 17

What must a buyer do to over-reach an equitable beneficial interest under a trust? (Sections 2 and 27 Law of Property Act 1925)

Answer 17

(a) the buyer must be acquiring the legal estate in the property;
(b) the buyer must pay the purchase money to all the trustees; and
(c) there must be at least two trustees (or a trust corporation). (Note that overreaching also applies to registered titles).

If the purchaser, does not overreach the beneficiary’s trust interest, they will be bound by it unless they are Equity’s Darling.

Question 18

How can a buyer by ‘Equity’s Darling’?

Answer 18

The buyer must be bona fide - this means he must be acting in good faith (without fraud).

The buyer must come within the definition of a purchaser - this includes a mortgagee or a lessee. A purchaser is a person who receives property other than by operation of law. (Operation of law i.e. situations which would mean the person would not be a ‘purchaser’ include receiving a property through the intestacy rule or bankruptcy).

The buyer must have bought the property for value - this means he must have given consideration for the purchase of the estate. Value includes any form of consideration which would be classed as valuable consideration in the law of contract, namely: money, money’s worth (eg land, stocks and shares), marriage or the promise of marriage, and payment of an existing debt. It does not have to amount to full consideration. It may be worth noting that a person who gives no valuable consideration is called a ‘volunteer’.

The buyer must have taken the legal estate in the property - he must have purchased a fee simple absolute in possession or a term of years absolute (Law of Property Act 1925, s 1(1)).

Lastly, the buyer must have bought the property without notice that the equitable interest exists. There are three recognised forms of notice - actual, constructive and imputed.

Question 19

What is actual notice?

Answer 19

A person has actual notice of all facts of which he has (or has had) actual knowledge, however that knowledge was acquired; but he is not regarded as having actual notice of facts which have come to his ears only in the form of vague rumours.

Question 20

What is constructive notice?

Answer 20

A buyer is deemed to have constructive notice of any matter or fact which ‘would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him’ (Law of Property Act 1925, s 199(1)).

Question 21

What is imputed notice?

Answer 21

A purchaser is deemed to have imputed notice of any matter of which his solicitor (or other agent) had actual or constructive notice.

Question 22

Section 44(1) of the Law of Property Act 1925 gives the purchaser the right to inspect the seller’s title deeds back to a good root of title, which is, unless otherwise provided in the contract, at least…

Answer 22

…15 years old.

He should also inspect the land to see who is in occupation.

Question 23

The Kingsnorth Finance Co Ltd v Tizard case made it clear that the purchaser or his agent must…

Answer 23

…make all inquiries and inspections that, in the circumstances, ought reasonably to have been made. Otherwise, the purchaser will not be equity’s darling, as he will be deemed to have constructive notice of ***’s equitable interest in the house.