Land Registration Act

Land Law

CASE 1: Solman A. Choudhury - 0814928

Case Facts

The agreement between Sylvia and her brother was an oral agreement and no formal conveyance of title took place, which would have triggered a registration at the Land Registry. Issues to be taken into consideration as mentioned above introduction. Sylvia's rights under unregistered and registered land are discussed below.

1.1 Unregistered Disposition

An unregistered land is where title of the land has not been registered with the Land Registry governed by Law of Property Act 1925. The title in such land is not guaranteed by the government.[1]

1.2 Determine Legal or Equitable Rights

Prior to looking at rights of Sylvia, it needs to be established whether Sylvia's agreement with John is not void due to her oral agreement and that it is enforceable in the courts. Sylvia's payment of £155,000 was not voluntary, e.g. a gift, as it was in consideration for the conveyance of the property, neither it was a contribution to purchase jointly with John. The LPA 1925, s.40[2] stated that ‘Contracts for sale…to be in writing' and it would be void if not made by a deed as per LPA 1925 s.52[3]. However, prior to Law of Property (Miscellaneous Provisions) Act 1989, s.2 (1)[4], oral agreement was not void but only that there needed to be some evidence in writing or part performance on Sylvia's part for it to be enforceable in the courts. The agreement became binding and complete on John's oral agreement that the house belonged to Sylvia and through part performance of Sylvia by moving into the property.

Next, it needs to be established the type of interests she has over the property, i.e. Legal or Equitable? The oral agreement Sylvia with her brother only gives rise to an interest under an estate contract, and cannot be established as an independent bare trust[5]. Therefore, under Land Charges Act 1972 s.2 (4) (iv), Sylvia's oral contract could only be defined as an estate contract. According to this section, an estate contract is ‘a contract by an estate owner or by a person entitled at the date of the contract to have a legal estate conveyed to him to convey or create a legal estate…' The LPA 1925, s.1 (2) lists the criteria that identify all legal interests, an estate contract is not under those that are listed. Therefore, according to LPA 1925, s.1 (3)[6] Sylvia's interest was equitable and John remained as the legal owner of the property. A formal conveyance would have established Sylvia's rights as a legal owner of the property.

1.3 Is it capable of protection under Land Charge?

The property was granted to Sylvia in return for ‘money or money's worth', her equitable interested would be protected if she had entered a charge against John by creating an entry on the charges register under Land Charges Act 1972 s.2 Class C (iv), i.e. ‘estate contract'. This is seen in case law of Blackburn[7]. The effect of registering a charge in LCA 1972 would have provided Sylvia protection under Actual notice as stated in LPA 1925 s.198 (1)[8]. In which case LBS would have not have provided mortgage to John. It is assumed that Sylvia has failed to register her ‘estate contract' interest, whether consciously or unconsciously, as a result this will be void and not take any affect against LBS for money or money's worth as stipulated under LCA 1972, s.4 (6)[9].

A point to highlight to Sylvia is that LBS will not be ‘prejudicially affected' under LPA 1925,s 199 (1) (i)[10] if she had failed to register any charges when applicable as identified in paragraph 1.4, regardless of whether they had Constructive notice.

Advise to Sylvia on unregistered disposition

Although no formal conveyance of title took place, Sylvia's interest in the property will be protected if she has registered her ‘estate contract' under LRA 1972. However, if she had failed to do this then she may not be protected as seen in case law of Carrick[11] where a similar situation arose. In this case law Mrs Carrick had failed to register her estate contract. The case in the first instance had provided protection to Mrs Carrick's rights through the Doctrine of Notice by establishing that her rights were not registrable as it was a bare trust, therefore no entry on land charges register was required. However, the House of Lords reversed the decision by accepting the mortgagee's argument that Mrs Carrick's interests were registrable as an ‘estate contract'. Considering Carrick, Sylvia's case come before a judge, then the court may be reluctant to impose a resulting or constructive trust to protect Sylvia's interest.

Under unregistered land, Sylvia would have more protection under Doctrine of notice if she had no contract, i.e. estate contract, with John. To protect her interest and prevail over LBS, she would be under statutory obligation to register her charge.

Sylvia may be able to protect her equity rights under Article 1 of the First Protocol[12] of the Human Rights Act 1998 which provides protection of property. Furthermore, it may be unconscionable for the court do deny some sort of protection under equity as Sylvia will loose £155000 from a perfectly acceptable and common situation which LCA 1972 failed to take into consideration.

Furthermore, Sylvia will be able to sue John for breach of contract.

1.4 Registered Disposition

Registered lands are those that have been registered with the Land Registry as part of Land Registration Acts[13]. Such title would be guaranteed by the state and could be relied upon by purchasers as proof of ownership.[14]

1.5 Determine Legal or Equitable Rights

Sylvia has equitable interest as mentioned above in Paragraph 1.2.

1.6 Is it protected by Notice or Restriction?

If a notice had been entered by Sylvia in the charges register of the registered title according to LRA 1925, s.49 (1) (c)[15], then this would provide Sylvia protection of her equitable interests. It will restrict John on dealings with registered property as the effect of a notice is that any future registered disposition of the property will take effect subject to Sylvia's interest protected by the notice. The LRA 1925 s.52 (1) stipulates the effects of notices ‘A disposition by the proprietor shall take effect subject to all estates, rights, and claims which are protected by way of notice on the register at the date of the registration…' The notice is assumed not to have been entered by Sylvia as John was successfully able to obtain a mortgage from LBS without it being alerted.

1.7 Is it an Overriding Interest?

If Sylvia has failed to protect her interest by entering a restriction, whether knowingly or unknowingly, can Sylvia's interest be an overriding[16] interest? Overriding interest will bind a third party purchaser although an entry is not made on the land register.

Under LRA 1925 s.70 (1) (g)[17] protection to persons in actual occupancy is given if they have; (1) interest on the land (2) are in actual occupation. It can be established that Sylvia has interests by the fact of her estate contract, i.e. payment of £155,000 and oral agreement by John confirming ownership of property to Sylvia. Sylvia was also in actual occupancy at the time of John taking out a mortgage with LBS. Therefore, Sylvia will be protected by her overriding interests. Overriding interests do not need registering but nevertheless they can bind a purchaser.

The case law of Boland[18] shows a similar situation to Sylvia, where the wife had failed to register her minor interests, but the court recognised her equitable interests and actual occupation of property by giving her protection against the bank. Lord Wilberforce stated that occupation was ‘physical presence on the land, not some entitlement in the law'. The fact here is that Sylvia was in actual occupation at the time of disposition, a requirement stated by case law of Cann[19] else she is not able to exercise this overriding interest.

Advise to Sylvia on registered disposition

As per unregistered land above, overreaching will not apply in Sylvia's case if the property was registered. A restriction entered on the land registry by Sylvia would have limited John's ability to deal with the land without her being alerted, consequently alerting LBS of Sylvia's interests at the time of granting mortgage to John.

The best protection Sylvia will receive is through her overriding interests by being in actual occupation at the time of John's mortgage with LBS.

Even though this would be decided under s.70 (1) (g) of the LRA 1925, the interpretation of actual occupation in modern cases highlights this further. See modern case laws mentioned in paragraph 4.5.2.

Conclusion

Section 14[20] of LPA 1925 has failed to achieve rights for Sylvia under unregistered land that which s.70 (1) (g) of the Land Registration Act 1925 has managed to protect for persons in possession under registered land[21]. The effect of non registration of land charges and equitable interests under estate contracts is an issue.

CASE 2: Hakeem Agboola - 0600079

Case Fact

In view of the facts of this scenario, Jane's contribution to the purchase of the estate and her occupation suggests she has a beneficiary interest. Therefore, whether this will be enough to afford her a protection in law or equity will depend on the established rules and statutory provisions, which, of course, are different under unregistered and registered conveyance.

Unregistered Disposition

2.1 What type of right does Jane has?

In light of this scenario, it is paramount to first establish whether Jane's right in the land is legal or equitable subsequent upon which other elements may be determined in other to be able to properly advise her as to her chances. Following the fact of this scenario, Simon's name on the deed and Jane's contribution of half the purchase money is a resulting trust according to Lord Denning in Hussey v Palmer[22]. This was also followed in later case of Williams & Glyn's Bank Ltd v Boland[23]. Although resulting trust and constructive existed by implication of law, there is a clear distinction in their creation as stated by Peter Gibson LJ in Curley v Parkes[24]. Consequently, these trusts as opposed to expressed trust are implied and not covered by the provisions in s.53 (1) (b) Law of Property Act, LPA 1925. All in all, Jane's interest in the land is equitable as it does not fall within those listed as legal interests under s.1 (2) LPA 1925.

2.2 If Jane's right is equitable; then is it overreachable?

According to s.2 of the LPA (1925), Jane's right is overreachable. In other words, this provision allows trustees of land, for example, Simon to sell the land free from the interests of the beneficiaries[25]. But, if Craig will take free of this right he has to pay two trustees as established in of City of London Building Society v Flegg[26]; or a trust corporation as the case may be thus the beneficial interest i.e. Jane's interest in this situation is not destroyed, but rather it is converted into the proceeds of sale resulting from the purchase.

2.3 If Jane's right is overreachable then is it capable of protection under land charge?

The general rule is that you cannot protect the right of a beneficiary of a trust under land charge. In addition this type of interest does not fall within the categories capable of protection under s.2 of the Land Charge Act 1972. Nevertheless, equity will enforce the right of a beneficiary of a trust. Therefore, Jane's right will be protected through ‘Doctrine of notice'.

By ‘doctrine of notice' it means, only a ‘bona fide purchaser' (equity darling) of a legal estate for valuable consideration (of money or money's worth) without notice whether actual, constructive or imputed is capable of taking free of her right in the estate.

Therefore, if Craig is to take free of Jane's right he must be a bona fide purchaser. But it is not easy to be a bona fide purchaser. Such a person must not only be acting in good faith but must also be diligent. He must be a purchaser of a legal estate only i.e. that is a purchaser of a ‘Fee Simple Absolute in Possession' or a ‘Term of Year Absolute'. These are two legal estates according to s.1 (1) of the LPA 1925. This includes lender who takes a charge by way of legal mortgage (e.g. banks, building societies etc)[27]. However, if he is acquiring an ‘equitable estate', the rule is that ‘where equities are equal the first in time prevail'[28]. Consequently, Craig had satisfied the first condition as he had purchased a legal estate ‘Fee Simple Absolute in Possession'.

Furthermore, Craig must be a purchaser for valuable consideration (of money or money's worth). Consideration, however, needs not be adequate but rather be sufficient; even if it is a payment of £500 for a property that originally worth £40,000[29]. Craig had also satisfied this condition as he had paid the purchase price as implied by the ‘acts of the parties' (i.e. Simon, the surveyor and Craig) and not by ‘operation of law' such as in the case of acquisition by adverse possession like the right of squatters or acquisition by gift.

2.4 Does Craig have any notice whether actual, constructive or imputed?

If Craig had no notice, he would not be bound by Jane's interest. But if, by any means, he had notice of any kind whether actual, constructive or imputed he would be fixed with beneficiary interest. In other words, he would take subject to Jane's interest.

In light of the fact of this case, Craig's surveyor notice of signs of female occupation during the inspection of the estate constitute constructive notice; and according to s. 199 (i) (ii) LPA 1925 a purchaser would be held to have knowledge of interests which they ought reasonably to have discovered if they had made necessary enquiries about the property and therefore were bound by such interest.

When such interests are noticed, it is reasonably expected that the purchaser or his agent or solicitor or surveyor should investigate further and make enquiries in order to get to the root of such presence as stated in Hunt v Luck[30]. Therefore, Craig would be bound by Jane's equitable interest as his surveyor did not probe further his suspicion of third party's interest in the estate.

In view of the fact of this scenario, Jane's interest on the estate is an equitable interest in form of resulting trust; and the rule is ‘equitable interest bind all except a bona fide purchaser'. It is overreachable provided the purchaser pays two trustees (i.e. Craig and Jane) such that the interest of the beneficiary is not destroyed but is rather converted into the proceeds of the purchase. Although incapable of protection under the land charge and does not fall within the list of legal rights under s. 1(2) LPA 1925, nevertheless equity will enforce this right through ‘doctrine of notice'. Therefore, it is only a bona fide purchaser “equity's darling” for valuable consideration without notice that can take free of Jane's right. Although Craig purchased a legal estate, for valuable consideration of money or money's worth but ultimately fell short of the last condition as he had notice of Jane's interest such that his surveyor noticed of a sign of female occupation constitute a constructive notice according to Judge John Finlay (QC) in Kingsnorth Finance Co Ltd v Tizzard[31]. So regardless of whether Simon dismissed this suspicion, this knowledge constitutes imputed notice as stated in the above case. The onus is on Craig and his agent to investigate this suspicion further in other to get to the root of the notice, which unfortunately, they failed to do as did the agent of Kingsnorth Finance Co. Consequently, Craig could not overreach Jane's right as the purchase money was paid only to Simon as the sole legal owner who is holding the estate in trust for Jane and himself.

As for Jane, it could be claimed that her interest in the estate had not been overreached as the conditions for doing so i.e. paying of two trustees had not been satisfied by the purchaser, who is Craig. Therefore, she is entitled to occupy the estate and seek eviction of Craig. Consequently, Craig would need to pursue Simon to collect back his money.

Registered Disposition

2.6 Is Jane's right legal or equitable?

Jane's right is equitable and this has been exhaustively dealt with in paragraph 2.1 above.

2.7 If Jane's right is equitable, is it then overreachable?

According to s.2 (1) and s. 27 (1) - (2) LPA (1925) (as amended by Trust of Land and Appointment of Trustees Act 1996, Sch.1), a purchaser will take free of any equitable interests, provided that he pays the purchase money to at least two trustees. Thus the right of the equitable owner is not destroyed but rather is converted into the proceeds of sale. Therefore Jane's right is overreachable provided Craig paid Simon and Jane which in this case was not. Consequently, Craig did not fulfil the requirement of s. 27(1)-(2) LPA 1925 therefore he cannot take free of Jane's right. Unlike the situation in City of London Building Society v Flegg[32], where it was held that overreaching has taken place because the mortgage company had paid two of the four trustees. But here, Craig had only paid one trustee which is Simon and consequently overreaching had not taken place. They could have insisted on a second trustee in order for overreaching to take place.

2.8 If Jane's right is overreachable, can it be protected by notice or restriction?

Jane's interest is capable of protection by entry of restriction in the proprietorship section of the register. This is given effect because it falls under the list of interest excluded from being entered as notice under s.33 Land Registration Act 2002. However, since Jane's interest is registrable as a restriction but failed to register it makes it void against a bona fide purchaser, who is Craig as established in the case of Lloyds Bank Plc v Carrick[33]. If Jane had entered a restriction in the register this would have constituted actual notice to Craig's surveyor of a third party interest and beneficiary of a trust on the estate and they would have insisted on paying two trustees (i.e. Jane and Craig) in accordance to s.27 LPA 1925 for overreaching to take place. But in this instance Craig will take free of Jane's right as she had failed to enter a restriction.

2.9 If Jane failed to enter a restriction, is her interest then overriding?

According to both sch. 1(2) and 3(2) of the Land Registration Act 2002, interest of a person in actual occupation is an overriding interest. And in view of the fact of this case, Jane was in actual occupation regardless of the fact that she was temporarily out of the town when Simon sold the estate to Craig as established in the decision of the Court of Appeal in Chhokar v Chhokar[34] where it was held that a wife who temporarily left her matrimonial home to have a baby in hospital while her husband mortgaged the estate was in actual occupation and her interest overrides.

Although, it is an established rule that to prove actual occupation physical presence is required and not just an entitlement to possession at law, but the decision of his honour Walton J in recent case of Link Lending v Hussein[35] suggest that even if the claimant had been away for a longer time, in this case, a person in long- term residential care the court may adopt other considerations such as evidence and intention to occupy as satisfying physical presence thus establishing actual occupation and therefore an overriding interest.

As earlier stated, third party equitable interests are protected in different ways in both unregistered and registered dispositions. Thus in this registered conveyance failure of Jane to enter a restriction in the register to safeguard her interest as a beneficiary of a trust meant that Craig could take free of her right, but the fact that she could prove to be in actual occupation suggest that she has an overriding interest according to s.70 (1) (g) LRA 1925 and this provided a life line protection for her. Therefore, Jane has the right to possession of the estate and may seek the eviction of Craig even though she had failed to protect her interest by entry a restriction in the register. Craig on the other hand may have to pursue Simon to claim back his purchase money.

CASE 3: Mustapha Masha - 0617377

Case Facts

In consideration of the facts of this problem question, Ahmed is claiming the right to enforce two restrictive covenants made in 1920 and 1930 relating to property owned by Javeira and their enforcement will greatly restrict the use that Javeira can make on her property. Restrictive Covenant is defined as clause in a deed or lease to property that limits what the owner of the land or lease can do with the property.[36]

Considering that the restrictive covenants made in 1920 are not registrable and whether they bind a purchaser such as Javeira depends upon whether she has notice of them or not. If, however, there has been a bona fide purchaser for value without notice of the covenants at any time as it applies to Javeira in this problem, then this will permanently destroy their binding effect.

On the other hand the 1930 covenants were registrable under the Land Charges Act 1925, and if they have been registered they are binding. If not registered, they are not binding.

Unregistered Disposition

3.1 Determine Legal or Equitable Rights

Before the Land Registration Act 1925 (LRA), there was no effective system of land charges registration. Therefore, if a restrictive covenant is created before 1926 it means it is not registrable in other words there is nowhere to establish that it exist. In that case one must then refer to the doctrine of notice in order to decide whether the restrictive covenant is binding on Javeira. Prior to considering the doctrine of notice, it is imperative to note that a restrictive covenant is an equitable interest as opposed to legal interest; Section 1 (3) Law of Property Act ( LPA) 1925 . This is necessary because of the different rules that apply to legal and equitable interest in land.

3.2 Are these Covenants Legal or Equitable?

Although these covenants are created by deeds nonetheless they are equitable interest as they do not fall within the list of legal interest in s.1 (2) Law of Property Act (LPA) 1925. Therefore, these covenants' interest according to s.1 (3) LPA 1925 on the estate is equitable, and the long held rule is that ‘equitable interest binds all except bona fide purchaser of a legal estate without notice[37].

In this problem question Javeira bought the property in 1987 may be a bona fide purchaser which qualifies her as an equitable owner. She is bona fide because she acts in good faith, she is a purchaser for value because she bought the land; she gave something of value in this instance money. In Tulk v Moxhay[38], it can be seen that it was important to the reasoning of that decision that the successor in title had notice of the restriction. Because restrictive covenants are interest in equity only, they are dependent upon notice.

3.3 Are the Covenants Registrable under the Land Charge Act?

In the above given fact, considering that the covenant created in 1920 prior to the Land Charge Act[39] is not registrable i.e. there is no provision to suggest that it exist in the charge register. Consequently, it would be protected by ‘doctrine of notice'. However, the other covenant created in 1930 will be governed by the provisions of the Land Charge Act[40] thus it is registrable under class D2 of the same act now amended by Land Charges Act[41]. Land charges (requiring registration) Act 1972, formerly 1925 under s.4 (6) will be void against Javeira. Midland Bank Trust Co. Ltd v Green[42]. Since the subjects of Javeira's right are two restrictive covenants created by deeds at different times, the protection afforded them will depend on the date of their creation.

3.4 Can the covenant created by deeds in 1920 under unregistered land be protected by notice?

In this problems question the covenants created in 1920 and 1930 are referred to in the 1982 deed and Javeira bought the land in 1987. Javeira would be deemed to have had actual notice of the restrictive covenant and therefore bound by them, irrespective of whether her solicitor explained about the covenants to her or not. She would also have had imputed notice if her solicitor has the knowledge of the covenant and any information regarding particular facts or circumstances that the law permits to affect her legal rights.

As an illustration, there are three forms of the doctrine of notice; first is Actual Notice, where a purchaser has actual notice if told of the rights. Secondly, is Constructive Notice is to investigate the title back to at least 15 years, to a good root of title. So anything that is mentioned in the deed which the purchaser should have seen, but they did not see, they will automatically have constructive notice of those rights. Section 1999 LPA 1925. They are also required to carry out a reasonable physical examination of the property in order to see who the occupiers are and to enquire whether or not they have any particular rights or interest in the property. Lastly is an Imputed Notice; where they would have this notice if their agent has a direct knowledge of the information and has a duty to report it to them as applied to Javeira.

A good example of the operation of the doctrine of notice can be found in case of, Kingsnorth v Tizard[43], the agent of the finance company failed to make sufficient enquires. It was held that the finance company did not take free of the wife's rights as it had constructive notice of her rights. Because the property was unregistered, Kingsnorth had to show that it was a bona fide purchaser for value of a legal estate without notice for its interest to take priority over Mrs. Tizard.

In view of the law above, consequently Javeira would be advised that because the restrictive covenants were created in 1920 under the unregistered land she may be bound by the restrictive covenant, which means it will be enforceable against her by relying on the rule of notice.

3.5 Can the covenants created by deeds in 1930 under the unregistered land be protected by notice?

Under the Land Charges Act 1925 (LCA) which was replaced by the Land Charges Act 1972 although the same lists of charges introduced under the 1925 Act were retained in the 1972 Act with the addition of Class F land charges. The Act divided land charges into Classes A-F with subdivisions, Classes C, D and F are the most important. Restrictive covenants are listed under Class D2. These Classes covers any restrictive covenants created after 1926.

To advice Javeira assuming the property was unregistered when purchased in 1987

To advice Javeira as regard the covenants dated 1920 and 1930 assuming the property was unregistered when she purchased it in 1987. She purchased the land by giving something of value in this instance money. A covenant created since 1925 in unregistered land must be registered as a Class D (ii) Land Charge against the name of the estate owner whose land is intended to be burdened that is, the original convenantor. Land charges Act 1972 (LCA 1972), ss. 2 and 3. If it is properly registered, it will be binding on future purchasers of the burdened land LPA 1925, s. 198. If it is not registered, it will not bind a purchaser for money or money's worth LCA 1972, s 4(2)[44]

However, because Javeira's solicitor has notice of the covenants created by deeds dated 1920 and 1930 and both referred to in a deed dated 1982. The courts might rely on the judgement of Lord Cottenham LC in Tulk v. Moxhay[45] which enforced the covenant on the grounds that in equity a person cannot avoid a restriction placed on the land if they take with notice of it; otherwise, they would be in a better position than the person from whom they had bought the land. In particular, they may be unjustly enriched, because they would pay less for a land subject to a covenant against building than for a land can be built upon. The court upheld the covenant.

Javeira should have investigated the title back to at least 15 years, to a good root of title. So that she will have notice of anything that is mentioned in the deed which the purchaser should have seen, but if Javeira claimed she did not see the notice, she will automatically have constructive notice of those rights. Section 1999 of LPA (1925).

Registered Disposition

3.6 What type of right do the covenant has?

The two restrictive covenants Ahmed is trying to enforce against Javeira in this problem have equitable rights, if the property had been registered land throughout, subsequently after 1926 when restrictive covenants became registrable, it then means that the covenants created by deeds in 1930 should have been registered.

Restrictive covenant is a D2 in the list and the effect of registration is that if it is registered then it will bind the world. Section 198 LPA 1925. On the other hand, the effect of non registration is that if one did not register a D2 then it would be void against a purchaser of legal estate for money or money's worth. Javeira in this case will take free of those rights regardless of notice whether Javeira know about the covenant or not S.4 (6) LCA 1972.

3.7 Can it be protected by notice?

Under section 50 (1) Land Registration Act 1925[46] it can be protected by the notice. However, if Javeira would have seen the restrictive covenants in the register, she would have taken the necessary precautions.

3.8 Is it an Interest that override?

Although Ahmed had option to protect it but he did not take any step to protect it. The effect of notice is emphasized in Section 52 (1) (2) Land Registration Act 1925. A disposition by the proprietor shall take effect subject to all estates, rights, and claims which are protected by way of notice on the register at the date of the registration or entry of notice of the disposition, but only if and so far as such estates, rights, and claims may be valid and are not independently of this Act overridden by the disposition.

Where notice of a claim is entered on the register, such entry shall operate by way of notice only, and shall not operate to render the claim valid whether made adversely to or for the benefit of the registered land or charge.

Advising Javeira assuming that the property had been registered land throughout.

One might suggest to Javeira that, if the covenant has been registered land throughout that the fundamental principle of registered conveyance is that the purchaser is bound by everything on the register which provides a mirror of the title and all the interests affecting the land. The Land Registration Act 1925 was concerned to simplify conveyance and provide positively for the purchaser for value. Therefore Javeira might stand a better chance as a purchaser for value because she bought the land.

Case 4: Atiqul Haque - 0814000

Case Facts

In terms of unregistered property based on the facts, there are two main issues that need to be taken into consideration. Primarily, the lease is for four years, secondly Jane has been given option to purchase David's property after the lease expires. These main issues contain other elements, which if established successfully, will bind Russell on Jane's interest in this property.

Unregistered Disposition

Where there is an unregistered property (defined in 1.1 above), the vendor produces deed to the buyer which is presented to the buyer as a proof of ownership so that the title of the land cannot be disputed. In this case David has produced the deed as a current owner and has been for a long time that no one could possibly dispute the claim of ownership.

4.2A Issue 1 - Determine Legal or Equitable Rights of Jane's Lease

The first issue is that of a deed between David and Jane regarding a short lease of four years at £5000 per year. Jane's lease has complied with legal formalities under Law of Property Act 1925 s.1(1) which is terms of year absolute and s.52(1) Law Property Act[47] created in deed, therefore this is a legal rights which ‘binds the whole worlds', thus Russel is automatically bind by Jane's legal rights whether he is aware of it or not .

4.2B Issue 2 -Determine Legal or Equitable Rights of Jane's Option to Buy

The second issue is that David had agreed with Jane, an option to buy the freehold when the lease expires. The option to purchase is a valid option to buy a property under an estate contract (as defined in 1.3) giving Jane an equitable interest.

4.2B (2) Is it capable of protection under Land Charge?

It could be assumed that they are unaware of the formalities of registering option to purchase, which is a registrable interest as Class C(iv) of Land Charge Act 1972. Effect of registering would have provided Russell with Actual Notice. In such case Russell would have exercised restraint prior to purchasing the property. However, if the option to purchase is not registered then this will be voided and then Russell would not be affected under s.4 (6) of Land Charge Act 1972 (as above 1.3). As a result he can take this property for money or money's worth.

4.2 B (3) Is it protected by Notice

Can Jane be given protection under the doctrine of notice? Jane may argue that Russell did not make any further enquires, known as constructive notice about the property at his initial visit at the time when Jane was residing at the property as identified in Hunt v Luck (see 1.5). However, the leading case of Midland Bank v Green[48], House of Lords held unanimously that the unregistered land charge was unenforceable against the purchaser. The good faith was irrelevant.

Advise to Russell on Unregistered Disposition

It would be advisable to Russell, based on the facts on unregistered property that Jane has lost her rights under Land Charge Act 1972 s.4(6) and Russell will take an estate free of an unregistered land charge despite Russell knowing the fact that Jane has an interest in the property but had failed to register her interest. In this case Jane can sue David for breach of contract. Russell will get this property but can be bind with lease, in which case he can sue David for damages.

Registered Disposition

In terms of advising Russell on purchasing registered property (defined in 1.4), considering the above facts, there are two issues that will be discussed. They are Lease and Option to Purchase which will show whether or not Russell will be bound.

4.3 Legal lease or Equitable lease?

As mentioned above, this is a legal lease. There are three main classes of interest in registered land; registrable dispositions, interest protected by notice/or restriction and interest that override.

4.3.1 Is this legal lease Registrable Disposition?

The primary element of Jane's lease from January 2008 to January 2012 should be considered which raises a question is this a registrable disposition or not: Land Registration Act 2002 s.27 (2)(b)(i)[49] provides if lease terms of year absolute is more than seven years then this lease will be a registrable disposition whereas Jane's terms of year is for four years therefore it cannot be registered, neither the registration is compulsory because compulsory registration will only fall into seven years or more lease under Land Registration Act 2002 s.4.

4.3.2 Is this lease protected by Notice or Restriction?

Second element of lease is whether Jane is protected by the notice or restrictions, considering the facts above it could be stated that as Jane's four years lease is not excluded under Land Registration Act 2002 s.33[50] therefore it can be protected by notice. If Jane had entered a notice against her brother's title in registered charges then, Russell would not have brought the house. The lease will have bind the purchaser, it can be assumed that although she could have registered but had not done so, presumably both brother and sister were unaware of the legal formalities and had come to an agreement without taking help of solicitors. As the lease is four years it can be protected by notice as pose to three years.

4.3.3 Does this interest override?

The final element is whether the lease if not capable of protection by notice is an overriding interest. Based on the facts presented, Jane's four years lease is capable of being an overriding interest under Land Registration Act 2002 SCHEDULE 3, Para 1, which states that any lease seven years or less can be an overriding interest. Therefore, Jane's lease is an overriding interest as it is not more than seven years from the date it was first issued. Therefore, Jane's interest will bind Russell.

4.4 Is the Option to Purchase legal or equitable?

Secondly, with regard to option to purchase, which an estate contract (equitable interest) is as mentioned in unregistered conveyance; there are two elements that need to be taken into consideration. Firstly is this interest protected by notice or restrictions; and secondly is it an interest that override.

4.4.1 Is this interest protected by Notice or Restrictions?

Firstly, element of Option to Purchase raises question, could this interest be protected by notice? Estate contract is not listed in exception of s.33 of Land Registration Act 2002; therefore Jane could be protected by notice. Ideally, the option to purchase should have been protected by changing the register against David's title in charges section. If he had done so, Russell would have checked the register prior to buying the property and would not have shown his interest in buying this property.

4.4.2 Does this interest override?

Secondly, will Option to Purchase override or not? Although, Jane had failed to undergo formal procedures, she can bind her interest by overriding interest on the basis that she has an interest in the property and is in actual occupation. Given above fact, there are two issues that need to be brought into attention. Firstly, Jane has an interest in this property as she has intention of buying at a later date, known as Option to Purchase. Secondly, she was residing at the property during the time when the property was sold to Russell. Jane's interest will override under Land Registration Act 2002 SCHEDULE 3, Para 2 (interest in the persons in actual occupation)[51]. Actual occupation explained by Lord Wilberforce in the leading case of Boland[52], ‘where the wives are in ‘actual occupation'? These words are ordinary word of plain English'. In this case overriding interest has been established under old laws under Land Registration Act 1925 s 70(1) (g) as mentioned in paragraph 1.9 above. In recent times overriding interest has been decided under a new Land Registration Act 2002 in case of Link Lending Limited v Hussein.[53]

Advising Russell in Registered Disposition

Overall, looking at the facts on registered property, it could be advisable to Russell that he could be bind by Jane's rights. Due to a short lease, Russell will need to wait a couple of years to sue David for damages, which would leave David in a very difficult situation. Jane can exercise her rights as option to purchase, where Russell would be left without property.

Bibliography
Text Books:

* S Clarke & S Greer, (2008), Land law Directions, Oxford University Press,ISBN 9780199216413

* K Gray and S F Gray, 2008, Elements of land law, Oxford University Press,ISBN 9780199219728

* J A MacKenzie & M Phillips, 12th Edition (2008), Textbook on land law, Oxford University Press, ISBN 978019954099

* J A MacKenzie & M Phillips, 11th Edition (2006), Textbook on land law, Oxford University Press, ISBN 0199289409

* R Sexton & B Bogusz, (2009), Complete land law: text, cases, and materials, Oxford University Press, ISBN 9780199558544

* Modern land law / Mark P. Thompson;2009;Imprint Oxford : Oxford University Press; ISBN 97801995508

* Land law / John Stevens and Robert Pearce and Nicola Jackson;2008;Imprint London : Sweet & Maxwell; ISBN 9780421960701

* Land law / Diane Chappelle;2008; Imprint Harlow : Pearson Longman; ISBN 9781405858250

* Unlocking land law / Judith Bray;2007;Imprint London : Hodder Arnold; ISBN 9780340941980

* M Thomas, 12th Edition (2004), Blackstone's Statutes on Property Law 2004-2005, Oxford; ISBN 0199272956

* N P Gravells, 2nd Edition (2000), Land Law - Text and Materials, Sweet & Maxwell; ISBN 0421620102

* Martin Dixon, Sixth Edition (2009), Modern Land Law, Routledge-Cavendish, ISBN 9780415458443

Websites:

* http://www.trinitychambers.co.uk/people/Antoine-Tinnion.php

* http://0-www.lawtel.com

* http://www.landregistry.gov.uk/

* http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1925/cukpga_19250020_en_1

* http://www.englandlegislation.hmso.gov.uk/RevisedStatutes/Acts/ukpga/1925/cukpga_19250021_en_1

* http://www.opsi.gov.uk/acts/acts2002/ukpga_20020009_en_1

* http://www.englandlegislation.hmso.gov.uk/RevisedStatutes/Acts/ukpga/1972/cukpga_19720061_en_1

M Thomas, 12th Edition (2004), Blackstone's Statutes on Property Law 2004-2005, Oxford UP

Acts / Legislations Used from www.opsi.gov.uk

Law of Property Act 1925

Land Registration Act 1925

Land Charges Act 1972

Law of Property (Miscellaneous Provisions) Act 1989

Collins paperback Dictionary and Thesaurus

Oxford Dictionary of Law

[1] Martin Dixon, Sixth Edition (2009), Modern Land Law, Routledge-Cavendish

[2] Land of Property Act 1925 s.40(1)[pre LP(MP)A 1989] ‘No action may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought…is in writing…'

[3] Land of Property Act 1925 s.52 (1) ‘All conveyances of land…are void…unless made by deed.'

[4] Land Property (Miscellaneous Provisions) Act 1989, s.2 (1) ‘A contract for the sale or other disposition of an interest in land can only be made in writing…'

[5] R Sexton, B Bogusz, (2009), Complete Land Law ‘A trust where there is only one beneficiary. Trustee under the obligation to hold the property on trust for that beneficiary.', p178

[6] LPA 1925 Section 1(3) ‘All other estates, interests, and charges in or over land take effect as equitable interests.'

[7] Oak Co-operative Building Society v Blackburn [1968] Ch 730

[8] Law of Property Act 1925, s.198(1) ‘The registration of any instrument or matter…, shall be deemed to constitute actual notice…'

[9] Land Charges Act 1972, s.4(6) ‘An estate contract…created or entered into on or after 1st January 1926 shall be void as against a purchaser for money or money's worth of a legal estate…unless the land charge is registered…'

[10] Law of Property Act 1925, s.199(1)(i), ‘A purchaser shall not be prejudicially affected by notice of—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 non-registration thereof'

[11] Lloyds Bank Plc v Carrick and Another [1996] 4 All ER 630

[12] Human Rights Act 1998 Article 1 Protection of Property ‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.'

[13] Land Registry Act 1862, Land Transfer Act 1875, Land Registration Act 1925

[14] Judith Bray, Second Edition (2004), Unlocking Land Law, Hodder Arnold

[15] Land Registry Act 1925, s.49 (1)(c) ‘Land charges until the land charge is registered as a registered charge'

[16] Land Registry Act 1925, s.3 (xvi) ‘all the incumbrances, interests, rights, and powers not entered on the register but subject to which registered dispositions are by this Act to take effect…'

[17] Land Registry Act 1925,s.70(1)(g) 'the rights of every person in actual occupation of the land or in receipt of the rents and profits thereof.‘

[18] As Footnote 6 above

[19] Abbey National v Cann (1991)1 AC 56. Occupation had to involve ‘some degree of permanence and continuity‘

[20] Law of Property Act 1925, s.19 ‘This Part of this Act shall not prejudicially affect the interest of any person in possession or in actual occupation of land to which he may be entitled in right of such possession or occupation.'

[21] http://webjcli.ncl.ac.uk/1996/issue4/todd4.html

[22] (1972) 1 WLR 1286 “...it is a trust imposed by law whenever justice and good conscience require it. It is a liberal process founded upon large principles of equity to be applied in cases where the legal owner cannot conscientiously keep the property for himself alone, but ought to allow another to have the property or the benefit of it or a share in it...”

[23] (1981) AC 487

[24] (2004) EWCA Civ 1515 ”…resulting trusts are founded on the contributions of money towards acquisition of the legal title to property: any other forms of contribution should, therefore, fall under constructive trusts...” Per LJ Peter Gibson

[25] Sandra Clarke and Sarah Greer, ‘Land Law Directions'(2008), pg 58

[26] (1988) AC 54

[27] S.87(1) LPA (1925)

[28] Clarke and Greer, ‘Land Law' Directions, PG 38

[29] Midland bank v Green (1981), Clarke and Greer, ‘Land Law' Directions, PG.38

[30] (1902)1 Ch 428

[31] (1986) 1 WLR 783 “…this information should have been communicated to the (surveyor's) principals. Thus his knowledge that there was a wife deemed to be knowledge in the plaintiffs'. this is ‘imputed notice'-the actual or constructive notice of an agent. Therefore, the actual or constructive notice of a solicitor will be imputed to his client purchaser”

[32] (1988) AC 54

[33] (1996) ALL ER 630

[34] (1984) FLR 313

[35] (2009) PLSCS 271

[36] dictionary.reference.com/browse/restrictive covenant

[37] Midland Bank Trust Co. Ltd v Green (1981) AC 513, Lord Wilberforce “....it would be a mistake to suppose that the requirement of good faith extended only to the matter of notice ...good faith is a ...separate test which may have to be passed even though absence of notice is proved”

[38] (1842)2 Ph 774

Midland Bank Trust

[39] (1925)

[40] (1925)

[41] (1972)

[42] (1981) AC 513

[43] Kingsnorth Trust Ltd v Tizard (1986) 2 AII ER The court held that, by virtue of "imputed" notice - on the basis of the information available to the surveyor - Kingsnorth could/should have been put on notice to make as many further enquiries as necessary, and thereby discovered Mrs. Tizard's equitable interest in the property. As a result of Kingsnorth's poor curiosity, Mrs. Tizard's interest had the priority.

[44] Clark and Greer,(2008),Land Law Directions, Oxford University Press (page 367)

[45] (1842)2 Ph 774

[46] s.50 LR Act 1925 Any person entitled to the benefit of a restrictive covenant or agreement (not being a covenant or agreement made between a lassor and lessee) with respect to the building on or other user of registered land may apply to the registrar to enter notice thereof on the register, and where practicable the notice shall be by reference to the instrument, if any, which contains the covenant or agreement, and a copy or abstract of such instrument shall be filed at the registry; and where any such covenant or agreement appears to exist at the time of first registration, notice thereof shall be entered on the register. In the case of registered land the notice aforesaid shall take the place of registration as a land charge.

[47] Law Property Act s.52 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.

[48] (1981) AC 513

[49] Under Land Registration Act 2002 s.27 27Dispositions required to be registered:(2)In the case of a registered estate, the following are the dispositions which are required to be completed by registration—(b)where the registered estate is an estate in land, the grant of a term of years absolute—(i)for a term of more than seven years from the date of the grant.

[50] Land Registration Act 2002 s. 33 provides Excluded interests:No notice may be entered in the register in respect of : (a)an interest under—(i)a trust of land, or(ii)a settlement under the Settled Land Act 1925 (c. 18),(b)a leasehold estate in land which—(i)is granted for a term of years of three years or less from the date of the grant, and(ii)is not required to be registered,(c)a restrictive covenant made between a lessor and lessee, so far as relating to the demised premises,(d)an interest which is capable of being registered under the Commons Registration Act 1965 (c. 64), and(e)an interest in any coal or coal mine, the rights attached to any such interest and the rights of any person under section 38, 49 or 51 of the Coal Industry Act1994 (c. 21).

[51] Under Para. 2 of Schedule 3 to Land Registration Act 2002 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.

[52] Williams & Glyn's Bank Ltd v Boland [1981] AC 487

[53] Link Lending Ltd. v. Hussein (2009) this case was decided whether person in long-term residential care remains in "actual occupation" of home address for purpose of creating an overriding interest under Para. 2 of Schedule 3 to Land Registration Act 2002)