{"id":474,"date":"2019-03-01T14:29:08","date_gmt":"2019-03-01T14:29:08","guid":{"rendered":""},"modified":"2019-06-11T10:22:00","modified_gmt":"2019-06-11T10:22:00","slug":"land-law-problem-question-4846","status":"publish","type":"post","link":"https:\/\/www.lawteacher.net\/problem-question-examples\/land-law-problem-question-4846.php","title":{"rendered":"Land Law Problem Question Example"},"content":{"rendered":"

Amarjit was the owner of a freehold property known as Ashdown Farm, title to which was unregistered when he purchased it in 1988.  The purchase did not trigger first registration at the Land Registry<\/a> as the area that Ashdown Farm was located in did not become a compulsory registration area until December 1990.<\/p>\n

In
\n2005, Amarjit granted his son, Sabeer, an option to purchase Oak Cottage, which
\nwas part of Ashdown Farm.  The option was
\nfor a period of twenty years from 2005.  The
\noption agreement was in writing and signed by both parties.  The document provided that the option could
\nbe exercised by the service of a notice by Sabeer to Amarjit.<\/p>\n

A
\ncouple of years later, Amarjit and Sabeer quarrelled and, without Sabeer\u2019s
\nknowledge, in 2009, Amarjit sold Oak Cottage to his brother, Caleb.  The purchase price Caleb paid for Oak Cottage
\nwas about half its market value.  Caleb
\nwas fully aware of the option granted in favour of Sabeer.  Caleb later sold Oak Cottage back to Amarjit.<\/p>\n

Last year, Amarjit\u2019s farm got into difficulties and his other brother, Daksha (who was in Australia at the time), agreed to lend him a sum of money to help him out. He lent him the money on condition that he could have a share of the farm if it was sold.  <\/p>\n

Notwithstanding
\nthe loan, Amarjit\u2019s business continued to struggle and he has now decided to
\nsell the farm to a neighbouring farmer, Edwin.<\/p>\n

He
\nexplains to Edwin all that has happened to the land and Edwin now seeks your
\nadvice as to whether he will be bound by any right or interest Sabeer or Daksha
\nmay have and, if he is, if there is any way he could avoid these.<\/p>\n

Advise Edwin<\/h3>\n

Land
\nTransfer law- Law of Property Act 1925<\/h4>\n

This area of law<\/a> looks at two different ways that an owner of the land, can prove that he owns the land in question. Land registry records all relevant details of ownership relating to a particular piece of land. The unregistered land which is governed partly by the rules of common law and equity and partly by provisions contained in the 1925 Law of Property Act[1]<\/a> and registered land system, which is governed by the Land Registration Act 2002[2]<\/a>. Previously, before the land register was invented, all land in England and Wales was unregistered. The Idea of the land legislation is to define the power of the owner of the land and prove ownership, in a much cheaper and easier way. The way land was held, and the way property ownership was proven and different types of interest that could be protected in relation to land was complicated. Since 1990, the whole of England and Wales has been subject to compulsory registration.<\/p>\n

Unregistered
\nLand <\/h4>\n

In
\norder to advice Edwin, how to transfer the legal estate free from any rights or
\ninterests. It needs to be established if the land is registered or unregistered
\nland, and whether the interest in land is a legal or an equitable Interest,
\nthis will determine which prior property rights will bind the purchaser.[3]<\/a>
\nThe aim of the provisions of the Law of Property Act 1925[4]<\/a> is
\nto effect as a \u201cCurtain\u201d between the legal estate in land and equitable
\ninterest. It seems that, based on the scenario, freehold property owned by
\nAmarjiit is an unregistered land.[5]<\/a><\/p>\n

If
\nan interest is capable of existing as an interest in land, and it is capable of
\nbeing legal, it is included in the Law of Property Act 1925 list section 1. Legal
\ninterest will then bind the whole world without the need for protection by
\nregistration. Section 1 of the 1925 act limited the number of legal estates and
\ninterests, because they will bind a purchaser automatically irrespective of
\nnotice.[6]<\/a> <\/p>\n

All
\nother estates, interests and charges in or over land if not listed in section1
\nof the 1925 act, but as mentioned in section1(3), take effect as equitable
\ninterest and will bind a purchaser or not in accordance with the method used to
\nprotect it[7]<\/a>.
\nSabeer\u2019s interest is not listed in section1, it is therefore, to be deemed as
\nan equitable interest. Protection of equitable interest falls into three types
\nof categories. First protection by registration, secondly protection by
\ndoctrine of overreaching or protection by the doctrine of notice.[8]<\/a><\/p>\n

Central
\nLand Charger Register<\/h4>\n

According
\nto Law of Property Act 1925 Section 198, If Sabeer\u2019s commercial interest is in
\nthe list of \u201ccentral land charges\u201d section2 of Land Charges Act 1972[9]<\/a>,
\nit must be registered against the name of the estate owner who entered into the
\narrangement in order to bind a purchaser.[10]<\/a> If
\nit is not, section 4 of the1972 act applies and it does not bind further
\ntransactions. <\/p>\n

\n

\u201cThe registration of any instrument or matter under the provision of the Land Charges Act, shall be deemed to constitute actual notice of such instrument or matter \u201c<\/p>\n<\/blockquote>\n

Amarjit
\ngranted Sabeer an option to purchase Oak Cottage, which was part of Ashdown Farm.
\nThe register composes of six sections from A to F. An \u201coption to purchase\u201d is
\nlisted under \u201cclass C interest\u201d as an estate contract under section2 of the
\n1972 Act. The option agreement was in writing signed by both parties, which
\nsatisfied s2(1) of Law of Property (Miscellaneous Provisions) Act 1989[11]<\/a>,
\nthe contract for sale. Moreover, the document provided that the option could be
\nexercised by the service of a notice by Sabeer to Amarjit. <\/p>\n

Under
\nSection32 of Land Registration Act 2002[12]<\/a> a
\nnotice is a protection to other rights in land, to potentially stop them from
\nbeing destroyed. The question in Spiro v Glencrown
\nProperties Ltd and another 1991<\/a>[13]<\/a>
\nwas whether, the contract was the agreement by which the option was granted, if
\nso it complies with the Act. However, if the contract was made by the letter
\nexercising the option then it did not comply with the Act. If the interest was
\nregistered Edwin will be bound by Sabeer\u2019s overriding interest. At the time the
\nplain purpose of the option agreement under section2(1) of 1989 Act[14]<\/a> ,was
\nto record the consent of the parties. If the interest was not registered, the
\neffect of non- registration is that it will be void against a purchaser of the
\nlegal estate for money or money\u2019s worth such as land.[15]<\/a><\/p>\n

Section
\n205(1)(xxi) of LPA 1925 Act[16]<\/a> ,defines
\na \u201cpurchaser\u201d as a purchaser in good faith for valuable consideration. In Midland
\nBank Trust v Green 1981[17]<\/a>
\nHouse of Lords decided that there was no requirement of good faith and it was
\nirrelevant under Land Charges Act 1972.In this case a father has granted his
\nson an option to purchase his farm, it could be argued that the system is
\nunjust, but some may argue that it is certain.<\/p>\n

Overreaching<\/h4>\n

If
\nthe interest is not listed in Central Land Charge, because it does not fall
\nwithin one of the classes mentioned in section2 of Land Charges Act 1972, then
\nit may be overreached. Overreaching is defined in section2(1) of the Law of
\nProperty Act 1925, it allows a purchaser to take free from prior family-based interest,
\nwhether he had notice of those interests or not. Not every equitable interest
\ncan be overreached. Interest which fall within the list of Central Land Charges
\ncannot be overreached. Not only is Sabeer\u2019s equitable interest listed under
\nclass \u201cC\u201d in central land charge register, but also the principle of
\ntwo-trustee rule has not been satisfied by Edwin.[18]<\/a><\/p>\n

Doctrine
\nof Notice <\/h4>\n

Furthermore, if the equitable interest was not registered by Sabeer in the Central Land Charge Register and it cannot be overreached, doctrine of notice is the last category. The doctrine of notice applies in unregistered land to determine priority of equitable interests not governed by the Land Charges Act 1925. The issue here is whether the purchaser had \u201cnotice\u201d of the equitable interest, in order to take a legal estate in land free from prior equitable right, the purchaser must have not had notice of the right. Equitable rights bind the whole world except a bona fide purchaser of a legal estate for value without notice of the prior equitable right. A purchaser with actual, constructive or impute notice, of a prior equitable right will take the estate subject to that right.[19]<\/a><\/p>\n

If Edwin obtain an actual notice, he will take subject to rights that he actually knew about. To rights he would have known about had he inspected the land, like considered in the case of Kingsnorth Finance v Tizard 1986<\/a>[20]<\/a>. Where the lender had failed to take reasonable steps to avoid being fixed with constructive notice, and also in the case of Hunt v Luck 1902<\/a>[21]<\/a>. Additionally, in section 199(1)(ii)(b) of Law of Property Act 1925[22]<\/a> he is deemed to have the same actual notice as his professional advisor.<\/p>\n

A
\nperson who purchases the legal estate in land, in this case Edwin, must give
\nvalue, not necessarily mean full or market value for the land in question. On
\nthe facts given, Edwin has been informed of all that has happened previously to
\nthe land, meaning that he has had an actual notice of the rights that could
\npossibly bind him. To advise Edwin he could possibly appoint a second trustee
\nto overreach the interest.<\/p>\n

Land
\nRegistration Act 1925<\/h4>\n

In
\n1925 two main legislations came into existence, the Land Registration Act 1925
\nand Law of Property Act 1925. Land Registration Act 1925 introduced a different
\nway of proving ownership of land to title deeds which it the unregistered land
\nsystem. Nevertheless, the later act of Land Registration Act 2002, which repeals
\nand replaces the Land Registration Act 1925 came into force. <\/p>\n

According
\nto the scenario, Oak Cottage was later sold by Amarjit to his brother Caleb
\nwithout Sabeer\u2019s notice in 2009. Caleb was aware of Sabeer\u2019s option to purchase,
\ncould be said that he did not act in good faith. As mentioned before, in 1990 a
\ncompulsory land registration came into place, meaning that when Amarjit sold
\nOak Cottage to Caleb it would have triggered the first registration of the
\nfreehold estate. Section 4 of Land Registration Act 2002 lists events that trigger
\nthe compulsory registration, most notable one is, the transfer of freehold
\nestate in land.[23]<\/a><\/p>\n

Caleb
\nwould have been under a duty to register the estate within time, section7(1) of
\nthe 2002 Act provides 2 months to complete the legislation otherwise, the
\neffect of non-registration would be that that the transfer becomes void Under
\ns7(2)(a) and land would have remained with Amarjit. Caleb later sold the Oak
\nCottage back to Amarjit. If Oak Cottage was not registered by Caleb it might
\nstill have an impact on the land and later been registered by Amarjit. It is
\nimportant to note that the Oak Cottage was sold, and not the entire Ashdown
\nfarm to Caleb. This can be perhaps seen as two lands and interests in both
\nregistered land an unregistered land. However, either way it does not have an effect
\non the option to purchase because it is still binding on Edwin and the
\nregistration would only affect future Interests.<\/p>\n

Last
\ninterest that could potentially bind Edwin. Daksha\u2019s Interest, who agreed to
\nlend Amarjiit a sum of money, on the condition that he could have a share of
\nthe farm if it was sold. The two-potential land are now owned by solo owner,
\nbut the Oak Cottage could be registered, and Ashdown Farm is not. Edwin will be
\nbound to register the Ashdown Farm as a whole and could be bound by interest
\nwhich have an overriding status without being on the register.<\/p>\n

In
\nthis matter, it needs to be established whether Daksha\u2019s Interest in land is a
\nlegal interest or an equitable interest. Section 1 of Law of Property Act 1925,
\ndoes not mention Daksha\u2019s Interest, which means that Section1(3) applies and
\nhis interests take effect as an equitable interest. As to the potentially
\nregistered part of the farm, Oak Cottage, the system of protecting is quite
\ndifferent from registered and unregistered titles. Daksha wants the share of
\nthe entire farm not just Oak Cottage. Section11 of Land Registration Act 2002,
\noutlines that when Edwin is registered as proprietor, and he has given valuable
\nconsideration, he will take free from pre-existing property rights, unless an
\ninterest is Registered against the title or is classified as an \u201coverriding
\ninterest\u201d.[24]<\/a><\/p>\n

Registrable
\nDispositions<\/h4>\n

Where
\ntitle to an estate in land is already registered, certain transactions with
\nthat tittle must be registered. Otherwise they do not take effect in common law
\nand take effect as an equitable interest which leaves interests very vulnerable.
\nThe list with registerable dispositions are listed in section27 of Land
\nRegistration Act 2002 and include transfer of land. There is also a priority rule,
\nsection29 and 30 of Land Legislation Act 2002 contains the rules that tell when
\nan interest in land will affect a later transaction with the land. As for interests
\nprotected by an entry on the register, there are two methods of protection,
\nrestrictions and notices governed by section 40 and 32 of the 2002 Act. Notice
\nis an entry on the register of title that seeks to give priority to an interest
\naffecting that land, this would not be available to Daksha as section 33
\nexcludes interests under a trust. Whereas restrictions are protecting rights in
\nland against a later sale of that land, it is a control mechanism. [25]<\/a><\/p>\n

Overriding
\nInterest<\/h4>\n

Overriding
\nInterests are not protected on the register and S29(2)(a)(ii) Land Registration
\nAct 2002 gives priority to them. The categories are set out in schedule 3 of
\nthe Act. Darsha could potentially have a family right, as with the borrowing of
\nthe money to Amarjiit he has a beneficial interest held behind a trust of
\nland.Similar issues were considered in the case of Williams & Glyns Bank
\nv Boland 1980[26]<\/a>.
\nMrs Boland did not have any legal interest listed in section 1(2) of LPA 1925.
\nShe had contributed to the cost of the land creating a trust and was in actual
\noccupation of the land. Lord Wilberforce held that her beneficial interest was
\ntherefore overriding by virtue of her actual occupation.<\/p>\n

In
\norder to establish an overriding interest, the claimant must prove two
\nelements. Firstly, that they have an interest in land at the time of the
\ndisposition and secondly that they are in actual occupation.[27]<\/a>
\nIn Daksha\u2019s case he is not in actual occupation mentioned in section 70(1)(g) and
\nonly wants a share from the profit made when the farm is sold. He will also be
\nbound by Sabeer\u2019s interest in Oak Cottage if he knew about the interest in
\nquestion. Edwin will not be bound with Daksha\u2019s interest as to the Oak cottage
\nif it was registered previously by Caleb.<\/p>\n

As
\nto the Land, if the whole farm was not registered, Darsha could see if his
\nequitable interest would be protected by the unregistered provision, for
\nexample overreaching or protection by the doctrine of notice. In order to advise
\nEdwin, he would have to overreach that beneficial interest that exist and ask
\nAmarjiit to appoint a second trustee and pay to at least two trustees. If only
\none trustee and third parties interest may be bound.<\/p>\n

Bibliography
\n<\/h2>\n

Barbara Bogusz and Roger Sexton, Complete Land Law,5th edition, 2016, Oxford University Press.<\/p>\n

 Diane Chappelle, Land Law,9th Edition, Pearson
\nPublishing 2009.<\/p>\n

Elizabeth Cooke, Land Law, Clarendon Law Series, 2006<\/p>\n

 John Stevens and Robert Pearson, Land Law, 5th
\nedition, Sweet and Maxwell Publishing<\/p>\n

Mark P. Thompson, Modern Land Law, 5th edition, Oxford Publishing, 2009,<\/p>\n

Martin Dixon, Modern Land Law, 10th edition, 2016, Routledge Publishing<\/p>\n

Meryl Thomas, Property Law 2017-2018, 25th Edition, Blackstone Publishing<\/p>\n

  Mark
\nDavys, Land Law,9th Edition, Palgrave Publishing.<\/p>\n

Paul Richards, Land Law, 2014, Pearson Publishing.<\/p>\n

Sandra Clarke and Sarah Greer, 5th Edition, Oxford Press.<\/p>\n

\n

[1]<\/a> Law of
\nProperty Act 1925, https:\/\/www.legislation.gov.uk\/ukpga\/Geo5\/15-16\/20\/contents.<\/p>\n

[2]<\/a> Land
\nRegistration Act 2002,
\nhttps:\/\/www.legislation.gov.uk\/ukpga\/Geo5\/15-16\/21\/contents.<\/p>\n

[3]<\/a> Diane
\nChappelle, Land Law,9th<\/sup> edition, Pearson Publishing 2009, P109.<\/p>\n

[4]<\/a> Law of
\nProperty Act 1925.<\/p>\n

[5]<\/a> Paul
\nRichards, Land Law,2014, Pearson Publishing, P121.<\/p>\n

[6]<\/a> Law of
\nProperty Act 1925, S1,op.cit.<\/p>\n

[7]<\/a> Sandra Clarke and Sarah Greer,5th<\/sup> edition,
\nOxford Press, P111<\/a>.<\/p>\n

[8]<\/a> Mark
\nDavys, Land Law,9th<\/sup> edition ,Palgrave Publishing ,P25.<\/p>\n

[9]<\/a> Meryl
\nThomas, Property Law 2017-2018,25th<\/sup> edition, Blackstone Publishing,
\nP167.<\/p>\n

[10]<\/a> Meryl
\nThomas, op.cit,(footnote 9), P107.<\/p>\n

[11]<\/a> Meryl
\nThomas, op,cit.(footnote 10),P236.<\/p>\n

[12]<\/a> Land
\nRegistration Act 2002, Section 32,
\nhttps:\/\/www.legislation.gov.uk\/ukpga\/Geo5\/15-16\/21\/contents.<\/p>\n

[13]<\/a> Spiro v
\nGlencrown Properties Ltd and another 1991, 1 All ER 600,<\/p>\n

[14]<\/a> Law of
\nProperty (Miscellaneous Provisions) Act 1989, Section 2(1),
\nhttps:\/\/www.legislation.gov.uk\/ukpga\/1989\/34\/contents.<\/p>\n

[15]<\/a> Diane
\nChappelle, Land Law,9th<\/sup> edition, Pearson Publishing 2009 P109<\/a>.<\/p>\n

[16]<\/a> Law of
\nProperty Act 1925, Section 205(1)(xxi).<\/p>\n

[17]<\/a> Midland
\nBank Trust v Green 1981, 2 WLR 28.<\/p>\n

[18]<\/a> Barbara
\nBogusz and Roger Sexton, Complete Land Law,5th<\/sup> edition,2016, Oxford
\nUniversity Press.<\/p>\n

[19]<\/a> Martin
\nDixon, Modern Land Law, 10th<\/sup> edition,2016, Routledge Publishing,
\nP42.<\/p>\n

[20]<\/a> Kingsnorth
\nFinance v Tizard 1986, 1 WLR 783.<\/p>\n

[21]<\/a> Hunt v
\nLuck 1902, 1 Ch 428.<\/p>\n

[22]<\/a> Law of
\nProperty Act 1925, S199(1)(ii)(b),
\nhttps:\/\/www.legislation.gov.uk\/ukpga\/Geo5\/15-16\/20\/section\/199<\/p>\n

[23]<\/a>
\nElizabeth Cooke, Land Law, Clarendon Law Series,2006, P28<\/p>\n

[24]<\/a> Mark P.
\nThompson, Modern Land Law,5th<\/sup> edition, Oxford Publishing,2009, P 64<\/p>\n

[25]<\/a> Sandra
\nClarke and Sarah Greer,5th edition, Oxford Press, P111<\/p>\n

[26]<\/a> Williams
\n& Glyn’s Bank v Boland ,1981 AC 487<\/p>\n

[27]<\/a> John
\nStevens and Robert Pearson, Land Law, 5th<\/sup> edition, Sweet and Maxwell
\nPublishing , P55<\/p>\n","protected":false},"excerpt":{"rendered":"

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