This is an extract of our Interests In Registered Unregistered Land document, which we sell as part of our GDL Land Law Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.
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Land Law: Legal & Equitable interests Structure for registered/unregistered land question??Identify the interest Legal or equitable right?
Formalities for creation?
Property protected to bind a third party?
o For Registered land o And unregistered Conclude
Interests in land LEGAL interests
? ?? ? S1(1) LPA 1925, legal interests: o (a): easements and profits for freehold/leasehold period o (c): mortgages o (e) rights of entry
? ?? ? Formalities o Must be granted by deed o Must be registered (unless implied easements) Transfer of existing legal interest
? ?? ? Assigned to successor---must comply with s52 LPA 1925, deed
? ?? ? If failed deed, may have estate contract to transfer the interest, if s2 LPMPA + SP available
? ?? ? If interest not mentioned in transfer deed, s62 LPA 1925: imply transfer of all interests in the estate, unless contrary intention express (s62(4)). EQUITABLE interests
? All other interests are equitable interests (s1(3) LPA 1925)---
starting by citing this when identifying the interest.
? Restrictive covenants
? Estate contracts o Includes: o Options to purchase o Right of pre-emption
? Beneficial interests behind a trust
? Equitable easements
? Equitable mortgages
? Equitable leases
? Formalities: o Minimum: In signed writing: s53(1)(a) LPA (exception: short leases) 1
o Equitable interests that take effect as contracts must also comply with S2 LPMPA (includes failed legal interest) o Exception: beneficial interests under an implied trust-s53(2) LPA. NB: for failed legal interests (eg easement of freehold/leasehold term not created by valid deed; failed legal lease) ? Walsh v Lonsdale: 'equity regards as done that which ought to be done' ?
a failed legal interest takes effect as an equitable interest, IF (1) S2LPMPA compliant + (2) specific performance available (i.e. clean hands) TRANSFER of existing equitable interest:
??? ?Minimum formalities: s53(1)(c).
??? ?If contracting to transfer, need s2 LPMPA + SP.
??? ?When holder of absolute title in estate transfer legal estate, if doesn't mention equitable interest in transfer deed---automatic transfer, s62 LPA 1925, unless contrary intention expressed.
Registered land, protection of interests Compulsory first registration, s4 LRA 2002
? S4 LRA 2002---listed events trigger compulsory first registration LRA 2002, 3 groups of legal rights:
? ?? ? (1) Registrable dispositions: s27 'substantive registration'. o Legal lease over 7 years o Express legal easement o Legal charge (mortgage)
? ?? ? (2) (3rd party) interests which must be protected, s32 notice on charges register o by a s32 notice o ? binding on purchaser for valuable consid (s29(2) LRA) o ? not registered, not binding on purchaser for valuable consid (s29(1) LRA), unless OI under Sch 3
? ?? ? (2)(a) beneficial interests under a trust---s40 restriction, subject to overreaching
? ?? ? (3) Overriding interests o No not have to be registered/protected to be binding. Sch 3 LRA 2002. o Sch 3 Para 1: Legal leases not exceeding 7 years o Sch 3 Para 2: Interests of those in actual occupation o Sch 3 Para 3: Implied easements LRA 2002, 3 parts of register
2 ?????Charges register (1) registrable dispositions [[must be registered to be legal] aka 'major interests', s27
?????Must be registered as part of creation, in order to be legal. o S27(2) LRA o Transfer (of freehold/leasehold of any length) o New lease of 7+ years o Expressly granted legal easement for a freehold or leasehold term o Landlord's right of entry (right to terminate a lease) o Legal charges/mortgage
?????S38: registrar will enter a s38 notice on charters register [[if error here, someone who suffers loss from mistake of registrar, will have claim to indemnity]]
(2(a)) registrable (third party) interests protected by notice, s32 notice, aka 'minor interests
??? ?Unlike registrable dispositions, do not need to be registered to be validly created? but need s32 notice to be protected against a buyer of the estate.
??? ?S32: entered on charges register.
??? ?Failure to register: disponee takes land free of the interest (unless an OI under Sch 3 LRA).
?????2 broad categories of equitable interests o Commercial equitable interests (are designed to continue to bind the servient land), eg equitable easements, restrictive covenants, estate contracts etc. These require a mechanism to ensure they continue to bind the land. o Family equitable interests (a moveable right), eg interests behind an express or implied trust. These require something enabling the equitable interest to move from the land to the proceeds of sale. o So s32 registration of 'notice' does not apply to 'family' equitable interests (i.e. trusts)
??? ?Person with benefit of the right must enter s32 notice on charges register of the burdened property.
? ?? ? (3rd party) Rights which require notice on charges register, s32 LRA [[these aren't listed in s32, are they listed in the statute somewhere? ASK??]]: o Restrictive covenant o Estate contract of any type (eg estate contract of equitable lease; or estate contract to buy).
? Eg, right of pre-emption (s115 LRA 2002, is an interest in land from time of creation) o Legal easement (is automatically entered, is a 'major interest')
3 o Equitable easement (when it is not equivalent to a duration of a legal estate in land) o A spouse's right to occupy under Family Law Act 1996
??? ?Can be an agreed notice (s34) or a hostile/unilateral notice (s35)
? ?? ? Interests that cannot be registered, s33 LRA: o An interest under a trust o A lease for 3 years or less (NB, if lease between 3 and 7 years, registration not required, but can be; if more than 7 years, is required to be legal lease) o A restrictive covenant between landlord & tenant.
? ?? ? NB: an entry of a notice does not in itself mean the interest is valid: if simply means that if it's valid, it has been protected.
? ?? ? Effect of registration (s29(2) ? purchaser for valuable consideration is bound)
??? ?[[NB: 'valuable consideration' in LRA 2002 does not include marriage consideration or nominal amount? s132 LRA. CF, LCA 1972, for unregistered land, it does include marriage consideration]]
? ?? ? Effect of non-registration (s29(1) LRA ? purchaser for valuable consideration is not bound) (unless an OI): o S28 says basic rule: prior interests in land are binding. o S29(1)---(2) purchaser for valuable consideration takes free of interests, subject only to (1) registered charge; or (2) OI under Sch 3. o But s29(1): if interest not correctly protected on register, is not binding on a purchaser for valuable consideration, even if they knew of it, unless it is an OI (s29(2)) o But a purchaser for no valuable consideration (eg gift, will) will be bound by the interests (s28), whether registered or not. o De Lusignan v Johnson: buyer had notice of an estate contract; but took free from it; because not protected. o Wilkes v Spooner: once a purchase has taken land free of an interest (because not registered); then all subsequent purchasers take free.
? ?? ? Exception, not permitting statute to be used as fraud: o where buyer's 'conscience' is affected/is 'inequitable' to deny 3rd party right, non-registered interest may be binding through imposition of a 'constructive trust' o i.e. ? if buyer has explicitly agreed to give effect to the right? Lyus v Prowsa, fraud: notwithstanding lack of registration, first buyer held plot on constructive trust for C; and condition in the contract between first and second buyers also gave rise to a constructive trust in favour of C. LRA cannot be used as an instrument for fraud.
But limits of this case: one cannot resort too swiftly to constructive trusts, or will make a mockery of the stick of invalidity in the registration system. If was not the mere fact of purchaser knowing about the protection option that created a constructive trust; but that he explicitly agreed to honour it, and paid a reduced price in consequence? i.e. would have been fraud.
(2)(b)---registrable 3rd party interests protected by Restriction (s40 LRA) (mainly beneficial interests under a trust), subject to overreaching
??? ?CF by notice, above.
??? ?Entered on proprietorship register, under name of proprietor.
??? ?Shows the proprietor is under some restriction affecting their ability to deal with the property.
??? ?Restrictions can be: indefinite; fixed period; or an until an event occurs (eg giving notice, obtaining consent etc).
? ?? ? Bankruptcy
? ?? ? (most common use) Co-ownership and trusts: o Restriction entered to ensure family equitable interests are overreached. o LRA s44: where 2 or more persons registered as proprietor holding for beneficiaries; registrar is obliged to enter a restriction to alert buyer of the need to overreach (i.e. pay purchase money to 2 or more trustees). o Presence of the restriction helps buyers to know of this. o Where someone has equitable interest under a trust---
that person places a restriction, informing of need to overreach. Overreaching, ss2 and 27 LPA 1925
??? ?Overreaching = purchase monies paid to a least 2 trustees: detaches equitable interest of beneficiaries from the land, and transfers it to the proceeds of sale.
? ?? ? Only applies to beneficial interests under a trust
? ?? ? Protect interest with a s40 LRA 2002 restriction [[if registered land]] on register, informing buyer of need to overreach.
? ?? ? Same 'overreaching' applies for registered & unregistered land.
? ?? ? If no overreaching, then whether a buyer (or mortgagee) is bound by a beneficial interest under a trust depends on whether person can claim an OI (under sch 3 para 2 LRA)---
interest + actual occupation.
? ?? ? City of London BS v Flegg, overreaching: parents, Mr & Mrs Flegg, had 1/3rd equitable interest under implied trust; 2 legal owners (husband and wife) took out mortgage; overreaching applies, beneficial interest of occupier not overriding. 5
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