A Purchasers Legal Obligations over a Lease - Essay Example

? LAND LAW 13 March LAND LAW Mr. Jones claims to have a monthly tenancy that is granted for a period of three years. The lease is therefore renewable on a monthly basis. However, registered purchase defines liability over registered third party rights. One of the factors to be considered is whether Henrietta made an enquiry with the registry to ascertain existence of registration of such claims.1 If the leases were registered but the registration failed to reveal, then Henrietta is entitled to compensation over the leases. If she however failed to make the necessary enquiries then she remains to be bound by the lease agreements.2 Mr. Wood claims to have a lease interest that was executed under deed. A purchaser’s legal obligations over a lease under deed are determined by legality of the deed. If the deed is legal then registration of the interest in the property is considered. In such a case, the deed must have been legally or properly constituted. The lease is legally binding under common law if Mr. Wood can prove that the deed was properly constituted.3 Otherwise, the purchaser’s obligation to to be bound by the lease will be determined under the doctrine of equity4 . Under this approach, Wood would need to prove that the agreement was in writing and was correctly registered.5 If this was the case, then the existing lease will bind Henrietta on ground of registered notices. The underlying principle of the written and registered agreement is that a purchaser of a registered property is supposed to make a search over all third party rights that are attached to the property before proceeding with the purchase. Failure to make the search and a subsequent existence of a right binds the purchase. If the lease was not registered then Henrietta is not bound by the agreement this is because unregistered interest on registered property is considered as null and void.6 Annabelle claims that she made a share contribution to the purchase of the property sold by Fred. The first factor is Henrietta’s enquiry to find out if such claim was registered.7 If the claim was not registered then it can only be enforced under equity. The case can therefore be considered based on property held under trust. Rights due to trust can be overreached if the the purchase price is paid to more than one trustee. Under such a circumstance, the purchaser is not bound by any claim of ownership by a third party, as the purchase price is sufficient under overreaching principle.8 Payment of the purchase price to one trustee however introduces the doctrine of overriding interest in the case. For this to be applicable, Fred’s grandmother must prove that she was in occupation of the property at the time of sale. If occupation can be successfully proved then the grandmother’s right over the land binds Henrietta. However, failure to prove interest or occupation in the property at the time of sale protects Henrietta from the grandmother’s claim.9 Mohamed has warned Henrietta against carrying out constructions on a portion of the purchased land on the basis of a restrictive covenant with a former owner. Restrictive covenants are not enforceable under law and would be interpreted in line with the doctrine of equity. In order to determine the legal position of Mohamed’s claim, circumstances under which the covenant was created as well as the nature of the created rights will be evaluated. Since covenants create interest in land, the next factor to be considered in determining Henrietta’s liability over the covenant is registration of the right created by the covenant. If the agreement was duly registered, then Henrietta has no legal option but to honour the terms of the covenant as was created between Mohamed and the former property owner. A different scenario would however be witnessed if the covenant was not duly registered.10 Failure to meet requirements under the registration deprives Mohamed of any legal claim over the covenant. In such a case, under which restrictive covenants fall, the purchaser is not bound by the agreement.11 The contract between Henrietta and Fred was made while a feature of a Greek goddess was affixed on the property. This feature had been a major point of attraction to Henrietta but was removed and replaced by Fred after the purchase of the property, to the disappointment of Henrietta. The factor for consideration in determining the legal position of Fred’s action is the determination of whether the feature was a fixture to the land or if it was just a mere chattel. While chattel is defined as a personal property of the immediate landowner, fixtures are regarded as part of land. This defines fixtures as real property on their own. As a result, fixtures are transferred with right over land while chattels remain property of the seller. In the case of Reynolds v Ashby and son [1904] AC 461 (HL)12, steps to distinguishing between a fixture and a chattel were established. The level of annexation of the subject item to land as well as the original intention for which the item was fixed are used in the test. An adverse connection as well as an original intention for permanently fixing the item defines the item as a fixture. The case of Holland v Hodgson [1872] LR 7 CP 32813 is instrumental in determining the level of annexation. According to the case, an item that is attached to land is regarded as a fixture. The extent to which the item is attached is not regarded and the proof of ‘non-fixture’ to land lies on the party that claims that the item is a chattel. On the other hand, an item that is not supported by land is considered a chattel. These definitions would be instrumental in classification of the water feature. Similarly, the intention of establishing the item in question is a factor to determining its status. The case of Australia provincial Assurance Co LTD V Coroneo14, it was held that an intention to affix an item for a temporary usage defines the item as a chattel while intentions to develop the item to be permanently used on the piece of land defines the item as a fixture. The case of Hobson v Gorringe [1897] 1 Ch 18215 offered a more succinct distinction between chattels and fixtures to identify the purpose of the owner of the property at the time of affixation. The extent of attachment of the water feature to land will therefore be the the first factor in determining if Henrietta had right over the property. Uncertainty over the the degree of annexation of an item would therefore bring up consideration of the original purpose for which Fred fixed the water fixture. It is however hard to prove the intention of the seller at the time of fixing the item and Henrietta may not have ground to hold Fred accountable for his action.16 The case of interest over the discovered property will be dependent on the existence of a rightful owner of the property. The definition of land according to law of property act to include anything that is attached to land would form ground for establishing the rightful owner. Since the piece of land belongs to Henrietta, she has a high chance of obtaining ownership of the property.17 Assuming that the sale of the piece of land had been unregistered, factors for determining the legal position would be different. In the case of Jones and Woods, the major factor to be considered is whether or not, Henrietta had a chance to discover existence of the leasehold interest as are held by the parties, before the purchase of the land. Another factor that would determine the legal position is the efforts that she made to discover existence of such rights. This is contrary to the purchase of a registered property in which search from the register is sufficient. In an unregistered purchase, any right that existed but was not discovered, due to lack of effort by the buyer, binds the buyer. Henrietta’s efforts to enquire from the seller of existence of any such rights would be of primary consideration. If the seller withheld the knowledge of existence of such rights from Henrietta, then she would not be bound by the lease hold rights. Similarly, efforts to make personal enquiries over interest by making personal surveys would be considerable in determining the legal relationship between Henrietta and the tenants.18 The basic principle for consideration in Annabelle under unregistered land is the family interest of the claimant over the piece of land. Being Fred’s Grandmother, the doctrine of equity would impose an interest in the piece of land with respect to the doctrine of holding property under trust. The law of property act then considers the payment of purchase price as a condition for overreaching the interest. The fact that the purchase price was paid to Fred alone fails to overreach the right. As a result, the grandmother’s interest becomes overriding.19 Similarly, covenants under an unregistered purchase are only binding under the doctrine of equity if Henrietta failed to make necessary efforts to discover existence of such covenants. Steps for discovery of the covenant that would include enquiry from Fred would therefore be of importance. If Henrietta made sufficient enquiry but did not learn of the existence, for example from Fred, then the covenant would not bind her. The fact that the covenant was made more than twenty years ago however has a possibility of inducing the doctrine of adverse possession on the land.20 Bibliography Chappell, D. The Jct Design and Build Contract 2005. (3rd Ed. John Wiley & Sons, Oxford, UK , 2007) Duncan, W. & Christensen, S. Sale of Businesses in Australia. (2nd Ed. Federation Press, Australia, 2009) Goo, H. Sourcebook on land law. (3rd Ed. Routledge, London, UK, 2002) Lawskool. Property law summary. Available from: http://www.lawskool.com.au/content/property_summary1.pdf. [Accessed on 13 March 2012] Legislation. (n.d.). Land Registration Act 2002. Available from: http://www.legislation.gov.uk/ukpga/2002/9/contents. [Accessed on 13 March 2012] Legislation1. Land Registration Act 1925. Available from: http://www.legislation.gov.uk/ukpga/Geo5/15-16/21/contents. [Accessed on 13 March 2012] Read More