Summary
Summary Enforceability of Third-Party Interests
- Module
- Land Law - MA in Law / GDL
- Institution
- Land Law - MA In Law / GDL
Enforceability of Third-Party Interests
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2+3 Enforceability of Third-Party InterestsSub-unit 2: Overview of the unregistered system
Unregistered system of land was the only system in existence prior to 1925. Then the Law of Property Act 1925 codified it and the Land
Registration Act 1925 codified the registered system
>40% of England and Wales by area still remain unregistered, which comprises 10% of all titles to land
Unregistered Conveyancing
Two stages to the conveyancing transaction;
1. Exchange of contracts – buyer obtains an equitable interest in the land
2. Completion – the parties execute a deed to transfer legal ownership of the land
Where land is unregistered, the buyer becomes the legal owner of the land at the date of conveyance
Where title to property isn’t registered at Land Registry, sellers must prove their right to possession by providing documents
The deed used to transfer ownership of land from sellers to buyers is called a conveyance – owners of unregistered titles prove their ownership by
showing prospective buyers a bundle of deeds, most of them conveyances
Proof of Ownership of Title
s44 Law of Property Act → unless the contract between the seller and the buyer provides to the contrary, the seller need only produce title deeds
proving ownership of the land for the last 15 years, culminating in the conveyance to the seller
Must prove law possession of the land back to a good root of title that is at least 15 years old
In unregistered conveyancing, landowners’ title deeds are used to prove their ownership of their land. The conveyances can also be used to find
out about some third-party rights (eg covenants and easements), which bind the land
Disadvantages of the Unregistered System
Forged title deeds – the conveyances proving ownership may look genuine but buyers have no guarantee that these documents are not
forgeries
Risk that title deeds shown to buyers to prove the sellers’ ownership of the land may be genuine but may not include documents that
record those transactions about which buyers may need to know about before buying the land
o Note: buyers don’t need to see any conveyance prior to the root of title document – these documents may be missing by
design or accident.
o Buyers of an unregistered title can never be certain that the title they investigate is a good title
No two unregistered titles look the same – each time land is sold, buyers have to read the old conveyances to establish ownership, and
this system of proving title is time-consuming and repetitive
o Also expensive since solicitors will usually be hired for this work
Problems if bundle of conveyances are lost, destroyed or stolen. Also, original deeds are sometimes hard to read
Enforceability of Third-Party Rights in the Unregistered System
Ownership of land can amount to ownership of a legal estate, freehold or leasehold, but it ca also include ownership of a third party interest or
right which can be legal or equitable
‘propriety interests’ – can bind someone who buys the land but was not a party to creating the propriety interest, eg right of way
Whether or not those third-party rights bind the land depends on whether you are dealing with an unregistered or a registered title
This topic is about enforceability of third-party rights over unregistered land – relevant whenever unregistered land is being sold to a purchaser, to
determine whether the purchaser is bound by any third-party interests that exist in the land. Note: these rules apply even where first registration
of the title is required after completion
Land Charges Act 1972 replaced the earlier Land Charges Act 1925, BUT Land Charges Act 1972 doesn’t apply to every third-party interest
If interest falls outside the Land Charges Act, the ‘pre-1926 rules’ apply
The Land Charges System
Apply only where a third party right exists over a piece of land with an unregistered title
From 1926, a system of registration of incumbrances came into existence. Certain third-party rights became registerable on the Land Charges
Register (a public register kept at the Central Land Charges Department in Plymouth)
(Note: Land Charges Register is different – it’s a register of third-party rights that affect unregistered land)
Land Charge Register is a register of third-party rights that affect unregistered land; a register of names
, Details of the third-party interests should be registered by the person with the interest against the name of the estate owner who has created the
interest and whose land is to be burdened by it (s3 LCA 1972) – should be done at the time the interest is created
Not all third-party interest can be registered on the Land Charges Register
S2(4), (5) and (7) and s3 of the land Charges Act 1972
Class D(ii) – restrictive covenant: a promise not to use land in a particular way
Class D(iii) – equitable easement, eg an easement not satisfying s1(2)(a) LPA
Class C (iv) – estate contract. Includes a contract to sell a freehold estate in land, and an estate contract would include a contract to grant a lease.
→ It also covers options to buy the legal estate and easements which satisfy s1 LPA but have not been created by deed
Class F – a statutory right of the non-owning spouse to occupy the matrimonial home under s30 of the Family Law Act 1996
Effect of registration of land charges – bind the world
Third parties with certain interests in land with an unregistered title can protect those interests by registration – this constitutes actual notice of
the incumbrance and of the fact of registration to all persons connected with the land affected, as from the date of registration (s198 LPA 1925)
Registered on the Land Charges Register so anyone who buys the land has ‘actual knowledge’
The land charge must be registered by the date of completion of the sale. In unregistered land, the date of conveyance when the purchaser
becomes the legal owner of the land
Effect of failure to register a land charge – if not registered, not binding
S4 Land Charges Act 1972 – purchasers of the land can take free of the unregistered land
‘purchaser’ includes a mortgagee and a lessee but not someone who has taken a gift of the property. A person who receives property as a gift
takes subject to all the third-party rights, whether registered or not
The Pre-1926 Rules: Legal Estates and Interests
Categorise third party rights into legal and equitable interests
Under the pre-1926 rule, legal estates and interests bind the whole world. So, a legal third party interest will bind the purchaser of the legal estate,
even if the purchaser has no knowledge of the existence of the interest when he buys the property
The Pre-1926 Rules: Equitable Interest – s199 LPA – Doctrine of Notice
Equitable interest are enforceable are enforceable against anyone except the bona fida purchaser of the legal estate for value without notice
(‘equity’s darling’)
Meaning of equity’s darling;
1. The buyer must be bona fida – must be acting in good faith (without fraud)
2. The buyer must be a purchaser – includes a mortgagee or lessee. A purchaser is a person who receives property other than by operation
of law
a. If A sells land, gifts it, or leaves it in a will = B is a purchaser
b. If B gets it through intestacy rules, or if A went bankrupt = B would not be a purchaser
3. The buyer must have bought to property for value – he must have given consideration for the estate
a. Eg money or money’s worth (land, stocks and shares), marriage, and payment of an existing debt
b. A person who gives no valuable consideration is a ‘volunteer’ and is not an ‘equity’s darling’
4. The buyer must have taken the legal estate in the property – he must have purchased a fee simple absolute in possession or a term of
years absolute (s1(1) LPA 1925)
5. The buyer must have brought the property without notice that the equitable interest exists. Three recognised forms of notice;
(a) Actual notice – (doesn’t include vague rumours)
(b) Constructive notice – any fact which ‘would have come to his knowledge if such inquiries and inspections had been made as
ought reasonably to have been made by him’, s199(1) LPA 1925
(c) Imputed notice – any matter which his solicitor (or other agent) had actual or constructive notice
The purchaser (or his agent) should investigate the seller’s title and he should follow up anything that appears inconsistent with that title. S44(1)
LPA gives the purchaser the right to inspect the seller’s title deeds back to a good root of title, which is at least 15 years old. He should also inspect
the land to see who is in occupation
If he doesn’t take these steps, he will have constructive or imputed notice of any right that the occupier may have
Kingsnorth Finance Co Ltd v Tizard [1986] – A is buying a house from Mr T, who lives with Mrs T. Mrs T may have an equitable interest since she
contributed to the purchase price.
The purchaser or his agent must make all inquiries and inspections that, in the circumstances, ought reasonably to have been made
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