Priorities

Question 1

Basic rule of priorities

Answer 1

s28 LRA 2002 - first in time prevails

Question 2

Exception 1 to the general rule outline - Registrable dispositions for valuable consideration

Answer 2

S29(1) If registrable disposition of registered estate is made for valuable consideration, completion by registration has the effect of postponing any other unprotected interests.

Question 3

Which interests are protected under s29?

Answer 3

s29(2):
Registered charges
Subject of a notice in the register
Overriding interests in schedule 3

s29(4): Leases which don’t require registration (eg short leases) are treated as reg dispositions

Question 4

What is not a registrable disposition for s29?

Answer 4

Implied legal easements

Equitable rights, such as anticipation rights, beneficiaries’ rights under trusts and covenants

Question 5

Protected interest 1: Subject of a notice on the register

Answer 5

Provides protection so the right cannot be deprioritised by s29

• Some registrable disps automatically have a notice entered in order to exist (s38 LRA)
• Anticipation rights - eg equitable lease, easement etc can be the subject of a notice
• Covenants

You cannot enter a notice for beneficiary’s rights under a trust, or short leases (but short leases overriding under sch 3)

Question 6

Overriding interests - sch 3

Answer 6

1. Some legal leases
2. Interests of parties in actual occupation
3. Some legal easements

Question 7

Some legal leases as an overriding interest (sch 3(1))

Answer 7

Short leases - except for those taking possession after 3 months from grant (other exceptions not relevant).
Aside from those which are registrable disps under s27(2) - they need to be registered.

Question 8

Overriding interest 2: Actual occupation (Sch 3(2))

Answer 8

Party must be in actual occupation at the time of the disposition.
Equitable or legal right is needed.

Exception 1: Unreasonable failure to disclose
Exception 2: Actual occupation would not have been obvious on a reasonably careful inspection, and third party did not know of the interest.

Question 9

Baker v Craggs (actual occupation)

Answer 9

1. Requires physical presence
2. Means different things depending on the type of property
3. Requires some permanence and continuity
4. Does not necessarily require phys presence of person saying they occupy.
5. Intentions and wishes of party relevant.
6. Length of absence and reason considered

Minor children cannot be in actual occupation (Hypo Mortgage)

Question 10

Meaning of actual occupation cases - Lloyd’s Bank v Rosset (builders on property) + Link Lending v Bustard (mental health) + Chhokar

Answer 10

Lloyd’s - Party had builders on land before moving in - AO established

Link Lending v Bustard - Person sectioned but regularly visited and had intention to return - still in AO

Easements generally don’t give rise to AO.

Chhokar v Chhokar - Woman in hospital temporarily, but her clothes and belongings still there - AO.

Question 11

Some legal easements as an overriding interest (sch 3(3))

Answer 11

This only really covers implied legal easements, since express ones need to be registered (and thus will be protected).

Overriding if one of 3 conditions met:
1. Third party has knowledge of easement
2. Easement obvious on reasonably careful inspection
3. Easement has been exercised in year prior to disposition

Question 12

Priority rule 2: Waiver/Consent

Answer 12

Where one takes out a mortgage, they traditionally must waive their priority - so the chargeholder takes priority.

Question 13

Priorities: Overreaching

Answer 13

Parties can take priority over beneficiaries if payment is made to two or more trustees - they overreach any beneficiaries.

Question 14

Requirements for overreaching (s2 + 27) + Sood (consideration) and Flegg (AO)

Answer 14

1. Conveyance of a legal estate - freehold, lease, charge over those.
2. To a purchaser in good faith for valuable consideration
   Sood - valuable cons includes a promise to increase credit limit in exchange for charge
3. Interest capable of being overreached (beneficiary’s rights)
4. s27(2) complied with - Has to be paid to two trustees (Flegg - AO is irrelevant)

Question 15

Priority rule 4: Acquisition Mortgages + the case

Answer 15

Where a mortgage is given for the purpose of buying a property, lender automatically takes priority (Cann)

Question 16

Valuable consideration? What does this not include

Answer 16

Does not include marriage consideration or nominal consideration - s132 LRA.

Question 17

Chaudhary v Yavuz - Easements in AO?

Answer 17

Easements are generally not considered as being in actual occupation - use is not occupation.