Enforceability of 3rd party rights in the unregistered system

Question 1

Land charges act 1972 - Interests which are included

Answer 1

• Class D(ii) - Restrictive covenant
• Class F - Statutory right of a non-owning spouse
• Class D (iii) - Equitable easement
• Class C(iv) - Estate contract

Question 2

Land charges act 1972 - How to register

Answer 2

Details of the third party interests should be registered by the person with the interest against the name of the estate owner who has created the interest and whose land is to be burdened by it. This should be done at the time the interest is created. Not all third party rights can be registered on the Land Charges Register.

Question 3

Land charges act 1972 - Effect of registration

Answer 3

Where a land charge has been registered on the Land Charges Register, anyone who buys the land is deemed to buy with actual knowledge of the land charge and so will be bound by it. In order to bind a purchaser, the land charge must be registered by the date of completion of the sale.

Question 4

Land charges act 1972 - Effect of failure to register

Answer 4

non-registration means that purchasers of the land can take free of the unregistered land charge.

Question 5

Pre-1926 rules - Interests which are included

Answer 5

1) Equitable interests arising under a trust
2) Most legal interests - legal leases, legal easements, legal mortgages
3) pre-1926 equitable interests - restrictive covenants and equitable easements created before 1st Jan 1926

Question 6

Pre-1926 rules - Legal interests

Answer 6

Legal interests bind the whole world. This means that a legal third party interest will bind the purchaser of the legal estate, even if the purchaser has no knowledge of the existence of the interest when he buys the property.

Question 7

Pre-1926 rules - Equitable interests - Basic rule

Answer 7

Equitable interests are enforceable against anyone except the bona fide purchaser of the legal estate for value without notice. (Equity’s darling)

Question 8

Pre-1926 rules - Equitable interests - Basic rule - Equity’s darling requirements

Answer 8

1) The buyer must be bona fide - must be acting in good faith
2) The buyer must come within the definition of a purchaser. If A sells land to B or gives it to B or leaves it to B in his will then B is a purchaser
3) The buyer must have bought the property for value - must have given consideration for the purchase of the estate
4) The buyer must have taken the legal estate in the property
5) The buyer must have bought the property without notice that the equitable interest exists

Question 9

Pre-1926 rules - Equitable interests - Basic rule - When it applies

Answer 9

Equity’s darlings only applies to those equitable interests that are not capable go registration as land charges.

Question 10

Pre-1926 rules - Equitable interests - Basic rule - Equity’s darling requirements - Types of notice - Actual notice

Answer 10

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

Question 11

Pre-1926 rules - Equitable interests - Basic rule - Equity’s darling requirements - Types of notice - Constructive notice

Answer 11

A buyer is deemed to have constructive notice of any matter or fact which ‘would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him’

Question 12

Pre-1926 rules - Equitable interests - Basic rule - Equity’s darling requirements - Types of notice - Imputed notice

Answer 12

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

Question 13

Notice - Solicitor

Answer 13

Eventhough the client did not have actual or constructive notice if the client’s solicitor did have actual notice the client is deemed to have imputed notice.

Question 14

Removal of third party interests

Answer 14

If a lease, easement, mortgage or covenant is discovered, the buyer may be able to negotiate with the person who holds the benefit of the interest, and get them to release their interest.

Question 15

Equitable interests under a trust and overreaching

Answer 15

A buyer will take the land free from equitable interests that arise under a trust where overreaching occurs. To overreach a beneficial interest:
(a) the buyer must be acquiring the legal estate in the property;
(b) the buyer must pay the purchase money to all the trustees; and
(c) there must be at least two trustees (or a trust corporation).