priorities 1 Flashcards
(15 cards)
mortgage
give off property in exchange for a loan, pay back loan and get property back.
owner conveys entire fee simple on terms that if paid back by certain time, they would convey the property back.
borrower’s right to get property back came to be an equitable estate: equity of redemption.
the mortgage is grant of property right to the bank, borrower gives a security interest known as charge which is here an interest in the land.
first in time rule
s.28
first in time has priority over later created interests: basic priority rule. easily displaced by other rules.
main priority rule
s.29: estates and s.30: charges
applies to registrable dispositions made for valuable consideration.
Interests registered later take priority if earlier interests are not protected by notice or falls within sch 3.
this sweeps away unprotected interests.
registrable dispositions
dispositions which are required to be completed by registration under s.27, include transfers, grants of leases and legal charge.
unregistrable interests
interests not required to be registered under s.27, can’t take advantage of priority rule in s.29. only capable of existing in equity, e.g. estate contracts and restrictive covenants.
priority determined by basic priority rule, priority against registrable dispositions can be protected by entry of a notice.
estate contracts
equitable interests in land, contract for creation/transfer of an interest in land, e.g. contract for sale, agreement for a lease option to purchase.
s.28 and s.29 the basic special priority rules.
Interest
must be proprietary in nature, LRA 2002 s.116.
southern pacific mortgages Ltd v Scott: unregistered interests under sch 3 must be proprietary in nature.
valuable consideration
Halifax v Curry Popeck 2008: mortgage fraud case, consideration must be genuine, not part of fraudulent scheme.
Norris J: Fraud renders concept of consideration meaningless; s.29 not engaged.
valuable consideration means genuine consideration, not fraudulent or
part of a fraudulent enterprise.
postponement
Law Com No 380 (2018):
s.29 “postpones” unprotected interests, doesn’t destroy them.
Prior interest may still bind others post-disposition.
Example: A grants restrictive covenant to Z (unnoticed). A later leases land to B. Under s.29, B takes free of Z’s covenant during lease, but covenant still binds A.
priority triangle
A owns land. B acquires interest. C then acquires right (e.g. buys land).
National Provincial Bank v Ainsworth [1965]: Deserted wife’s equity = personal right, not proprietary. Failed content test.
exception to basic rule
Ali v Dinc:
Assess if B’s right is inherently qualified (e.g. by original agreement).
If A acts within scope of B’s consent, B’s right cannot bind C.
lack of registration defence
s.28: Basic rule — first in time prevails.
s.29/s.30: Provide defence to C if:
Disposition = registrable
Made for valuable consideration
B’s interest unprotected (no notice or overriding)
Effect:
C must search register + inspect land.
B must protect by notice or be overriding.
Registration protects C against unregistered prior rights.
overriding interests
property rights which do not appear on register but are immune from lack of registration defence
lists of overriding interests:
sch 1: overriding at first registration
sch3: overriding on a disposition.
law commission: Rights like estoppel, trust often arise informally. Occupants might not realise need to register.
Schedule 3
sets out overriding interests
leases under seven years will have priority
easements (check statute)
interests of people in actual occupation
exceptions to this rule: an interest of a person who made an inquiry
before the disposition and failed to disclose the right when he could
reasonably have been expected to do so
an overriding interest based on occupation wont bind a purchaser if they don’t know about it and they cannot see the occupation
actual occupation
