Unregistered Land

Question 1

Give one of the main purposes of investing title to unregistered land.

Answer 1

• It is important in order to establish whether land is subject to any third party rights which may bind the purchaser.
• For unregistered title this will depend on:

1) whether interest is legal or equitable; and
2) how the interest is protected.

Question 2

How do you determine whether an estate or interest is a legal estate or interest?

Answer 2

Estate or interests which are capable of being legal (under s1(1) or (2) LPA 1925) and which has been created using the correct formalities, will create a legal estate or interest.

Question 3

Does the buyer need to know about the legal interest for it to bind them?

Answer 3

No.

Provided it is capable of being a legal interest and complies with the relevant formalities, it will bind the buyer regardless of whether they knew about it.

Question 4

Are all legal interests binding without being registered?

Answer 4

Yes apart from pusine mortgages.

Pusine mortgages must be protected by a land charge.

Question 5

How do you tell if the land interest in question is an equitable interest?

Answer 5

Interests are equitable because either:

1) Interest is not capable of being legal (as it does not appear in s1 LPA 1925) or;
2) Interest is capable of being legal but has not been created using the correct formalities.

Question 6

What are the two ways an equitable interest will be protected?

Answer 6

1) A land charge; or
2) The doctrine of notice.

Question 7

List the interests which can be capable of being protected by means of a land charge.

Answer 7

• estate contract;
• restrictive covenant;
• equitable easement;
• a home right;
• pusine mortgage.

Question 8

What is a pusine mortgage?

Answer 8

A legal mortgage or charge which is not protected by the despot of deeds.

This will usually be a second mortgage where the first mortgagee (lender) has already taken despite of the deeds as part of their security.

Question 8

How do you register a land charge?

Answer 8

It is not registered against the parcel of land.

It is registered against the estate owner (in the version their name appears in the deeds). It must be registered against the correct name, otherwise it will not be properly registered.

Question 9

What is the effect of registering a land charge (as confirmed by s18 LPA 1925)?

Answer 9

Registration of land charge at the Land Charges Department (NOT LAND REGISTRY) is deemed to constitute actual notice of the interest from its death of registration.

Any buyer will be bound by a registered interest at the Land Charges Department (regardless of whether they know about it).

Question 10

Describe the effect of failing to register a land charge.

Answer 10

It will be void against buyers unless land charge is registered before completion of the purchase.

Question 11

Can an interest be binding on the buyer if it is not registered but the buyer had actual knowledge of the interest?

Answer 11

No. The knowledge of the buyer is irrelevant.

Question 12

When buying unregistered land, what must the buyer’s solicitor do in order to determine whether there are any interest over the land which will be binding?

Answer 12

They must do a search of the land charges register against all names revealed in the epitome of title (including those which pre-date the root of title). This is because any charges registered will bind the buyer.

A certificate will be produced once the search has been completed, as this is binding in favour of the buyer provided they have carried out the searches correctly (as above).

Question 13

Explain the provision of s10 LCA 1972 (search certificates from the land charges register).

Answer 13

search certificates from the land charges register will be bidding in favour of the buyer.

This acts as proof they have searched the register against all relevant owners of the land revealed in the epitome of title and root of title.

Question 14

What happens where buyer correctly carries out land charges search, but they end up being bound by a land charge not revealed in the epitome of title (or in the search )?

Answer 14

Buyer may be entitled to statutory compensation if they have suffered loss.

Question 15

Explain the doctrine of notice.

Answer 15

Equitable principle which is codified in s199(1) LPA 1925.

Applies to:

1) equitable interests pre-dating 1925; and
2) beneficial interests under a trust (express or implied) whenever created.

Question 15

What is the effect of the doctrine of notice?

Answer 15

Where the doctrine applies, a buyer is bound by equitable interests unless they are ‘equity’s darling’.

This is a bona fide purchaser for the value of a legal estate or interest without notice of the equitable interest.

Question 16

Can beneficial interests under a trust be protected by registration of a land charge?

Answer 16

No.

The only protection available is the doctrine of notice.

Question 17

Define equity’s darling.

Answer 17

This is a bona fide purchaser for the value of a legal estate or interest without notice of the equitable interest.

Question 18

What does bona fide mean (in relation to the definition of equity’s darling)?

Answer 18

Good faith.

The buyer must act honestly and without fraudulent intent.

Question 19

What is a purchaser for value (in relation to the definition of equity’s darling)?

Answer 19

This means the purchaser must give consideration.

Someone who is gifted land is not a purchaser for value.

Value simply means some form of consideration. This could be nominal (eg £1).

Question 20

What does ‘ of the legal estate or interest’ mean in relation to the definition of equity’s darling?

Answer 20

Buyer must be acquiring either legal estate or legal interest. Interest must therefore appear in s1(1) or (2) LPA 1925, and comply with relevant formalities for the creation of legal estate or interest.

Eg buying a freehold or taking a mortgage which is created by deed. They are both legal interests and provided they are created by deed and comply with formalities they will be valid.

Question 21

Can the buyer of an equitable interest claim the benefit of the doctrine of notice?

Answer 21

No.

This may mean they are bound by the third party right depending on which equitable right was created first.

Question 22

Define without notice

Question 23

In summary, when will a buyer not be bound by an equitable interest in the land?

Answer 23

If the bona fide purchaser for value of a legal estate or interest, buys their interest without notice of the existing equitable interest over the land, it will not be binding on the buyer.

If they have any form of notice (constructive, actual or imputed) or are not a buyer for consideration of a legal interest (or are not acting in good faith) the interest will bind the purchaser.

Question 24

The onus is on the buyer to prove they did not have notice of the existing equitable interest. What are the three types of notice?

Answer 24

1) Actual Notice.
2) Constructive Notice;
3) Imputed Notice.

Question 25

Define actual notice.

Answer 25

The buyer actually know of the equitable interest. Commonly, this will be where the seller has alerted the buyer to the existence of the equitable interest over the land.

However rumour/ gossip (speculation) of the equitable interest does not constitute knowledge for these purposes.

Question 26

Define constructive notice.

Answer 26

• Buyer obliged to inspect land and investigate title. They must also raise enquiries which a reasonable person with competent legal advice would raise.
• Buyer should be looking for evidence of third party rights on inspection f the property (eg a worn track may indicate a right of way). They should also check if anyone else is in occupation of the land (eg under a lease or trust).
• When inspecting lan, buyer is not expected to look in drawers or cupboards.
• If buyer fails to make reasonable enquiries, they will have constructive notice of the equitable interests.

Question 27

Define imputed notice.

Answer 27

If buyers agent (eg solicitor, surveyor etc), has actual or constructive notice of an equitable interest, this will be imputed to the buyer.

This effectively means the knowledge of the agent is assumed to be the knowledge of the principal (the buyer).

Question 27

What happens if the buyer can prove they are equity’s darling?

Answer 27

If buyer can demonstrate they are bone fide purchaser for value of a legal interest or estate without notice of the legal interest or estate, they will take the estate free of equitable interests created prior to 1925, as well as beneficial interests under a trust.

Question 28

Why does the doctrine of notice not apply to interests created post 1925?

Answer 28

Interests created after 2925 are registrable and protected by land charges.

Beneficial interests under trusts (regardless of when created) are protected by the doctrine of notice as they are not registrable as land charges.

Question 29

Explain overreaching

Answer 29

A mechanism by which beer can take property free of the interests of people with a beneficial interest under a trust.

For it toward, on completion buyer must pay purchase money to a minimum of two trustees who hold the legal estate overt their property.

Beneficiary’s beneficial interest in the property then ‘lifts’ from the property and vests in the purchase monies instead.

Question 30

What is the effect of overreaching?

Answer 30

Effectively the beneficial interest in the property shifts to a beneficial interest in the purchase monies (provided the buyer pays the purchase monies to two or more trustees who hold the legal estate in the property).

Question 31

What needs to be registered as a C(iv) Land Charge in order to be an overriding interest?

Answer 31

An estate contract.

Question 32

What needs to be registered as a D(iii) Land Charge in order to be an overriding interest?

Answer 32

An equitable easement.

Question 32

What needs to be registered as a D(ii) Land Charge in order to be an overriding interest?

Answer 32

A restrictive covenant.

Question 33

What needs to be registered as an F Land Charge in order to be an overriding interest?

Answer 33

A home right.

Question 34

What needs to be registered as an C(i) Land Charge in order to be an overriding interest?

Answer 34

A pusine mortgage.

Note this is the only legal interest which MUST be protected by a land charge.

All other legal interests will ‘bind the world’ so long as they are capable of being a legal interest and comply with the relevant formalities.

Question 35

Do legal interests need to be registered as land charges/ does notice need to be given to the buyer?

Answer 35

No. Legal interests which are capable of being legal interests and comply with the relevant formalities are binding on the world.

The only exception is a pusine mortgage which must be registered as a C(i) land charge.