In this essay I am going to advise Miss Stanfield of her position in five properties and how those interest may bind a potential buyer in light of existing legislation and precedent. With particular refers to Land Registration Act 1925, amended by LRA 2002, Land Property Act 1925 land Charges Act 1972 and another legislation with the guidance of case law.
The Land Property Act 1925 consolidated all existed law to make it alot easier to understand and to clarify land law to its simplest form. The Act reduced legal estates in land to two, which are:
- Freehold & (LPA s.1(1)(a)
- Leasehold (LPA s1(1)(b).
Legal rights bind the whole world, these are rights in Rem. The Statute also limited the number of legal interest in land to five under LPA 1925 s1(2), I.e. Mortgages, easements, rent charges, right of entry, profit a perjure. All other estates, interest and charges in or over land take effect as equitable interests (LPA 1925 s1(3)).
The freehold is the largest estate one has in land and it means absolute ownership of land (one can do what ever he wishes to that land). Miss Stanfield holds the freehold in all five properties whether its over registered or unregistered land. The leasehold however is the lesser estate in land and is defined by the LPA 1925 s205(xxvii), it could be legal or equitable. Equitable rights are rights in Personam(against the person).
A legal lease over three years must be created by a deed s52(1)of the LPA 1925. It is possible for a legal lease to take effect under law without a deed or in writing, which takes effect in possessions for a term not exceeding three years as it was illustrated in the case of Crago v Julian (1992). A lease for three year most comply with s1 of the LPA (MP) Act 1989 states that the formal document must express it to be a deed and it must be signed, witnessed and delivered. A valid lease must be for a fixed duration with exclusive possession and for rent.
However, if a lease fail short and does not meet the requirement of a legal lease it could well still be an equitable lease but if the lease is in writing it will be viewed as a valid contract to grant a legal lease and therefore the courts can order specific performance to executed a deed. As with equitable interest it is unto the courts discretion whether or not to grant specific performance as “equity looks on that as done which ought to be done” as this maxim was followed in the case Walsh v Lonsdale(1882).
There are two types of land one that is registered under the Land Registration Act 2002, which has made it compulsory to register an moment concerning land therefore what happened in reality to a piece of land was reflected in the register, which is referred to as the “mirror principle”. The land is Register on a central registrar by the Land Registry, the land which is registered will have its own unique title number and any interest regarding that land would be registered under that title number.
There is also unregistered land pre 2002 as it was not compulsory to registered estate or interest in land, which does not mean land was not registered back then, it was done on a voluntary bases. As from the October 13 2003 it has become mandatory that one registers land. After the 2002 Act the registrar allows for voluntary first registration by giving discount on fees. If land has not been registered in the past it will take effect as first registration, there are certain event that would trigger first registration, which includes the transfer of a freehold estate or an assignment of a leasehold estate, the creation of reversionary tenancy and legal mortgage.
There are certain types of interests in land know as the ‘overriding interests' which mean even though they are not registered they would still bind the third party. Theses are outlined in Schedule 1 of the LPA 2002 Act and include:
- legal leases of seven years or less
- the interests of persons in “actual Occupation” and reversionary tenancies.
- legal easement or profit.
For a legal lease to exist there most be actual occupation to override interest, mere exists will not suffice as it was seen in the case of Strand Securities v Caswell without physical presence it will not the adequate. Actual occupation most exist when the transfer to the purchaser takes place Abbey National Building Society v Cann (1991). Were law and equity conflict the law of equity will prevail(Supreme Court of judicature Act 1875).
Property One- Is a registered freehold land it has its own title number HU 12345. Miss Stanfield holds the freehold in the property as we have been told therefore she would fall under Law Property Act 1925 s.1(1). As this is a registered land everything that happens on the land should be reflected on the register, If Mr A has registered his interest then the potential purchaser would be bound by the lease, if not registered it will be void against any purchaser for money or money”s worth. Before we look an further one needs to decide if the lease here is a legal or equitable one. Mr A agreed to grant a lease for four years but because the lease is less than seven years it come under the exception that it does not come under registrable dispositions under the LRA 2002 s.4. However, a lease to be legal over three years most be in some for of agreement in a deed s.52(1) LPA 1925 unless it fails under s54(1) of the Act.
Before one can established whether it”s a legal or equity lease one has to look at the agreement to see if there are all the elements present to form a lease. The commencement date is certain, it states June 2008 for a fixed period of four years and for £650 per month, which suggests consideration is given in the form of rent per month because the lease is over years, it most be by deed s52 and s1 of LP(MP)A 1989.
Miss Stanfield has agreed to grant a lease, it is seen as good as granting a legal lease Parker v Tawell (1958). As an agreement is to grant a lease was not put into a deed because of fraudulent intention then Mr A would have an equitable lease and the court could grant specific performance. Therefore because the land is registered Mr A should registered his interest as a entry of a notice, if that is done then the new purchaser of that property will be bound by this interest has he/she had notice of it.
Property Two- This property Miss Stanfield has is unregistered freehold. Therefore the disposition would trigger first registration as it is a lease over seven years LPA 2002, s.4(2) and it is the estates owner responsibility to registered the disposition, if that has not been the case then there is sanction under s.6. The utmost important thing to decide is if this is a legal or equitable lease. For it to be legal it must be made in a deed s.52 unless under the three years exception, which it”s the case here. Miss Stanfield offered to let this property in a letter(in writing).
The agreement has all the necessary ingredients for a valid lease as the courts laid it out in Street v Mountford for a valid lease, it most be certain and for a fixed period, with exclusive possession that take effect immediately and for a reasonably rent obtainable. As it can be seen that Miss Stanfield has stated the time the lease will started and for how long for rent of £550 per month, which suggests that Miss B has a monthly tenancy. As the contract does not start immediately Miss B could enter this as a estate contract under class c to protect her interest in land so that any potential buyer can see on the register that there people who has interest over that land. As it is in writing it must be in accordance with s.2(1) LP(MP)A 1989. The agreement was in a letter therefore it could be said in a contract as long as it complies with s2. Miss B must register it under the land chargers Act 1972 class c(iv) against the estate owner s.3(1)LCA 1972, the potential purchaser will be regarded as being put on actual notice under s198 of the 1925 Act. and will be bound by it. If a land charge is not REGISTRED then under s. 4(6) it is void against a purchaser for money or money”s worth and the potential buyer will take free from the equitable interest Midlands Bank v Green (1981) AC 513.
Property Three- As this land this registered any rights that are vested into this property must be registered unless they fall under the exceptions of s54 LPA. It has to be registered within two months s6 LRA but if failed to do so will give effect to s7 LRA 2002, unless a good reason is given to the HM Land Register for not registering the interest. Miss Stanfield has “Granted” a lease to Mr C which implies that it has been done in a deed s52 and is a legal lease for six years. The legal does not have to be registered substantively as it falls under the exceptions of seven years. A lease under seven years is an “overriding interest” s.70(1)(k) LPA 1925 and schedule 3 Para 1 of the LRA 2002. It has all the category meet in Street v Mountford to be a valid legal lease. Therefore Mr C has a legal lease for the term that has been agreed and the subsequent purchaser would be bound.
Property Four- Miss Stanfield has verbally agreed to let Mrs D who is a friend to live in the unregistered land for 2 and a half years for rent payable of £200 per month. On the face of the agreement one would think it”s a monthly tenancy. Lets analyse the facts in more detail. This arrangement seem to be an act of friendship. The lease could potentially be legal as it fall under the exception of three years s54 and has all the elements of a lease are present, the commencement date, duration of the lease and at a rent but the rent may not be seen as to the market value. This is a tenancy at will not be equitable either. Unless part performance has taken place. Mrs D could registered this interest under doctrine of notice, just so that the potential buyer has knowledge of her existence.
Property five- is also registered land and Miss Stanfield hols the Freehold estate in the land. The lease to be legal lease it should be terms of years absolute within LPA 1925s1(1). If there is any lease to exist there most be certainty of duration along with exclusive possession. The Lease is granted for 15 years, therefore it is a fixed duration unless there has been a break clause incorporated in to the contract when either parties are allowed to opt out of the agreement. Mr and Mrs E entered into an agreement in January 2005 but went into possession March 2005 for it to be a legal lease. The lease most be registered under the LRA 2002 as the lease exceeding seven years. As the lease is “granted” the words construe that it is in a deed. Legal lease would be protected under Land Registration Act such 3 Para 1 and will be bind on the
The Bona Fide Purchaser of Legal Estate for value without notice as it was seen the case of Shiloh Spinners v Harding (1973).
Miss Stanfield can not end a tenancy unless one of the tenants is in arrears or in breach of their tenancy agreement.
The potential purchaser of the properties will only be bound by the interests if they had actual, constructive or imputed notice. If the purchaser is a bone fide purchaser of the legal estate for value without notice, will take land free from any equitable interest vested into it. Under Land Property Act 1925 s199, the purchaser most carry out all the necessary investigations and inspect the land and make any enquiries of the occupiers as to their right in land and if the purchaser fails to do this them they could be deemed to have notice and be bound by it. As seen in the following cases Barnhart v Green shields (1853), Jones v Smith (1841) and in West v Reid (1843). Even if the potential purchaser didn”t not carryout the necessary enquiries but this solicitor also failed under s199(1)(ii)(b) but be interpreted as having adequate notice if he had carried out his/her investigation. If a potential purchaser should have know or ought to have know if they had any of the tenants living in the property, at the time when the sale was to happen then the new purchaser would more likely to have had constructive notice. Any purchaser should first look at the register. Where the purchaser”s of property one, three and five should inspect the register and the equitable interest should be registered and if they have not they the purchaser can take the property free from constructive or imputed notice but if the new owner has notice of it but still purchasers the properties then the new buyer will by bound by the equitable interest. The potential buyer could take free from any of the other interests in land if they pay two trustees under the Land and Trustees Act.