Enforcement of Interests Flashcards
Enforcement of Land Contracts
Properly Created? Must be in writing + contain all expressly agreed terms + signed by both parties.
- any variation of material term of the contract must also meet the above formalities.
Land contract is a proprietary right capable of enforcement against third parties for VALUE if protected (by notice on the register for reg land or land charge for unreg land).
What is a Land Contract?
Contract between parties to transfer land to another.
Passes as equitable interest in land to buyer provided remedy of specific performance is available (e.g clean hands).
e.g sale contract / agreement for lease / option agreement / right of pre-emption in relation to land.
Remedies for Breach of Land Contract
Damages (common law, available as of right)
Specific performance (equitable right, discretionary, equitable principles apply).
Injunction (equitable remedy, discretionary and equitable principles apply).
Enforcement of Interests in Registered Land
3 types of interest: (1) registrable dispositions; (2) Equitable interests protected by notice or restriction; (3) Overriding interests.
Enforcement of Registrable Dispositions in Registered Land
Registrable dispositions: legal interests which must be created by deed and registered to have legal effect.
LRA 2002, s 28: basic rule of priority that interest ranks in order of creation.
LRA 2002, s 29: exception to above, where registration of disposition for value, registration gives priority over any pre-existing right in land EXCEPT those protected on register + overriding interests.
Donees will always take land subject to all pre-existing interests.
Registrable dispositions = legal mortgage / transfer of land for value / legal lease of over 7 years / express grant or reservation of a legal easement / right of forfeiture.
Enforcement of Equitable Interests protected by entry of notice
Equitable interests are only binding and enforceable on third party purchaser for value if protected by a notice or restriction in the Land Register.
If interest validly created + protected by notice.
Donee always bound by equitable interests.
Equitable interests:
- restrictive freehold covenants
- estate contracts
- equitable easements
- equitable leases
- legal leases between 3-7 years (notice is optional)
BUT NOT TRUST INTERESTS
Enforcement of Equitable Interests Protected by Restriction
Equitable interest in land by virtue of being beneficiary of a trust (LRA 2002, s 40).
Where land subject to trust is sold to someone else by the trustees, must overreach the beneficiary’s equitable interest otherwise buyer takes land subject to this as overriding interest.
Overreaching = mortgage fund or purchase price must be paid to at least 2 trustees, this transfers beneficiary’s equitable interest in the land to the money paid.
What are overriding interests?
Interests which will bind a purchaser for value of the land even though they are not protected by notice on the register or by registration.
(1) Legal leases for term less than 7 years;
(2) equitable interests held by people in actual occupation, subject to exceptions;
(3) Implied legal easements and profits a prendre
Overriding Interest: Equitable Interest held by person in actual occupation
degree of permanence _ continuity of physical presence required. Intention and wishes of person, absence from property and reasons for it. Occupation must be at time of transfer deed and possibly also registration. Not defeated by temporary absence but perhaps by long absence.
WILL NOT BE AN OVERRIDING INTEREST IF:
- person holding interest or their solicitor (who knows of interest) was asked about interest and failed to disclose.
- person acquiring land does not know of interest + occupation not obvious on reasonably careful inspection of land at time disposition was made.
Overriding Interest: Implied Legal Easements
Binding as overriding interest if new owner:
(a) had actual knowledge; or
(b) did not have actual knowledge but it was obvious on reasonable inspection of land; or
(c) easement had been exercised within 12 months immediately preceding disposition.
Enforcement of Legal Interests: Unregistered Land
Pre-1926: legal rights bind the whole world regardless of knowledge of purchaser / whether for value.
Post-1926: A legal right, such as an easement created by deed or legal lease, will continue to bind the whole world. No need for registration or any notice served on anyone, except where there is a puisne mortgage (which must be registered as a land charge).
Enforcement of Equitable Interests: unregistered land
Pre-1926: not automatically binding, equity will only intervene and enforce an interest against a successor where the successor’s conscience had been affected (successor aware or should have been aware of interest) BUT where successor is equity’s darling (good faith purchaser for value of legal estate in land without notice of prior interest), they take land free of the interest.
Post-1926: equitable interests in land created post-1926 must be protected by a land charge under the Land Charges Act 1971.
HOWEVER, doctrine of notice continues to apply to:
- equitable easements / restrictive covenants created before 1926;
- equitable interests in a trust of land that have not been overreached.
Effect of entry of a land charge
Interest will be binding on the purchaser irrespective of knowledge (LPA, s198).
Failure to register land charge makes the interest void against a purchaser of land but not against a donee.
Must be entered against the name of the landowner at the time the right is granted or created. Name must be same as name in the title deeds, rather than birth certificate etc.
To which equitable interests does the doctrine of Notice apply?
Only now applies to equitable easements and restrictive covenants created pre-1926 and equitable interests in a trust of land which have not been overreached.
What is equity’s darling?
Equity’s darling is a bona fide purchaser for value of a legal estate without notice.
Bona fide = buyer acts in good faith.
Purchaser = acquires land otherwise than by operation of law (e.g intestacy).
Value = money, money’s worth or future marriage (including nominal consideration).
Legal estate = freehold, leasehold or legal mortgage.
Without notice = without actual, constructive or imputed notice.
If there is no notice of the equitable interest and the land is purchased, the equitable interest becomes void and cannot be revived.
