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The place of Land Law in Society - Land law is about peoples relationships with and over land REGULATION A/C: Gray and Gray Elements of Land Law : For serious students of property, the beginning of truth is the recognition that property is not a thing but a power relationship a relationship of social and legal legitimacy existing between a person and a valued resource (whether tangible or intangible). THREE ELEMENTARY ISSUES FOR ANY QUESTION: (I) What interest does each person have in the land? [States/interests] (II) What is the relationship between all the persons with an interest in the land? (III) You must also bear in mind the asset relationship of the land- i.e., what rights are changed or altered when a piece of land is sold for its value. (This will depend upon the interest or title to land (registered/unregistered). 3. Social Context/Policy of Land LawAsset value of the land became secondary under the LRA 1925 to the social and alienable nature of land. The system now protects the use and occupation value of the land and the asset value.

Williams & Glyns Bank v Boland [1980] 2 All ER 408 FACTS: Mr B had signed Mrs Bs named fraudulently. Mrs B was trying to say that her interest had bound the mortgage company because her interest has always existed from the time of purchase. She didnt enter into the mortgage so she couldnt be bound by the mortgage. HELD: Mrs Boland who did not appear of the legal title was given a beneficial interest in land. The mortgage company was bound by her interest and if the property was sold, then Mrs B would have to be given some of the mortgage entitlement and could in effect have a valid reason to stop the sale. The Bank in this case were not ultimately aware that a beneficial interest behind a trust was capable of creating an overriding interest. Hence this is one of the reasons why they didnt ask for another legal owner to be placed on the deeds in order to allow overreaching to take place.( s.2 LPA)

Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449 In a relationship involving undue influence the bank is now under specific duties. The case sets out series of guidelines where a person may be protected by this.Mortgage company has guidelines as to what they must do to avoid this issue. 4. Individual Interests and Larger Social Interests

LAND: Changing social needs for land Land includes all rights, such as easements, held for the benefit of the particular plot of land s. 205(ix) Law of Property Act 1925. An owner of land no longer has rights to certain valuable minerals under the surface. Unmined gold and silver belongs to the Crown - Case of Mines (1567) Items found on the land will belong to the Crown if they are treasure trove Treasure Act 1996. Nor can a land owner prevent aircraft flying through the airspace above his land Civil Aviation Act 1982. A land owner cannot abstract water flowing across his land for other than domestic purposes without a licence Water Resources Act 1991. All these controls reflect the increasing demands of the population on land use.

BASIC CONCEPTS 1. Trust Anytime you have more than one person owning the same interest in land (they are co-owners of the property behind a trust)A house bought together 2. Estate The concept of land ownership is based on the feudal system of land ownership. There is no such thing as absolute ownership in land, instead there are estates in land. The crown owns everything and gives its subjects pieces which are called estates. The estate exists independently from the land itself. The land is not important but the concept of the estate is. The estate defines the limits and contents of a persons relationship land. An estate is a concept which has three constituent parts: A bundle of rights over a parcel (technical phrase four your defined piece of land) of land for a particular period of time.- an estate is limited by its period in time and it can technically come to an end

Types of Estate: (a) Term of Years Absolute- A lease or tenancy which is granted for a limited period of time. After its time, the estate ends and it ceases to exist. An estate for life can also exist and this will end when you die. (b) Fee simple absolute in Possession- (Freehold) This is the largest type of right that you can have. The duration of this is the closest to perpetual that you can have. (c) Fee Simple in reversion- This is where the freehold owner has leased their property to create a new estate for a period of time but still ultimately retains the title of freehold owner once the terms of the lease come to end.

ESTATES AND INTERESTS 1. Estates LPA 1925 REDUCED the amount of estates that could exist. Equitable proprietary rights do not bind in the same way as legal proprietary rights. Legal rights are enforceable against everyone, whereas equitable rights are enforceable against everyone except equities darling. Estates: Bundles of rights Interests: Specific types of rights in land LPA 1925 : Estates S1 (1) Law of Property Act 1925: The only estates in land which are capable of being of subsisting or of being conveyed or created at law are: (a) An estate in fee simple absolute in possession; (b) A term of years absolute. S1 (3) Law of Property Act 1925: All other estates, interests, and charges in or over land take effect as equitable interests. (A) Fee simple absolute in possession In possession of the estate at that point in time and with it being Absolute it is capable of continuing indefinitely: S7 Law of Property Act 1925

(B) Term of years absolute Two Types of terms of years absolute: (i) Fixed Term- This is where a lease is granted for a fixed term from the outset. The lease will not terminate until the end of the fixed term, subject to the presence of break clauses allowing for early termination, or a breach of covenant, which could lead to termination of the lease by forfeiture. (ii) Periodic Tenancy- This is a lease that is granted initially for a certain period but that period will automatically recur until the lease is brought to an end, either by serving the appropriate notice period or through procedures following a breach of covenant. Under the Protection from Eviction Act 1977 a yearly periodic tenancy requires 6 month notice and a periodic tenancy over a dwelling house requires a minimum of four weeks notice.

Contract TO CREATE A TERM OF YEARS (TOYA): s.205 (1) (xxvii) LPA 1925 Term of years absolute means a term of years (taking effect either in possession or in reversion whether or not at a rent) with or without impeachment for waste, subject or not to another legal estate, and either certain or liable to determination by notice, re-entry, operation of law, or by a provision for cesser on redemption, or in any other event (other than the dropping of a life, or the determination of a determinable life interest); but does not include any term of years determinable with life or lives or with the cesser of a determinable life interest, nor, if created after the commencement of this Act, a term of years which is not expressed to take effect in possession within twenty-one years after the creation thereof where required by this Act to take effect within that period; and in this definition the expression term of years includes a term for less than a year, or for a year or years and a fraction of a year or from year to year; NOTE: A License ( Personal right to occupy)vs Term of Years Absolute (proprietary). A TOYA imprints the contact onto the estate to give effect to proprietary rights. This means that if you sell on your terms of years absolute, the contractual terms you agree to are no longer contractual, they are enforceable against whoever buys the estate.)

LEADING CASE: Street v Mountford [1985] Lord Templeman 1) Certain term- If it is to be a lease, it must have a certain term and both parties must know the maximum duration of the lease . Exception to the rule: .149(6) LPA 1925 (Leases for life are normal in wills, but only valid if there is a rent Lace v Chandler [1944]: Lease was granted for as long as the war continued. This lease was held in law to be uncertain because objectively you could not tell what the maximum duration of the war was going to be. Ashburn Anstalt v Arnold [1989]: Upheld that there must be a maximum fixed term. Prudential Assurance v London Residuary Body [1992]: Road widening scheme. The lease was going to last until the road widening scheme began. Both parties were aware of this. HELD: You need a clear objective view of the maximum duration. The law lords were not happy, but felt that they couldn t invoke the practice direction. Javad v. Aqil [1991]: (Implied periodic tenancy) Highlight the problems associated with periodic tenancies. Sometimes if you tried to create a fixed term tenancy but werent successful you can have an implied periodic tenancy. Mexfield Housing Co-op v Berrisford (2011): An appeal based on the prudential rule. It isnt however about a term of years as a mutual housing organisation cannot grant a term of years absolute.

2) Rent- whether or not at a rent s.205 (1) (xxvii) LPA 1925 Ashburn Anstalt v Arnold [1989]: The absence of a rent may need to have an explanation.

3) Exclusive possession- The right to exclude all others from the land including the lessor Street v Mountford [1985] AC 809: It places emphasis not on what the wording say, but the fact to what it created. The court should be alive to strike out sham terms which are only in place to avoid giving tenants exclusive possession. (note: not every term is sham or pretence) Fork and spade metaphor This is an objective analysis of the practical components of the terms. (this has ultimately led to problems by not focusing on the subjective analysis) Aslan v. Murphy [1990] 1 WLR 766 A licence agreement was held to be a lease. Focus on the nature of the accommodation. Ie, basement room Antoniades v Villiers [1990] 1 AC 417 (multiple occupancy) Couple singed separate agreement but the reality of the case was that they would not have signed unless they were going to have the same effect. The contracts were interdependent and had unity of title. AG Securities v. Vaughan [1990] 1 AC 417 (multiple occupancy) A clause stating that a maximum of three persons could be introduced to share the property with the licensee was held to be real and reflected the reality of the arrangement. The court was influenced by the fact that each occupant had signed an agreement, which incorporated a clause that a maximum of three other people could be introduced to share the house with them. This was a practically acceptable clause in relation to a four bedroom house. The occupants were stranger who arrives at the property willing, presumably to share with other persons they did not know, unlike the couple in Antoniades v Villiers [1990]. In essence, the occupants must in addition to certainty of term also have a right to possess the whole of the property. Westminster City Council v. Clarke [1992] 2 A.C. 288 (temporary plan did not matter) Case decided on the fact that the council provided services and have a right to move people for medical reasons should they become violent whilst staying in one of the temporary accommodations. Relationship of landlord and tenant with no legal estate Bruton v London Quadrant Housing Trust [1999] 3 WLR 150: The Hol held that it does matter whether or not the landlord has an estate to support a lease binding it on third parties. On the facts, the landlord had a mere license. This did not stop an agreement (in form of a license) under which exclusive possession was enjoyed, from creating the relationship of lease or tenancy as between the landlord and the possessor. Lord Hoffman decided that someone who had a license, could themselves grant an estate in land vs NEMO DAT A/C: Bright, Leases, Exclusive Possession, And Estates [2000] 116 LQR 7 He created a new form of contractual tenancy and tries to identify what this would look like. Pawlowski, Occupational Rights In Leasehold Law: Time For Rationalisation [2002] Conv. 550 Asked whether it was a time to rationalise this area of law and doubts whether Hoffmans views are correct. Kay v London Lambeth Lambeth Borough Council [2006] 2 W.L.R. 570 (HL):

The 'estate' tenancies held by the appellants were derived from and could not survive the termination of the [head] lease. The 'non-estate' Bruton tenancies could survive as against the grantor of them [the Housing Trust], but they were not binding as against [the freeholder] (per Lord Scott) A contractual tenancy gave no additional rights beyond a license. Confirmed in: Doherty v Birmingham CC [2008] UKHL 57 (Appeal Case)

Statutory Formalities for the creation of TOYA: (i) A fixed term lease for 3years or longer must be made by a Deed (this is different from a contract) Ss 52(1) and 54 Law of Property Act 1925- A lease has to be made by deed to be legal. (A legal term of years absolute) s. 1 Law of Property (Miscellaneous Provisions) Act 1989 (defined requirements of a deed) (ii) If less than 3 years, this can be created by parol. (orally) It also has to be for the best rent that can easily be obtained. s.54 LPA 1925

(iii) Equitable lease Walsh v Lonsdale (1882) 21 Ch D 9 If you dont have a deed but YOU DO have a binding contract to create a lease; equity will see as done what ought to be done and (possibly) grant an equitable lease. s.2 Law of Property (Miscellaneous Provisions) Act 1989 (as amended by the Regulatory Reform (Deeds and Documents) Order 2005 (SI 2005/1906) This alters what is necessary for a contract to create an interest in land.

d. Relationship between landlord and tenant Courts are reluctant to imply terms into covenant. Implied covenants: (a lease hold clause or term) A promise that is contained in a deed. (i) For quiet enjoyment Suggesting that the landlord leaves the tenant alone to enjoy their estate in land Southwark L B C v Mills [1999] 4 All ER 449: (HOL) Effect of a covenant of quiet enjoyment: could the landlord be held liable for not properly soundproofing? HELD: The noise made by neighbours was not sufficient to cause an actionable nuisance in tort. Covenant of quiet enjoyment was not relevant and the landlords were not liable for the breach. Tenant took on an estate in the building and there were no statutory codes requiring a particular density of wall for such tenants. Lee v Leeds City Council [2002] 1 WLR 1488 They tried to argue that the covenant of quiet enjoyment led to a warranty of habitability. (premises of a decent human living standard) There is no general warranty of habitability in English law. Facts maintained that the covenant of quiet enjoyment could not be used to imply this warranty of habitability. (ii) Not to derogate from grant If you give somebody an estate in land, you cannot take an action based on the premise that you never handed over the lease to the tenant. (iii) Repair There is a difference between something being out of repair and not fit for service. S11 Landlord and Tenant Act 1985: (s.13 & 14 required to be read in unison) [This is an implied obligation of repair]- The definition of a dwelling house is important. (1)In a lease to which this section applies (as to which, see sections 13 and 14) there is implied a covenant by the lessor (a) To keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes), (b) To keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity), and (c) To keep in repair and proper working order the installations in the dwelling-house for space heating and heating water.

(iv) Passing of covenants Covenants that regulate the agreement becoming imprinted on the estate. If you create an estate by contract, any of these terms will become more than contractual and turn into proprietary rights. (Binding upon 3rd parties) Privity of estate:

Landlord and tenant for the period of time have privity of estate between each other. Eg, if you move, you can sell on your lease and in doing so you assign (give away all of your rights) your rights to that estate. Privity of estate exists between the new lease holders. The covenants agreed in the originally lease agreement will pass onto the new lease holder and they will be enforceable by the landlord & equally so the new tenant against each other. Spencers Case (1583) The passing of the benefit and burden of lease hold covenants passes with privity of estate... to become enforceable by the tenant and landlord. Not all covenants will pass...they have to touch and concern the land...they must not be personal between the parties but instead, be relevant to control over the land. City of London Corp v. Fell [1993] Q.B. 589 The contractual obligations which touch and concern the land having become imprinted on the estate, the tenancy is capable of existence as a species of property independently of the contract. (per Nourse LJ) s.141 Law of Property Act 1925, Rent and benefit of lessees covenants to run with the reversion (1)Rent reserved by a lease, and the benefit of every covenant or provision therein contained, having reference to the subjectmatter thereof, and on the lessees part to be observed or performed, and every condition of re-entry and other condition therein contained, shall be annexed and incident to and shall go with the reversionary estate in the land, or in any part thereof, immediately expectant on the term granted by the lease, notwithstanding severance of that reversionary estate, and without prejudice to any liability affecting a covenantor or his estate. (2)Any such rent, covenant or provision shall be capable of being recovered, received, enforced, and taken advantage of, by the person from time to time entitled, subject to the term, to the income of the whole or any part, as the case may require, of the land leased. (3)Where that person becomes entitled by conveyance or otherwise, such rent, covenant or provision may be recovered, received, enforced or taken advantage of by him notwithstanding that he becomes so entitled after the condition of re-entry or forfeiture has become enforceable, but this subsection does not render enforceable any condition of re-entry or other condition waived or released before such person becomes entitled as aforesaid. (4)This section applies to leases made before or after the commencement of this Act, but does not affect the operation of (a) Any severance of the reversionary estate; or (b) Any acquisition by conveyance or otherwise of the right to receive or enforce any rent covenant or provision; effected before the commencement of this Act. s.142 Law of Property Act 1925: Obligation of lessors covenants to run with reversion (1)The obligation under a condition or of a covenant entered into by a lessor with reference to the subject-matter of the lease shall, if and as far as the lessor has power to bind the reversionary estate immediately expectant on the term granted by the lease, be annexed and incident to and shall go with that reversionary estate, or the several parts thereof, notwithstanding severance of that reversionary estate, and may be taken advantage of and enforced by the person in whom the term is from time to time vested by conveyance, devolution in law, or otherwise; and, if and as far as the lessor has power to bind the person from time to time entitled to that reversionary estate, the obligation aforesaid may be taken advantage of and enforced against any person so entitled. (2)This section applies to leases made before or after the commencement of this Act, whether the severance of the reversionary estate was effected before or after such commencement: Provided that, where the lease was made before the first day of January eighteen hundred and eighty-two, nothing in this section shall affect the operation of any severance of the reversionary estate effected before such commencement. This section takes effect without prejudice to any liability affecting a covenantor or his estate Note: A lease is identifiable different from a contract through its ability to continue through change of ownership the rights and interests concerned under the covenants on that lease. ***See: The Landlord and Tenant (Covenants) Act 1995*** (v) Breach of covenant (equates to damages) Where a leasehold covenant is breached, the normal remedy is damages. Other remedies are available (forfeiture= right for tenant to forfeit his lease for breach of covenant) (iv) Protection from Eviction Act 1977 This stops people being evicted for due process

However, the act is one of the few pieces of legislation that applies to both terms of years absolute and licenses. (In both cases you are entitled to only be evicted by court order)

e. Commonhold. Designed to deal with modern living standards. This gives people more rights! (i) Commonhold and Leasehold Reform Act 2002 It is not a new form of property ownership! It exists as a modified version of the free hold in absolute possession.

Legal and Equitable Interests in Land


You always need to identify which TYPE OF RIGHT is present! Either legal or equitable interests. A. Legal Interests

s.1(2)(a-c) LPA1925 (2)The only interests or charges in or over land which are capable of subsisting or of being conveyed or created at law are (a)An easement, right, or privilege in or over land for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute; (an easement can be a legal interest if it is granted for the term of a legal estate) (b)A rentcharge in possession issuing out of or charged on land being either perpetual or for a term of years absolute; (no longer possible to create rentcharge - not important) (c)A charge by way of legal mortgage; B Equitable Interests s.1(3) LPA 1925: All other estates, interests, and charges in or over land take effect as equitable interests Key point: Equitable interests whatever their nature cannot exist on their own. It must relate to someones estate and normally attached to an estate of your own. C. Validly Creating Interests in Land: Statutory Formalities s.1 LPA 1925 Legal estates and equitable interests (1)The only estates in land which are capable of subsisting or of being conveyed or created at law are (a)An estate in fee simple absolute in possession; (b)A term of years absolute s.52 LPA 1925: Conveyances to be by deed (1)All conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed. (2)This section does not apply to (a)assents by a personal representative; (b)disclaimers made in accordance with [F66sections 178 to 180 or sections 315 to 319 of the Insolvency Act 1986], or not required to be evidenced in writing; (c)surrenders by operation of law, including surrenders which may, by law, be effected without writing; (d)leases or tenancies or other assurances not required by law to be made in writing; (e)receipts [F67other than those falling within section 115 below]; (f)vesting orders of the court or other competent authority; (g)conveyances taking effect by operation of law s.53-Instruments required to be in writing (1)Subject to the provision hereinafter contained with respect to the creation of interests in land by parol (a)no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law; (b)a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will; (c)a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will. (2)This section does not affect the creation or operation of resulting, implied or constructive trusts s.54-Creation of interests in land by parol.(orally) (1)All interests in land created by parol and not put in writing and signed by the persons so creating the same, or by their agents thereunto lawfully authorised in writing, have, notwithstanding any consideration having been given for the same, the force and effect of interests at will only. (2)Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine s. 1(2-3) LPMP 1989- Deeds and their execution (2)An instrument shall not be a deed unless (a)it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and (b)it is validly executed as a deed by that person or, as the case may be, one or more of those parties. (3)An instrument is validly executed as a deed by an individual if, and only if (a)it is signed (i)by him in the presence of a witness who attests the signature; or (ii)at his direction and in his presence and the presence of two witnesses who each attest the signature; and (b)it is delivered as a deed by him or a person authorised to do so on his behalf.

s.2 LPMP 1989- Contracts for sale etc. of land to be made by signed writing. (1)A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each. (2)The terms may be incorporated in a document either by being set out in it or by reference to some other document. (3)The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract. (4)Where a contract for the sale or other disposition of an interest in land satisfies the conditions of this section by reason only of the rectification of one or more documents in pursuance of an order of a court, the contract shall come into being, or be deemed to have come into being, at such time as may be specified in the order. s.27 Land Registration Act 2002 (for registered title only): In certain cases you will need more than a deed. You will also be required to register the land.

Common interests in land


Must be able to: Explain what the different interests are, identify them as either easement/mortgages, decide whether they are legal/equitable rules (enforceability issues) and ensure statutory Formalities are in place for all.

(A) Easements: An easement is a right attached to one piece of land which is exercisable over an adjacent piece of land. A right will not be recognised as an easement unless it is sufficiently defined and benefits the first piece of land. Re Ellenborough Park [1956] Ch 131- List a series of requirements for something to be an easement. What the law of easements does is to balance the competing rights of the owner of the dominant tenement (that is the benefited land) and the rights of the owner of the servient tenement (that is the burdened land). LEGAL EASEMENT: A legal easement can be acquired by an actual grant by deed, A new legal easement created in registered land must be entered on the land register. A legal easement can also be acquired by a presumed grant. If a right is exercised for a sufficiently long period of time the law will assume that there was once a valid grant by deed. This is called acquisition by prescription Prescription Act 1832. We have seen that an easement granted for the equivalent of a fee simple or a term of years absolute is a legal interest. An easement granted for any other period, for example for life, is equitable and will required registration for protection. An easement granted in writing but not by deed is an equitable easement and will also require protection by registration. (i) (B) Mortgages A mortgage is the interest taken over an estate by a lender as security for his loan. It is a contract between a lender and a borrower which gives the lender a proprietary right in the estate of the borrower. The right of possession is limited in the case of a house by s.36 Administration Justice Act 1970 and s. 8 Administration of Justice 1973 which gives the courts power to prevent a lender gaining possession where, for example, the borrower can show that he can pay off any arrears of mortgage payments in a reasonable time. A mortgagee powers: Before the mortgagee can sell there must be at least 2 months arrears of interest - s.103 Law of Property Act 1925. Mortgagee must exercise care to get the true market value for the property Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949. The must pass on the rest of the proceeds of sale to the borrower. LEGAL MORTGAGE: Created by deed. A lender takes a charge by deed expressed as a legal interest by s.1(2)(c) Law of Property Act 1925. A lender taking a first legal mortgage of unregistered land who, as is normal practice, takes the title deeds is protected. All other legal mortgages of unregistered land need to be protected by registration. Any legal mortgage of registered land must be entered on the land register. EQUITABLE MORTGAGE: A mortgage which is in writing, but not by deed, will be an equitable mortgage and will need to be protected by registration. -

(C) Restrictive covenants A restrictive covenant is an agreement between two freehold estate owners limiting the use of the land of one of them for the benefit of the other. A covenant can always be enforced between the original parties to the deed RESTRICTIVE COVENANT: (one that does not require money to be spent). Only be enforceable, other than against the original covenantor, if it relates to the land and not to be person. Registration required to protect RC! It must touch and concern the land Person seeking to enforce the covenant must have a legal estate in the land benefited by the covenant. In addition the benefit of the covenant must have been annexed to the legal estate Federated Homes v Mill Lodge Properties [1980]- Annexation is now largely regarded as automatic. Special rules allow Elliston v Reacher [1908] Special rules allow restrictive covenants on a housing estate to be enforced by and against any owner of a house on the estate.

SEE EXTRA NOTES HANDOUT!

Protection of interests against third parties


There are two types of doctrine of notice: (i) Actual Actual notice is being aware of the interest s.198 LPA 1925: Under the unregistered system you can have deemed actual notice where you are not actually aware but the law assumes that you to be.

(ii) Constructive A purchaser will be deemed to have notice of all matters which he or she could have discovered if they made the usual and proper enquiries. As a purchaser, you cannot ignore facts that might highlight an interest being present then you will be fixed with constructive notice. Onus is on a purchaser to prove that they are a BPFVWN. (equities darling) s..199 LPA 1925: Restrictions on constructive notice (1)A purchaser shall not be prejudicially affected by notice of (i)any instrument or matter capable of registration under the provisions of the Land Charges Act, 1925, or any enactment which it replaces, which is void or not enforceable as against him under that Act or enactment, by reason of the nonregistration thereof; (ii)any other instrument or matter or any fact or thing unless (a)it is within his own knowledge, or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him; or (b)in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such, or of his solicitor or other agent, as such, or would have come to the knowledge of his solicitor or other agent, as such, if such inquiries and inspections had been made as ought reasonably to have been made by the solicitor or other agent. Purchaser will be deemed to have Constructive Notice: (i) Where the purchaser is aware that person X has an interest but they are not aware what type of interest. If the purchaser could have found out the extent of this interest through enquiry, then they will be fixed with constructive notice. Eg, beneficial interest behind a trust which does not appear of the legal title. (ii) In circumstances where you purchase the property and do not try to find out the full extent of the interests in that land at all. (You will have constructive notice for failure to take any reasonable action) (iii) Where a person fails to make proper enquiries through carelessness. ***[The reasonable enquiry would be needed where there is something in place contrary to the rights of the purchaser]*** Kingsnorth Trust Co Ltd v Tizard [1986] (read this case) {Combination of different facts gave rise to constructive notice} Facts: Mrs T had BI in property and Mr T legal oner. (family home implied trust) Mrs T has contributed over the years; it had been established Mrs T has a beneficial interest behind a trust. Mrs T left the house but visited the children almost every day. (except on Sundays) Mr T tried to sell and arranged a surveyor to visit the property on a Sunday. In addition, he hides Mrs Ts clothes when the surveyor visits in order to obliterate any sign of her presence. Mr T then represented to the surveyor that he lived alone. The surveyor arrived but failed to draw a conclusion from the photographs listed throughout the property-TAKEN TOGETHER HE SHOULDVE BEEN ON ENQUIRY. Held: In view of all these collective factors, the surveyor had constructive notice of Mrs Ts beneficial interest as he should have been put on further enquiry. The surveyor had constructive notice, however he was employed by the mortgagee and this was an agency relationship. Therefore, if the agent is fixed with constructive notice, then the mortgage company are also fixed with constructive notice. [THIS IS IMPLIED/IMPUTED NOTICE]

Overreaching
For overreaching to take place there are two conditions: (i) The interest must be capable of being overreached (overreachable); (ii) There must be an overreaching sale. (Purchaser pays money to two or more trustees or a trust corporation). Aim of overreaching sale under s.2 LPA 1925: Make land alienable Reflect the mirror principle more efficiently Unburden the buyer LPA 1925: s.2 (1): This tells you what overreaching is; and how the process works under certain circumstances. (2): This outlines what is an overreaching sale (is it an overreaching sale?) (3): The exclusions to an overreaching sale. Key point: The process of overreaching takes away the beneficial interest (life interest/trust) and instead gives that beneficiary a representation of that interest in monetary value. Use and occupation overruled by asset value of land. Note: s.27 (2) LPA is the purchasers equivalent of s.2 (2). Application of the above principle as per s.2 (2): OVERREACHING SALE NOT ALWAYS POSSIBLE Kingsnorth Trust Co v Tizard [1986]: Mr T was the single trustee pertaining to the beneficiaries equitable interest under the trust. Therefore, if someone were to purchase his house, it could not be deemed an overreaching sale under s.2 (2) LPA 1925. He was trustee beneficiary as he had both legal and equitable ownership. Mrs T was not a beneficiary. Definition of Purchaser: s.205 (xxi) LPA 1925: Purchaser means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property except that in Part I of this Act and elsewhere where so expressly provided purchaser only means a person who acquires an interest in or charge on property for money or moneys worth; and in reference to a legal estate includes a chargee by way of legal mortgage; and where the context so requires purchaser includes an intending purchaser; purchase has a meaning corresponding with that of purchaser; and valuable consideration includes marriage [F207, and formation of a civil partnership,] but does not include a nominal consideration in money Key point: Where you are granting an easement or a mortgage to someone then you are regarded as a purchaser under this section. You do not have to be buying the estate but merely creating interests. If you are granting mortgage money for an overreaching sale, it has to be to two trustees or a trust corporation. City of London Building Society v Flegg [1987] If you have notice (actual or constructive) it is not relevant as you cannot be bound by an interest that is capable of being overreached. Birmingham Midshires Mortgage Services Ltd v Sabherwal (2000) This was a case where an interest arose, not by means of a resulting or constructive trust but because of proprietary estoppel. HELD: That an interest arising by estoppel could be classed as an equitable interest and could be overreached as result of this. (Applied Flegg [1987]) State Bank of India v Sood [1997] 1 All ER 169 (CoA) Issue, was the mortgagee a purchaser where there was no actual money advanced? Money was advanced but it went against paying of an existing debt. At law, if you discharge a debt, this is not technically at law an advance of money. Held: They asked whether overreaching can take place outside of s.2 LPA 1925? [Specific to s.2 (2)]. In these very limited circumstances (facts of this case), overreaching can take place. y Working example of overreaching principles above: House to Debra for life, remainder to any children she might have You know this can only exist behind a trust and both parties have an equitable interest. If the property is sold during her lifetime and the purchase money is paid to two trustees, then she is entitled (and her unborn children) to an interest in the monetary value of the proceeds of sale. This is possible as her interest is beneficial and is capable of being overreached. (s.2 LPA 1925) However: If the purchase money is paid to only one trustee, then no overreaching takes place. Why? Although her interest is overreachable, there has been no overreaching sale taking place as it does not satisfy s.2 (2) two or more trustees or a trust corporation. Whether her interest would then bind the purchaser, would depend on the doctrine of notice (actual or constructive) and those rules would then need to be applied.

UNREGISTERED LAND
Introduction Parliament created s.1(1) LPA 1925- Limitation to only two forms of legal estate ( freehold /leasehold) The system of unregistered titled was only an interim measure. If an estate in land is not registered, then you must prove good route of title of 15 years prior. Unregistered estates can have certain interests registered as land charges under LCA 1972. Where an interest is not capable of being registerable as a land charge, then the old rules of doctrine of notice are applied: Old rule Applies: Legal interests bind the world; equitable interests bind according to the doctrine of notice. What interests are not registerable? Beneficial Interest Behind Trust: Every time you have a beneficial interest in land, it happens behind a trust in land. (Trust of Land and Appointment of Trustees Act 1996 s.1). They are not capable of being protected as such interests are supposed to be capable of being overreached at sale. y

The System of Registration


s.2 LCA 1972: Outlines which charges are registerable and divides them into 6 classes of registerable interests. (Class A-F) (A) CLASS C Land Charges: (i) Pusny Mortgage: If you are granted a second legal mortgage as a mortgagee you cannot retain the title deeds as these will be lodged with the first legal mortgagee. Therefore, even though it is legal, it has to Registered under the Land Charges system to be effective. (ii) General Equitable Charge: Any interest which isnt listed anywhere else will be a general equitable charge unless excluded by the subsection within this piece of statute. (Class C under the LCA 1972 s.2) (iii) Contract to create an Estate: A person has not yet created a Deed but has contracted to so in the future. This includes an option to purchase property or contracts to renew leases. (B) Class D Land Charges: (i) Restrictive Covenants (D2 Land Charge) (ii) Easements (Only Equitable) (D3 Land Charge)

Class F Land Charges Spouses statutory right of occupation A charge affecting any land by virtue of Part 4 of the Family Law Act 1996 Lord Dennings deserted wifes equity theory overturned by NPB v Ainsworth [1965] AC 1175 Part 4 (s.30) of the Family Law Act 1996: This gives the spouse who is not already the legal owner, a right not to be excluded from the home. Two requirements: (i) A spouse ( or as per Family Law Act amendments- civil partnerships) (ii) You have to not appear on the legal title. Practical effect: This, when registered, requires that a spouse must consent to any selling of land or creation of interests within it. However, very few people are aware that they can register this right to protect their right to consent.

(C) -

The Effect of Registering a land Charge:


A person must: Register land charge personally against the name of the estate owner. s.198 LPA 1925: Registration of a land charge against the name of the estate owner binds the purchaser. It is deemed actual notice s.199 (1) LPA 1925: A registerable land charge is void for non-registration and is unenforceable against a subsequent purchaser. The doctrine of notice not applicable. (STRICT APPLICATION) Midland Bank Trust Co Ltd v Green [1981] Facts: Concerned an estate contract in the form of an option to purchase which was given by a farmer to his son. An option to purchase is a right to a contract of sale. However, it is only enforceable if you exercise the option. At the point when you exercise this option, then a binding contract will come into existence. Farmer and his son fell out and ended up hating each other. The son had not exercised the option as a result of this. The farmer then conveyed the farm to a third part for a price far below market value but only to defeat the sons option to purchase. This issue was that the 3rd party was aware of the sons option to purchase. However as it was unregistered land, the son had failed to protect this as C4 land charge (estate contract). Held: The court agreed with the farmer and held that if you do not register a land charge against the land owners name (personally), you cannot claim actual or constructive notice (s.199)- [HL unanimous verdict] It was also held that bad faith in selling the farms at a gross undervalue was irrelevant.

Specific rules for Non-Registration of Interests


s.4 LCA 1972 provided two separate systems which are dependent upon the type of interest not registered: Class A,B,C(i)-(iii) and Class F land Charges [s.4(2)-(3)-(5)-(8)] Non registration will be void as against a purchaser of the land or any interest in such land where they have given valuable consideration. It will however be binding against non-purchasers where the transfer of land is by way of gift. Note: (a) The definition of a purchaser would include a mortgagee as per LPA 1925 s.205(1)(xxi). (b) Valuable consideration does not have to be adequate consideration [Midlank Bank v Cooke] (c) Valuable consideration need not be money: Marriage Consideration. Class C (iv) Estate Contract + Class D Restrictive Covenant/Equitable Easement [s.4(6)] Non registrations will be void against a purchaser of a legal estate in land who gives money or moneys worth of a legal estate in land. Even if unregistered, a Class C (iv) or Class D land charge could be binding against someone who is creating an equitable interest in land. Note: Where someone is not a purchaser, they will be bound by the unregistered interest. An unregistered land charge of whatever type may bind someone who is given a gift of land. Proper Registration: The Land Charges register requires you to register the interest against the owner of the land. So in this sense you have to make sure you register this against the correct legal owner. [name of the estate owner at the time of registration- s.3(2)] Diligent Finance Co Ltd v Alleyne (1972) 23 P&CR 346 Facts: A wives statutory right of occupation under the then Matrimonial Homes Act. Wife tried to register a Class F land charge and she registered against Erskine Alleyne (not the full name). A search was then carried out on the Land Charges registry against the full proper name and her charge did not show up under his correct full name. Held: The finance company (purchasers) took free of any charges as the wife had not properly registered the charge. The search being conducted must also be done using the correct full name and if not, then a person will be bound against that which would have been there under the correct full name search. (search)

ENFORCEABILITY OF INTERESTS AFFECTING UNREGISTERED LAND

Identify Nature & Inherent Validity of Interest

Personal: Purchaser Not Bound

Proprietary and Valid

Registrable under LCA 1972?

Registrable: Is Right Actually Registered?

Not Registrable: Is Right Legal or Equitable?

No: Void Against Most Purchasers. Apply ss. 4(5) valuable consideration & 4(6) money or moneys worths LCA 1972.

Yes: Purchaser Bound

Legal: All Purchasers Bound

Equitable: Is Right Overreachable? S.2 LPA 1925 &S.27

Yes: Has Overreaching Taken Place?

No, or No Actual Overreaching: Is Purchaser b.f.p. w/o notice?

Yes: Purchaser Not Bound

Yes: Purchaser Not Bound

No: Purchaser Bound

REGISTERED LAND
1. Difficulties with Unregistered Land The estate owner must physical prove entitlement to the land by showing deeds that derived title from a person who has been in peaceful possession for a period of 15 years or more. Certain interests in the land still depend on the doctrine of notice to give protection. (beneficiary behind a trust) The unregistered system is of decreasing importance but much of the registered system finds dependence on the registered system (building blocks) Registered Land Official copy of the register and title plan from the Land Registry (this is proof of title). The title to the land itself is registered and is guaranteed by the state.(insurance principle) Almost all encumbrances (third party interests) are protected by registration with the land registry- subject to certain exceptions (overriding interests). Those third party interests that are not protected by the register may become protected via actual occupation. (only use this phrase in registered land) The doctrine of notice has no relevance in registered land.

2.

Mirror Principle: The idea is that the register should act as a mirror which reflects the full facts material to the title. However, cracks will form in the mirror due to interests that override a disposition. The LRA 2002 has reduced the extent of these cracks in the mirror by decreasing the OIs. . 3. Purpose of Registered Land System: Only interests capable of subsisting at law under s.1 LPA 1925 (legal estates and legal interests) are registerable as registerable interests. You cannot have a different right in registered land than you can have in unregistered land as only recognised land law rights are capable of protection. ( the law has not changed, only the system) LRA 2002

4.

13 October 2003 - LRA 2002 and Land Registration Rules 2003 SI 2003 No.1417 came into force completely replaced LRA 1925 [LRA 1925 is in italics] EXAM TIP: Exam question may focus on identifying the relevance of cases decided before 2002 LRA came into play. How important are they now since certain wording has changed. Land Registration for the 21st Century: A Conveyancing Revolution, 2001, Law Com No.271 The fundamental objective of the Bill is that under the system of electronic dealing with land that it seeks to create, the register should be a complete and accurate reflection of the state of the title to the land at any given time, so that it is possible to investigate title to land on line with the minimum of additional enquiries and inspections (para.1.5) A. 1. THE REGISTRATION SYSTEM Compulsory Registration

LRA 2002, s.4: When title must be registered [Triggering Events] Once one of the above triggering events takes place, there is then a duty to apply for registration under s.6 as below: Further, s.7 outlines the effects if registration does not take place within 2 months. LRA 2002, s.6: Duty to apply for registration of title LRA 2002, s.7 Effect of non-compliance with section 6 Transfer does not become ineffective; but instead equity will see the transfer as complete, but the law will not] LRA 2002, s.3 Voluntary Registration Practically people will not voluntarily invoke registration, therefore the system continues to have cracks.

2. The Register The registration is of the individual title and evidence of this registration is given to the registered proprietor through a Title Information Document. The Title Information Document includes: (New to the LRA 2002) (i) Property register: This will also include benefits of the land which are held.ie, easement (ii) Proprietorship register: The nature of the title held (categories of title)/ Name and address of registered proprietor Sets out restrictions to the land. (iii) Charges register: Contains entries of rights adverse to the land which are protected by Notices. LRA 2002, s.66 - The register is now open public inspection LRA 2002, s.27 and sched.2- No register of a registered estate is complete until there is entry on the register system Registration Gap--The period of time between the transfer and registration period. E-Conveyancing will ensure transfer and registration takes place simultaneously and will make this issue void] Barclays Bank v Zaroovabli [1997] Legal mortgages under LRA 2002 Failure by a purchaser (mortgagee) to register legal mortgage gives the mortgagee only an equitable interest. This mortgage lost its priority to a registerable disposition the owner s later contract into. (ie, leasehold) Permanent Building Society v Famini (1998) Where legal mortgage not registerd and the subsequent leasehold is only equitable, then the first in time principle prevails as per s.28 LRA 2002. Leeman v Mohammed (2001): Purchase failed to apply for registration within 2 months, therefore, the title remains with transferor until it had been properly registered. A/C: Dixon: The e-conveyancing system will change the process from of title, to title by registration. Categories Of Title Upon first registration of land, the registrar will give one of the following categories to the owner based on the route of the title and the proof of such title: [s.58 LRA: Registered proprietor deemed to have been vested with rights as per register] Absolute: Generally given to freeholds. s.9(5) LRA 2002- Already registered s.11 LRA 2002- 1st registration Possessory: Given where there is insufficient evidence to allow absolute title. Qualified: Fundamental defects with route of title. Good leasehold: Absolute title, except that is subject to any interests affecting the landlords freehold. s.12(6) LRA 2002 LRA 2002, s.62 Registrar can upgrade the lesser titles: A/C: Dixon-This will be taken into consideration for qualified title if it is felt that it may later be possible to upgrade the title. Following initial clarification of the category of title, any subsequent dealings with the land will be subject to: 1) s.28, s.29, s.30 LRA 2002 THEN on the basis of these sections it must be decided: 2) What is the position of the transferee? ( mortgagee/the new owner/ purchaser) 3) What is the position of a person with a third party interest in land?

Position Of The Registered Proprietor


GENERAL RULE: LRA 2002, s.58 Entry on the Register is Conclusive A/C: Dixon- Fundamental link to the states guarantee of title (insurance principle) and it must be presumed so until something otherwise is proved differently. LRA 2002, s.11 Effect of First time Registration FREEHOLD TITLE (4)The estate is vested in the proprietor subject only to the following interests affecting the estate at the time of registration. (a)interests which are the subject of an entry in the register in relation to the estate,. (b)unregistered interests which fall within any of the paragraphs of Schedule 1, and. (c)interests acquired under the Limitation Act 1980 (c. 58) of which the proprietor has notice.. LRA 2002, s.12 Effect of First Time Registration LEASEHOLD TITLE (4)The estate is vested subject only to the following interests affecting the estate at the time of registration. (a) implied and express covenants, obligations and liabilities incident to the estate,. (b) interests which are the subject of an entry in the register in relation to the estate,. (c) unregistered interests which fall within any of the paragraphs of Schedule 1, and. (d) interests acquired under the Limitation Act 1980 (c. 58) of which the proprietor has notice.. LRA 2002, s.23 Owners Powers over the REGISTERED ESTATE Owners powers over a registered estate allow them to make a disposition of any kind in relation to the land but not a mortgage by demise (only a charged mortgage can be created) LRA 2002, s.26 - Unlimited Seems to protect a purchaser because the conditions of this section infer that the registered proprietor has the right to whatever it is they seek to carry out; therefore protecting the purchasers subsequent conveyance of the property. The disponee will not have any questions as to their rights to title.

Effect on the Priority following subsequent dispositions: Once land is registered, any subsequent transaction in relation to the new purchase and third party rights in that estate will be subject to s.28 and the full effects listed in s.29 & s.30 LRA 2002 s.28 Basic rule

Priority is determined by the order in which the interest was created. However, the general rule is uncommon and so s.29 & s.30 are more common in practice.
s.29 & s.30 maintain that for the earlier interest to have its authority, it must be registered either substantively or else protected by entering a Notice unless it is an overriding interest!!! LRA 2002 s.29 Effect of registered dispositions: ESTATES (1)If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration.. (2)For the purposes of subsection (1), the priority of an interest is protected . (a)in any case, if the interest . (i)is a registered charge or the subject of a notice in the register,. (ii)falls within any of the paragraphs of Schedule 3, or. (iii)appears from the register to be excepted from the effect of registration, and. (b)in the case of a disposition of a leasehold estate, if the burden of the interest is incident to the estate.. (3)Subsection (2)(a)(ii) does not apply to an interest which has been the subject of a notice in the register at any time since the coming into force of this section.. (4)Where the grant of a leasehold estate in land out of a registered estate does not involve a registrable disposition, this section has effect as if . (a)the grant involved such a disposition, and. (b)the disposition were registered at the time of the grant.. LRA 2002, s.30 Effect of registered dispositions: charges.- MORTGAGES

Halifax and Bank of Scotland v Curry Popeck [2008] EWHC 1692 - s.28 did applied This case involved a complex mortgage fraud with two competing equitable interests. It was held that s.28 applied, meaning that the first in time applied and took precedence. The reason why s.29 didnt apply even though there had been an intervening transfer of property was that s.29 requires valuable consideration to be given for a registerable disposition of a registerable estate and in the current case, there was no valuable consideration of the later transaction due to the fraudulent enterprise.

CLASSIFICATION OF INTERESTS IN REGISTERED LAND You have to decipher where your interest fits within the system and it will ultimately fall within one of the following categories: (note: they are not listed in the LRA 2002) Registerable Interests Situation: The land is already subject to the registered systemLRA 2002, s.27-Dispositions which must be completed by Registration - Outright Transfers - TOYAs of more than seven years from the date of grant. - Express grant or reservation of an interest of a kind falling within s.1(2)(a) LPA 1925: - Easements for an interest equivalent to an estate in fee simple absolute or a term of years absolute. (Deed Required) - You would need to know how long the easement had been granted for in order to know if its suffice. Ie, it must be for a fixed period (TOYA) or for ever (FSA). - the grant of a legal charge

Registered Charges LRA 2002, s.30- Separate section for Registered Charges regarding priority of interests LRA 2002, s.27 (3) (3)In the case of a registered charge, the following are the dispositions which are required to be completed by registration . (a)a transfer, and. (b)the grant of a sub-charge. LRA 2002, s.132 definition of registered charge A charge the title to which is entered in the register Interests That Override A Disposition - Overriding Interests Interests that are not protected in anyway, but they override a registered dispositions (bind them). If you have one of these, they bind a third party purchaser of an estate or a charge without them appearing on the register. Crack in the mirror principle in action. LRA 2002, Schedule 1 Applicable to first time registrations LRA 2002, Schedule 3- Applicable to already registered land. See s.29 & s.30- These sections back up the concept of overriding interests regarding priority of rights.

Interests Capable of Being Protected by Entry on the Register There is no list of these residual interests; As it is merely everything else that is left over from the above three categories. [Used to be called minor interests] LRA 2002, ss.28-29 They can be protected if they are registered; however, they are also capable of being over overreached.

PROTECTION OF INTEREST Interests Protected By Entries On The Register All rights and interests which are not in the first three categories will fall within this residual category. Their capacity to bind will rely solely on if they have been registered. A purchaser will not be bound by an unregistered interest of this nature even where they have actual notice except in very limited circumstances. (see bad faith & constructive trusts below) If an interest is protected, the purchaser cannot plead that they are BFPFVWN- as noted in Parkash v Irani Finance ltd [1970] Failure to Protect Interest Basic rule is that if the [old term: minor] interest is not protected on the register, then it will not bind the purchaser. De Lusignan v Johnson (1973)} There used to be certain Exceptions to this rule, however see the following: Peffer v Rigg [1977]: Brother in law bad faith against unregistered interest on non-legal owner. OLD LAW: Grounds (1) If the purchaser took in bad faith (equitable fraud). Held: [Decided under the LRA 1925] It was binding, as the ex-wife aware of the previous agreement. The court went on to say that the definition of a purchaser under the 1925 act was held to include a purchaser in good faith and so the court felt they could go outside the scope of the act in this circumstance. NEW LAW: Law Com No.254, para.3.4: LRA 2002, s.29 makes it clear that neither bad faith nor actual notice will impact on an unprotected interest LRA 2002 as this provision of good faith no longer appears. Lloyd v Dugdale [2001]: There is no general principle which makes it unconscionable for a purchaser to rely on lack of registration even when they took with express notice of the interest which wasnt protected. Hence, its not unconscionable for a purchaser to say Im not bound by an interest which should have been protected even if I knew about it. HELD: A decision to the contrary would defeat the whole purpose of the legislature introducing the registration system in the first place. OLD LAW: Grounds (2) Constructive trustee: Peffer v Rigg contd: They took the land expressly subject to an interest they knew about which had not been protected and therefore they held the land on constructive trust for the other brother in law. Lyus v Prowsa Developments Ltd [1982] Facts: Plaintiffs had contracted with builder to buy a plot of land and to have a house built on it, (An estate contract present which needed registration to be protected. The estate contract had not been protected. The building company ultimately went into liquidation and the bank (as mortgagee) sold the plot to other developers who agreed that they took it subject to the plaintiffs estate contract and then the land was sold onto another set of 2nd defendants which was again subject to the plaintiffs estate contract. Held: The defendants held the land on constructive trust for the plaintiffs and had to give effect to the estate contract. The court here went onto say that the defendants couldnt rely on provisions within the LRA 1925 requiring such interests to be registered as in doing so (based on the facts of this case) then that would be to use the statute as an instrument for fraud. A/C DIXON: It could also be argued that the LRA 2002 s.29 &s.30 could also be used as an instrument for fraud; however in contrast to this, the LRA is in place to provide a much more effective mirror principle. To give weight to a person who does not register an interest for protection would defeat the purpose of the statute itself.

Protective Entries under the LRA 2002 The following is still concerned with residual interests that do not fall within the other three categories of classification of interests. These are subsidiary entries and not a registered disposition as per s.27 LRA 2002. They are protected by either entering a Notice or a Restriction: LRA 2002, s.77 duty on application A person who in entering a notice or restriction must act reasonably in the sense they must have reasonable cause in attempting to enter such a notice or restriction.

a. Entry of Notice
LRA 2002, s.32 Nature and Effect (1)A notice is an entry in the register in respect of the burden of an interest affecting a registered estate or charge. (2)The entry of a notice is to be made in relation to the registered estate or charge affected by the interest concerned. (3)The fact that an interest is the subject of a notice does not necessarily mean that the interest is valid, but does mean that the priority of the interest, if valid, is protected for the purposes of sections 29 and 30. LRA 2002, s.29(2)(a)(i) binding upon purchaser: An interest will take priority if it is the subject of a notice in the register and will therefore bind a purchaser. LRA 2002, s.33 Interests that cannot be entered as a notice- Excluded Interests Trust of land: A trust of land cannot be protected as a Notice; However it will be noted below that a restriction will be used instead! Leasehold estate in land: Which is granted for a term of years of three years or less from the date of the grant, and is not required to be registered. Restrictive covenant made between a lessor and lessee. This is only concerning terms of years. Restrictive covenants between Freeholders would be capable of protection under s.33 LRA 2002.

LRA 2002, s.37 Registrar may enter Notice If it appears to the registar that a registered estate is subject to an unregistered interest which overrides at first registration, he may enter a notice in respect of that interest provided that interest is capable of protection by means of a notice. A/C DIXON: These are neither agreed nor unilateral but may become known as registrars notices. The ideology behind this is to greater strength the true effect of the mirror principle. LRA 2002, s.29(3) No longer Overriding : An interest that may have been overriding will now only be a notice. TYPES OF NOTICE: LRA 2002, s.34(3) Agreed Notice Example: A agrees with B to create an estate contract. The purchaser then wishes to register a Notice protecting this estate contract. When the registered proprietor agrees with this, then it becomes a registered Agreed Notice LRA 2002, s.35 Unilateral Notice The person with the interest goes along to the registrar and seeks to protect the interest by way of a Unilateral Notice. The registrar then gives Notice to the registered proprietor about this entry, who can then agree or disagree. LRA 2002 s.36 Cancellation of unilateral Notice The registered proprietary can then ask for the cancellation of the notice. Practically, the registrar will discuss with both parties and wipe out the notice or else upgrade it to an Agreed Notice. LRA 2002, s.73 Objection to notice See: Silkstone v Tatnall [2011] EWCA Civ 801 LRA 2002, s.108, 111 - adjudication Introduced under the LRA 2002:This gives the adjudicator jurisdiction in this kind of case. Following this, appeal is to the High Court under s.111 LRA 2002.

b.

Restriction

LRA 2002, ss.40-47

LRA 2002, s.40 Nature of Restriction A restriction is an entry in the register regulating the circumstances in which a disposition of a registered estate or charge may be the subject of an entry in the register. The restriction is a form of entry that places limitations on the registered proprietors powers over the land. LRA 2002, s.41 Effect of a Restriction (1)Where a restriction is entered in the register, no entry in respect of a disposition to which the restriction applies may be made in the register otherwise than in accordance with the terms of the restriction, subject to any order under subsection (2). (2)The registrar may by order. (a)disapply a restriction in relation to a disposition specified in the order or dispositions of a kind so specified, or. (b)provide that a restriction has effect, in relation to a disposition specified in the order or dispositions of a kind so specified, with modifications so specified.. (3)The power under subsection (2) is exercisable only on the application of a person who appears to the registrar to have a sufficient interest in the restriction. LRA 2002, s.42 GENERAL POWERS OF REGISTRAR TO ENSURE OVERREACHING This is the main purpose of restrictions. It will let prospective buyers be aware of the fact that they cannot do as they please with the land without having to pass monetary value to the persons with a registered notice under the overreaching principle. s.41(1)(b): Securing that interests which are capable of being overreached on a disposition of a registered estate or charge are overreached LRA 2002, s.40(2)(b) Restriction very wide in Nature LRA 2002, s.44 OLBIGATORY REGISTRATION BY REGISTRAR OF A RESTRICTION If the registrar enters two or more persons in the register as the proprietors of a registered estate in land, he must also enter in the register such restrictions as rules may provide for the purpose of securing that interests which are capable of being overreached on a disposition of the estate are overreached. LRA 2002, s.45 Objections (1)Where an application under section 43(1) is notifiable, the registrar must give notice of the application, and of the right to object to it, to. (a)the proprietor of the registered estate or charge to which it relates, and. (b)such other persons as rules may provide.. (2)The registrar may not determine an application to which subsection (1) applies before the end of such period as rules may provide, unless the person, or each of the persons, notified under that subsection has exercised his right to object to the application or given the registrar notice that he does not intend to do so..

Overriding Interests- unregistered interests which override a registered disposition


LRA 2002, s.29(2)(a)(ii) effect = These are interests which bind without being evident on the registry and do not need to be protected as they are binding in any event. - This SECTION outlines that the priority of an interest is protected if it falls with any of the paragraphs of schedule 3. (this contains a list of overriding interests). A/C: Hayton, Overriding interests ... provide a cavernous crack in the fundamental mirror principle under which the register is supposed to reflect accurately and irrefutably the current facts material to a particular title. A/C: Academics have argued that this overriding principle is just a statutory version of the notice doctrine. LRA 2002, Sched.3 Already registered land: overriding interests. LRA 2002 Sched 1- Only applies on first registration of unregistered land : overriding interests A:C: Policy considerations behind the LRA 2002. Under the old s.70(1) of the LRA 1925 there were far wider lists of overriding interest. This is important to show how the crack in the mirror is being ever increasingly decreased in size.

LRA 2002, s.117 LONG TERM REDUCTION OF OVERRIDING INTERESTS (1)Paragraphs 10 to 14 of Schedules 1 and 3 shall cease to have effect at the end of the period of ten years beginning with the day on which those Schedules come into force. LRA 2002, s.37-Registrar Entering a Notice: An interest that may have been capable of being an overriding interest, but has been entered as a Notice by the registrar, will remain as a notice. (see above) and also the effect of LRA 2002, s.29(3) LRA 2002, s.71- Duty to disclose unregistered Interest when applying for Registration Where rules so provide (a)a person applying for registration under Chapter 1 of Part 2 must provide to the registrar such information as the rules may provide about any interest affecting the estate to which the application relates which. (i)falls within any of the paragraphs of Schedule 1, and. (ii)is of a description specified by the rules;. (b)a person applying to register a registrable disposition of a registered estate must provide to the registrar such information as the rules may provide about any unregistered interest affecting the estate which. (i)falls within any of the paragraphs of Schedule 3, and. (ii)is of description specified by the rules Note: LRA 1925 s.70 Rights Acquired through Adverse Possession: no longer overriding interest!

SPECIFIC TYPES OF OVERRIDING INTERESTS


a. Leases for Less than 7 Years (para.1) LRA 2002 Schedule 3 Para 1 A/C: The law had changed from requiring 21 years, to only 7 years. There is talk that this will be further reduced to 3 years! Therefore increasing the number of registered leases and improving the mirror principle. b. Legal Easements and Profits (para.3) LRA 2002 Schedule 3 Para 3 (1)A legal easement which at the time of the disposition. (a)is not within the actual knowledge of the person to whom the disposition is made, and. (b)would not have been obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable.. Remember: Express easements fall under s.27 in most cases. Therefore the only easements that will be overriding easements under this section are impliedly acquired. You can acquire a legal easement through prescription and this makes practical sense as being an overriding interest. Celsteel v Alton House Holdings [1985] 1 WLR 204 (Ch) Court interpreted the LRA 1925 very widely and felt that the section could include legal and equitable easements. Note: LRA 1925 s.70 (1) (a) used to deal with this as stating easements not being equitable easements. The law now makes it more obvious that only legal easements will qualify as overriding interests.

c. Miscellaneous (para.10-16) Chancel Repair Liabilities: Aston Cantlow PCC v Wallbank [2003] UKHL 37, [2004] 1 AC 546 The applicants failed. d. Persons in Actual Occupation (para.2) LRA 2002 Schedule 3 Paragraph 2 An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for. (a)an interest under a settlement under the Settled Land Act 1925 (c. 18);. (b)an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;. (c)an interest. (i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and. (ii)of which the person to whom the disposition is made does not have actual knowledge at that time;. (d)a leasehold estate in land granted to take effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition Note: Old Law: LRA 1925, s.70(l)(g) Must be land law right of interest in land National Provincial Bank v Ainsworth [1965] AC 1175 (HL) There is no such thing as a deserted wifes equity. In order to have a land law right there needed to be a resulting trust or common intention constructive trust. Ashburn Anstalt v Arnold [1989] Ch 1 (CA) Dealt with a contractual license. (only a personal rights) Therefore, this was not an overriding interest under the then s.70(1)(g). Only proprietary rights will do: For the avoidance of doubt, the LRA 2002 included the following sections to highlight that they existed as proprietary rightsLRA 2002, s.115- Rights of pre-emption (1)A right of pre-emption in relation to registered land has effect from the time of creation as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).. (2)This section has effect in relation to rights of pre-emption created on or after the day on which this section comes into force

Comment [A1]: -Converts EXISTING INTERESTS IN LAND INTO OVERRIDING INTERESTS. -Actual occupation + land law right!!!= overriding interest. Comment [A2]: -There had been much confusion as to the exact realms of the old s.70(1)(g) LRA 1925. -The new piece of legislation tries to ensure that purchasers are given better protection. -NOTE: You must be aware of pre 2002 LRA case law as below! Comment [A3]: This overriding interest is different in that it does not concern one particular right. Instead, it concerns any interest [land law rights] belonging to a person in actual occupation at the time of the disposition.

LRA 2002 s.116- Proprietary Estoppel and Mere Equities It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following (a)an equity by estoppel, and. (b)a mere equity,. has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority). Family Law Act 1996, s.31(10) does not include statutory right to occupy s.30(10)(b)- A persons home rights are not capable of falling within Para 2 of Schedule 3.
Comment [A4]: -This statutory right to occupy plus actual occupation does not equate to a Para 2 overriding interest. -This kind of statutory right needs to be protected by notice.

Williams & Glyns Bank Ltd v Boland [1981] AC 487 (HL) Facts: A bank was found to be bound by a wifes beneficial interest under a trust. Having advanced the mortgage monies to just one legal owner (the husband) it had not successfully overreach the beneficial interest and this, coupled with the fact that the wife was in actual occupation of the property, gave her an overriding interest binding upon the bank. Held: Successful overreaching requires payment of the moneys to at least two trustees or a trust corporation. Where a beneficial interest has not been overreached and the beneficial owner is in actual occupation, it will bind a purchaser as an overriding interest. Kingsnorth Finance Trust v Tizard [1986] Lord Wilberforce in Boland [1981] had talked about physical presence but that this did not necessarily mean continuous and uninterrupted. Malory Enterprises v Cheshire Homes [2002] ACTUAL OCCUPATION: In this case the land was uninhabitable and it was held that fencing the land and keeping boundaries was suffice to amount to actual occupation of that land. Abbey National Building Society v Cann [1991] This case decided the following points: (1) ACTUAL OCCUPATION: Going in to measure up and having furniture moved into a house is not sufficient for actual occupation. (2) TIMING: The time for deciding whether a person was in actual occupation is the date of completion and NOT the date of registration. Note: This is a shorter time period and therefore narrowing the number of overriding interests that can exist. NOW: under LRA 2002: It is noted as being at the time of the disposition. Lloyds Bank Ltd v Rosset [l991] 1 AC 107 (HL) ACTUAL OCCUPATION: Occupation can be through agents such as builders It is going to be a fine line as to when actual occupation begins in those situations Chhokar v Chhokar [1984] FLR 313 (CA) Facts: The wife went into hospital for a period of time and when in hospital the husband tried to sell on the property. Held: ACTUAL OCCUPATION: (hospital case) Temporary absence from the property will not prevent a finding of actual occupation provided there is some physical evidence coupled with an intention of the temporarily absent occupier to return. The following three cases apply actual occupation rules as per the LRA 2002: Link Lending v Bustard [2010] EWCA Civ 424 Facts: A mental patient was sectioned under the Mental Health Act and was not able to be at her property for those reasons. Held: LJ Mummery Ratio: that she was still in actual occupation. Her personal effects still remained in the property. She also made brief supervised visits to her house about once a week to collect her post. Thompson v Foy [2009] EWHC 1076 (Ch), [2010] 1 P & CR 16 Justice Lewison: Obiter comments only. Timing of Actual Occupation: (As per Abbey Nation v Cann) It is the time of disposition taking place and not the registration. He did leave open whether there has to be actual occupation at the date of disposition as well as the date of registration- he thought you needed both dates. Thomas v Clydesdale Bank Plc [2010] EWHC 2755 (QB); [2010] NPC 107

Comment [A5]: Unregistered land case, so use as reference only!

Comment [A6]: Partner case to the facts in Lloyds Bank v Rosset: - A builder on a building site acting as a persons agent for the sake of creating an O.I

Comment [A7]: - Overriding interest found to be valid in this case.

Comment [A8]: - Always an intention to return to the property. This was a key point in the decision of the court of Appeal. Comment [A9]: See academics he refers to for the contrary view to Justice Lewison

ACTUAL OCCUPATION: Wife was supervising major renovations in property on a daily basis and it was intended that she would live there after the renovation was complete. Mr Justice Ramsay: She could prove actual occupation.

Provisos of Schedule 3 Para 2: O.I must relate to the specific land where there is actual occupation: Ferrishurst v Wallcite [1999] Ch 355 (CA) Under the new law in LRA 2003 the overriding interest must relate to the specific land where there is actual occupation. This provision overturns the finding in this case which was based on the LRA 1925 S.70(1)(g) which did not include this intricate detail. Estate Contract creating an overriding interest: Webb v Pollmount [1966] Ch 584 (Ch) This case found that due to the land being registered land: An estate contract + actual occupation = o.i **However it is worth noting that in unregistered land this would need to be protected as a Class C(iv) Land charge even if the purchaser is aware of this interest. (Midland Bank Trust v Green)** Exceptions in Schedule 3 Para 2(b) (similar to s.70(1)(g) An interest is not overriding if it is the interest of a person in whom inquiry was made before the disposition and who failed to disclose the right when he could have been reasonably expected to do so HSBC Bank Plc v Dyche [2009] EWHC 2954 (Ch), [2010] 2 P & CR 4 Married couple bought a property from the wives parents. The property was bought for 25,000 which was less than market value and there was also a loan taken out from Lloyds Bank for 17,000. The reason for the property being sold was to avoid her father having the house taken of him by the trustees in bankruptcy. The parents continued to live there as their home and they paid of the Lloyds Mortgage. However, contrary to the agreement between the parties, the property was not transferred back to the parents names. Following the divorce of the daughter, the property was transferred into the daughters sole name and she then took out a loan with HSBC and supplied a forged document which showed her father as a an assured shorthold tenant. The daughter then became bankrupt and HSBC sought possession of the property but the father is still alive living there. Held: The couple held the property on constructive trust for the parents and the father as the sole beneficial owner left alive, was entitled to the entire property. His interest (constructive trust) was overriding as he was in actual occupation throughout the time. He was entitled to a transfer of the property to him free from any mortgage charge. HSBC could have avoided this by making inquiry as to the fathers actual occupation; however in failing to do so, he acquired an overriding interest.
Comment [A10]: Apparently the bank were considering arranging a document of consent from the father however, they believed that had all the necessary documentation already to explain his presence in the property. However, these documents were those that had been forged by the daughter by way of an assured shorthold tenancy.

Para 2(c) An interest is an overriding interest if the occupation would have been obvious on a reasonable careful inspection or if the purchaser has actual knowledge of it

Comment [A11]: Thompson v Foy: Outlined that the old cases are still relevant. However, Para 2(c) is entirely new so you need to let the market know you are aware of this and there may be some kind of difference!! Comment [A12]: -Similar to actual/constructive notice BUT these do not exist in registered land. Is this just a statutory version??? -How does this affect the mirror principle? NOTE: CASES WILL BE FACTUAL SIGNIFICANT!!

City of London Building Society v Flegg [1988] AC 54 (HL)

Comment [A13]: Compare with Boland [1981]. The only difference was that in Boland there was only one legal owner when the mortgage was entered into; however in Flegg (see case)

There was more than one legal owner in this case and meant that the interests were overreachable.

Paddington Building Society v Mendelsohn (1985) 50 P & CR 244 (CA) Owner beneficial interest can give up their priority to the property.

Comment [A14]: Even where there is only one legal owner; a beneficial owner can expressly give her consent to the conveyance or interest of another purchaser. Comment [A15]: This gave rise to consent issues; the banks now have to ensure that there is independent legal advice given to such peoples.

Note: s.70(1)(g) used to protect those that were in the receipt of rents and profit therefore. However it has not been maintained by the LRA 2002 and so you can longer claim an overriding interest purely because you are in receipt of rents & profits. Strand Securities v Caswell [1965] Ch 958 (CA)

B. ALTERATION AND INDEMNITY The register is guaranteed by the state; however there will be circumstances where there register is wrong and alterations need to be made to the register. In doing so, a person is more than likely to lose out. This is where the following two concepts arise. This will take place through either rectification or indeed non rectification. The terminology has changed under the LRA 2002, however the principles remain the same. 1. Alteration LRA 2002, s.65 and sched.4 Para 2 (courts powers) & 5(registrar powers) allow the court or the registrar to make alterations. Note: The registrar can also remove a superfluous entry. Para 3 & 6 give protection to a proprietor in possession.
Comment [A16]: -This is done in order to correct a mistake or bring the register up to date or to give effect to interests which are accepted from the effect of registration. Comment [A17]: -A Proprietor in possession is generally protected so that no rectification is made without that persons consent unless they are in some way responsible for the error in question. -This may take place if the proprietor has acted in fraud or bad faith etc. Comment [A18]: A proprietor in possession is defined in s.131 LRA.

2. Indemnity This will arise where the register should be changed in your favour but due to a proprietor in possession, it cannot be carried out. LRA 2002, s.103 and sched.8

**See diagram overleaf** n

SUCCESSIVE AND CONCURRENT INTERESTS IN LAND

Comment [A19]: Suggested reading: Gravells, pp. 253-255; Smith, ch.14,17

A. INTRODUCTION The two different forms of multiple interests in land. This is either concurrent or successive interest in the land. The trust is used for both forms of multiple ownership of the land where the legal and equitable interests are separated. Concurrent: Co-Ownership - Those which are joint or held at the same time as each other e.g., the land is conveyed to A & B. Successive: - Interests are held one after the other e.g., land is held on trust for A and then for B. - Historically land owners often wanted to provide for several future generations and to ensure that the estate remained intact. - This was made capable through a successive interest in the land. - The private interest is to maintain the property within the family, however the public interest is to have the property broken up and go outside the family in order that more members of the public have good access to land. - SLA 1925 maintained that you could no longer split up the legal estate, so that all successive interest must now of necessity be only equitable in nature.
Comment [A20]: Perpetuity Rules maintain trusts cannot last forever.

Comment [A21]: PUBLIC POLICY

Comment [A22]: Thus, a Fee Simple absolute is going to be held by trustees on trust for those that have their successive interests which can only exist in equity.

Two Methods by which Successive Interests in Land may exist: (i) Strict Settlement (SLA 1925) - The tenant for life holds onto legal estate - Very archaic (ii) Trust of Land (TOLATA 1996) [formerly trust for sale pre-1996] - Legal estate in held by the trustees. - This can accommodate both successive and concurrent interests in land - This can be used for both land and personlty. Note: - Under both systems, the families successive interests are both equitable. Both methods have safeguards to ensure protection of beneficial interests. - Trusts of Land and Appointment of Trustees Act 1996 Any new successive interest settlements and all co-ownership now use trust of land (latter converted in 1997 from trusts for sale) Overreaching: - When the legal estate in sold the beneficiaries proprietary rights will be changed into monetary compensation and the purchaser will take the property free of the beneficial interest.

Comment [A23]: Note. The 1925 reforms were to make land alienable!

Comment [A24]: Subject to s.2 LPA 1925 being satisfied!!

Eg, To A for life, then to B for life, then remainder to C absolutely.

Bs interest will come into possession when A dies. At that time if the property has already been sold, then this is when Bs rights to the income of that land will take effect. The value of the equitable interest will depend on the maintenance of the value of the land. B &C will both look to ensure that A does a good job in looking after the land properly because that will impact on B & Cs later interest. The holder of the legal estate (tenant for life or trustees) is given sufficient powers to deal with the land to satisfy the public policy in ensuring land is made alienable when possible. However, there also need to be safeguards that protect the equitable interests as well.

STRICT SETTLEMENTS ONLY APPLY TO SUCCESSIVE INTERESTS AND ARE ONLY RELEVANT STILL IF THEY CAME INTO FORCE BEFORE TOLATA 1996. 1. Basic Structure of SLA settlement SLA 1925, s.1(7) - A strict settlement would have come into existence whenever there was successive interests in land and there was no trust for sale SLA 1925, s.4(2) legal estate in tenant for life
By the vesting deed the land shall be conveyed to the tenant for life or statutory owner (and if more than one as joint tenants) for the legal estate the subject of the intended settlement:. Provided that, where such legal estate is already vested in the tenant for life or statutory owner, it shall be sufficient, without any other conveyance, if the vesting deed declares that the land is vested in him for that estate

Comment [A25]: Strict Settlement was a default.

SLA 1925, s.19-20 who is tenant for life, has powers of tenant for life - The tenant for life is the person who has their beneficial interests in possession (ie, they currently have the legal title under the terms of the strict settlement) SLA 1925, s.30 Trustees of the Settlement - These people will often be given the power to sell the land but ofcourse the tenant for life has the power to sell. - Trustees are specifically tasked with receiving moneys on sale and then holding this on trust for the rest of the beneficiaries. - Also regarded as statutory owners if there is no Tenant for Life and hold this title until they can convey it under s.4 to the Tenant for Life. (ie, a clause in the strict settlement that requires the tenant for life to me married before receiving his interest)
Comment [A26]: Tenant for life holds the estate as a fiduciary and not for themselves. HE IS NOT REGARDED AS A TRUSTEE UNDER THE STRICT SETTLEMENT.

Comment [A27]: This allows overreaching to take place as the money does not pass to the Tenant for Life and therefore s.2 LPA 1925 can be fulfilled.

2. Powers Of The Tenant For Life SLA 1925, s.18 Only in accordance with SLA - The tenant for life cannot deal with the legal estate unless it is expressly authorised under the act. SLA 1925, Statutory powers s.38-39 - Tenant for life has power to sell the settled land but only for the best price possible. s.41-48 Leasings

Comment [A28]: -These are in place to ensure effective supervision can take place. -These powers are used in the best interest of the settlement as a whole!

Comment [A29]: If sold for less and overreaching is possible, then this will still take place and beneficiaries will only have an personal claim against A.

- Power to let the land/lease it for the best outcome of the s.71 Mortgages - Power to mortgage the property only when money is being borrowed for the purposes of the settlement as a whole. (legal mortgage) - However, the tenant for life can use their own beneficial interest as security for the loan if it is just to fund their own personal interests. (Equitable mortgage) SLA 1925, s.110(1) Protection of purchaser
On a sale, exchange, lease, mortgage, charge, or other disposition, a purchaser dealing in good faith with a tenant for life or statutory owner shall, as against all parties entitled under the settlement, be conclusively taken to have given the best price, consideration, or rent as the case may require, that could reasonably be obtained by the tenant for life or statutory owner, and to have complied with all the requisitions of this Act
Comment [A30]: No comeback against the third party purchaser. Only the tenant for life may be claimed against through personal rights.

SLA 1925, s.106 Cannot exclude statutory powers of tenant for life - Effectively precludes the exclusion of any of the powers of the tenant for life. - Any provision that purports to prevent a tenant for life within the terms of the settlement which has the effect of hindering the tenant for life powers under the SRA is void. Re Orlebar [1936] Ch 147 Provision: A tenant for life shall forfeit their interest if they cease to live on the land Held: The court found that this is ineffective if the tenant for life wishes to sell the land (which is allowed under the SRA subject to certain conditions).

Comment [A31]: It does not apply if the tenant for life just left the land for no apparent reason relating to the rules of the SRA 1925

B. TRUSTS OF LAND

1. Introduction
There can be no new strict settlements in creation; it can only be a trust of land. (TOLATA 1996). However existing settlements (SLAs) that were in place when the act came into force are still to be regarded as strict settlements. In addition, the Trust for sale (old) which used to be in place is no longer used and all previous trusts for sale have been converted into Trusts of Land under TOLATA 1996. TOLATA 1996, s.1 Meaning of trust of land..
(1)In this Act . (a) trust of land means (subject to subsection (3)) any trust of property which consists of or includes land, and. (b) trustees of land means trustees of a trust of land.. (2)The reference in subsection (1)(a) to a trust . (a)is to any description of trust (whether express, implied, resulting or constructive), including a trust for sale and a bare trust, and. (b)includes a trust created, or arising, before the commencement of this Act.

Trust for Sale: - Structure chosen by the SLA 1925 to be used by choice for successive interests in land and for concurrent interests in land the Trust for Sale was the only mechanism that could be used. - The underlying purpose of a trust for sale was to sell land. - This was due to the strong emphasis on sale based on the idea that the focus of the act was to make land alienable. - Technically Trustees were in essence required to impose a sale however; they effectively used their powers to postpone this duty to sell. - In a trust for sale the Trustees had both the powers of tenant for life and a trustee combined as under the SLA 1925. - The beneficiaries under a trust of sale only had equitable interests in the property and they would only have the powers which the trustees chose to delegate to the beneficiaries, which did not include the power of sale (remained with the trustees). - However, one of the mechanisms in place to protect the beneficiaries was overreaching. Another was consultation - Finally the intervention of the court under the LPA s.30 (now repealed) and replaced by similar provisions in TOLATA 1996. Doctrine of Conversion: no protection of beneficiaries - The courts traditionally held that where you have a trust for sale the land must be sold and that the beneficiaries behind a trust for sale only had an interest in money, not in land. This was based on the fact that as a trust for sale was ultimately meant to be sold, then equity looks upon what ought to be done as done. Hence, the land would be sold anyway and therefore, the beneficiaries could only ever establish personal monetary interest in the sale. This also kept in line with the 1925 legislation aims to protect the purchaser from being bound by a pre-existing interest. Flegg (1987): The court here followed the conversionist approach, the idea that the parents who contributed only had money in interests anyway and it was immaterial that they didnt have a proprietary interest in the land. Boland (1980): The court categorically stated for the first time that beneficiaries behind a trust could have a property land law which when coupled with actual occupation, could be an

Comment [A32]: Any trust where the subject matter was or included land is now to be governed as a trust of land under TOLATA 1996. IE, CONSTRUCTIVE TRUST, RESULTING TRUST OR IMPLIED TRUST. Comment [A33]: This does not sit well for the practical usage of a trust for sale. Ie, used for the creation of successive and concurrent arrangements in land. Comment [A34]: This required the unanimous agreement of the trustees, otherwise the duty to sell prevails. Duties override powers. Comment [A35]: BACKGROUND ONLY!!!!!!! -This meant that where a husband and wife held a property on trust for sale, they purchase the property through a mortgage (which under the SLA was only allowed to improve the property in the interests of the beneficiaries). -Hence the co-owners did not in effect have the power to do this unless their powers were increased on the terms of the trust, however, in most circumstances these co-ownerships come into existence without a formal trust instrument (ie, resulting trusts) ie, s.52(2) LPA Comment [A36]: Note the lack of protection of the equitable owners! Comment [A37]: However, this was of no use in a BOLAND scenario as there was only one legal owner. In contract to FLEGG where there was two legal owners. Comment [A38]: Trustees would speak with beneficiaries when they elected to use certain powers under the trust. (Also in TOLATA 1996) Comment [A39]: Those concerned with the trust could go to the court and seek directions of the court whether the powers being used could be exercised. Comment [A40]: -The argument here is that you will never need overreaching as If this is read in the strictest sense; there never was an interest in land which needed to be protected by overreaching. -This was contrary to reality and social expectation. ARGUE!!

overriding interest. (anti-conversionist). The wife was held to have a proper land law right even though it was an interest behind a trust. Old s.30 LPA contd: - Under this section, where 1 or more trustee refused to sell the property, any person interested could apply to the courts for an order for sale. (This order could be made as the court thinks fit). In exercising is discretion the courts began to look at the terms and the purpose of the trust in place. In doing so the court started to realise the practical fiction of the for sale part of a trust for sale.ie, the general intention was to keep the land and not to sell it on. However, the intentions of the parties will often change over time and therefore, the situation at hand must be analysed too. Re Buchanan-Wollastons Conveyance [1939] Ch 738 (CA): - Four neighbours who owned a piece of land between them. Infront of their property there was an empty space of land and the four neighbours decided the buy the area in front of the land. Thye bought it with the aim of just keeping it in order to enjoy the scenery infront of their houses. Ultimately one of the owners decided to enforce the duty to sell (under s.30 LPA). The court said they could not enforce the other owners to co-operate in the sale because the whole purpose of the trust was to enjoy the view. Transfer of Land: Trusts of Land, 1989, Law Com No.181 - Proposed reform which is later outlined through TOLATA 1996.

Comment [A41]: -Dramatic downfall for banks following this case who found that their security in property was useless due to the circumstances of Boland arising in subsequent scenarios. - The case focused on the societal changes.

2. Trust of Land - Basic Structure


The legal estate is vested in the trustees and they have an implied power to postpone sale which is a power that cannot excluded. TOLATA 1996, s.4 Express trusts for sale as trusts of land.
(1)In the case of every trust for sale of land created by a disposition there is to be implied, despite any provision to the contrary made by the disposition, a power for the trustees to postpone sale of the land; and the trustees are not liable in any way for postponing sale of the land, in the exercise of their discretion, for an indefinite period.. (2)Subsection (1) applies to a trust whether it is created, or arises, before or after the commencement of this Act.. (3)Subsection (1) does not affect any liability incurred by trustees before that commencement.

There can be no duty to sell as per s.4 above and therefore the following section applies: TOLATA 1996, s.3 Abolition of doctrine of conversion
(1)Where land is held by trustees subject to a trust for sale, the land is not to be regarded as personal property; and where personal property is subject to a trust for sale in order that the trustees may acquire land, the personal property is not to be regarded as land.. (2)Subsection (1) does not apply to a trust created by a will if the testator died before the commencement of this Act.. (3)Subject to that, subsection (1) applies to a trust whether it is created, or arises, before or after that commencement.

3. Trustees
As the holder of the legal estate, there are certain powers given to trustees.

TOLATA 1996, s.6 General powers of trustees


(1)For the purpose of exercising their functions as trustees, the trustees of land have in relation to the land subject to the trust all the powers of an absolute owner. (2)Where in the case of any land subject to a trust of land each of the beneficiaries interested in the land is a person of full age and capacity who is absolutely entitled to the land, the powers conferred on the trustees by subsection (1) include the power to convey the land to the beneficiaries even though they have not required the trustees to do so; and where land is conveyed by virtue of this subsection . (a)the beneficiaries shall do whatever is necessary to secure that it vests in them, and. (b)if they fail to do so, the court may make an order requiring them to do so.. (3)The trustees of land have power to [F1acquire land under the power conferred by section 8 of the Trustee Act 2000.]. F2(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (5)In exercising the powers conferred by this section trustees shall have regard to the rights of the beneficiaries.. (6)The powers conferred by this section shall not be exercised in contravention of, or of any order made in pursuance of, any other enactment or any rule of law or equity.. (7)The reference in subsection (6) to an order includes an order of any court or of the Charity Commissioners.. (8)Where any enactment other than this section confers on trustees authority to act subject to any restriction, limitation or condition, trustees of land may not exercise the powers conferred by this section to do any act which they are prevented from doing under the other enactment by reason of the restriction, limitation or condition.
Comment [A42]: s.6(1): Trustees have all the powers of an absolute owner and are therefore not limited as the case used to be under previous law. They are able to now mortgage the property and let the property. HOWEVER THEY ARE STILL ACTING AS TRUSTEES IN THE BEST INTERESTS OF THE BENEFICIARIES!! Comment [A43]: Re Power [1947] : This case questioned whether s.6(3) could in effect operate. Now, as a result of TOLATA 1996, it is obvious that the law allows for this. Comment [A44]: s.6(3):Purchasing powers. Allows trustees to acquire land either as an investment or to reside within. Comment [A45]: s.6(6): Powers not to contradict other law!

All the powers under s.6 can be restricted by the disposition that creates the trust. Hence, where the trust is expressly created, there may well be express terms that may remove some of the trustees powers.

Trustee Act 2000, s.8 Exclusion and restriction of powers


(1)Sections 6 and 7 do not apply in the case of a trust of land created by a disposition in so far as provision to the effect that they do not apply is made by the disposition. (2)If the disposition creating such a trust makes provision requiring any consent to be obtained to the exercise of any power conferred by section 6 or 7, the power may not be exercised without that consent.. (3)Subsection (1) does not apply in the case of charitable, ecclesiastical or public trusts.. (4)Subsections (1) and (2) have effect subject to any enactment which prohibits or restricts the effect of provision of the description mentioned in them.

Comment [A46]: The SLA 1925 did not allow for the disposition to take away powers from the trustees/ tenant for life.

The trustees can all or any of their powers via power of attorney to any beneficiary(s) of full age who are beneficially entitled to an interest in possession. TOLATA 1996, s.9 Delegation by Trustees
(1)The trustees of land may, by power of attorney, delegate to any beneficiary or beneficiaries of full age and beneficially entitled to an interest in possession in land subject to the trust any of their functions as trustees which relate to the land.. (2)Where trustees purport to delegate to a person by a power of attorney under subsection (1) functions relating to any land and another person in good faith deals with him in relation to the land, he shall be presumed in favour of that other person to have been a person to whom the functions could be delegated unless that other person has knowledge at the time of the transaction that he was not such a person.. And it shall be conclusively presumed in favour of any purchaser whose interest depends on the validity of that transaction that that other person dealt in good faith and did not have such knowledge if that other person makes a statutory declaration to that effect before or within three months after the completion of the purchase. (3)A power of attorney under subsection (1) shall be given by all the trustees jointly and (unless expressed to be irrevocable and to be given by way of security) may be revoked by any one or more of them; and such a power is revoked by the appointment as a trustee of a person other than those by whom it is given (though not by any of those persons dying or otherwise ceasing to be a trustee).. (4)Where a beneficiary to whom functions are delegated by a power of attorney under subsection (1) ceases to be a person beneficially entitled to an interest in possession in land subject to the trust. (a)if the functions are delegated to him alone, the power is revoked,. (b)if the functions are delegated to him and to other beneficiaries to be exercised by them jointly (but not separately), the power is revoked if each of the other beneficiaries ceases to be so entitled (but otherwise functions exercisable in accordance with the power are so exercisable by the remaining beneficiary or beneficiaries), and.

Comment [A47]: Ie, Tenant for Life under the SLA 1925.

Comment [A48]: This operates both with successive and concurrent interests.

(c)if the functions are delegated to him and to other beneficiaries to be exercised by them separately (or either separately or jointly), the power is revoked in so far as it relates to him.. (5)A delegation under subsection (1) may be for any period or indefinite.. (6)A power of attorney under subsection (1) cannot be an enduring power within the meaning of the M1Enduring Powers of Attorney Act 1985.. (7)Beneficiaries to whom functions have been delegated under subsection (1) are, in relation to the exercise of the functions, in the same position as trustees (with the same duties and liabilities); but such beneficiaries shall not be regarded as trustees for any other purposes (including, in particular, the purposes of any enactment permitting the delegation of functions by trustees or imposing requirements relating to the payment of capital money).

Comment [A49]: The beneficiary must then act in a fiduciary capacity.

Note: While TOLATA 1996 aimed to give more power to the trustees, it had to find a middle ground in ensuring that the interest of the beneficiaries was equally safeguarded. 4. Protection Of Beneficiaries A beneficiary to whom all or some powers have been delegated to by the trustee has a very strong position but for aside from the beneficiary in this scenario, there exists the following 5 mechanism in place under TOLATA 1996:

(A) Overreaching Is the land registered or unregistered land? Then follow the correct process as per the type of land in question. See: Flegg & Boland. (B) Consultation TOLATA 1996, s.6(5)
In exercising the powers conferred by this section trustees shall have regard to the rights of the beneficiaries
Comment [A50]: How strong is this? Find academic commentary to debate just what have regard actually means?

Note: compare the above and below sections: Which one carries greater strength for the beneficiaries? TOLATA 1996, s.11Consultation with beneficiaries
(1)The trustees of land shall in the exercise of any function relating to land subject to the trust .

(a)so far as practicable, consult the beneficiaries of full age and beneficially entitled to an interest in possession in the land, and. (b)so far as consistent with the general interest of the trust, give effect to the wishes of those beneficiaries, or (in case of dispute) of the majority (according to the value of their combined interests).. (2)Subsection (1) does not apply . (a)in relation to a trust created by a disposition in so far as provision that it does not apply is made by the disposition,. (b)in relation to a trust created or arising under a will made before the commencement of this Act, or. (c)in relation to the exercise of the power mentioned in section 6(2).. (3)Subsection (1) does not apply to a trust created before the commencement of this Act by a disposition, or a trust created after that commencement by reference to such a trust, unless provision to the effect that it is to apply is made by a deed executed . (a)in a case in which the trust was created by one person and he is of full capacity, by that person, or. (b)in a case in which the trust was created by more than one person, by such of the persons who created the trust as are alive and of full capacity.. (4)A deed executed for the purposes of subsection (3) is irrevocable.

Comment [A51]: 3 Conditions: 1) Be practicable 2)Off full age and in possession of the beneficial interest 3)Consistent with interest of the trust. Comment [A52]: In an express trust, if there is a term in the disposition that strikes out s.11, then it will not apply.

Comment [A53]: A pre TOLATA trust must expressly include this provision for it to apply to that trust for sale (now trust of land)

A purchaser need not be concerned to see that any requirement in s.11 had not been complied with. Hence a beneficiary will only be able to make a personal claim against a trustee for failing to consult. The trustees would simply just have to maintain that their actions were warranted in line with the intentions of the trust or not practicable to consult. TOLATA 1996, s.16 Protection of purchasers
(1)A purchaser of land which is or has been subject to a trust need not be concerned to see that any requirement imposed on the trustees by section 6(5), 7(3) or 11(1) has been complied with.. (2)Where . (a)trustees of land who convey land which (immediately before it is conveyed) is subject to the trust contravene section 6(6) or (8), but. (b)the purchaser of the land from the trustees has no actual notice of the contravention,. the contravention does not invalidate the conveyance. (3)Where the powers of trustees of land are limited by virtue of section 8 . (a)the trustees shall take all reasonable steps to bring the limitation to the notice of any purchaser of the land from them, but. (b)the limitation does not invalidate any conveyance by the trustees to a purchaser who has no actual notice of the limitation.. (4)Where trustees of land convey land which (immediately before it is conveyed) is subject to the trust to persons believed by them to be beneficiaries absolutely entitled to the land under the trust and of full age and capacity . (a)the trustees shall execute a deed declaring that they are discharged from the trust in relation to that land, and. (b)if they fail to do so, the court may make an order requiring them to do so.. (5)A purchaser of land to which a deed under subsection (4) relates is entitled to assume that, as from the date of the deed, the land is not subject to the trust unless he has actual notice that the trustees were mistaken in their belief that the land was conveyed to beneficiaries absolutely entitled to the land under the trust and of full age and capacity.. (6)Subsections (2) and (3) do not apply to land held on charitable, ecclesiastical or public trusts.. (7)This section does not apply to registered land

(C) Consent TOLATA 1996, s.8(2)Exclusion and Restriction of Powers


If the disposition creating such a trust makes provision requiring any consent to be obtained to the exercise of any power conferred by section 6 or 7, the power may not be exercised without that consent.
Comment [A54]: Only applies with expressly created trust where the settlor has included consent provisions.

TOLATA 1996, s.10(1) Consents


(1)If a disposition creating a trust of land requires the consent of more than two persons to the exercise by the trustees of any function relating to the land, the consent of any two of them to the exercise of the function is sufficient in favour of a purchaser.. (2)Subsection (1) does not apply to the exercise of a function by trustees of land held on charitable, ecclesiastical or public trusts.. (3)Where at any time a person whose consent is expressed by a disposition creating a trust of land to be required to the exercise by the trustees of any function relating to the land is not of full age . (a)his consent is not, in favour of a purchaser, required to the exercise of the function, but. (b)the trustees shall obtain the consent of a parent who has parental responsibility for him (within the meaning of the M1Children Act 1989) or of a guardian of his.

Comment [A55]: Practical to allow the majority verdict to be imposed.

(D) Occupation TOLATA 1996, s.12(1) The right to occupy


(1)A beneficiary who is beneficially entitled to an interest in possession in land subject to a trust of land is entitled by reason of his interest to occupy the land at any time if at that time . (a)the purposes of the trust include making the land available for his occupation (or for the occupation of beneficiaries of a class of which he is a member or of beneficiaries in general), or. (b)the land is held by the trustees so as to be so available. (2) Subsection (1) does not confer on a beneficiary a right to occupy land if it is either unavailable or unsuitable for occupation by him. See: Chan v Leung [2002] EWCA Civ 1075, [2003]

Comment [A56]: Expressly included in TOLATA 1996 as a new provision! Comment [A57]: Hence by repealing the doctrine of conversion, a person will not have their proprietary right questioned, which could have ultimately affected their right to occupy. BOLAND IS VERY IMPORTANT IN THIS REGARD!

LJ Parker held unsuitability involves a consideration not only of the general nature and physical characteristics of the particular property but also a consideration of the personal characteristics, circumstances and requirements of that particular beneficiary.

TOLATA 1996, s.13 Exclusion and restriction of right to occupy


(1)Where two or more beneficiaries are (or apart from this subsection would be) entitled under section 12 to occupy land, the trustees of land may exclude or restrict the entitlement of any one or more (but not all) of them. (2)Trustees may not under subsection (1) . (a) unreasonably exclude any beneficiary s entitlement to occupy land, or. (b) restrict any such entitlement to an unreasonable extent.. (3)The trustees of land may from time to time impose reasonable conditions on any beneficiary in relation to his occupation of land by reason of his entitlement under section 12. (4)The matters to which trustees are to have regard in exercising the powers conferred by this section include . (a)the intentions of the person or persons (if any) who created the trust,. (b)the purposes for which the land is held, and. (c)the circumstances and wishes of each of the beneficiaries who is (or apart from any previous exercise by the trustees of those powers would be) entitled to occupy the land under section 12.. (5)The conditions which may be imposed on a beneficiary under subsection (3) include, in particular, conditions requiring him . (a)to pay any outgoings or expenses in respect of the land, or. (b)to assume any other obligation in relation to the land or to any activity which is or is proposed to be conducted there.. (6)Where the entitlement of any beneficiary to occupy land under section 12 has been excluded or restricted, the conditions which may be imposed on any other beneficiary under subsection (3) include, in particular, conditions requiring him to . (a)make payments by way of compensation to the beneficiary whose entitlement has been excluded or restricted, or. (b)forgo any payment or other benefit to which he would otherwise be entitled under the trust so as to benefit that beneficiary.. (7)The powers conferred on trustees by this section may not be exercised . (a)so as prevent any person who is in occupation of land (whether or not by reason of an entitlement under section 12) from continuing to occupy the land, or. (b)in a manner likely to result in any such person ceasing to occupy the land,. unless he consents or the court has given approval. (8)The matters to which the court is to have regard in determining whether to give approval under subsection (7) include the matters mentioned in subsection (4)(a) to (c).

Comment [A58]: Ross Martyn [1997] Conveyancer 254

Comment [A59]: Exception: Rodway v Landy [2001]

Comment [A60]: Conditions can be imposed.

Comment [A61]: Types of conditions that can be imposed. These could for example be to pay council tax or assume responsibility for repairs.

Comment [A62]: THESE ARE CONDITIONS IMPOSED ON THE BENEFICIARY WHO HAS BEEN GIVEN THE RIGHT TO OCCUPY OVER ANOTHER BENEFICIARY. (COMPENSATION MEASURES REALLY) This will not always be practicable. In the case of siblings, they may well be happy to provide compensation. However, as was the case in Stack v Dowden [2007], where one half of a couple leaves the other with a child in the home, then they are likely to be less willing.

Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432 - Baroness Hale felt the both the old way of using the equitable principles of accounting or the new way via s.13(6) would give the same results. Lord Neuberger it would be rare for equitable and statutory to produce different results.

(E) Application to the Court Protection The courts power to intervene and protect beneficiaries had developed in the past under the trust for sale. However the jurisprudence on this area has now been placed on a statutory footing through s.14 & s.15 TOLATA 1996. This section is built on the old s.30 of the LPA 1925. TOLATA 1996, s.14 Applications for Order by Court
(1) Any person who is a trustee of land or had an interest in property subject to a trust of land may make an application to the court for an order under this section. (2) On application for an order under this section the court may make any such order(a) relating to the exercise by the trustees of any of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with the exercise of any of their functions), or (b) declaring the nature or extent of a person s interest in property subject to the trust as the court thinks fit. (3) The court may not under this section make any order as to the appointment or removal of trustees. (4) The powers conferred on the court by this section are exercisable on an application whether it is made before or after the commencement of this Act.
Comment [A63]: There is now unfettered powers of the court to make any order it thinks fit. Comment [A64]: This includes a beneficiary, trustee or mortgagee etc. Comment [A65]: This section will deal with nonlegal owner beneficiaries seeking to postpone sale vs mortgagee seeking to force a sale. Comment [A66]: This would be the point of relevance when dealing with an alleged beneficiary behind a trust. Ie, Lloyds Bank v Rosset- there was no beneficial interest behind a trust found.

This section gives guidance to the court regarding its orders made through the powers given to it under s.14. It is however no an exhaustive list as it states the points for consideration include those listed in s.15(1)(a-d).These have however been put in place as a result of the case law decided under the old provision contained in s.30 LPA 1925. (CODIFICATION?) TOLATA 1996, s15- NEW PROVISION
(1) The matters to which the court is to have regard in determining an application for an order under section 14 include(a) The intentions of the person or persons (if any) who created the trust, (b) The purpose for which the property subject to the trust is held, (c) The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and (d) The interests of any secured creditor of any beneficiary (2) In the case of any other application relating to the exercise in relation to any land of the powers conferred on the trustees by section 13, the matters to which the court is to have regard also include the circumstances in section 6(2), the matters to which the court is to have regard also include the circumstances and wishes of any beneficiaries of full age and entitled to an interest in possession in property subject to the trust or (in case of dispute) of the majority (according to the value of their combined interests). (3) This section does not apply to an application if section 335A of the Insolvency Act 1986 applies to it.
Comment [A67]: Most of the trusts will be constructive or resulting trusts, so it can often be difficult to decipher the importance of this provision. Comment [A68]: The wife may make a claim that the property is still required for the children to reside in whilst they are still at school Comment [A69]: A bank lending money to the legal owner seeking to enforce their security.

y Repealed s.30 Cases Jones v Challenger [1961] 1 QB 176 (CA): Highlights importance of the true intentions behind a trust for sale. A house was bought as a matrimonial home and the marriage broke down. The parties split up and there were no children. HELD: The CoA held under a s.30 LPA application that the house should be sold. With the ending of the marriage, the purpose of the trust also been severed. The court made a point of emphasising the primacy of a trust of sale is that the property should be sold.

y Secured Creditor vs Beneficiary Case Law The courts will often have to decide in balancing the interests of a beneficiary over that of the secured creditor. Abbey National v Moss [1994] 1 FLR 307 (CA): Highlights importance of the collateral purpose of the trust and its continuance. The defendant (mother) had been persuaded to transfer her house into the joint names of her and her daughter under the understanding that the property would not be sold during the mothers lifetime. The daughter mortgaged the property to the Abbey National through forging her mothers signature which was effective to mortgage the daughters beneficial interest. The daughter then failed to pay back the money owing on the mortgage. The Abbey National then applied for a sale order under s.30 LPA. HELD: The CoA refused the application for an order to sale on the grounds that the collateral purpose of the trust still remained, ie, that the mother should continue to live in the property for the rest of her life.

Comment [A70]: IMPORTANT: This maintains that the trust was create for a certain purpose and if they purpose still remained, then an order for sale should not be made.

y Trustee in Bankruptcy v Beneficiaries When dealing with a trustee in bankruptcy, the general outcome is that the courts will order a sale, even if the effect of the order is to cause considerable hardship to the members of the bankrupts family In re Citro (A Bankrupt) [1991] Ch 142 (CA): Where a spouse who has a beneficial interest in the matrimonial home has become bankrupt under debts which cannot be paid without the realisation of that interest, the voice of the creditors will usually prevail over the voice of the other spouse and a sale of property ordered within a short period of time. The voice of the other spouse will only prevail in exceptional circumstances. In cases such as this, the economic factors outweighed the social factors. y Trustee in Bankruptcy Statutory Duty Insolvency Act 1986, s.335A: (This is a new provision inserted by TOLATA 1996) This provision only applies to cases Post-TOLATA. It deals with s.14 of TOLATA and lays down particular criteria to take into account when dealing with a trustee in bankruptcy. A trustee in bankruptcy will look for a sale to pay the debts owed and the beneficiaries will seek to avoid a sale in order to remain the property.
(1)Any application by a trustee of a bankrupt s estate under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (powers of court in relation to trusts of land) for an order under that section for the sale of land shall be made to the court having jurisdiction in relation to the bankruptcy.. (2)On such an application the court shall make such order as it thinks just and reasonable having regard to . (a)the interests of the bankrupt s creditors;. (b)where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt or the [F3bankrupt s spouse or civil partner or former spouse or former civil partner] . (i)the conduct of the [F4spouse, civil partner, former spouse or former civil partner], so far as contributing to the bankruptcy,. (ii)the needs and financial resources of the [F4spouse, civil partner, former spouse or former civil partner], and. (iii)the needs of any children; and. (c)all the circumstances of the case other than the needs of the bankrupt (3)Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt s estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt s creditors outweigh all other considerations

Comment [A71]: CONSIDERATIONS TO TAKE INTO ACCOUNT IN TRUSTEE IN BANKRUPTCY CASES.

Re Holliday [1981] Ch 405 (CA) y Post TOLATA Case Law The Mortgage Corporation v Shaire [2001] Ch 743 (Ch): Pro-Beneficiary Case that aimed to enhance courts flexibility through s.14 & s.15. Justice Neuberger maintained that s.14 & s.15 had to some extent changed the law in this area. He focused on the court being given greater flexibility when exercising its jurisdiction under order of sales. HELD: It is for the court to weigh up each factor based on the circumstances of each individual case. The judge left it to the parties to try and agree terms between themselves. He focused on the fact that should Mrs Shaire not agree to terms that allowed the bank to be given a realistic chance of recovering some of its money, then he would make an order for sale. Bank of Ireland Home Mortgages Ltd v Bell [2001] 2 AER (Comm) 920 (CA): Pro- Creditor: Maintained s.14 & 15 to not be that radical. This was a facts specific case however due to the minimal equity held by the wife. The wife in this case had a very small beneficial interest and was one of the key considerations when deciding the case. The wife was given a reprieve in the lower courts. However, the CoA reversed the lower decision and ordered a sale. Held: TOLATA has given some scope for change but this was not as radical a change as that suggested by Mr Justice Nueberger in Shaire [2001]. The judge at first instance had not taken into account the fact that the mortgagee would take all the proceeds on the sale of the property considering the amount that was owed to them. Nor did the judge acknowledge the subsequent injustice for the bank resulting from indefinite refusal of sale. First National Bank plc v Achampong [2003] EWCA 487, [2004] 1 FCR 18: Pro Creditor: Decided against beneficiary and the mere presence of children. This was a wife trying to resist a sale and in doing so she tried to maintain that the house was a matrimonial home (collateral purpose) and that even though the couple were no longer living together she tried to make the assumption they would get back together. She also tried to point out that there were issues with the children and grandchildren; however she had not shown to the court the effect of the sale on these people. Furthermore, she argued the bank had delayed in bringing this action. Held: The sale was ordered on the basis that the bank would continue to suffer financial detriment and the debt owed would continue to increase. Regarding the banks supposed delay, the court found this to be irrelevant as during the delay she was given use of the property for a longer period.

Edwards v Bank of Scotland Plc [2010] EWHC 652 (Ch): Pro-Creditor: Discretion used to postpone order for sale to allow innocent co-owner to sell property. (Striking a rough but equitable balance) Husband and wife as joint legal owners and beneficial owners. Hence the wife needed his signature. The wife forged mortgage documents. She defaulted on the payments. The bank then applied for an order for sale under s.14. Held: An order for sale was granted but was postponed for a period of 4 months to allow the innocent co-owner to sell the property and purchase a new one. Whilst at the same time giving the bank relief for the debts owed to it.

Comment [A72]: This avoided the mortgagee selling the property, who although under guidelines via the LPA 1925. They would only seek to recover the loss. Whereas, the innocent co-owner will look for the best sale possible in order to make take away a better financial outcome from the situation.