New Perspective on Land Law - Essay Example

? Land Law and Land Law Facts Mishal and Rick bought a house, Number 46, on a registered freehold title land from Anjum in July for ?350,000. Mishal and Rick then registered as proprietors shortly after completion. Number 46 is a large, Victorian, semi-detached house with a self-contained basement flat. Rick’s mother is planning to move into the house next year. Last week Mishal and Rick came home from work only to find a man called Ned in the basement flat. He explained that he has been away in Paris for six months work. He also explained that in 1995 he bought a twenty-year lease of the flat from the then owner. The owner later sold the house to Anjum in 2002. Ned produced a document signed by him and by the previous owners, setting out the terms of the lease. The document is dated 1 June 1995. Mishal and Rick do not have a copy of the document and cannot recall if the signatures were witnessed. Ned also explained that they had had an agreement with Anjum that if Ned gives Anjum ?15,000 he will have procured the option of purchasing the house for ?300,000 at any time between 1 December 2013 and 30 November 2014. He had a document duly signed by Anjum and him for that effect and was dated 1 December 2012. Mishal and Rick do not have a copy of this agreement. Anjum sold Ned the option because she needed the cash. Ned has saved enough to purchase the property and now wants to purchase it. 1. Mishal and Rick are entitled to evict Ned Mishal and Rick have a proprietary interest in the property that they have purchased from Anjum. Their interest is registrable in accordance with s.27 of the Land Registration Act 2002. Mishal and Rick registered the property shortly after completion. This section demands that any transfer of a freehold, whether by value, gift or death, be registered. If such a disposition is not registered then it does not operate at law (Feinman, 2010). Since the land title was absolute title, it was clear that had there been any other interest in the land, and house, it would have been registered with the registrar of land. An absolute title means that there is nothing dubious about the title. Ned bought a lease for 20 years from 1995. Since the lease period is above seven years, Ned should have registered this interest, but he did not since the absolute title did not have a record of another interest against it. The Law of Property (Miscellaneous Provisions) Act1989 clearly states in section 2 that for a contract of sale or other disposition of an interest in land to be valid all the terms must have been made in writing and all terms incorporated in one document, or where contracts are exchanged, in each. Therefore, the documents that Ned produced, purporting to have entered into contracts with the two previous owners does not hold under the law because they are not in the same legal document which should contain all the material terms. This point was made in Keay v Morris Homes (West Midlands) Limited [2012] EWCA Civ 900 where a document purporting to be a contract that complies with the provisions of s.2 of LPMPA 1989 but did not include all the expressly agreed terms was not considered as a contract at all. In the ruling, the judge mentioned the Grossman Point by referring to the Grossman case. In this case, Mr. Hooper bought a property in his sole name. Miss Grossman had beneficial interest in the property. After 10 years their relationship deteriorated and they parted ways with signing of a document of informal agreement transferring the property to Miss Grossman. The document expressly provided that now Miss Grossman will take charge and responsibility of repaying the mortgage secured against it. After she contended it was held that the document was void as a contract as it did not comply with s.2 which directs that the all the express terms be included. The need to clearly state in writing the all the express terms is also evident in North Eastern Properties Limited v Coleman Limited and another [2010] EWCA Civ 277 and First Post Homes Limited v Johnson [1995] 1 WLR 1567. Again, Mishal and Rick have a right to evict Ned based on the priority of the interests involved. According to s.29 of the Land Registration Act “a person can only acquire an interest under registrable disposition for valuable consideration”, if there is an entry in the register, or there is an unregistered interest that overrides or the interest has been exempted from registration by provisions of the law (Beale and Furmston, 2008, p. 5). All other interests apart from the aforementioned are postponed to the interests under the disposition (Hudson, 2012). This means that the successfully registered purchaser’s interests will get the priority over all the other interests that may be on the property at the time of acquisition. In this case, the interests of Mishal and Rick are given priority to that of Ned. The courts of law are courts of conscience, they not only apply the law to the letter but also apply them in such a way that justice is served to both parties. Competing rights are the other factor that gives Mishal and Rick the right to evict Ned. These rights are involved in a dispute and both parties have a claim. The enjoyment of one party’s rights lead to the infringement of the other party’s rights and freedoms. These rights usually bring the dilemma over which rights should be given preference or prevail over the others (Hudson, 2012). In this case Mishal and Rick have family interest in the property as a home. They have already made it their home and are intending to make the basement flat the home for Rick’s mother starting the following year. Ned on the other hand is not around a lot and the main reason for deciding to purchasing the property was primarily because he found it uneconomical to continue sub-letting yet he was earning enough to make purchasing the house an option. In Manchester CC v. Pinnock the Supreme Court issued an instruction to the other UK courts in form of precedence by stating that the courts have a mandate to assess whether any infringement to one’s right to a home is justifiable or at least proportionate. In that case the UK Supreme Court gave preference to one’s right to a home over the lender’s right to recover debt payments unless the circumstances clearly justify so (Hudson, 2012). 2. Ned is entitled to stay Ned will be entitled to stay if he proves that the buyer undertook the purchase of the property without first checking the register and investigating the land for any evidence of overriding interests. Overriding interests need not be registered like the other proprietary interests in the property. If Ned actually registered his legal lease, which should be registered since it subsists for 20 years, and also registered the option to buy the Number 46 at ?300,000 any time between 1st December 2013 and 30th November 2014, then he has the legal right to stay. This decision will fault the oversight on the part of Mishal and Rick. Alternatively, Ned can use the principle of proprietary estoppels to advance the case against being evicted by the new owners. This is a legal claim that relates to the right to use the property of the owner under specific circumstances. The rights under proprietary estoppels can only transfer if a person is given clear assurance of acquisition of a property; they in turn reasonably rely on that assurance and act on the strength of the assurance with the action later proving detrimental (Collins, 2003). In this case, Ned was given the assurance that he will be availed the opportunity to purchase Number 46 for ?300,000 if he paid ?15,000 to trigger the option. Ned relied on this assurance by Anjum and made the payment. Now that he has gotten the money and intends to buy the property he learns that the interests have been transferred to another interest holder. Yeoman’s Row Management Limited v Cobbe [2008] UKHL 55 provides some insight into the application of proprietary estoppels. In this case Mr. Cobbe acted on the promises made by the company and when the company later defaulted Mr. Cobbe sought to be compensated through primary estoppels and constructive trust. Scott LJ held that it was not applicable since the agreement the two parties had had was oral and therefore not binding. Setting aside this decision, it is clear that Ned will have a favourable case having put his agreement with Anjum in writing and signed by both parties. 3. Mishal and Rick refuse to sell to Ned for ?300,000 Whether Mishal and Rick should be compelled to sell the property to Ned will depend on Ned’s ability to prove that he had a valid option contract and that it was protected under s.29 LRA 2002. The first issue is to prove that Ned had a valid option contract. Here, s.2 of the LPMPA 1989 will determine whether there was a valid contract. According to this legislation a 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 agreed in one document, or where contracts are exchanged, in each. Anjum had expressly provided that Ned could purchase that property for ?300,000 at any time between 1 December 2013 and 30 November 2014 on payment of ?15,000 to her. The fact that the agreement has been signed by both parties privy to the agreement and in a single document makes the contract valid. But that is not the only determinant. The other question that needs to be answered is whether Ned’s interests are protected according to s.29 LRA and whether there was there a supporting restriction. Having created a valid contract, Ned should have registered his interests by making an entry on the register in form of a notice in the changes register. He did not do that and that is why there was no restriction when Mishal and Rick initiated and completed the purchasing process from Anjum. Section 2 of the LRA directs the persons acquiring registrable dispositions for valuable consideration to make an entry into the register. This legislation gives priority to the interest under the disposition. Hence, a registered purchaser’s interests gets priority over all the other interests in the property. This principle is clearly brought out in Chhokar v Chhokar [1984] FLR 313 where Mrs. Chhokar, having family home interest in the property, was protected from eviction or paying of rent to the new owner who had dubiously purchased Mr and Mrs. Chhokar’s family house. The court instead directed that the two, Mrs. Chhokar and Mr. Parmar, the new owner, hold the house as tenants’ in common in equity and in equal shares. Had Ned registered his interest in the property, the buyers would have seen it during the purchasing of the property. His failure to register means that even though he had a valid contract his interests are not prioritized by the law and hence not enforceable. Ned can only purchase the property from Mishal and Rick for that price only if the new owners want to sell it to him. Mishal and Rick are under no legal obligation to honor the contract signed between other parties that did not form part of the disposition contract when ownership was changing. 4. Ned Can Exercise the Option to buy Ned can still exercise the right to buy the property for ?300,000 as agreed in the contract he signed with Anjum. Ned can do this by showing that he was in actual occupation of the property and that he has a high degree of permanence and continuity in living on the property. Schedule 3 paragraph 2 provides the circumstances under which an interest may become overriding. The overriding interests are further mentioned in ss.33 and 90(4) of the LPMPA 1989, LRA 2002 and s.57(2) of the LRR (Feinman, 2010). All interests and rights over a land have to be registered, otherwise if another person buys the land the interest will not apply. Overriding interests are the exception to this provision. They are stipulated in s.29(2)(a)(ii) where they are given priority even though they are not protected on the register. Schedule 3 Para 2 states that an interest may become overriding when the person who is claiming the interest is in actual occupation obvious upon reasonable inspection. It also states that it an interest may become overriding where the person claiming the interest is not only in actual occupation but the person to whom the disposition is made has the knowledge of the interest. In this case, Ned was in actual occupation of the property when the first interest in the property changed hands. He has been leasing the property since 1995 and therefore there is reasonable evidence that he has been living in the house. This points at the degree of permanence and continuity as pointed out in the Abbey National Building Society v Cann [1991] 1 AC 56. This case also established that the relevant time for actual occupation according to s.70(1)(g) is the date of completion of the transaction and not necessarily the day of registration. Therefore, 1st December 2012, the date the contract was signed between Ned and Anjum is the actual date that Ned occupied the property pending the completion of purchase in the duration specified in the contract. Having got the money within the period, 1st December 2013 to 30th November 2014, he is entitled to exercise the option he had triggered by paying ?15,000 to Anjum. There is no statutory definition of actual occupation and the courts will have to determine that on case by case basis as pointed out in the Williams & Glyn’s Bank v Boland [1981] AC 487. However, in circumstances where actual occupation is hard to determine the intention to come back home can also be used to show interest. Ned can prove that even if he was away for six months in Paris he was still planning to come back to the house he wanted to purchase, which has been his home for 18 years now. The intention to come home was explicated in Link Lending Limited v Bustard [2010] EWCA Civ 424. In this case Mrs. Hussein tricked Mrs. Susan Bustard, a mental patient into passing the ownership of her property. Mrs. Bustard was then admitted in a hospital for over a year during which Mrs. Hussein took a loan against the house and defaulted on payment. When the bank moved to repossess the house claiming that the owner had not been occupying it for over a year, the court came to her rescue by declaring that she was still in occupation. Mummery LJ when delivering the ruling stated that the fact that Mrs. Bustard longed to come home, evidence by the frequent visits she would make, signified that she was indeed in actual occupation. Ned can claim the same. That apart from being away for less than one year, he has also been intending to come back and live in that house. This is evidenced by his triggering the option to buy, and thus he was still in actual occupation of the property. He therefore should be afforded the opportunity to execute the remaining part of the contract now that he has enough money to do so. References Primary Sources Abbey National Building Society v Cann [1991] 1 AC 56 Chhokar v Chhokar [1984] FLR 313 First Post Homes Limited v Johnson [1995] 1 WLR 1567 Keay v Morris Homes (West Midlands) Limited [2012] EWCA Civ 900 Land Registration Act 2002 Link Lending Limited v Bustard [2010] EWCA Civ 424 North Eastern Properties Limited v Coleman Limited and another [2010] EWCA Civ 277 The Law of Property (Miscellaneous Provisions) Act1989 Williams & Glyn’s Bank v Boland [1981] AC 487 Yeoman’s Row Management Limited v Cobbe [2008] UKHL 55 Secondary Sources Beale, B., and Furmston, E., 2008. Contract: Cases and Materials. Oxford University Press. Collins, H., 2003. The Law of Contract: Law in Context. CUP. Feinman, J., 2010. Law 101. Oxford University Press. Hudson, A., 2012. New Perspective on Property Law: Human Rights and the Family Home. Routledge. Read More