Enforcement of 3rd party rights against a purchaser - Unregistered Flashcards
Mercer v Liverpool, St Helen’s and South Lancs Railway Co [1902]
Legal Rights pre-1926
legal rights bind the whole world (except puisne mortgages)
Puisne Mortgage
- Legal mortgage over a legal estate not protected by deposit of title deeds, usually because land is subject to prior legal mortgage and first mortgagee (lender) has title deeds to property for security.
Equitable rights pre-1926
- bind everyone except ‘Equity’s Darling’
- a bona fide purchaser for value of a legal estate without notice
- ‘Purchaser’ includes lender and buyer
3 categories of Equitable Interest
- Equitable interests subject to protection under Land Charges Act (LCA) 1972 - most commercial equitable interests
- Equitable interests subject to overreaching - most family equitable interests
- Equitable interests that don’t fall into above – subject to doctrine of notice
Interests not subject to Protection under LCA 1972
- Legal (apart from puisne mortgages)
- Overreachable – family equitable interests
- Interests still subject to doctrine of notice
Effect of entry of a Land Charge and Protection under LCA 1972
S198 LPA 1925 - Registration at Plymouth constitutes Actual Notice of the interest. Purchaser will see the interest and be bound by it.
Effect of Non-Protection of an Interest
S24 LCA 1972
Non-protection of an interest will make it VOID against certain categories of purchaser
Interests protected under Class C
LCA 1972 s2(4)
- C (i) – LCA 1972, s2(4)(i) - puisne mortgage (2nd or subsequent legal mortgage) – alerts a purchaser to fact there is a 2nd or subsequent legal mortgage outstanding at the property. Know if has to be paid off to take the land free from the mortgage.
- C (iii) – LCA 1972, s2(4)(iii) - equitable mortgage – created if the person only has an equitable estate. Such a charge frequently arises where failure to comply with common law formalities, e.g. there was no deed as required by LPA 1925, s52(1)
- C (iv) – LCA 1972, s2(4)(iv) - estate contract – can be deliberately created contracts but can also cover failed legal estates and interests if comply with S2 LP(MP(A)
Interests protected under Class D
LCA 1972 s2(5)
- D (ii) - LCA 1972, s2(5)(ii) – negative covenant affecting the land – e.g. covenant not to use land as business premises, not to build a second storey
- D (iii) - LCA 1972, s2(5)(iii) – equitable easements – equitable interest will generally arise when not created formally, i.e. by deed OR created formally but not for a duration equivalent to a freehold or leasehold term.
Interests protected under Class F
LCA 1972 s2(7)
- F - LCA 1972, s2(7) – spouses’ right to occupation – protects spouse’s right to occupy home under FLA 1996 if land is unregistered.
- Does not protect an interest in land
- Merely a statutory right of occupation
Incorrect Entry
LCA 1972 s3(1)
Land charge must be entered against the correct name(s) of the estate owner(s) at the time of the creation of the land charge.
Standard Property Investment plc v British Plastics Federation [1985]
Incorrect Entry
Correct name to be entered on the land charge register is version of the name as it appears in title deeds
Diligent Finance Co Ltd v Alleyne [1972]
Incorrect Entry
If land charge is entered against the incorrect name, the protection is nulled.
Registered against Erskine Alleyne, not Erskine Owen Alleyne which allowed later mortgagee to take free from spouse’s right of occupation.
Effect of Non-Entry of a Land Charge
S4(5) LCA 1972
Failure to Enter Land Charge
- Failure to enter C(i) & C(iii) land charge means your interest is void against purchaser for value of any estate or interest