Analysis of Property Law Cases - Assignment Example

Topic: Property Law Insert Undergraduate Insert Your Language Style: English UK 25 October 2008 Answer no 1) Mr. Law will advise in light of the curtain principle. The curtain principle encapsulates the idea that certain equitable interests in land should be hidden behind the ‘curtain’ of a special type of trust. Thus, if a person wishes to buy registered land which is subject to a trust of land, the purchaser need be concerned only with the legal title to the land which is held by the trustees and reflected on the title register. Here Rose contributed half of the purchase price when Major Thorn acquired Bramble Farm. Equitable rights will be overreached if the proper formalities of the purchase are observed under ss2 and 27 LPA 1925. Consequently, this right will not affect in his enjoyment of the land. However, it is the Courts discretion to decide whether Rose has overreaching interest or not. If Court held that Rose has overreaching interest then Mr. Hay has to pay Rose half of the purchase price though she was not registered owner of the Bramble Farm. Rose had no actual occupation, so she can’t claim overriding interest under s. 70 (1) (g) of LRA 1925. But from the question it is not possible to identify whether Rose had actual occupation or not. Therefore, Rose may have overreaching interest under this section. The principle of overreaching is that rights arising under equity which attach to the land can be transferred from the land to the capital money. Under s 27(2) of Law of Property Act 1925, overreaching will apply where there is two or more trustee or a trust corporation and the purchase money is paid over to both of them. In City of London Building Society v Flegg1 a son, his wife and his parents joined together to purchase property. The son and daughter-in-law were registered as owner. They owned the legal estate as trustees for themselves and their parents-in-law. The parents-in-law were in occupation of the property but when the loan was not repaid the building society decided to exercise its power of sale it was held that their rights were overreached2. The rights of the parents-in-law should have been protected because their rights were transferred to the capital money. 2) Section 1(1)(b) of the LPA1925 provides the definition lease and it must be created in the proper manner and it must satisfy the definition contained in LPA 1925 s. 205(1)(xxvii). Here, Mr. Wood has produced a properly executed deed. Where the lease is a legal lease (created by deed or within the LPA 1925, s.54(2)) for a period not exceeding seven years it will be an overriding interest under the LRA 2002, Schedule 3, Para 1 and so binding on Mr. Hay automatically under s.29 and 30 of LRA 2002. In City Permanent Building Society v Miller3, it was held that the words ‘lease granted’ in s. 70 (1)(k), LRA 1925 could means only legal leases and not equitable leases. Under s. 70(1) of the LRA 1925 there was a long list of overriding interests. The list included easement, and rights of squatters under the limitation Acts and leases not exceeding seven years. But the most significant considerable group of all were rights of a person in actual occupation of property, under s. 70 (1)(g) of LRA4 1925. However, Schedule 3, Para. 2 is not as wide as the former s. 70(1)(g), of LRA 1925, and para. 2(c) excludes the interest of a person whose occupation would not have been obvious on a reasonably careful inspection of the lands if the purchaser does not have actual knowledge of it. Mr. Wood has never actually lived in the cottage. Therefore, he has no actual occupation of the property. Mr. Hay was entered as the registered proprietor with absolute title and he had no actual knowledge of the lease. However, Mr. Wood can’t claim under equitable lease because it was legal lease of registered land. He can’t claim overreaching rights for the deed. There was no privity of contract between Mr. Wood and Mr. Hay. So the option is not applicable here according to the case of Midland Bank Trust Co Ltd v Green5. In this case, a father granted his son a 10 years option to purchase. Later, the father was sold the farm to his wife at undervalue. Oliver J at first instance held that the option was not binding because it had not been registered before the ‘purchase’ by the wife. 3) Mr. Plant has right to using the field as a short cut to the local pub. Here he has to prove that he has legal interest under the Law of Property Act 1925, s. 1(2)(a). Thus, it must be for a period equivalent to a fee simple or a term of years. The use of the word ‘granted’ implies that it was created by deed and complies with s. 1(2)(a), then it will be a legal interest. If the interest is not legal, it may still be enforceable in equity. If Mr. Plant have been used the field for 20 years as a short cut to the local pub, then he may have prima facie right to a claim to an easement under the prescription Act 1832. Law of Property Act 1925, s.40 now repealed and replaced by the Law of Property (Miscellaneous Provisions) Act 1989, s.2. This requires that there must be some written evidence of the contract signed by the party to be charged or an agent. Under the Land Registration Act 2002, a legal easement expressly granted is a registrable disposition under s. 27(2)(d) and will not operate at law until registered (s.27(1)). It will not be an overriding interest under Schedule 3, paragraph 3. Equitable interests are minor interests and not binding on a purchaser unless they are protected by an entry on the register. Mr. Hay bound to follow this easement6. 4) Paragraph 3 of Schedule 3 replaces, in relation to registered dispositions, s 70(1)(a) of the Land Registration Act 1925. Paragraph 3 of Schedule 3 provides that no equitable easement or profit will override and only certain legal easements and profits may override. All easements and profits outside of this regime require deliberate protection by an entry on the register if their priority against a registered disposition is to be assured. Major Thorn had installed the elephant and other memorabilia in the garden in the late 1970’s as a result he may have prima facie right to a claim to an easement under the prescription Act 1832 or possibly under the doctrine of lost modern grant. May be he intended to pass the burden to the successor. If the neighbour has acquired rights by prescription, then it will be a legal one, which will be binding upon Mr. Hay. Section 62 of LPA 1925 Contains general words which can imply rights into the conveyance where they have not been specially mentioned. Major Thorn could rely on Section 62; as a consequence Mr. Hay can retrieve the elephant. In registered title, the interest acquired by prescription may be an overriding interest under Schedule 3, paragraph 3, LRA 2002 if exercised within one year of Mr. Hay’s purchase, or if he actually knows of it (which he appears to do), or it would have been discoverable on a reasonably careful inspection of the land. Section 62 of LPA 1925 and Schedule 3, paragraph 3, LRA 2002, Mr. Hay can retrieve the elephant7. Answer no 2: 1) Prior to the 1925 reforms such interests were governed by the doctrine of notice, that is, they were binding on the whole world except the bona fide purchaser of a legal estate for value without notice. This involved the purchaser in making inquiries and inspections on the land, and it was in order to obviate the necessity for such steps to be taken that the system of land charges registration was introduced in 1925. The Land Charges Act 1972, which replaces the LCA1925, provides for the registration of certain land charges in the land charges register. The land charges are set out in section 2 of the Act and the most important for this purpose. In Class D (ii), that is in section 2(5) (ii) of LCA 1972 the purchaser of a legal estate in the land charged for money or money’s worth can take free of the unregistered charge. It means that whereas under the land charges a purchaser of an equitable estate can take free of the charge. Once a search had been made at the Land Charges Registry a certificate would be produced and if a charge against the land had not been made, for whatever reason, then the charge would not be binding on the land. It is no longer mattered whether or not the purchaser actually knew about the exercise of equitable rights in land. In Wilkes v Spooner8 the purchaser did not have notice of the covenant, therefore, purchasers was not bound by the covenant9. If Mr. Corn were a bona fide purchaser for value of the land then the decision will depends up on the doctrine of notice. Mr. Corn can exclude liability if he follows the land Charge Act. According to Land Charge Act 1925, Mr. Corn must refrain from opening the cafe on the premises. (2) Legal interests in another person’s unregistered land such as mortgage, legal leaseholds are, in the main, automatically effective against the land over which they exist, even if not granted by the current land owner. Consequently, they will bind automatically any person coming to the ownership or occupation of the land, be he a purchaser, donee of a gift or an adverse possessor. This is the old pre-1926 rule that ‘legal rights bind the whole world’. Thus, if a person buys a piece an unregistered land, he will take the land virtually every legal interest over it. The legal lease must be for a term certain and must be created by deed in accordance with the Law of Property Act 1925, s.52, except where s. 54(2) applies. However, this lease has to be registered at the time of creating the lease agreement. Mr. Root who produces a letter showing that he has a 25-year lease which is amounts to legal lease and it is enforceable against Mr. Corn. Mr. Corn is legally bound by the contract. However, s. 4 of LCA 1972 provides that Class C(iv) charges, if not registered, are void against purchaser of a legal estate in the land who gives ‘money or money’s worth’. In Lloyds Bank v Carrick10 where the long term lease was held void against the purchaser due to lack of registration. The section11 roughly corresponds with the old rule in Hunt v Luck12, which was of general application to unregistered land before 1926, but which was largely superseded by the LCA 1925. The rule fixes a purchaser with notice of rights which he should have discovered by reason of persons in occupation of the land. On the other hand, Mr. Leek who is occupying a small flat claimed that Farmer Field has granted monthly tenancy three years ago. It was equitable lease and in order to bind a purchaser of unregistered land (here Mr. Corn), a land charge must be registered in the appropriate way. According to Walsh v Lonsdale13 Mr. Corn will not be bound by the equitable lease unless he has notice of lease and this depends on whether the lease has been registered. A valid contract complying with the requirements of the LPA14 1989, s. 2 will create an equitable lease which is registrable as an estate contract under Class C (iv) of the Land Charges Act 1972, s. 2(4). (3) In this case Major Thorn granted Heather a right of way to her property over a driveway across Bramble Farm. A legal easement was is de fined is defined in s 1(2)(a) LPA 1925 and is one which is granted by deed (express, implied or presumed) and which is either to last in perpetuity or for a fixed period of time. If it can be proved that they used the land for a long time then the right could pass under the rule in Wheeldon v Burrows15 which allows quasi-easements to pass where they are continuous, apparent and necessary to the reasonable enjoyment of the of the land granted and which were at the time of the grant used by the grantor for the benefit of the part granted. Even if the right was exercised by Heather then it can still pass when Mr. Hay purchase the land under s 62 of the Law of property Act 1925 which implies into the conveyance all liberties and privileges enjoyed at the time and this would include licences. There must be diversity of occupation under Sovmots v Secretary for State for the Environment16. This suggests that the right of way will be binding on Major Thorn’s successor. The last point to consider is the LRA 2002 to register the rights. Under the 2002 Act, easements rely on registration for their effectiveness. Only those legal easements that have been acquired prescriptively or by implied grant can continue to exist as overriding interests. Where an easement passes under s.62 of the LPA 1925 the easement will be acquired impliedly. Under Schedule 3, para 3 to the 2002 Act an easement will be overriding under only three circumstances: a) the purchaser for valuable consideration actually knows about them b) they are obvious on a reasonably careful inspection of the land c) They have been used in the year preceding the disposition 4) A major part of the unregistered land system is devoted to the protection of equitable third party interests in land. It should be noted that the purchase of an unregistered estate which triggers a first registration is an unregistered transaction, with registration ‘added on’ to its end. Thus attention must be paid to whether any third party rights were binding upon the purchaser under the Land Charges Act 1972 or the doctrine of notice. Lack of registration equals to voidness if the purchaser actually knew of the charge- s 199 LPA 1925, as illustrated by Midland. Daisy paid one third of the purchase price when Meadow Farm was purchased nine years. Section 70(1)(g) of LPA 1925 has been replaced by paragraph 2 of Schedule 3 of LRA 2002. The provision of the constructive notice is fairer to a purchaser than was s. 70(1)(g). Under the new provision a purchaser is only bound if the occupation is discoverable on a reasonably careful inspection of the lane. In Birmingham Midshires Mortgage Services Ltd v Sabherwal17 it was held that even an interest that took effect under proprietary estopple can be subject to overreaching. This was aright in land that arose because the party had been led to believe that they had a right in land and they had acted on it. However, this right could transfer to the purchase money because the property was sold and the purchase money was handed over to two trustees. The Doctrine of constructive notice and the wording of s. 199 placed great emphasis on the on the purchaser having to make such reasonable inquires as the circumstance demand. Whether Mr. Corn is bound or not (assuming he has no actual knowledge of the interest because Daisy has been in Wales for the past 6 months) depends simply on whether the occupation was obvious on a careful reasonable inspection of the land and nothing else. Therefore, charge will not be binding on Mr. Corn if he properly inspects the land. Daisy has proprietary interest on Meadow Farm because she contributed on purchases price. In Inwards v Baker18 where a father suggested to his son that he might build bungalow on the father’s land when buying other land proved to be very expensive. When the father died, the land was left to some one else. The son was held to have a right to stay in the property indefinitely because the son had an expectation fuelled by his father’s active encouragement that ha would be able to remain in the property for his lifetime. On the other hand, Daisy was old lady; therefore, it was an unconscionable conduct to sell property without her knowledge because she had actual occupation on the property. In Gillett v Holt the court found that Mr. Gillett who had worked for Mr. Holt for nearly 40 years. The court granted him proprietary rights on the property. From the decision of this case it can be said that Daisy has equitable rights on this property. When a purchaser buys land from the trustees he wants to be sure that he purchases free of the rights of the beneficiaries under the trust. Martin J. & Turner C, (2008) argued that the trustees of the land are the legal owner. All the trustees must join in the sale to pass ownership to the buyer, for example. If there are two trustees then all four must join in the sale even though overreaching can take place with only two trustees. If a sole trustee conveys the land to a purchaser then the rights of the beneficiaries are not overreached. However, here Farmer Field’s was the sole trustee as a result the rights of Farmer Field’s grandmother Daisy are not overreached. In Williams & Glyns Bank Ltd v Boland19 a house was registered in the sole name of a husband but the wife had made contributions which gave her rights in equity in the house. The husband therefore held the property on trust for them both. He mortgages the property to the Williams & Glyns Bank which was treated as a conveyance for the purpose of s. 2(1)(ii) of the LPA 1925. It was held that he was unable to overreach the rights of the wife because he was the sole trustee. The wife’s right to remain in the property was upheld. Her equitable rights would continue to attach to the land and would not transfer to the proceeds of sale. It gave her the right to continue living in the property. Bibliography: Dr Dixon, M. (2005), Modern Land Law, 5th edition, Cavendish Publishing Limited, pp-29-101 Jackson N,(2008), Overreaching in Registered Land Law, University of Manchester - School of Law, available at: < http://papers.ssrn.com/sol3/papers.cfm?abstract_id=886807 > [accessed on 25 October 2008]] Gray & Gray, (2006), Elements of Land Law, 4th edition, Oxford University Press, pp-38 Martin J. & Turner C, (2008), Unlocking Land Law, 1st edition, Hodder &Stoughton.. Revised Statute from The UK Statute Law Database, (2008), Law of Property Act 1925, < http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1925/cukpga_19250020_en_1> [accessed on 25 October 2008]] Thompson M.P. (2006), Modern Land Law, Oxford University Press, ISBN: 0199277907, pp-40-48 Wilkie M. & Luxton P. (2006), Land Law: Question and Answer, Oxford University Press, pp-35-61 Table of Cases: Cases No City of London Building Society v Flegg [1988] AC 54 Wheeldon v Burrows (1879) 12 Ch D 31 Midland Bank Trust Co Ltd v Green [1981] 2 WLR 28 Sovmots v Secretary for State for the Environment [1979] AC 144. Williams & Glyns Bank Ltd v Boland [1981] AC 487, Lloyds Bank v Carrick [1996] 4 ALL ER 630 Walsh v lonsdale [1882] 21 Ch D 9 Hunt v Luck [1901] 1 Ch 45 Yaxley v Gotts (2000) (2000) 1 AII ER 711 Wilkes v Spooner [1911] 2 KB 473 Birmingham Midshires Mortgage Services Ltd v Sabherwal [2000] 80 P & CR 256 City Permanent Building Society v Miller [1952] Ch 853 Inwards v Baker [1965] 2 QB 929 Gillett v Holt [2001] Ch 210 Table of Statute: Statute Section Law of Property Act 1925 s. 2 & s.27 Law of Property Act 1925 s. 62 Law of Property Act 1925 s 199 Law of Property Act 1925 s.1(2)(a). Law of Property Act 1925 s.40 Law of Property Act 1925 s. 52 S.205(1) (xxvii) the Law of Property (Miscellaneous Provisions) Act 1989 s.2. Land Registration Act 2002 Paragraph 2 of Schedule 3 Land Registration Act 2002 s. 70 (1)(g) Land Registration Act 2002 s 70(1)(a) Land Registration Act 2002 s.29 and 30 Land Registration Act 2002 Paragraph 3 of Schedule 3 Land Charges Act 1972 s.2(4) Land Charges Act 1972 s. 2(5)(ii) Land Registration Act 2002 s. 27(2)(d) Read More