Authorities Flashcards

Question

Enforceability of Third Party Rights > 2. Legal? > s.1(2) or s.1(1)(b) LPA

Answer 1

Yes: Easements, mortgages, leases

Answer 2

s.1(2) or s.1(1)(b) LPA

Answer 3

No: Restrictive Covenants, estate contracts, options, beneficial interests, trusts, FLA

Answer 4

s.1(3) LPA

Answer 5

Must be equivalent to terms of years absolute/forever

Answer 6

Must be by deed (see below)

Answer 7

s.52(1) LPA

Answer 8

s.52(1) LPA

Answer 9

Must be signed, witnessed and delivered as a deed and say it is a deed

Answer 10

S.1 LP(MP)A

Answer 11

``` Conditions: • Not exceeded three years • In possession; • At market rent; and • Without a fine ```

Answer 12

Another option: a legal periodic tenancy can arise even where there is no deed. Or where s.2 LP(MP)A is not satisfied.

Answer 13

s.2 LP(MP)A

Answer 14

s.52(1) LPA 1925

Answer 15

Must be signed, witnessed and delivered as a deed and say it is a deed

Answer 16

s.1 LP(MP)A

Answer 17

* Be married/civil partnership * Legal owner still alive * Home must be/have been/will be the matrimonial home

Answer 18

Signed and in writing

Answer 19

s.52(1)(a) LPA

Answer 20

(Because equitable lease is a type of estate contract) • Signed • In writing; and • Contains all terms

Answer 21

s.2LP(MP)A

Answer 22

* Signed; and | * In writing

Answer 23

s.53(1)(a) LPA

Answer 24

(Correct formalities for an estate contract – signed by both parties, writing, contains all agreed terms) Can be equitable if: • Fails s.1(2)(a); or • Fails s.52(1)

Answer 25

s.2 LP(MP)A 1989

Answer 26

equitable lease; option to purchase land

Answer 27

* Signed; * In writing; and * Contains all agreed terms

Answer 28

s.2 LP(MP)A

Answer 29

Express Trust: In writing

Answer 30

s.53(1)(b) LPA

Answer 31

Implied Trust: arise without formalities

Answer 32

s.53(2) LPA

Answer 33

Often the question will involve considering firstly whether the purchaser will be bound under the registered system, and then considering whether he would be bound if the land was unregistered.

Answer 34

1. Is the right registerable on the Land Charges Register? (in plymouth) 2. If the right is registerable, depends if registered against owner’s name by date of completion of sale 3. If right is not registerable depends if legal or equitable

Answer 35

1. Is the right registerable on the Land Charges Register? (in plymouth)

Answer 36

s.2 Land Charges Act 1972

Answer 37

Puisne Mortgages

Answer 38

Class C(i) Land Charge

Answer 39

Estate Contract

Answer 40

Class C(iv) Land Charge

Answer 41

Restrictive covenant. Unless: o Contained in a lease; or o Created before 1926

Answer 42

Class D(ii) Land Charge

Answer 43

Equitable Easement

Answer 44

Class D(iii) Land Charge

Answer 45

s.30 Family Law Act 1996 (FLA) right to occupy the matrimonial home

Answer 46

Class F Land Charge

Answer 47

If the right is registerable, depends if registered against owner’s name by date of completion of sale • If registerable and registered --> binds buyer • If registerable and NOT registered --> buyer takes free of interest (unless a gift)

Answer 48

If right is not registerable depends if legal or equitable • If a trust interest --> binds buyer unless: o He has overreached (s.2, s.27 LPA) see conditions below o He’s equity’s darling • If a non-trust interest --> binds buyer unless he is equity darling

Answer 49

1. Classify the right as either a registerable disposition, an overriding interest, a trust interest or an interest affecting a registered estate (IARE) 2. How to bind buyer

Answer 50

1. Registerable Disposition 2. Overriding Interest 3. Trust Interest 4. IARE (Interest affecting a registered estate)

Answer 51

``` Sch 3 para 2 • Legal easements (expressly by deed) • Legal Charges (i.e. mortgages) • Legal Lease of seven years • Note: Even if not registered, check for Sch 3 para 2 ```

Answer 52

``` Sch 3 para 2 • Legal easements (expressly by deed) • Legal Charges (i.e. mortgages) • Legal Lease of seven years • Note: Even if not registered, check for Sch 3 para 2 ```

Answer 53

Overriding interest (both legal and equitable interest)

Answer 54

Sch 3 LRA 2002, paras 1-3

Answer 55

Legal lease for 7 years or less

Answer 56

Sch 3, para 1; if created before 13/10/03 Sch 12 para 12

Answer 57

Legal Easements (prescription/implied on sale of part), provided: o Within actual knowledge of buyer; o Obvious on a reasonably careful inspection of the land; or o Used within the past year

Answer 58

Sch 3 para 3(1); if created before 13/10/03 Sch 12 para 9

Answer 59

Express trusts, implied trusts (resulting or constructive)

Answer 60

Cannot be protected by notice; and,

Answer 61

May be recorded as a restriction in the proprietorship register at the Land Registry by date of registration of buyer

Answer 62

All other interests (most equitable interests) • Estate contract • Equitable easements • Restrictive covenants; and • FLA right (s.31 cannot be protected by Sch 3 para 2)

Answer 63

s.29 LRA Must be registered at Land Registry by date of registration of buyer as new owner  only legal at this point (deed is insufficient)

Answer 64

Registrable Disposition: Must be registered at Land Registry by date of registration of buyer as new owner  only legal at this point (deed is insufficient)

Answer 65

Must exist by date of registration of buyer as new owner – Need NOT be registered BUT For Sch 3 para 2 the date of registration of the buyer as the new owner is the relevant date for assessing actual occupation

Answer 66

For Sch 3 para 2 the date of registration of the buyer as the new owner is the relevant date for assessing actual occupation

Answer 67

Restriction will alert the buyer of the need to overreach (buyer pays all purchase monies to all trustees, being at least 2 in number)

Answer 68

ss.2 and 27 LPA

Answer 69

* If the buyer fails to overreach they will be prevented from registering the purchase * Whether or not there is a restriction recorded, the trust interest might be overriding under Sch 3 para 2 and therefore the buyer must overreach to purchase free of any interest

Answer 70

Must be registered on charges register at Land Registry by date of registration of buyer

Answer 71

Easements that were overriding under old law continue to override

Answer 72

Sch 12 para 9

Answer 73

Legal leases for 21 years or less granted before 12/10/2003 continue to override.

Answer 74

Sch 12 para 12

Answer 75

Equity’s Darling, actual occupation, overreaching and the registers

Answer 76

1. Bona Fide (acting in good faith, not fraudulent 2. Purchaser (receives property other than by operation of law – i.e. not intestacy rules or bankruptcy) 3. of the legal estate; 4. For value (have given consideration) 5. Without notice. Hard to prove, but can be: • Actual (s.198 LPA) • Imputed (solicitor/agent had actual/constructive knowledge); or • Constructive – o Would have come to notice if such inquiries/inspections had been made as ought reasonably to have been made (s.199(1) LPA) o Presence wold have been apparent from inspection (Kingsnorth Finance Co Ltd v Tizard)

Answer 77

Bona Fide purchaser of the legal estate; for value without notice

Answer 78

Without notice: includes actual

Answer 79

Would have come to notice if such inquiries/inspections had been made as ought reasonably to have been made

Answer 80

s.199(1) LPA

Answer 81

Presence wold have been apparent from inspection

Answer 82

Kingsnorth Finance Co Ltd v Tizard

Answer 83

Must be: 1. Obvious on a reasonably careful inspection of land, or buyer knew of it; or 2. Person disclosed the right if enquiries were made of it when he could reasonably be expected to do so.

Answer 84

``` An FLA right (s.31(10)(b) FLA); and, An easement (because the dominant owner is not in actual occupation of the land affected ```

Answer 85

For actual occupation to be ‘obvious on a reasonably careful inspection’, there must be ‘visible signs of occupation, which have to be obvious on inspection.’

Answer 86

Thomas v Clydesdale bank Plc

Answer 87

Fencing may suffice on derelict land

Answer 88

Mallory Enterprises v Cheshire Homes

Answer 89

Actual Occupation necessitates ‘physical presence on the land’.

Answer 90

William’s & Glynn’s Bank v Boland

Answer 91

Actual Occupation can be visiting the property regularly to supervise renovation work

Answer 92

Lloyd’s Bank Plc v Rosser

Answer 93

Actual Occupation can be a car parked regularly in the garage

Answer 94

Kling v Keston Properties

Answer 95

A temporary absence does not preclude actual occupation

Answer 96

Chhokar v Chhokar

Answer 97

Preparatory steps leading to actual occupation are not actual occupation. Some degree of permanence and continuity is needed (Lord Oliver)

Answer 98

Abbey National Building Society v Cann

Answer 99

An agent can have actual occupation for you; a relative cannot

Answer 100

Strand Securities v Caswell

Answer 101

Can be in actual occupation if your possessions are still in the property and you have aspirations to return

Answer 102

Link Lending v Bustard

Answer 103

Cannot be actual occupation if you have no aspiration to return

Answer 104

Thompson v Foy

Answer 105

A minor cannot be in actual occupation, they are classed as shadows of their parents

Answer 106

Hypo Mortgage Services v Robinson

Answer 107

(A minor cannot b in actual occupation) unless they are there as their ‘agent’

Answer 108

Lloyd’s Bank v Rosset

Answer 109

Ratio: son’s occupation is not parent’s occupation Obiter: having a second home does not mean first home ceases to be a home

Answer 110

AIB Group (UK) Plc v Turner

Answer 111

son’s occupation is not parent’s occupation

Answer 112

having a second home does not mean first home ceases to be a home

Answer 113

ss.2, 27 LPA

Answer 114

Dissolving of an equitable right under a trust in a property can occur where: 1. Buyer purchasing legal estate; 2. Pays monies to all trustees; and 3. Trustees are at least two in number, or a trust corporation

Answer 115

City of London Building Society v Flegg

Answer 116

Overreaching

Answer 117

Some transactions require compulsory registration at the land Registry, e.g. the sale, gift, mortgage or assent of a freehold/leasehold which has more than seven years left to run

Answer 118

s.4 LRA 2002

Answer 119

Describes the property and the legal estate held in it

Answer 120

The property register

Answer 121

Third party interests that burden the land

Answer 122

The charges register

Answer 123

Describes nature of title held (e.g. absolute), details of owners including restrictions on their power to deal with property (e.g. trust interest).

Answer 124

The proprietorship register

Answer 125

* Leasehold covenants; and | * Overriding interests (need only exist, not be registered)

Answer 126

Step One: State – ‘This question involves the co-ownership of [insert name of property] by [insert names of purchasing parties]. When land is co-owned, it gives rise to a statutory trust of land (s.36 Law of Property Act 1925)’ Step Two: Explain how the LEGAL TITLE to the land is held on the purchase of the property Step Three: Explain how the EQUITABLE INTEREST in the land is held on the purchase of the property Step Four: Discuss the effect of incidents/changing arrangements described (deaths, sales, mortgages, etc.) on the LEGAL TITLE Step Five: Discuss the effect of incidents/changing arrangements described (deaths, sales, mortgages, etc.) on the EQUITABLE INTEREST Step Six: Conclude as to how both the legal title and the equitable interest are held (joint tenants or tenants in common, and in what proportions Step Seven: If question requires, explain how DISPUTE BETWEEN TRUSTEES AND BENEFICIARIES over whether to sell the property might be resolved. Step Eight: If the question specifies, explain whether any potential buyer will be bound by the equitable interests that exist in the property.

Answer 127

‘This question involves the co-ownership of [insert name of property] by [insert names of purchasing parties]. When land is co-owned, it gives rise to a statutory trust of land (s.36 Law of Property Act 1925)’

Answer 128

When land is co-owned, it gives rise to a statutory trust of land

Answer 129

s.36 Law of Property Act 1925

Answer 130

Legal Title is ALWAYS held as JOINT TENANCY

Answer 131

s.1(6) LPA 1925

Answer 132

A maximum of FOUR people may hold the legal estate jointly (first four on the deed) But remember that a co-owner must be 18 in order to hold a legal estate in land

Answer 133

s.34(2) LPA 1925

Answer 134

JOINT TENANCY; or TENANCY IN COMMON

Answer 135

* Co-owners have identical interests in the property, their interests being of non-defined proportions; * Cannot dispose of legal joint tenancy in will, joint tenancies will run on survivorship (Gould v Kemp)

Answer 136

Joint Tenancy

Answer 137

• Cannot dispose of legal joint tenancy in will, joint tenancies will run on survivorship

Answer 138

Gould v Kemp

Answer 139

* Co-owners have separate, but as yet undivided shares in the property, each for a specific percentage in ownership of the property; and * A Co-owner’s share can be disposed of in a will

Answer 140

Tenancy In Common

Answer 141

1. Are the FOUR UNITIES PRESENT? 2. Express Statement 3. Words of Severance 4. Presumptions

Answer 142

Possession, Interest, Title, Time Unity of TIME Unity of TITLE Unity of INTEREST Unity of POSSESSION

Answer 143

Did the co-owners acquire their interests in the property at the same time?

Answer 144

Did the Co-owners acquire their interests in the property under the same document?

Answer 145

Are the Co-owners’ interests in the property of the SAME NATURE AND DURATION?

Answer 146

Are the co-owners each equally entitled to use and occupy the WHOLE PREMISES?

Answer 147

If all unities are present, the equitable interest MAY be held as a JOINT TENANCY (proceed to tests 2, 3 and 4 to confirm) If any one of the unities are missing, it CANNOT be a JOINT TENANCY

Answer 148

Does the transfer document contain EXPRESS STATEMENT as to how the equitable interest is held? --> if it does, it is CONCLUSIVE.

Answer 149

Goodman v Gallant

Answer 150

Are there WORDS OF SEVERANCE in the transfer document? E.g. to be held equally/in equal shares --> if so, equitable interest will be held as TENANCY IN COMMON

Answer 151

Robertson v Fraser

Answer 152

Are there WORDS OF SEVERANCE in the transfer document? E.g. to be held equally/in equal shares  if so, equitable interest will be held as TENANCY IN COMMON (Robertson v Fraser)

Answer 153

Does EQUITY PRESUME A TENANCY IN COMMON? Equity will do so where: • The buyers each contributed different amounts to the purchase price (Lake v Gibson); or • The property was bought on behalf of a business

Answer 154

• The buyers each contributed different amounts to the purchase price

Answer 155

Lake v Gibson

Answer 156

Severance of the Legal Title is PROHIBITED. Therefore, Legal Title will continue to be held as JOINT TENANCY.

Answer 157

s.36(2) LPA 1925

Answer 158

On the death of a Trustee (one of co-owners of the property), legal title passes onto other co-trustees

Answer 159

Under the RIGHT OF SURVIVORSHIP

Answer 160

The equitable interest may be SEVERED (i.e. ownership of the equitable interest as a joint tenancy ends, and co-owners become tenants in common, owning separate shares in the property), by: 1. Notice 2. Alienation 3. Mutual Agreement or A course of Dealings 4. Homicide

Answer 161

To be effective, any severance must comply with s.36(2) LPA 1925 • Be IN WRITING but needs to: o Show CORRECT INTENTION, i.e. must show intention to sever immediately, and not at some later date o Be correctly SERVED

Answer 162

To be effective, any severance must comply with s.36(2) LPA 1925

Answer 163

o Show CORRECT INTENTION, i.e. must show intention to sever immediately, and not at some later date

Answer 164

Harris v Goddard

Answer 165

• Notice is left at the last known abode/place of business of person to be served

Answer 166

s.196(3) LPA 1925

Answer 167

[Last known abode/business] | o (If delivered here, notice will be effective even if addressee does not actually receive the notice)

Answer 168

Kinch v Bullard

Answer 169

• Notice is sent by registered post to person to be served

Answer 170

s.196(4) LPA 1925

Answer 171

[Registered Post] | o Effective, even if not actually ‘received’, provided letter is not sent back undelivered

Answer 172

Re 88 Berkley Road NW9

Answer 173

Notice will be correctly served if: • Notice is left at the last known abode/place of business of person to be served (s.196(3) LPA 1925) o (If delivered here, notice will be effective even if addressee does not actually receive the notice) (Kinch v Bullard) OR • Notice is sent by registered post to person to be served (s.196(4) LPA 1925) o Effective, even if not actually ‘received’, provided letter is not sent back undelivered (Re 88 Berkley Road NW9)

Answer 174

* Sale, gift, mortgage or bankruptcy | * Any severance by alienation must be in compliance with s.53(1)(c) LPA 1925 – evidenced in signed writing

Answer 175

Where joint tenants expressly agree to sever the equitable interest

Answer 176

Oral agreement is sufficient to show common intention necessary to sever a joint tenancy

Answer 177

Burgess v Rawnsley

Answer 178

Where parties act in a way that suggests they intend the shares to be held as tenancy in common

Answer 179

e.g. Where bought for business. | This cannot be a unilateral statement by one party alone.

Answer 180

Morley v Bird

Answer 181

The last method of severance is the severance that occurs when one co-owner kills another. Where one of two joint tenants murders the other, this has the effect of severing the joint tenancy in equity. This prevents the murderer from benefiting from the crime. The victim’s equitable interest in the land passes to the beneficiaries under his or her will or intestacy. The murderer takes the legal estate in the land as a result of survivorship. The legal estate is held on trust of land for the murderer and the victim’s estate as equitable tenants in common

Answer 182

When severance occurs, the severed part will hold on a tenancy in common basis, any other parties will remain joint tenants of the remainder

Answer 183

Remember that the legal estate cannot be held by one person as a joint tenant – he/she will become the sole surviving owner of the legal estate

Answer 184

Typical problem question scenario: as the sole surviving owner of the legal estate, the trustee of land wishes to sell property, against the wishes of one or more beneficiaries who hold an equitable interest in the property.

Answer 185

1. State 2. s.6(1) TLATA 1996 3. s.14 TLATA 1996 4. s.12 TLATA 1996

Answer 186

‘under s.36 LPA 1925, co-ownership of a property gives rise to a trust of land, and this is governed by Trusts of Land and Appointment of Trustees Act (TLATA) 1996

Answer 187

Trustees of land have all the powers of an absolute owner of the land (i.e. they may sell or lease the property). But – in the exercise of these powers, trustees must: • Have regard to the rights of beneficiaries; and s.6(5) • Consult beneficiaries and, so far as consistent with the general interest of the trust, give effect to the majority wishes s.11(1)

Answer 188

s.6(1) TLATA 1996

Answer 189

Have regard to the rights of beneficiaries

Answer 190

s.6(5) TLATA 1996

Answer 191

Consult beneficiaries and, so far as consistent with the general interest of the trust, give effect to the majority wishes

Answer 192

s.11(1) TLATA 1996

Answer 193

In the case of a dispute, either the trustee of the land (legal owner) or the beneficiary/ies (with an equitable interest) may apply to the court for a decision

Answer 194

s.14 TLATA 1996

Answer 195

In coming to this decision, the court will consider factors such as: • The purpose for which the property on trust is held (consider: does this purpose still exist?) And; • The welfare of any minor who might be seeking to occupy the property as his home

Answer 196

s.15 TLATA 1996

Answer 197

Beneficiaries are entitled to occupy land at any time provided: a) Purposes of the trust are to make land available for his occupation and b) Land is held by the trustees so as to be so available

Answer 198

s.12 TLATA 1996

Answer 199

- Despite the provisions of s.12, trustees may impose reasonable conditions on a beneficiary n relation to this entitlement to occupy the land

Answer 200

s.13 TLATA 1996

Answer 201

As a buyer will be buying from at least two trustees, he will be OVERREACHING the beneficiaries’ equitable interests under a trust of land, so he will take the land free of these interests.

Answer 202

How the buyer will take for free depends on whether the land is registered or unregistered

Answer 203

A restriction can be entered on the proprietorship register to alert the buyer - If a restriction has been registered, buyer must OVERREACH (ss.2 and 27 LPA 1925) - If no restriction has been registered: buyer may assume land was previously held as a joint tenancy in equity and is therefore safe to buy

Answer 204

If a restriction has been registered, buyer must OVERREACH

Answer 205

ss.2 and 27 LPA 1925

Answer 206

BUT – where an equitable interest under a trust is protected by a right under Sch3 para 2 LRA (if someone is in actual occupation), this will elevate the trust interest to OVERRIDING STATUS. If this is the case, buyer must overreach or be bound.

Answer 207

Williams & Glyn’s Bank v Boland

Answer 208

Trust interests are not registrable land charges, and thus cannot be registered on the Land Charges Register. To take land free of the equitable interests, buyer must either OVERREACH or be EQUITY’S DARLING

Answer 209

ss.2 and 27 LPA

Answer 210

Step One: Is the right a lease or license? Step Two: Have the formalities for creation been satisfied? Step Three: Enforceability

Answer 211

* Exclusive possession * Certainty of Duration; and * Rent (although there may still be a lease if no rent paid)

Answer 212

Exclusive possession

Answer 213

Street v Mountford

Answer 214

Certainty of Duration

Answer 215

Lace v Chantler

Answer 216

Rent (although there may still be a lease if no rent paid)

Answer 217

Ashburn Anstalt v Arnold

Answer 218

Occupant has the right to use the property to the exclusion of all others

Answer 219

Court will look at effect of the agreement, not the label

Answer 220

Street v Mountford

Answer 221

Agreements on identical terms, signed on the same day --> were interdependent and meant to be read as one single agreement --> clauses were held to be a sham and the agreement amounted to a lease. i. Attempts to exclude exclusive possession (EP) must be genuine – if EP clause is a sham, courts will disregard and give effect to what they consider to be the true bargain. ii. Consider: • Relationship between occupiers • Intended use of property • Nature, extent and mode of accommodation; and • Whether the Four Unities are present: o Time o Title o Interest o Possession

Answer 222

Antoniades v Villiers

Answer 223

Licence because: i. Agreements were different, signed on different dates, with different rents  independent from each other (did not confer rights of exclusive possession) ii. Parties described as owner and licensee; and iii. Rooms occupied on a rolling basis (nature and purpose of property; and relationship)

Answer 224

AG Securities v Vaughan

Answer 225

i. Agreements were different, signed on different dates, with different rents --> independent from each other (did not confer rights of exclusive possession)

Answer 226

Parties must know at the outset the date of the beginning and end of lease

Answer 227

Lace v Chandler

Answer 228

(i) Creation – must be expressly created; parties must know from outset the maximum duration of agreement

Answer 229

s.52/54 LPA 1925

Answer 230

• Tenancies for life granted to an individual may be converted into 90 year leases by operation of s.149(6) LPA 1925

Answer 231

Berrisford v Mexfield

Answer 232

• Periodic Tenancies will not have certainty of duration unless both parties have the ability to end tenancy by way of notice

Answer 233

Prudential Assurance Co. Ltd v London Residuary Body

Answer 234

* Automatic – end of lease period * Forfeiture – where the lease includes provisions allowing the landlord to prematurely end if the tenant fails to meet obligations * Break clause

Answer 235

i. Lease automatically renews, provided the tenant pays rent and neither side serves notice (Javad v Mohammed Aqil) ii. Notice = length of period except: a. annual tenancy = six months; b. residential tenancy less than four weeks = four weeks (Protection from Eviction Act 1977) iii. The landlord must obtain court order to recover possession of premises where the occupier continues to reside there under a lease or license. (s. 3 Protection from Eviction Act 1977)

Answer 236

i. Lease automatically renews, provided the tenant pays rent and neither side serves notice

Answer 237

Javad v Mohammed Aqil

Answer 238

ii. Notice = length of period except: a. annual tenancy = six months; b. residential tenancy less than four weeks = four weeks

Answer 239

Protection from Eviction Act 1977

Answer 240

iii. The landlord must obtain court order to recover possession of premises where the occupier continues to reside there under a lease or license.

Answer 241

s.3 Protection from Eviction Act 1977

Answer 242

Rent is NOT necessary for a lease --> ‘whether or not at a rent’ But where rent is paid, will certainly indicate a formal landlord/tenant relationship and may give an indication as to the duration of the lease (for periodic tenancies)

Answer 243

Ashburn Anstalt v Arnold and s.205(1)(xxvii) LPA

Answer 244

• Does not give the tenant proprietary interest  Not bidning • Is a mere permission for licensee to do something o Bare Licence: automatically revoked by the death of a licensor or a transfer of his land; it can also be revoked by the licensor at will. o Contractual Licence: enforceable against the original licensor in accordance with its terms  cannot be revoked until the contractual period has expired

Answer 245

automatically revoked by the death of a licensor or a transfer of his land; it can also be revoked by the licensor at will.

Answer 246

enforceable against the original licensor in accordance with its terms --> cannot be revoked until the contractual period has expired

Answer 247

Capable of being legal provided term of years absolute in possession

Answer 248

Must be created by deed

Answer 249

Deed must be signed, witnessed and delivered as a deed

Answer 250

s.1 LP(MP)A

Answer 251

``` Parol Lease exception: • In possession; • For less than or equal to 3 years; • At the best rent; and • Without fine ```

Answer 252

s.54(2) LPA

Answer 253

If formalities for legal leases are not satisfied, will be equitable – equity sees done that which ought to be done.

Answer 254

Walsh v Lonsdale

Answer 255

Can be an estate contract

Answer 256

s.1(3) LPA

Answer 257

An estate contract must be: • In writing; • Signed by/on behalf of parties; and • Contain all the agreed terms

Answer 258

s.2 LP(MP)A

Answer 259

A registrable disposition per s.27 LRA – must be registered on the property register by date of registration of new owner; if not (Sch 3 para 2)

Answer 260

Can be elevated to interests of person in actual occupation and will bind buyer if it is in existence by date of completion of sale if – • Disclosed the interest if (and when) asked • Interest is within actual knowledge of buyer; or • Actual occupation is obvious on a reasonably careful inspection of land.

Answer 261

Sch 3 Para 2

Answer 262

Will be an overriding interest under Sch 3 Para 1: must be in existence by date of registration

Answer 263

Sch 3 Para 1

Answer 264

If created before 13/10/03

Answer 265

Sch 12 para 12

Answer 266

IARE: must be registered on charges register at land registry by date of registration of new owner

Answer 267

Binds the world

Answer 268

In order to be in writing: • Must be registered as a C(iv) Land Charge (S.2 LCA) • Against the owners name (s.3 LCA) • By date of completion (s.4 LCA)

Answer 269

Must be registered as a C(iv) Land Charge

Answer 270

Against the owners name

Answer 271

By date of completion

Answer 272

Step One: Old or new lease? Consider only the ORIGINAL grant Step Two: Identify breaches of covenant. By the landlord or tenant? Step Three: Identify who you are advising and explain Step Four: What are the relevant remedies?

Answer 273

Before 1st Jan 1996

Answer 274

On or After 1st Jan 1996

Answer 275

- Express Covenants (usually these) | - Implied Covenants (are usually LANDLORD covenants) - including quiet enjoyment and repair

Answer 276

* Rent; * Use; or * Not to assign/sublet (alienation)

Answer 277

The landlord cannot unreasonably withhold consent

Answer 278

The landlord must give an answer to a request within reasonable time;

Answer 279

(for new leases) – the landlord is entitled to require the tenant to enter into an AGA on assignment

Answer 280

s.22 LT(C)A 1995

Answer 281

Quiet Enjoyment | Repair

Answer 282

Tenant protected from interference with his possessions and enjoyment of the property by the landlord or someone claiming title through the landlord.

Answer 283

Kenny v Preen

Answer 284

Regular excessive noise – but doesn’t apply to things done before a grant of tenancy

Answer 285

Southwark LBC v Mills

Answer 286

Unlawful for the landlord to deprive the tenant of occupation if does so without belief/reasonable cause to believe the tenant ceased to live there.

Answer 287

s.1(2) Protection from Eviction Act

Answer 288

It is only an offence for the landlord to attempt to interfere with the tenant’s peace/comfort if the act is done with the intention of causing the tenant to give up residence.

Answer 289

s.1(3) Protection from Eviction Act

Answer 290

The landlord must keep in good repair and working order: • Structure/Exterior of dwelling house; • Water, gas, electricity, sanitation installations; and • Heating and water heating

Answer 291

s.11 LTA 1985

Answer 292

To repair the land, the landlord must be notified

Answer 293

Obrien v Robinson

Answer 294

Must be genuine disrepair, not just an inconvenience (e.g. condensation)

Answer 295

Quick v Taff Ely BC

Answer 296

Tenants obliged to do reasonable jobs of repair

Answer 297

Warren v Keen

Answer 298

1. Who has the benefit and who can sue? 2. Who has the burden and who can sue? T2 cannot be sued by L3 as he is not liable for things that happen after his time in possession

Answer 299

Burden for duration of lease (privity of contract) | Does not end if the tenant assigns the lease

Answer 300

Burden for duration of lease, BUT: 1. The Landlord can only recover if serves notice on T1 within six months of fixed charge (e.g. rent) becoming owed to the landlord by the subsequent tenant (s. 17 Landlord and Tenant (Covenants) Act) 2. If T1 pays the current tenant’s debt, he can seek to recover the amount he has paid from the person who is in breach (Moule v Garrett) 3. Indemnity Covenant – UNREGISTERED LAND – Either express or implied so can always recover money (s. 77 LPA) 3. Indemnity Covenant – REGISTERED LAND – Either express or implied so can always recover money (Sch 12 Para 20 LRA)

Answer 301

Burden for duration of lease, BUT: 1. The Landlord can only recover if serves notice on T1 within six months of fixed charge (e.g. rent) becoming owed to the landlord by the subsequent tenant

Answer 302

s.17 Landlord and Tenant (Covenants) Act

Answer 303

Burden for duration of lease, BUT: | 2. If T1 pays the current tenant’s debt, he can seek to recover the amount he has paid from the person who is in breach

Answer 304

Moule v Garrett

Answer 305

Burden for duration of lease, BUT: | 3. Indemnity Covenant – UNREGISTERED LAND – Either express or implied so can always recover money

Answer 306

Burden for duration of lease, BUT: | 3. Indemnity Covenant – REGISTERED LAND – Either express or implied so can always recover money

Answer 307

Sch 12 Para 20 LRA

Answer 308

Cannot be sued for breaches of his successors

Answer 309

Current Landlord has benefit of the tenant’s covenants (s.141 LPA) and the burden of the original covenant (s.142 LPA) provided that the covenants have ‘reference to the subject matter of the lease’ (P&A Swift)

Answer 310

Current tenant has benefit of the landlord’s covenants and burden of the tenant’s covenants that ‘touch and concern’ the land (Spencer’s Case)

Answer 311

Current tenant has benefit of the landlord’s covenants and burden of the tenant’s covenants that ‘touch and concern’ the land (Spencer’s Case)

Answer 312

‘Touch and Concern’ and ‘Have reference to the subject matter’ are synonymous

Answer 313

Definition of Touch and Concern: 1. Covenant benefits Landlord/Tenant, only while they own the land; 2. Covenant affects the nature, quality, mode of use of the land; 3. Covenant is not expressed as personal; and 4. Covenants to pay money if covenant is connected with something to be done on that land AND conditions 1-3 are satisfied

Answer 314

P&A Swift Investments v Combined English Stores Group Plc

Answer 315

Can asked to be released when L1 assigns (s.6(2)(a) LT(C)A). If the Landlord is released, he no longer has the benefit of the tenant’s covenants L3.

Answer 316

Automatic release when T1 assigns (s.5(2)(a) LT(C)A) and ceases to benefit from the Landlord covenants (s.5(2)(b) LT(C)A).

Answer 317

AGA’s (only commercial leases)

Answer 318

The Landlord can mandate that the tenant must guarantee performance of assignee (s.16 LT(C)A). But once successor signs, AGA ceases to operate.

Answer 319

s.16 LT(C)A

Answer 320

If T1 had to pay T2’s debt due to AGA, T1 can recover payment from T2

Answer 321

Moule v Garrett

Answer 322

If T2 gave an AGA, T2 can be sued for T3’s breach

Answer 323

Current Landlord has benefit of the tenant’s covenants (s.3(3)(b) LT(C)A) and the burden of the landlord’s covenant (s.3(3)(a) LT(C)A) provided they are ‘not expressed as personal.’

Answer 324

Current Tenant has benefit of the landlord’s covenants (s.3(2)(b) LT(C)A) and the burden of the tenant’s covenant (s.3(2)(a) LT(C)A) provided they are ‘not expressed as personal.’

Answer 325

When the landlord is suing a former tenant for outstanding payment/services of current tenant, notice must be served on former tenant within 6 months.

Answer 326

s.17 LT(C)A

Answer 327

The landlord can agree with the tenant that the landlord may withhold consent to an assignment under certain conditions (only with commercial property.)

Answer 328

s.22 LT(C)A

Answer 329

1. Action for Debt 2. Commercial Rent Arrears Recovery 3. Forfeiture

Answer 330

If the tenant has become insolvent, a debt action is not that useful – the landlord may have to look at actions against former tenants.

Answer 331

The landlord can sue the tenant for debt, but claim must be made within six years of arrears become due

Answer 332

S.19 Limitation Act

Answer 333

If the landlord is suing former tenant, notice must be served within 6 months

Answer 334

s.17 LT(C)A

Answer 335

Sch 12 Tribunals, Courts and Enforcement Act Outlines new procedure, which abolishes common law distress for recovering rent in cases of commercial emergency. Recovery is subject to a minimum amount of arrears, which is currently specified as seven days’ rent. Enforcement agent serves notice that binds the tenant’s goods until debt paid.

Answer 336

Outlines new procedure, which abolishes common law distress for recovering rent in cases of commercial emergency.

Answer 337

Sch 12 Tribunals, Courts and Enforcement Act

Answer 338

The Landlord can end the lease before the term expires

Answer 339

The right to forfeit arises when: • There is a condition in the contract stipulating that the landlord may forfeit when a particular event takes place; or • when there is a forfeiture clause the landlord may enter property after breach of covenant

Answer 340

The landlord must make a formal demand for rent. the landlord has to turn up before sunset on the last day on which payment is due and demand the payment before the sunsets. (But in practice, most contracts have a clause that does away with the need for a formal demand.)

Answer 341

Duppa v Mayo

Answer 342

* peaceable re-entry (but not allowed for dwelling-houses - s.2 Protection From Eviction Act) * commencing forfeiture proceedings (preferred option to avoid charges under s.6 CLA 1977)

Answer 343

peaceable re-entry is not allowed for dwelling-houses

Answer 344

s.2 Protection From Eviction Act

Answer 345

• commencing forfeiture proceedings (preferred option to avoid charges under s.6 CLA 1977)

Answer 346

s.6 CLA 1977

Answer 347

If the tenant repays debt in a timely manner, he will usually be given relief from forfeiture

Answer 348

Under s.146(2) LPA

Answer 349

``` Damages Specific Performance Injunction Forfeiture Self-help by means of set- off ```

Answer 350

Same rules as for a contractual breach

Answer 351

A discretionary equitable remedy that will only be granted when damages are considered insufficient

Answer 352

Another discretionary remedy that is only used for cases of restrictive covenants

Answer 353

As above, that the landlord must serve notice to the tenant under s.146 LPA and tenant may be given relief from forfeiture under s.146(2) LPA

Answer 354

Where landlord fails to perform an obligation tenant will have the right to carry out repairs themselves and then to duct the cost from rent payable

Answer 355

Taylor v Beale

Answer 356

For this to apply tenant must first notify the landlord of the need to perform these obligations before resorting to set off

Answer 357

Lee-Parker v Izzet

Answer 358

Step One: read the information carefully. Then draw an annotated diagram showing the various events and benefitted/burdened land Step Two: What types of covenant exist? Step Three: Identify the breaches and who can be sued Step Four: who can sue? Normally the claimant is an owner of benefitted land (i.e. covenantee) Step Five: Identify who has burden and benefit Step Six: Remedies

Answer 359

Require the covenantor to do something

Answer 360

Require the covenantor not to do something

Answer 361

Distinction is in substance and not form

Answer 362

Covenant touches and concerns the land when it enhances the enjoyment of one parcel of real property by burdening the enjoyment of another

Answer 363

The Claimant can consider suing X, as original covenantor, or Y as successor Covenantor. Y can be sued if the claimant has the benefit of the covenants and if Y has the burden of the covenants.

Answer 364

1. The Benefit and Burden MUST match, i.e. both in common law, or both in equity. 2. Then consider if the benefit and burden has passed in EQUITY

Answer 365

There has been EXPRESS ASSIGNMENT

Answer 366

Even if not, benefit can pass AUTOMATICALLY. Conditions: 1. The covenant touches and concerns covenantee’s land – must show that covenant affects mode of occupation or value of the land and is not personal.

Answer 367

Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board and Swift Investments v Combines English Stores Group (leasehold)

Answer 368

Even if not, benefit can pass AUTOMATICALLY. Conditions: | 2. Original covenantee and claimant had legal estate;

Answer 369

Smith and Snipes

Answer 370

Even if not, benefit can pass AUTOMATICALLY. Conditions: | 3. Statutory (deemed) annexation

Answer 371

s.78 LPA 1925

Answer 372

GENERALLY NO

Answer 373

Austerberry v Oldham Corpn

Answer 374

No, because of: 1. Privity of Contract 2. Original Covenantor remains liable (s.79 LPA)

Answer 375

1. A chain of indemnity covenants; or 2. A mutual benefit and burden rule (Halsall v Brizell and Wilkinson & others v Kerdene Ltd) Provided burden in some way relates to benefit conferred (Rhone v Stephens)

Answer 376

2. A mutual benefit and burden rule

Answer 377

Halsall v Brizell and Wilkinson & others v Kerdene Ltd

Answer 378

[2. A mutual benefit and burden rule] | Provided burden in some way relates to benefit conferred

Answer 379

Rhone v Stephens

Answer 380

The covenant touches and concerns the land of the covenantee; and One of the following applies: 1. Express assignment (s.136 LPA); or 2. Original parties intended the benefit to run – • Express annexation (check wording of transfer document); or • Statutory (deemed) annexation (s.78 LPA (Federated Homes Ltd v Mill Lodge Properties Ltd))

Answer 381

1. Express assignment

Answer 382

• Statutory (deemed) annexation

Answer 383

s.78 LPA (Federated Homes Ltd v Mill Lodge Properties Ltd)

Answer 384

YES, if: i. Covenant is restrictive ii. Covenant touches and concerns the covenantee’s land (Apply Swift Investments) iii. Original parties intended burden to run – 1. Express wording; or 2. Deemed intention (s.79 LPA); and iv. Covenant is correctly registered 1. Registered land: IARE, so enter a notice on Charges Register before date of registration of new purchaser (ss.29 and 32 LRA) 2. Unregistered Land: register as Class D(ii) Land Charge before date of completion of sale

Answer 385

Pre 1925 covenants will bind all except Equity’s Darling

Answer 386

Damages only against an original covenantor, even if he no longer owns the land.

Answer 387

* Injunction/Specific performance for breach of restrictive covenant against the current owner of the land (equity may award damages in Lieu * For a positive covenant the only option is to sue the original covenantor for damages

Answer 388

Express release Common Ownership s.84 LPA (Re Vince’s Application) Breach insurance

Answer 389

The covenantee of a restrictive covenant can agree to the modification or release of a covenant through a deed

Answer 390

If the burdened and benefitted land come into the same ownership, the covenant is extinguished.

Answer 391

By application to the Lands Tribunal e.g. if the covenantee cannot be located or refuses to release/modify covenant

Answer 392

The covenantor will be able to recover any loss incurred by the enforcement of his breach

Answer 393

It has been recognised that many aspects of the law relating to freehold covenants are now outdated and cause difficulty. The Law Commission Report, ‘Making Land Work: Easements, Covenants and Profits à Prendré (Law Com No 327) proposes a more coherent scheme of covenants, together with easements.

Answer 394

1. Is there a dominant tenement (parcel of land with benefit of easement), and a servient tenement (with burden)? 2. Does the easement accommodate (benefit) the dominant tenement? 3. Are the dominant and servient tenements owned and occupied by different people? 4. Is the right capable of forming the subject matter of a grant?

Answer 395

There cannot be an easement where an owner of land grants a right to a non-owner of land, instead this is a license. ‘There can be no such thing as an easement in gross’

Answer 396

Rangeley v Midland Railway Co

Answer 397

Must be able to show the right is connected with the normal enjoyment of the land which is a question of fact

Answer 398

Re Ellenborough Park

Answer 399

‘A right of way over land in Northumberland cannot accommodate land in Kent’

Answer 400

Bailey v Stephens

Answer 401

* Lease arrangements count | * If own person owns and occupies both pieces of land, right may be a quasi-easement

Answer 402

Owner of servient tenement must not be deprived of too many of his rights, i.e. must not effectively exclude owner from own land

Answer 403

Copeland v Greenhalf

Answer 404

Right to light? Yes, to one’s windows. (But only in relation to the erection of a building in very close proximity)

Answer 405

Dalton v Angus

Answer 406

Right to a view? No – imposes a burden on a very large and indefinite area

Answer 407

Dalton v Angus

Answer 408

Right to TV Reception? No, would impose immense burden on people building for miles around

Answer 409

Hunter v Canary Wharf Limited

Answer 410

Right to park? Yes, question of degree, depends if would leave servient owner without any reasonable use of this land

Answer 411

London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd

Answer 412

Courts are strict on negative easements – must be viewed with caution as may prevent neighbour from enjoying his land to the full

Answer 413

Phipps v Pears

Answer 414

Right to light is a negative easement and is limited to specific apertures rather than light in general

Answer 415

Colls v Home and Colonial Stores Ltd

Answer 416

Would the servient owner retain possession, and subject to a reasonable exercise of the right in question, maintain control of the servient land

Answer 417

Bachelor v Marlow

Answer 418

Class of potential easements is not closed (e.g. a right to use a golf course may be an easement.)

Answer 419

Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd.

Answer 420

In order to ascertain whether there has been a valid creation of an easement, consider whether there has been a sale of part.

Answer 421

1. Express creation (in a separate deed of grant or in writing) 2. Acquisition by Prescription

Answer 422

* Express grant – servient owner grants right over his own land * Express reservation – in conveying land to another, owner saves or reserves an easement in it (seller/testator) * Both must satisfy s.1(2)(a) LPA 1925; s.52 LPA; and s.1 LP(MP)A 1989.

Answer 423

• Common Law (weak) and doctrine of lost modern grant – conditions: o Use is: - Unchallenged by land owner; - Exercised openly; and - Without permission o User is a fee simple owner against a fee simple owner o Use must be continuous for a requisite period of time

Answer 424

Common Law prescription Doctrine of Lost Modern Grant Prescription Act 1832

Answer 425

Where 20 years’ use, there is a presumption or use since time immemorial (1189). But this is easily rebuttable.

Answer 426

Where 20 years’ use, assumed that there has been a deed granting the right, but lost (Simon v Dobson). The doctrine is particularly useful where 20 years’ use is established and there’s been a break in the use (Mills and another v Silver and Others).

Answer 427

Doctrine of Lost Modern Grant: Where 20 years’ use, assumed that there has been a deed granting the right, but lost.

Answer 428

Simon v Dobson

Answer 429

Doctrine of Lost Modern Grant: The doctrine is particularly useful where 20 years’ use is established and there’s been a break in the use

Answer 430

Mills and another v Silver and Others

Answer 431

Where right claimed is in use for 20 years (or 40 to be absolute and indefeasible) – unless enjoyment depends on written consent)

Answer 432

* Right to light: if 20 years’ use uninterrupted and without written consent, absolute and indefeasible right to light (only in respect of buildings) * Must show access of light and that use is being made of it * Amount of light entitled, ‘sufficient light according to the ordinary notions of mankind for the comfortable use and enjoyment… or for the beneficial use and occupation (of building)’ (City of London Brewery Co v Tennant). Question for courts, case specific, must take into account the burden on the servient land.

Answer 433

* No right to an easement arises until court action brought to claim it. * 20/40 years’ use must be continuous until date of the court action. * But interruptions ignored unless person claiming easement allows them to continue for a year after becoming aware of them and of any person responsible for them.

Answer 434

1. Express creation (within the sale of part deed) 2. Acquisition by Prescription 3. Implication on a sale of part (create a legal easement, as implied into the deed for sale of part).

Answer 435

1. Express creation (within the sale of part deed) • Express grant – servient owner grants right over his own land • Express reservation – in conveying land to another, owner saves or reserves an easement in it (seller/testator) • Both must satisfy s.1(2)(a) LPA 1925; s.52 LPA; and s.1 LP(MP)A 1989.

Answer 436

Same as if there were not a sale of part

Answer 437

Create a legal easement, as implied into the deed for sale of part. BUT – who is claiming the easement, the buyer or the seller?

Answer 438

Easements of necessity – arises where, without it, no use can be made of the land Easements implied due to the common intention of the buyer and seller at the time of sale. Reasonable contemplation of parties at the time of the contract.

Answer 439

arises where, without it, no use can be made of the land Wong v Beaumont Property Trust Ltd

Answer 440

Easements implied due to the common intention of the buyer and seller at the time of sale. Reasonable contemplation of parties at the time of the contract. Wong v Beaumont Property Trust Ltd

Answer 441

• Easements created under the rule in Wheeldon v Burrows. On a sale of part, buyer will get easement if right is: o Continuous and apparent, i.e. some feature (with a degree of permanence) must be present on the servient tenement which would be apparent on inspection o Necessary for reasonable enjoyment of the land (Ward v Kirkland); and o Being used as a quasi-easement by seller for the benefit of part of land being sold (quasi easement = right was being used by previous owner prior to sale of part under circumstances of unity of occupation). • Easements created under s.62 LPA 1925 Conditions for creation: i. Conveyance of part (sale of freehold of part or legal lease of part) ii. Before conveyance of part, there was a license/permission capable of being an easement; and iii. There was (generally) diversity of occupation at the time of sale of part. (N.B. Key point of distinction between s.62 and Wheeldon v Burrows).

Answer 442

i. There was (generally) diversity of occupation at the time of sale of part. (N.B. Key point of distinction between s.62 and Wheeldon v Burrows). N.B. High Court recently held that this is not essential. Key question is whether right is enjoyed with the land

Answer 443

a) Implies words into conveyance  existing easements automatically transferred to buyer; and b) Under Wright v Macadam may transform license/permission into legal easement.

Answer 444

• Where Dominant land sold – benefit of easement will pass automatically under s.62 LPA 1925 • Where Servient land sold – whether burden of easement passes depends on whether easement is: o Legal or equitable; and o Registered/unregistered title

Answer 445

(a) Conditions to be legal i. Duration must be equivalent to a freehold or leasehold estate (forever or for a fixed period of time) s.1(2)(a) LPA 1925 ii. Must be created by deed (s.52 LPA) – criteria for a deed see s.1 LP(MP)A 1989; and iii. If land is REGSTERED – registerable disposition -> required to be registered (s.27(2)(d) LRA 2002) – not legal otherwise (s.27(1) LRA 2002) (b) To bind purchaser – i. If REGISTERED land: 1. Register of the title of the servient land – entry to appear in the charges register of the title to the servient tenement; 2. Register of title of the dominant land – entry to be made in the property register; 3. If not registered  equitable. ii. If land is UNREGISTERED – legal interest binds the world

Answer 446

(a) if duration (see s.1(2)(a) LPA 1925) not satisfied, must be created by deed/in signed written document (s.53(1)(a) LPA 1925) (b) If not by deed, must satisfy formalities for valid estate contract (s.2 LP(MP)A 1989) and will still be an equitable right. (Walsh v Lonsdale) (c) To bind the purchaser: i. If REGISTERED land – an IARE  requires registration, protect by an entry (a notice) on the register of servient title before purchaser registered as new owner ii. If UNREGISTERED land – a Class D(ii) land charge  register easement on Land Charges Register against name of servient owner by completion of sale.

Answer 447

• If created after 2003 (Sch 3 para 3 LRA 2002) – will be overriding interest, provided either: a) Buyer of servient land knew about it; b) Would have been obvious to buyer of servient land on a reasonably careful inspection of the land; or c) Person claiming easement can prove has exercised his/her right in the year prior to sale to buyer of servient land. • If created between 13 October 2003 and 13 October 2006 – overriding under Sch 3 para 3 LRA 2002 (no ned to satisfy consitions) • If created before 2003: Sch 12, para 9 LRA 2002 – will be overriding interest

Answer 448

• If created after 2003 (Sch 3 para 3 LRA 2002) – will be overriding interest, provided either: a) Buyer of servient land knew about it; b) Would have been obvious to buyer of servient land on a reasonably careful inspection of the land; or c) Person claiming easement can prove has exercised his/her right in the year prior to sale to buyer of servient land.

Answer 449

overriding under Sch 3 para 3 LRA 2002 (no ned to satisfy conditions)

Answer 450

Sch 12, para 9 LRA 2002 – will be overriding interest

Answer 451

On 8 June 2011, the Law Commission published a report on reform of the law of easements and covenants. The proposals relating to easements include replacement of the current method of implication of easements with a single statutory principle that easements will be implied where they are necessary for the reasonable use of the land at the time of the transaction. The paper also proposes creating a single statutory scheme of prescription to replace the current methods.

Answer 452

``` Step One: Define Step Two: Creation of legal mortgage Step Three: Remedies Step Four: Protection of mortgages – how does the mortgagee protect the mortgage. Guaranteeing (i) that it will bind future purchasers of the land; and (ii) that it has priority over later mortgages? Step Five: Priority rules ```

Answer 453

An interest in land given as security for a loan

Answer 454

To create a legal mortgage, the following must be satisfied: • Interest capable of being legal (s.1(2) LPA) • Must be created by deed (s.52(1) LPA) • Signed, witnessed and delivered as a deed (s.1 LP(MP)A) • Registerable disposition, therefore, must be entered in the charges register of the title (s.27 LRA)

Answer 455

Mortgagee can either (1) take possession in order to sell the property or (2) intercept the income from it.

Answer 456

• Must manage the property with due diligence. If they fail to do so, they must account to the mortgagor for the income he did and would have received had due diligence been taken.

Answer 457

White v City of London Brewery

Answer 458

• Lenders can take possession of property as soon as the mortgage is complete

Answer 459

Four Maids Ltd v Dudley Marshall (Properties) Ltd

Answer 460

o No violence or threat of violence under the Criminal Law Act 1977 o Court can adjourn possession proceedings if a mortgagor brings a major claim under s.36 Administration of Justice Act 1970: It must be established that a mortgagor can repay in reasonable time. o But – mortgagee does not have to bring court proceedings to exercise his right to possession (Ropaigealach v Barclays), in which case, s.36 AJA is bypassed, so the mortgagor’s only protection will be the Criminal Law Act.

Answer 461

N.B. It is not possible for mortgagor to claim under Article 8 Human Rights Act 1998 (right to respect for private and family life) when mortgagor has stopped paying mortgage to mortgagee.

Answer 462

Horsham Properties Group Ltd v Clark and Beech

Answer 463

Mortgagee (Lender) can appoint a receiver to collect and redirect the income from the property.

Answer 464

(a) Mortgage was created by deed (s.101(1)(iii) LPA) – the ability for the mortgagee to appoint a receiver is implied into every deed) (b) Power has arisen, i.e. the legal date of redemption must have passes (s.101 LPA); and (c) Become exercisable under s.103 LPA: i. The lenders have served noticed on the borrowers requiring repayment of the loan, borrowers have failed to comply for 3 months. ii. Interest due under the mortgage is two months in arrears; OR iii. The borrowers have breached a term under the mortgage deed.

Answer 465

• The receiver must be appointed in writing

Answer 466

a) Outgoings on the property b) Interest on any prior mortgages c) Insurance premiums on the property and his own costs; d) Interest on the current mortgage; e) Capital on the current mortgage (if directed to do so in writing by the mortgagee); and f) The balance to the mortgagor

Answer 467

Sell the property to use the proceeds to pay back the sum owed by the mortgage

Answer 468

* Implied power of sale if mortgage was created by deed | * The power must have arisen, i.e. legal date of redemption must have passed

Answer 469

• The power must be exercisable: i. The lenders have served noticed on the borrowers requiring repayment of the loan, borrowers have failed to comply for 3 months. ii. Interest due under the mortgage is two months in arrears; OR iii. The borrowers have breached a term under the mortgage deed.

Answer 470

• Lenders have the following duties when exercising their power of sale: o Act in good faith; and o Take reasonable care to obtain the true market value

Answer 471

Cuckmere Brick Co Ltd v Mutual Finance

Answer 472

• Seller must apply the proceeds as follows: (a) Any prior interests/mortgages; (b) Mortgagee’s (lender) expenses on sale; (c) Mortgagee’s (lender) own mortgage; (d) Pay off mortgages over which the selling mortgage has priority (and notice); and (e) Any residue is due to the mortgagor

Answer 473

• Under s.104(1) LPA, the buyer will take the whole estate. Is he bound by any third-party interests? He will take: o Free from interests that selling mortgagee had priority over; but o Subject to any interests that took priority over the selling mortgagee.

Answer 474

(Basically very rare, so don’t have to worry too much about it) • The effect of foreclosure is to vest absolute ownership (the borrower retains no equitable interest) of the borrower’s property in the lenders. • The right to foreclosure arises when (a) date of redemption passes, or (b) mortgagor (borrower) breaches a term of the mortgage. • BUT under s.91(2) LPA any person interested either in the mortgage or in the right of redemption can request the court to make an order for sale instead (see above).

Answer 475

* Rare, given that if borrower has failed to meet mortgage payments it is unlikely, they can comply with a court order for debt payment. * Available only after the date for redemption has passed * Barred under the Limitation Act to 12 years from the date the payment became due.

Answer 476

how does the mortgagee protect the mortgage. Guaranteeing (i) that it will bind future purchasers of the land; and (ii) that it has priority over later mortgages?

Answer 477

* Legal mortgages are registerable dispositions under s.27 LRA – must be registered against the title to make it binding on purchaser or later mortgagee. * If not registered, mortgage will not be binding

Answer 478

First mortgage • First mortgage can take possession of title deeds (s.85(1) LPA) – if mortgagee has title deeds. Later mortgages • Subsequent mortgages are not protected by deposit of title deeds. They are puisne mortgages and are registerable against the mortgagor’s name as Class C(i) Land charge. • If not registered, not binding.

Answer 479

1. Establish types of interest – lease, mortgage, easement etc 2. Have these interests been created using the correct formalities? 3. Create a timeline to establish whether interest(s) was created before/after mortgage. 4. Rights created after the date of mortgage will not bind the mortgagee (lender). a. Priority between mortgage and other proprietary interest • Governed by s.104(1) LPA 1925 the mortgagee is freed from all proprietary interests made after the mortgage but held subject to those made correctly before the mortgage • In the context of LRA 2002, ‘purchaser’ includes mortgagee • Was the interest created before the mortgage? If so, not binding on the mortgagee. • Was the interest created before the mortgage? If so, consider enforceability rules for registered or unregistered land (WS2&3), treating mortgagee as purchaser • Consider Williams & Glyde Bank Ltd v Boland (trust interest overreaching by mortgagee); Lloyds Bank v Rosset for why overriding interests are usually unlikely to bind the first mortgagee (essentially, occupation usually occurs after completion of the sale). b. Priority between multiple mortgages • The mortgagee that ranks first gets repaid in full before considering the mortgagee second in priority • S.48 LRA – the order of priority depends on the order in which they are registered on the register. • If the mortgage has not been registered, then the mortgage only takes effect in equity. Under s.29 LRA, an equitable mortgage is an IARE --> must be registered to be binding.

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