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Limiting the usage on a property: Land Law

None of the four people in question are the legal owners of the property, but each may have some kind of third party right over the property which could be binding on Seaview Holidays Ltd (SHL) and limit their usage of the property for the purposes they require. It seems sensible to take each individual in turn and assess what rights, if any they have and their effect on SHL.

Helen

Helen will have a right to occupy the property under the Family Law Act 1996[1] for the duration of the civil partnership, as a non-owning civil partner’s right of occupation[2]. These rights are known as ‘home rights’[3] and apply to the civil partner or spouse, who has no right to occupy a property, when their partner or spouse does have that right. A ‘home right’ is an interest affecting a registered estate[4] and should be protected by a notice in the charges register of the title to the property[5]. If Helen has registered this interest it will be protected and have priority over SHL’s purchase. Failure to register the interest will result in the purchaser of the land for valuable consideration taking free of that interest once the sale has been completed by registration[6]. It seems unlikely that Helen will have registered such a notice in that, if she had, it would have been brought to SHL’s attention by their conveyancer prior to agreeing the purchase.

Failure to register may not be fatal to Helen’s rights in this situation however. Helen made a contribution to the purchase price of The Archway and, as such, Amelia holds the property on trust of land for herself as legal owner and for Helen and Jessica in equity. This kind of interest is also an interest affecting a registered estate and should be registered this time as a restriction in the proprietorship register of the property. The same conditions apply as above with regards to non-registration and it seems likely, once again, that Helen has not registered a restriction in this respect.

An equitable interest under a trust is, however also, an overriding interest[7] in the land and will therefore not need to be registered. In order for Helen to be able to exercise any right to the property two criteria must be met[8]. Firstly Helen must have an interest in the property. It has been mentioned above that she has an equitable interest under a trust of land, and this is sufficient for these purposes in that it can endure ‘through different ownerships of the land according to the normal conceptions of title to real property’[9]. Secondly, Helen must be in actual occupation of the property at the date of the completion of the purchase[10] and this occupation must be obvious on a reasonably careful inspection of the land[11]. Actual occupation requires a physical presence at the property which should be the case since the house was ‘a matrimonial home’[12], but actual occupation will not cease to be, if the person to whom the right applies is only temporarily absent[13]. Helen, it seems, may be in actual occupation of the property at the time of the sale, even though she was temporarily absent because of her holiday. It must be noted however that her occupation should be apparent from a reasonably careful inspection. All of the case law on the matter appears to require occupiers, even if they are not resident, to visit the property on a regular basis[14] and as such since Helen has had a reasonably lengthy holiday, she may be precluded from being in actual occupation. There is a possible concern also, in that, in a heterosexual relationship the items which suggest actual occupation of the partner, clothes for example, would be obvious. This may not be the case in a homosexual relationship and what would ordinarily be considered a reasonable inspection would not suffice.

SLH will not be bound by Helen’s overriding interest, even if she is found to be in actual occupation, if they made an enquiry as to whether she had any rights to the property and she failed to inform them of her rights when it would have been reasonable for her to do so[15].

Since Helen’s right is an interest under a trust of land SHL would be able to overreach that right if they ensure that Amelia appoints a second trustee and the purchase price is paid to both of them[16].

Jessica

Jessica may also have an overriding interest in the property since she also contributed to the purchase price and has an equitable interest under a trust of land[17]. The same requirements as for Helen are present, in that she must have an interest in the land and be in actual occupation. She has an interest in the land, but her actual occupation is far less certain. This is a question of fact in each case, but the requirements are that the occupation is obvious on a reasonably careful inspection of the property by the purchaser. It seems highly unlikely, given that Jessica leaves only a few clothes in an old suitcase at the property, that her occupation would be obvious on reasonable inspection. In actual fact she does not occupy the property at all, she simply visits. SHL would buy The Archway free of Jessica’s interest unless she has placed a restriction, relating to her equitable interest, on the proprietorship register of the property.

Callum

Callum has been granted a legal lease of seven years or less. It is not entirely clear from the facts whether the document signed was a lease running for two years from 10th October or a contract for a lease to begin on 11th December. If it is the latter Callum will have an equitable lease and would be able to seek a remedy of specific performance if the lease was not granted[18]. This is a contract creating a legal estate in land; an estate contract[19] and therefore requires protection, as an interest affecting a registered estate, by a notice on the charges register of the property. If this has not been done the right will be void against a purchaser for valuable consideration. Clearly this would only be relevant if the purchase of The Archway took place prior to 11th December. At this point even without the grant of a lease Hassan would have a periodic tenancy as a result of occupying the premises and paying rent. The terms of the tenancy would determined by referring to the rent payments[20]. So if rent payments were annual the periodic tenancy would run for twelve months with SHL being required to give six months notice to end the tenancy at the end of the year. Periodic tenancies are overriding interests[21] and given the facts of Callum’s occupation would be binding on SHL.

If Callum has been granted a lease, because it is for seven years or less, it is an overriding interest[22] and does not require registration. The issue of whether SHL bought The Archway subject to this interest will depend on whether Callum was in actual occupation at the time of the purchase. It has been mentioned above that it is not possible for an overriding interest to be created in the gap between the purchase of the property and its registration[23]. If SHL completed the purchase of the Archway prior to 11th December Callum will not have been in actual occupation and SHL will buy free of his interest if it is after that date Callum will have been in actual occupation and SHL will be bound by his right.

Hassan

Hassan has been granted a lease of a term in excess of seven years and for this reason his lease constitutes a registrable disposition[24]. Up until the point of registration his rights take the form of an equitable interest and, as such, become an interest affecting a registered estate. Since Hassan’s lease began before SHL purchased the property, he must, to protect his interest, either place a notice on the charges register or be in actual occupation of the property.

There is no definitive information given, but it seems likely that Hassan has not registered his title to the property, nor has he placed a notice on the register since this would have been brought to the attention of SHL prior to their purchase. In order to ensure his right Hassan must be in actual occupation. Unfortunately for Hassan, the sending in of furniture has been held to be nothing more that taking ‘preparatory steps’ to occupation[25] and will not constitute actual occupation and SHL will buy free of Hassan’s right as purchasers for valuable consideration.

In summary all four may have rights that could have been registered but if not all except Jessica may be found to have an overriding interest under the Land Registration Act 2002, if they found to be in actual occupation.

Table of Cases

Abbey National Building Society v Cann [1991] 1 AC 56

Adler v Blackman [1953] 1 QB 146

Chhokar v Chhoker [1984] FLR 313

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

Kingsnorth Finance v Tizard [1986] 1 WLR 783

Lloyds Bank plc v Rosset [1989] Ch350

National Provincial Bank v Ainsworth [1965] AC 1175

Walsh v Lonsdale (1882) 21 ChD 9

Williams & Glyn’s Bank v Boland [1981] AC 487

Table of Legislation

Family Law Act 1996

Land Charges Act 1972

Land Registration Act 2002

Law of Property Act 1925

Bibliography

Clarke, A., Kohler, P., Property Law Commentary and Materials, Cambridge University Press, Cambridge, 2005.

Mackenzie, J., and Philips, M., Textbook on Land Law, 11th Edition, Oxford University Press, Oxford, 2006.

Riddall, J., Land Law, 7th Edition, Oxford University Press, Oxford, 2003.

Smith, R., Property Law Cases and Materials, 3rd Edition, Pearson Longman, Harlow, 2006.

Tee, L., The Rights of Every Person in Actual Occupation: An Enquiry into Section 70(1)(g) of the Land Registration Act 1925 (1998) CLJ 328

Wilkie, M., Luxton, P., Malcolm, R., Land Law, 6th Edition, Oxford University Press, Oxford, 2007.

1


Footnotes

[1] S.30

[2] S.30(1)

[3] S.30(2)

[4] Land Registration Act 2002

[5] Ibid s.32

[6] Ibid s.29

[7] Ibid sch.3 para.2

[8] Williams & Glyn’s Bank v Boland [1981] AC 487

[9] National Provincial Bank v Ainsworth [1965] AC 1175

[10] Abbey National Building Society v Cann [1991] 1 AC 56

[11] Op cit

[12] Op cit per Lord Wilberforce

[13] Chhokar v Chhoker [1984] FLR 313

[14] See Kingsnorth Finance v Tizard [1986] 1 WLR 783 and Lloyds Bank plc v Rosset [1989] Ch350

[15] Op cit sch. 3 para.2 (b)

[16] City of London Building Society v Flegg [1988] AC 54

[17] Op cit

[18] Walsh v Lonsdale (1882) 21 ChD 9

[19] Land Charges Act 1972 s.2(4)(iv)

[20] Adler v Blackman [1953] 1 QB 146

[21] Op cit

[22] Op cit

[23] Op cit

[24] Law of Property Act 1925 s.1(1)(b)

[25] Op cit


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