Introduction to Property/Land Law PDF

- Statutes cases - - important Introduction to Property / Land Law (Adapted from Modern Land Law 12th edn, Martin Dixon; Land Law, Ben McFarlane, Nicholas Hopkins & Sarah Nield; Textbook on Land Law, Judith-Ann...

- Statutes cases - - important Introduction to Property / Land Law (Adapted from Modern Land Law 12th edn, Martin Dixon; Land Law, Ben McFarlane, Nicholas Hopkins & Sarah Nield; Textbook on Land Law, Judith-Anne Mackenzie & Mary Phillips; Elements of Land Law, Gray & Gray; UOL Subject Guide) Studying Property Law A. What are the rights a person can have over property? B. Creation - How are property rights created? C. Registration Do those rights bind a Purchaser? A. Classification of Property generally: REAL PROPERTY / PERSONAL PROPERTY / REALTY / PROPRIETARY PERSONALTY Property Rights and Personal Rights a. Personal Right A Right in Personem b. Property Rights A Right in Rem Property can be defined (simplistically) as rights against the world, in contrast to the contractual rights which are rights against individuals. Property right gives the rights-holder the ability to exclude anyone in the world from interfering with that right apart from someone with a better claim to the right in question. That is why property is so powerful as it implicitly involves a claim that has consequences for everyone else in the world. National Provincial Bank v Ainsworth (1965) Lord Wilberforce – Proprietary right must be definable, identifiable by Third Party & stable (a degree of permanence) Williams & Glyn’s Bank v Boland (1981) City of London BS v Flegg (1988) Lord Templeman Compiled and prepared by Ms. Sharon Page 1  B. What is land? v All land is owned by the Monarch (others own either Estates or Interest in the land) v Definition of land – Section 205 (1)(ix) LPA 1925 “Land” includes land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of buildings (whether the division is horizontal, vertical or made in any other way) and other corporeal hereditaments; also a manor, an advowson, and a rent and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or derived from land;... and “mines and minerals” include any strata or seam of minerals or substances in or under any land, and powers of working and getting the same...; and “manor” includes a lordship, and reputed manor or lordship; and “hereditament” means any real property which on an intestacy occurring before the commencement of this Act might have devolved upon an heir; Ø The physical land Cuius Est Solum Latin – whoever’s the soil, it is theirs all the way to Heaven and all the way to Hell – down to the center of the earth & up to the heavens Anchor Brewhouse Developments v. Berkley House (Docklands Developments) (1987) - crane in the airspace of the neighbours ; he was trespassing Ø Legal definition of Land - Anything physically attached to it – physical land / asset - Rights that owner or others may enjoy over it This can be classified into: The Real / Tangible The Intangible Corporeal Hereditaments Incorporeal Hereditaments v Why is land so special? - Land is scarce, a precious and limited commodity / resource - Special feature of land include its permanence - The uniqueness of each piece of land – its physical location can never be shared by another piece of land. - Its capacity for multiple simultaneous use - Its social importance - This special features and importance of land has been recognised in the European Convention of Human Rights – Article 8. Everyone has the right to respect for ‘his home’ Compiled and prepared by Ms. Sharon Page 2  C. What a buyer of land would generally want to know. 1. Does the Seller have the title to sell? Is he entitled to sell the land? Proving title 2. Whether any other parties have rights to the land which might interfere with his use of the land (personal rights or property rights). The enquiries made will differ depending on the applicable system There are two (2) systems to prove title a. Registered Title – Registered Land – Land Registration Act 2002 b. Unregistered Land – Law of Property Act 1925 & Land Charges Act 1972 v Important date to remember – 1925 Law of Property Act 1925 Land Charges Act 1925 and later replaced with LCA 1972 Land Registration Act 1925 and later replaced with LRA 2002 Trustees Act 1925 Administration of Estates Act 1925 ↑ easier to buy The purpose / policy of these statutes is to simplify conveyancing and to strike a Balance between the rights of interest holders and the rights of the purchasers of the land ü Land was becoming very difficult to buy and sell. ü Too many people had too many rights and Purchasers were afraid to buy land. ü Difficult to determine all possible rights and the holders of those rights were not sufficiently protected The 1925 reforms seems to favour the Purchasers by eliminating the need to make too many inquiries before purchase of the land v The 1925 legislation introduced the 2 systems: UnRegistered Land Registered Land The rationale under both systems was to reduce the need for the purchaser to make excessive inquiries and inspections of the land, although they still need to make some inspection of the land. Compiled and prepared by Ms. Sharon Page 3  D. Types of Proprietary Rights The 1925 legislation reduced the number of Estates and Interest in law: ESTATES INTEREST Cornerstone of land law Rights that a person enjoys in the All land in England owned by Crown (Monarch) land of another All else owns an Estate in land Eg: easements, Restrictive covenant Tantamount to Ownership – for a Time Ownership for a “slice of time” Right to Use and Control land Section 1(1)(a) & (b) LPA 1925 – only 2 estates Can subsist in law Fee Simple Absolute Terms of Years Absolute In FSAIP TOYA Posession Leasehold Freehold ↳ absolute3 d Compiled and prepared by Ms. Sharon Page 4  Equitable Owner E. Legal and Equitable Rights Interest under trust Legal Rights o Right in rem o Right in the land o Traditional rights of property recognised by the common law, o Enforceable against anyone who acquired an estate / interest in land (Registered Land) o Good against the whole world - Legal rights are enforceable as of right. o ‘Legal rights bind the world’. Equitable rights o Enforceable against certain people o Rights known only to the Court of Chancery o Equitable rights are at the courts discretion o Note: Bona Fide Purchaser for Value Without Notice. ‘Equitable rights bind the world with the exception of the bona fide purchaser of a legal estate for value without notice’, often referred to as ‘equity’s darling’. How do we determine if a Right is Legal or Equitable? Two questions must be answered 1. Is the Right Capable of existing as a Legal Right Or is it merely recognised as an Equitable right Only these 4rights &Rights capable of being recognised as a legal right – Section 1(1)(a)(b) & 1(2)(a)(c) LPA 1925 ü FSAIP - Section 1(1)(a) LPA 1925 ü TOYA - Section 1(1)(b) LPA 1925 ü Easement - Section 1(2)(a) LPA 1925 ü Mortgage - Section 1(2)(b) LPA 1925 ü Profit A Prendre 2. Has it been created in a proper way – satisfying the formalities of creation of the right AND Formalities Deed – Section 52 LPA 1925 And Registration – Section 27 LRA 2002 Right will be Equitable if: GFSAIP & TOYA x Easement & i. Not listed in section 1(1)& (2) LPA 1925 Mortgage ii. Found in section 1 LPA 1925 but Not created by Deed or no Registration was done iii. No registration is done – Section 27 LRA 2002 Compiled and prepared by Ms. Sharon Page 5 a)Lease Right Equitable a [No Regist b) (Proprietary Estoppel) Deed t Registered 3 Equitable e) FS Deed 7 Reg  ↳ How does a contract become a deed? sealeda delivered Sign , F. Land transactions - Documents used in land dealings: Ø Section 52 LPA 1925: Conveyances to be by deed. (1) All conveyances of land or of any interest therein are void for the purpose of conveying ↳ or creating a legal estate unless made by deed. selling/transferring of land Subject to only limited exceptions, the proprietary right must have been created by deed. A ‘deed’ is a written document of a special kind and it goes beyond a mere written contract. According to section 1 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989), an instrument is not a deed unless it makes it clear on its face that it is a deed (either by such words or otherwise) and it is executed as a deed (commonly by a signature, that is witnessed with delivery of the deed). Usually, a document intended to be a deed will declare itself to be a deed (it will say ‘this is a deed’ or similar) and will state that it is ‘executed as a deed by X and Y’ and will be witnessed as such by another. In some circumstances, currently with certain mortgages, a digital deed may be used, being an electronic instrument that is regarded for all legislative purposes as a deed. Ø Section 2(1) & (3) LP(MP)A 1989 – Any contract for the sale or other disposition of an interest in land can only be made in writing and signed by each party to the contract, containing all the terms of the of the agreement. This is known as an Estate Contract. Note: Section 40 LPA 1925 (repealed) 27 / 09 / 89 Section 53(1)(a) LPA 1925 the creation or disposal of an equitable interest in land must be by signed writing. Section 53(1)(b) LPA 1925 there must be signed written evidence that an express trust of land was declared (even though the declaration itself might have been oral). Section 53(1)(c) LPA 1925 any subsequent conveyance of an existing equitable interest (whether in land or anything else) must, like the creation or disposal of equitable interests in land, be by signed writing. Neocleous & another v Rees (2019) – name automatically added to an email by the footer was considered as signed for the purposes of satisfying section 2 LP(MP)A 1989 This requires us to first differentiate a contract from a conveyance. In the context of land transactions the contract is the agreement to transfer an interest, which usually (but not always, as in the case of a gift) precedes the actual transfer known as a conveyance. The first stage is referred to as ‘exchange of contracts’ and the second stage ‘completion’ leasenorecognized a b writing ; a written dowment w a signature along Compiled and prepared by Ms. Sharon Page 6  Orally / Verbally Written / Created Rights Documents GR: NOT recognised as Valid Rights Exception to the General Rule Verbally / Orally given rights Informal Document – Formal Document – GR: Section 2 LP(MP)A 1989 – the Contract / Agreement In Deed disposition of rights in land must be done Writing in signed writing. Ø Exception to the requirement of writing Writing Sect 52 LPA 1925 Signed Sec 1 LP(MP)A 1989 53 years or less ] i. Short leases – section 54(2) LPA 1925 Sec 2 LP(MP)A 1989 & section 2(5)(a) LP(MP)A 1989 ii. Interest under implied trust – Section ↳ verbally 53(2) LPA 1925 Anne - iii. Proprietary Estoppel Note: Adverse Possession 3 Lease [3 yrs3 Lease more than yrs] ① ↳ writing Deed , , Orally Compiled and prepared by Ms. Sharon & Page 7  Unregistered Land Law of Property Act 1925 Land Charges Act 1972 Seller proves his title to the purchaser through old fashioned title deeds. A bundle of documents EQUITABLE RIGHTS LEGAL RIGHTS Section 1(3) LPA 1925 a. Any interest Not mentioned in Sec 1(1) (2) LPA 1925 OR Estates b. Interest mentioned in Section 1(1) LPA 1925 Interest sec 1(1) & (2) but not (a) FSAIP Section 1(2) LPA 1925 created by Deed (b) TOYA (a) Easement (c) Mortgages Interest Section 1(1) LPA 1925 Interest And Created by DEED Section 1(1) LPA 1925 Section 1(2) Section LPA 1925 1(2) LPA 1925 FSAIP FSAIP BINDS THE WHOLE WORLD Easement Easement TOYA TOYA Mortgage Mortgage Non Registrable Equitable Overreachable Right Registrable Equitable Right Right The application of Land Charges The application of the Doctrine of The application of Sections 2(1) Act 1972 Notice. The rule in Hunt v Luck & 27 Law of Property Act 1925 The rights must be registered Bona Fide Purchaser of the Legal CLBS v Flegg Estate for Value without Notice Compiled and prepared by Ms. Sharon Page 8 More Commercial in nature More Family in nature  Registrable Equitable Rights Section 2 Land Charges Act 1972 Class C Class D Class F Spouses’ statutory right of occupation Class C(iv) Class D(iii) of the matrimonial Class C(i) Class D(ii) Estate Equitable home Puisne Restrictive Contract Easements Mortgage Covenants Class C(iii) General Eq Charge Class C(iv) Estate contracts: Contract to have the legal estate conveyed ü Contract to grant a lease - Equitable Lease ü Contract to grant the fee simple - Equitable Fee Simple ü Option to Purchase Right to buy ü Pre-emption The right of first refusal Armstrong & Holmes v Holmes Compiled and prepared by Ms. Sharon Page 9 If a party has any of the above rights, they must enter in a Land Charge against the name of the estate owner in the Land Charges Register, Section 3 LCA 1972 Effect if the Rights is : Registered Not Registered Class C(iv), Class D(ii), Class D(iii) Section 198 LPA 1925 Registration will amount to Actual Section 4(6) LCA 1972 Notice of that right to the Purchaser. Right is: VOID against Right will BIND the Purchaser. - A Subsequent Purchaser - Of the Legal Estate Actual knowledge is irrelevant - For Money or Money’s worth Midland Bank v Green Note: Class C(i), C(iii) Class F Section 4(5) LCA 1972 Midland Bank v Green (1980) Facts: Unregistered Land Father Son Granted an Option to Purchase Son DID NOT of the farm for £22,500 register his right Estate Contract = Class C(iv) Father wanted to ‘frustrate’ the agreement (avoid carrying out the option) after a quarrel with the Son. Father Wife Market value was Conveyed the farm for £500 £40,000. A purchaser for money or money’s worth includes The Son tried to register the Option to Purchase but it was too late. nominal consideration. The issue was whether the Wife was bound by the Son’s unregistered Option to Purchase which she had actual knowledge of? Compiled and prepared by Ms. Sharon Page 10  Non Registrable Equitable Rights These are rights that Do Not fall within any of the above categories The Doctrine of Notice – The rule in Hunt v Luck 1. Examples of Rights Ø Interest under Trust (which has not been overreached) Ø Interest arising under Proprietary Estoppel 2. The Rule : the Interest is Void against a Bona Fide Purchase for Value of the Legal Estate Without Notice a. Bona Fide Acting in good faith Honestly Without fraud b. Purchaser Acquires the property Not a donee Includes mortgagee and Lessee c. For Value Must have provided consideration – money or money’s worth, marriage consideration and also includes nominal consideration. Consideration must be sufficient but need not be adequate Midland Bank v Green d. Legal Estate e. Without Notice Cases to note: Actual Notice – he has actual knowledge of the rights. He had been told of the rights or had found out for himself. Lloyds Bank v Carrick Imputed Notice – where the Purchasers agent has notice of the right Hollington Brothers Constructive Notice - he would have been aware of the rights if he had checked. v Rhode Checking will include all enquiries and inspections which he ought reasonably to have made. Thus must make inquiries that you reasonably ought to have made. Bridges v Mees Section 199 LPA 1925 - the Purchaser is prejudicially affected by notice of those matters Webb v Pollmount which would have come to his knowledge if such enquiries and inspections had been made as ought reasonably to have been made by him. Kingsnorth Finance v Tizard Compiled and prepared by Ms. Sharon Page 11  This applies to Registered and The Doctrine of Overreaching - Overreachable Rights Unregistered Land Overreaching is a process by which a purchaser of a legal estate takes it free of (i.e. will not be bound by) pre-existing equitable rights in the land, but the equitable interests do not ‘vanish’: they attach instead to the purchase money, converting rights in the land into a corresponding share in that money. Overreachable rights are generally those of a family nature (such as interests existing behind a trust) Section 2(1)(ii) LPA 1925 Section 27(2) LPA 1925 City of London BS v Flegg (1988) Lord Templeman Williams & Glyns Bank v Boland (1981) Under Section 2 LPA 1925, the purchaser of a legal estate will take free of any equitable (beneficial) interests provided they pay the purchase money (if there is any) to at least two trustees under section 27 LPA 1925. The Beneficial interest will be Overreached - To Overreach is to take the land free of the equitable interest. Rights are taken from the land and put into money. The process whereby certain equitable rights in land, which may have enjoyed certain protection in the system of registration upon sale, is “swept off” the land and transferred to the Purchase Money that has been paid. City of London BS v Flegg (1988) Lord Templeman HL: The Fleggs claim was not successful. Though the Fleggs had a right in the property by virtue of their financial contribution towards the purchase, their right had been Overreached. Since the rights were Overreached, they no longer have any Interest in the land. Thus they will also not be able to claim an Interest that Override Who does this law protect? Does the beneficiary actually Conditions want the money? Can the trustees be trusted? 1. Equitable Interest must be capable of being Overreached Is this a good law? Only applies to family rights – Beneficial Interest under trust Birmingham Midshires Mortgage Services v Sabherwal (2000), Robert Walker LJ: Interests that are Registrable cannot be Overreached. Rights that are commercial in nature cannot be overreached. 2. There must be conveyance of the Legal estate. (The Purchaser must buy the legal estate) William & Glyn’s Bank v Boland City of London BS v Flegg Bank of India v Sood 3. The purchase / capital money must be paid to TWO (2) Trustees or a Trust Corporation Note: Overdraft facilities Bank of India v Sood (1997) CA Compiled and prepared by Ms. Sharon Page 12  A Purchaser of an Unregistered Land will have to do the following: I. A good root of title search II. Land Charges search III. Physical inspection of the land Note: Overreaching Although the terminology is not found in the LCA 1972, equitable interests are often helpfully divided into two categories (Robert Walker LJ’s dictum in Birmingham Midshires Mortgage Services Ltd v Sabherwal). These are: Ø Commercial equitable interests (such as estate contracts, restrictive covenants, equitable easements, etc.) where the interest only has meaningful value to its owner so long as it binds the land over which it is exercised; and Ø Family equitable interests (such as beneficial interests behind a trust of land) where the interest has value irrespective of what assets the trust currently holds. “The essential distinction is…between commercial and family interests. [A commercial interest] cannot sensibly shift from the land affected to the proceeds of sale. [A family interest] can do so…since the proceeds of sale can be used to acquire another home.” Note examples of rights a. Easements b. Leases – regardless of the duration c. Option to Purchase d. Beneficial Interest under Trust – Resulting Trust & Constructive Trust e. Freehold / Restrictive Covenants f. Right of Pre-emption g. Rights under Estoppel h. Mortgages Compiled and prepared by Ms. Sharon Page 13 Registered Land Ø Registration was introduced in 1925 – Land Registration Act 1925. It is now succeeded by Land Registration Act 2002. Ø Basic concept of Title Registration - Title of the land is recorded in the register. It is the registration of the title and not the land. Ø Created a Centralised Register – a Comprehensive Title registration. Maintained in the Land Registry under the governance of the Chief Land Registrar Ø System of Land Registration – the greatest reform of 1925 legislations - His Majesty’s Land Registry Ø Why is there a need for Registration – Practical reasons Land Registration Act 1925 & Land Registration Act 2002 1. Land Registry Blog 9/10/ 2014 - Today 85% of England and Wales is under “Registered Land” 2. Today LRA 2002 applies. The LRA 1925 has been repealed but its principles are still being used. LRA 2002 - Came into force 13th Oct 2003 3. Although the government has set 2030 as the target date to achieve comprehensive registration of all land titles in England and Wales, it is difficult to judge if it will succeed. 4. LRA 2002 is the product of years of consultation – Land Registry & Law Commission. Law Commission 271 – July 1998 “Land Registration for the 21st Century; A Conveyancing Revolution” (2001) Law Commission Consultative Document “Land Registration for the 21st Century”. Law Commission No. 254 Compiled and prepared by Ms. Sharon Page 14  5. LRA 2002 – Purpose / Objective / Policy o The Register should be a complete and accurate reflection of the state of the title of the land at any given time. o To have as many rights as possible in the register. o The number of Overriding Interest should be reduced o Possible to investigate title to the land on-line with min added inquiry / inspection o To enhance the security of the title offered by the Register through technology – online o Title by registration o Electronic Conveyancing 6. LRA 2002 was primarily designed for E-Conveyancing – the most revolutionary aspect 7. Primary Aim – LRA 2002 It is to ensure Quick Efficient Inexpensive Transfer of Estates and Interest in land While ensuring that Third Party interest in the land are properly protected Simplify Conveyancing Law Commissioner Professor Nick Hopkins said in July 2018 that “For many, the land they own is the most valuable thing they will ever have, so it’s important that the registration system provides clarity over who owns what.” There should exist an accurate and reasonably comprehensive record of title to land and of third- party interests in that land in order that dealings with the land can be accomplished safely and quickly. Compiled and prepared by Ms. Sharon Page 15  Land Registration Act 2002 Principles of Registered Land Types of Rights Mirror Insurance Curtain Registrable Estates / Interest Overriding Interest / The Register Interest that Override Interest that require Registration Property Section Charges Section Proprietorship Section Compiled and prepared by Ms. Sharon Page 16 Registered Titles v Title by Registration – LRA 2002 (not registration of title – LRA 1925) v The New Owner must register within 2 months from the completion of the transaction. If he did not, it would be VOID as regards the Legal Title. He would only have an Equitable title. Title by Registration o The Register is the Source of a person’s title and it is not simply the recording of the title o The Register is the reason why a person owns land o The act of registration confers title to the new proprietor o Until the registration is complete, the new owner does not have title o Thus only ONE owner which is the Registered Owner o Even if there was a mistake leading to registration, the act of registration will cure any defect. o The register is everything o The Register though not a perfect mirror is Conclusive The Title is Not Complete Until the Registration takes place Registration is the Source of the Title Section 58 LRA 2002 Ø The registered title is guaranteed Ø It is a valid title Ø Interest is conclusive Ø Even of the title was obtained through fraud / mistake Walker v Burton (2013) The conclusive effect of section 58 LRA 2002 was challenged in: Malory Enterprise Ltd v Cheshire Homes & CLR (2002) Fitzwilliam v Richall Holdings (2012) But the CA in Swift 1st v Chief Land Registrar (2015) said that a person registered with a title has both the Legal and Equitable title. Compiled and prepared by Ms. Sharon Page 17 Principles of Registered Land A. Mirror – the Register must mirror the totality of rights that exist on the land. Register reflects the state of the land accurately and conclusively. (Is the current Register perfect?) B. Curtain – certain rights do not appear on the register. They exist behind the curtain. Interest under Trust. Note the principles of Overreaching C. Insurance – the Government guarantees the register. Thus any loss suffered due to the register, will be compensated The Register A. Property Section of the Register – describes the land, reference to the plan and type of title. The map of the land B. Proprietorship Section of the Register – name of the proprietor and address C. Charges Section of the Register – details of Third Party rights over the land Types of Rights Registrable Estates / Interest – Substantive Registration This category comprises the only estates and interests guaranteed by the Land Registry. As confirmed in Swift 1st Ltd v Chief Land Registrar the registration of such an interest gives the registered owner a guaranteed interest. These are rights that are registered with their own unique title number. Registrable estates are those that are capable of existing at law (legal rights) and they may be registered in their own right. Only Legal Estates are capable of substantive registration (section 1 LPA 1925). Under the LRA 2002, there are two such legal estates (ownership of land). The statute also states that can also be legal registrable interests. Compiled and prepared by Ms. Sharon Page 18 Three separate provisions on the registration of title must be considered under LRA 2002: A. Voluntary First Registration - Section 3 LRA 2002 B. Compulsory First Registration – Section 4 LRA 2002 C. Disposition of Estate which is already registered (Subsequent Registration) – Section 27 LRA 2002 Sections 2 – 4 LRA 2002 Voluntary Registration Compulsory Registration Section 3(1) LRA 2002 Section 4(1) &(2) LRA 2002 1. Legal Estates When a trigger event takes place: FSAIP TOYA > 7 years [sec 3(3)] 2. Rentcharge 1. Transfer of a Legal Estate for FSAIP 3. Franchise - valuable consideration 4. Profit A Prendre - other consideration - gift - court order - vesting assent 2. Legal Lease > 7 years TOYA > 7 yrs 3. Creation of 1st legal mortgage * Expressly Created Legal Easement – ST is Registered Land – Section 27(2)(d) Compiled and prepared by Ms. Sharon Page 19  A. Voluntary First Registration - Section 3 LRA 2002 B. Compulsory First Registration – Section 4 LRA 2002 Section 4 – states the trigger events Section 6(4) LRA 2002 – must register within 2 months of the relevant period (trigger event) Section 7 LRA 2002 – the new owner must make the application. – If fail to register the FSAIP, the transaction is VOID in law. – If fail to register Lease or Mortgage, the interest would be VOID in law. They will only have an Equitable Interest Note: Section 132 LRA 2002 – the consideration provided by the purchaser C. Disposition of Estate which is already registered (Subsequent Registration) – Section 27 LRA 2002 If the Title is already registered, there will be a ‘registered disposition’ transferring the already registered title from the Transferor to the Transferee. This must be done in a DEED. However in order for it to be a Legal Estate (exist in law), it must be completed with registration. Section 27 LRA 2002 (1) If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met. (2)In the case of a registered estate, the following are the dispositions which are required to be completed by registration— (a) a transfer, (b )where the registered estate is an estate in land, the grant of a term of years absolute— (i) for a term of more than seven years from the date of the grant, (d) the express grant or reservation of an interest of a kind falling within section 1(2)(a) of the Law of Property Act 1925 Section 27(1) - It will be legal only if completed by Registration. The dispositions above will NOT take effect at law until the registration requirements are met. DEED + REGISTRATION Compiled and prepared by Ms. Sharon Page 20 Rights substantially registered are: A. Fee Simple Absolute In Possession B. Leases of MORE than 7 years C. Legal Mortgage D. Expressly Created Legal Easements If a piece of land which is subject to the title to which is registered is sold, then section 29 indicates that the purchaser will only be bound by all the things which are on the register and a limited category of rights which we call unregistered interests that override. Section 29 LRA 2002 – Special Priority Rule The purchaser will be bound by a. Interest that appear on the Charges register b. Interest that Override If a Purchaser has paid - Valuable consideration. Section 132 LRA 2002 – excludes: Nominal Consideration Marriage consideration - Completed the purchase by registration Any other earlier interest which in not protected on the register will not bind the Purchase even if he know / had actual knowledge of the rights. Section 28 LRA 2002 – the Basic Priority Rule. Halifax v Popeck (2008) 13% of Land which is Unregistered 87% of Land which is Registered Section 3 – Voluntary First Registration Section 27 – Deed & Registration Fee Simple Absolute In Possession Fee Simple Absolute In Possession Leases of MORE than 7 years Leases of MORE than 7 years Legal Mortgage Expressly Created Legal Easements Section 4 – Compulsory First Registration Fee Simple Absolute In Possession Leases of MORE than 7 years 1st Legal Mortgage Expressly Created Legal Easements Compiled and prepared by Ms. Sharon Page 21 Interest that Require Registration / Interest Protected by Entry on Register (Minor Interest) What are these rights Methods of Protection Notice Restriction Interest that CANNOT be protected by entry of Notice Section 33 LRA 2002 What are these rights o The aim of the LRA 2002 – to enter as many proprietary interests as possible on the register. Any property rights. o The purpose is to protect the interest AND to alert the Purchase of the existence of the rights o Section 29 LRA 2002 - If a person has an interest in land, then that right must be protected on the register, to ensure their priority against a Subsequent Purchaser. If it is not protected, it would be Void and will NOT be binding on the subsequent purchaser. o Section 28 LRA 2002 - Unregistered interest will bind a Non-Purchaser o Section 71 LRA 2002 Compiled and prepared by Ms. Sharon Page 22  Methods of Protection A. Notice Section 32 – an entry in the register of the burden of an interest affecting the registered estate Ø Usually entered in the Charges Section of the Register Ø A mechanism by which commercial equitable interest are nailed to the land to ensure they survive subsequent disposition. Ø When entered – the interest will take priority. It will bind a subsequent purchaser – Section 29 LRA 2002; Dominion Homes v Prince Evans Solicitors (2015) Ø The entry of Notice does not however guarantee its validity (unlike the rights under Sec 27) Ø There is no exhaustive list of what be protected by Notice. Ø There is however a list of what CANNOT be protected by entry of Notice – Section 33 LRA 2002 Rights that CAN be protected by Notice CANNOT be protected by Notice Not Exhaustive Section 33 LRA 2002 a. Agreed Notice Section 34 LRA 2002 b. Unilateral Notice Section 34(2)(b) LRA 2002 There is No Difference in the level of protection between Agreed Notice and Unilateral Notice. The degree of protection is the same – both give Substantive Priority Protection. 33 - Excluded interests No notice may be entered in the register in respect of any of the following— (a) an interest under— (i) a trust of land, or (ii) a settlement under the Settled Land Act 1925 (c. 18), (b) a leasehold estate in land which— (i) is granted for a term of years of three years or less from the date of the grant, and (ii) is not required to be registered, Compiled and prepared by Ms. Sharon Page 23  given even more exemptions D Short Leases Exception to the requirement of writing Short leases – section 54(2) LPA 1925 & section 2(5)(a) LP(MP)A 1989 Leases of 3 years or less can be done orally, provided: i. Takes effect in possession (date of the grant) ii. Best rent reasonably obtainable (market rent) Fitzkriston v Panayi (2008) iii. Does not require payment of premium or fine These Short Leases will be Legal Leases Note: An unregistered option may exceptionally be given priority by imposing personal liability on a purchaser by imposing a constructive trust to prevent behaviour that would otherwise amount to an unconscionable attempt to deny the existence of the right: Lyus v Prowsa Lloyd v Dugdale Chaudhary v Yavuz Equity will not allow a statute to be used as an engine of fraud. B. Restriction Section 40 & 41 LRA 2002 Ø Entered in the Proprietorship Section of the Register Ø Controls the registered proprietors ability to sell the land or deal with it Ø Prevents a disposition of the land and any manner of dealings with the land unless and until there has been a compliance with the terms of the relevant ‘restrictions’ Ø Conditions will be specified and these must be satisfied if the land is to be dealt with Ø E.g. of rights protected by Restriction - Persons with a Beneficial Interest under Trust - Option to Purchase Ø Note the Doctrine of Overreaching The important point to note is that an overreachable interest will never bind a purchaser who complies with overreaching (City of London Building Society v Flegg ) and will only bind a purchaser who does not comply with overreaching, if it is additionally an overriding interest (Williams & Glyn’s Bank v Boland ). Compiled and prepared by Ms. Sharon Page 24 Interest that Override / Overriding Interest o These are rights that DO NOT appear on the register o Rights that Bind a Purchaser without entry / appearing on the register o Rights that bind automatically without registration o Overriding interests are hence a hazard for the purchaser: not visible on the register but binding upon the purchaser regardless of notice. FLAW in the system CRACK in the mirror of title - The rights are discovered through physical inspection of the land - Preventing the Register from being the perfect reflection of title - There cannot be a Register Only system Overriding Interest under LRA 1925 Section 70(1) Section 70(1)(a) – Section 70(1)(f) – Section 70(1)(k) – Easement and Adverse Leases Not Profits Possession exceeding 21 years Celsteel Ltd v Alton Hse Hldg Section 70(1)(g) – Thatcher v Douglas Interest of - Legal and equitable persons in Actual Occupation Compiled and prepared by Ms. Sharon Page 25  Schedule 1 – First Registration Schedule 3 – Subsequent Registration Unregistered Land Registered Land Registered Land Registered Land Para 1 Para 2 Para 3 Para 1 Para 2 Para 3 Compiled and prepared by Ms. Sharon Page 26  Interest that Override / Overriding Interest under LRA 2002 Schedule 3 Para 1 Para 2 Para 3 - Legal Leases – CPBS Impliedly Created Legal v Miller (grant = - Interest of a person Easements equitable leases - In Actual Occupation excluded) - Not exceeding 7 years Note the Conditions Note the Conditions Provided they are either: - Known to the purchaser and - Obvious on a reasonably careful inspection of the ST land or - Have been exercised within one year before the sale of the land. Compiled and prepared by Ms. Sharon Page 27  Schedule 3 Para 2 An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for Interest Actual Occupation Interest / Right + Actual Occupation = Overriding Interest R + AO = OI Conditions Except for: (a) an interest under a settlement under the SLA 1925; (b) an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) an interest— (i) 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 that time; Compiled and prepared by Ms. Sharon Page 28  · beneficial interest adverse posession freehold Seg : lease , easement , , covenant rights mortgages , A. Interest any property rights > - o A Proprietary Right - it must be recognised as interest in the land Examples of rights Rights that do NOT fall within this category a. Spouses right to occupy b. Interest under a SLA 1925 settlement – Para 2(a) c. Future leases that need to be registered – Para 2(d) be - this must proven B. Actual Occupation o This is a Question of Fact to be determined by reference to the circumstances of each case Williams v Glyns Bank v Boland (1981), Lord Wilberforce - These words are ordinary words of plain English and should be, in my opinion, be interpreted as such. I do not think that the word actual was intended to introduce any additional qualifications, it merely emphasises what is required is physical presence. “…it is the fact of occupation that matters…”and what is required is “physical presence on the land and not some entitlement in the law”. o This was considered again in Thompson v Foy (2009) Lewison J and it was followed in Link Lending v Bustard (2010) Mummery LJ. Applied Boland - AO was as what Lord Wilberforce had said. Abbey National BS v Cann (1991) Lord Oliver – “involve some degree of permanence and continuity” o The nature and extent of physical presence can vary depending on the nature of the property. Malory Enterprises v Cheshire Homes (2002) Rock Ferry Waterfront Trust v Pennistone Holdings Ltd EWCA o Time to be in Actual Occupation – Actual Occupation must be present at the date of disposition (date of transfer and the registration) Abbey National BS v Cann (1991) Thompson v Foy (2010) Compiled and prepared by Ms. Sharon Page 29  o Temporary absence from property The length and the reason for the absence will be looked at in determining Actual Occupation Chhokar v Chhokar (1984) - Actual Occupation Stockholm Finance v Garden Holdings (1995) – No Actual Occupation as absent for 1 full year If the person at any particular time is not physically present on the land at that time, it would usually be necessary to show that his occupation was manifested and accompanied by a continuing intention to occupy. Link Lending V Bustard (2010) CA Rock Ferry Waterfront Trust v Pennistone Holdings Ltd EWCA Points to Note 1. Actual Occupation under LRA 1925 – which no longer applies under LRA 2002 a. Rights of a person who is in receipt of rents and profits LRA 1925 – will be considered to be in AO LRA 2002 – will NOT be considered to be in AO b. Ferrishurst v Wallcite has been overruled. The interest must relate to land of which the person is in AO. The right will only override to the extent it coincides with the AO 2. The mere fact of Actual Occupation itself is not protected if the Occupier has no separate proprietary interest in the property (thus it is Not right of Actual Occupation) 3. There is No need to have a causal link / connection between the Interest and the AO. ↳ for the right to Example: protected ; right ↑ land law be Right –EOption to Purchase the house She should register AO – staying there as a family member / licencee / tenant of the house ↳ 8392 ; She won't no AO have Of ; 4. Actual Occupation serves as a warning to the Purchaser of the existence of a potential right in the property 5. Several people can be in Actual Occupation at the same time Hodgson v Mark (1971) 6. Spouses Actual Occupation Bird v Syme – Thomson (1979 William v Glyn’s Bank v Boland Compiled and prepared by Ms. Sharon Page 30  7. Children’s Actual Occupation Hypo – Mortgage Services v Robinson (1997) 8. Can an easement amount to Actual Occupation Chaudhary v Yavuz (2011) CA The Court of Appeal found that there was no actual occupation of any part of the metal stairway, so Mr. Chaudhary did not have an overriding interest for the purposes of the Land Registration Act 2002. Actual occupation required a personal physical presence. Regular use of the staircase to access the upper floors of the property was insufficient. This is the first time that the Court of Appeal has considered what is meant by actual occupation for the purposes of overriding interests and made clear that use is not to be confused with occupation. The case also highlights the importance of protecting an interest by registration, the Claimant could have registered a unilateral notice against the title but failed to do so. That would have prevented all the subsequent problems. * Saeed v Plustrade (2001) CA - other easements like parking or storage may satisfy the requirement of Actual Occupation. Chaudhary regarded Saeed with suspicion. Additional conditions under Schedule 3 These additional conditions were not found in section 70(1)(g) LRA 1925 These conditions are not found in Sch 1 Para 2 Schedule 3 Para 2 (a) an interest under a settlement under the SLA 1925; (b) an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) an interest— (i) 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 that time; Schedule 3 Para 2 (b) - Interest of a person of whom inquiries were made before the disposition and who fails to disclose the rights in circumstances where they could reasonably have been expected to do so. Schedule 3 Para 2(c)(i)(ii) Interest of a person whose occupation would not have been Obvious on a Reasonably careful inspection of the land and of which the Purchaser does not have Actual Knowledge Compiled and prepared by Ms. Sharon Page 31 Sections 29 & 132 LRA 2002 Section 28 LRA 2002 The rights will bind the Purchaser if: 1. If the Right holder has protected their rights (Substantive registration & Interest that require registration 2. If the Right holder has an Overriding Interest 3. If the ‘Purchaser’ is a Donee / Volunteer (provided no consideration) 4. If the Purchaser provided Nominal consideration 5. If the Purchaser provided Marriage consideration Conclusion Some rights can come under a few categories. 1. Legal lease of between 3 to 7 years Notice – section 32 OI – Sch 3 Para 1 2. Equitable Leases Notice – Section 32 OI – Sch 3 Para 2 3. Option to Purchase Notice – Section 32 Restriction – Section 40 LRA 2002 OI – Sch 3 Para 2 4. Interest under trust Restriction – section 40 OI – Sch 3 Para 2 Overreaching – section 2 & 27 LPA 1925 Compiled and prepared by Ms. Sharon Page 32 UOL Subject Guide Examination tips Within the scope of this topic, there are three principal areas for assessment: 1. An essay title asking you to consider the suitability and efficacy of the reforms to the land registration system in 2002. This may involve some comparison with the three mechanisms that operated in unregistered land for the protection of land law interests (land charges, overreaching and the doctrine of notice) discussed in Topic 2. 2. A problem question asking you to consider the appropriate treatment of a variety of different property rights within the land registration system. 3. A problem question asking you to consider the rights of people in ‘actual occupation’ and other informal rights against the registered proprietor of the property. Assessment tips In problem questions, always ask whether the title is registered or unregistered and be prepared for questions that ask you to apply the rules pertaining to both systems. If you are not told whether the title is registered or not, answer in the alternative where that is significant. If you are advising on both registered and unregistered title, initially answer the entire problem on the basis of registered title and then briefly explain how each of your conclusions would differ (either in outcome and/or detail) if title was unregistered. Avoid obvious errors – for example LCA 1972 applies only to unregistered title, not registered title. Do not go behind the facts you have been given – thus if you are told ‘X has given Y an easement’ you do not need to consider the Re Ellenborough requirements of an easement as you have already been told that Y has one. Nor do you need to consider whether it was expressly or impliedly granted as, in that example, you have already been told it is an express assignment as X gave it to Y. You therefore only need to consider whether the easement is legal or equitable (i.e. how it was given) and how that will affect its status in registered and/or unregistered title. Compiled and prepared by Ms. Sharon Page 33  Remember, in registered title there are three basic categories of property interest: 1. Major interests – registrable legal interests (e.g. fee simples, leases over seven years, easements, charges and profits in gross) the existence of which is guaranteed by the Land Registry. 2. Minor interests – a prima facie interest that can be protected by either a notice (e.g. commercial equitable interests such as estate contracts, restrictive covenants, equitable easements) or a restriction (e.g. overreachable beneficial interests behind a trust of land) entered on the register – these interests are not guaranteed by the Land Registry and thus their legitimacy has not been tested but the right (insofar as it exists) is protected (insofar as it can be) by registration. 3. Overriding interests – interests that can bind even though not substantively registered nor protected (even if they are registrable and/or could be protected): including short- and medium-term legal leases (i.e. no longer than seven years); implied or prescriptive (but not express) legal easements (that have either been exercised in the last 12 months, or are known to, or discoverable by, the purchaser); and any property interest that is coupled with (but not necessarily causally linked to) discoverable occupation. Remember, in registered land, under s.27 LRA 2002, any express registrable interest capable of being legal will only be legal (even if a deed has been used to convey it) once it has been registered. Until then it is only equitable (and, as such, can be protected by means of a notice if there is some reason why it cannot be substantively registered and hence made legal Compiled and prepared by Ms. Sharon Page 34 UOL Subject Guide Activity Activity 3.5 Paul transfers the registered title of Whiteacre to Samantha for £10,000. Will Samantha be bound by the following interests, all of which arose prior to the sale of Whiteacre to Samantha? a. An easement granted by Paul to his neighbour Bethany. b. A restrictive covenant granted by Paul to his neighbour Saskia. c. Eloise’s beneficial interest in Whiteacre arising from her contribution to the purchase price Paul paid when he bought the property. d. Tamara’s licence to occupy Whiteacre. e. The option to purchase Whiteacre Paul granted Chris. f. How, if at all, would your answer to each of the questions change in each of the following alternative circumstances? Ø Samantha paid £10 for Whiteacre. Ø Samantha paid a peppercorn for Whiteacre. Ø Samantha gave no consideration for Whiteacre. Ø The legal title of Whiteacre was co-owned by Paul and Gordon who jointly conveyed it to Samantha. Subject Guide: There are four key questions to ask in response to any land law problem, and you must always be prepared to answer them and to explain why the answers matter: v Is the title to the land registered or unregistered? (Even though it is important to appreciate the significance of this distinction by asking the question, you can expect that today title is registered unless specifically advised to the contrary.) v What property interests may exist in the relevant land? v Is each of the possible property interests legal or equitable? v Have any necessary steps been taken to protect each of the possible property interests? Since there has been so much statutory intervention in land law at different times, the dates on which events occur in a problem question are often crucial, and a ‘before and after’ answer is often necessary. Questions will usually target your knowledge of key legislative changes in this way. But case law is also important, whether in interpreting statutory rules or in creating legal rules in their own right. Please note: unless told otherwise, you should always answer a question as if you were giving advice on the date of the examination, not the date in the question. Compiled and prepared by Ms. Sharon Page 35 Sample Questions Question 1 Daniel was the registered owner of Blackacre and has lived there with his high school sweetheart, Nancy for many years now. They both contributed unequal amounts to the purchase price. Blackacre is a farm which includes two fields known as Snow Field and Gold Field. i. Last year, Daniel orally agreed that Stephen could rent Snow Field for three years for an annual rent of £10,000. ii. Fawn, a neighbouring landowner, insists that she has a legal right to use a shortcut across Gold field to access the road from her house However, Fawn does not have any documentation to support her claim. iii. In January 2020, Daniel agreed, in writing, to give Roger the right to purchase Blackacre anytime over the next two years. iv. At the beginning of this year, Nancy went to Nepal for an indefinite period to do some research for her PhD. v. Daniel has also allowed his nephew, James, to occasionally use their guest room when he is in town. Last month Daniel sold Blackacre to Aaron who is now the registered owner of Blackacre. Aaron has asked Stephen to leave Snow Field and refused Fawn permission to cross Gold Field. Roger now wants to exercise his option. Nancy has returned to claim what “is rightfully hers”. Daniel has disappeared with the proceeds of the sale. Aaron has asserted that he is not bound by Roger’s option and owes Nancy nothing. He has also threatened James that he will sue him for trespass if comes onto the land. Advise Stephen, Fawn, Roger, Nancy and James How will your answer be different if the land was Unregistered Land? Question 2 Lucy was the registered proprietor of Pinkacre. In 2018 she granted Peter a five-year lease of a cottage on Pinkacre; in 2019 she contracted to grant Quentin a four-year lease of a field for grazing purposes; in 2020 she agreed orally to let Rick have exclusive use of a barn for three years at an annual rent of £300, and she invited Rick to pick as many apples as he liked from her orchard. In 2022 she sold Pinkacre to William, who has now written to Peter, Quentin and Rick telling them to keep off his land. Discuss. Question 3 W lives in Rose Cottage, the matrimonial home, of which her husband, H, was the registered proprietor with absolute title. In 2021 H deserted W and mortgaged the cottage to B Bank. The mortgage payments are well in arrears and B Bank now seeks possession of the cottage. W, who had given H £10,000 towards the purchase price of the cottage, refuses to leave. Discuss. Compiled and prepared by Ms. Sharon Page 36