This advice will consider the potential third-party rights that may affect Lancaster Hall, of which Borat is the registered proprietor. As the title is registered, the governing framework is the Land Registration Act 2002 (LRA 2002). This advice will analyse the potential rights of Walter, Lindy, Frank, and Kemi, and will outline Calum’s legal position in respect of these rights and the practical steps he should take before purchasing the property.
Walter
Walter’s contribution to the purchase price in 2015 gives rise to a beneficial interest in the property under a resulting trust (Dyer v Dyer (1788)). Although there can be a presumption of advancement (a gift) from a father to a son, this presumption is less strong in modern law and is likely to be rebutted by the fact of his financial contribution (Pettitt v Pettitt [1970]). Walter therefore has an equitable interest in Lancaster Hall.
For this interest to bind a purchaser like Calum, it must be protected. One way is through the entry of a restriction on the Land Register (s.40, LRA 2002). If a restriction is present, Calum would be unable to register his purchase without complying with its terms. The more likely issue for Calum is whether Walter’s interest could be an ‘overriding interest’. Under Schedule 3, Paragraph 2 of the LRA 2002, an interest belonging to a person in actual occupation can override a registered disposition.
The key question is whether Walter is in "actual occupation". He moved into a self-contained flat in 2018 but is now on an "indefinite trip". A person can be in actual occupation even if they are temporarily absent, as seen in Chhokar v Chhokar [1984], where a wife was in hospital giving birth. However, the absence must be coupled with an intention to return. In Stockholm Finance Ltd v Garden Holdings Inc [1995], a property owner who had been absent for over a year with no evidence of an intention to return was held not to be in actual occupation, even though her furniture remained. Walter’s trip is "indefinite", which suggests he may not have a firm intention to return, weakening his claim to be in actual occupation. However, if his possessions remain in the flat and he intends to use it as his home base, he may still be in occupation (Link Lending v Bustard [2010]).
Advice to Calum: Calum’s legal position regarding Walter is uncertain. If Walter is found to be in actual occupation, his beneficial interest will bind Calum. To protect himself, Calum must first make enquiries of Borat about Walter’s intentions and whether his possessions remain in the flat. The safest course of action is to ensure Walter’s interest is ‘overreached’. Overreaching is a process where a purchaser takes the property free from beneficial interests if they pay the purchase price to at least two trustees (ss. 2 and 27, Law of Property Act 1925). As Borat is the sole proprietor, Calum must insist that Borat appoints a second trustee to receive the purchase money. This will ensure Walter’s interest detaches from the land and attaches to the money, leaving Calum free of the claim.
Lindy
As Borat’s wife living in the property, Lindy may also have a beneficial interest. This could arise under a constructive trust if she has contributed to the property, either financially or through significant improvements, based on a common intention that she should have a share. The facts are silent on this, but it is a possibility.
If Lindy does have such an interest, she is clearly in actual occupation, as she lives there. Her occupation is likely to be obvious on a reasonably careful inspection. Therefore, her interest would be an overriding interest under Schedule 3, Paragraph 2 and would bind Calum (Williams & Glyn's Bank v Boland [1981]).
Advice to Calum: Calum should not assume Lindy has no rights just because she is the owner’s wife. He must make direct enquiries of Lindy to ascertain if she claims any interest in the property. To protect himself fully, the best approach is again to insist on the appointment of a second trustee so that any potential interest she has is overreached upon payment of the purchase monies.
Frank
Frank has been using a shortcut through the grounds since 2017. This right appears to be an easement (a right of way). For this easement to be binding on Calum, it must be a legal easement. A legal easement must be created by deed (s.52, LPA 1925) and, for registered land, its creation is a registrable disposition that must be completed by registration to operate at law (s.27(2)(d), LRA 2002).
If the easement was properly registered, it will be noted on the charges register of Lancaster Hall’s title and will bind Calum. If it was not registered, it could still bind him as an overriding interest under Schedule 3, Paragraph 3 of the LRA 2002. This paragraph protects legal easements if the purchaser (Calum) had actual knowledge of them, if they were obvious on a reasonably careful inspection of the land, or if they had been exercised in the year before the sale. Frank told Calum about the right, so Calum has actual knowledge. Frank was also seen using the shortcut, so it is likely obvious on inspection.
Advice to Calum: Calum should first inspect the register for Lancaster Hall to see if a legal easement is registered. Even if it is not, Frank’s right is almost certain to be an overriding interest that binds Calum because Calum has actual knowledge of it. Calum must therefore assume he will be bound by this right of way. He could attempt to negotiate a release of the easement with Frank, but Frank is under no obligation to agree.
Kemi
Kemi has a "written document" which appears to create two separate rights over Lancaster Hall. These must be considered individually.
(i) The Restrictive Covenant
The agreement that Lancaster Hall be used "solely as a private residence" is a restrictive covenant. For the burden of this covenant to bind Calum, the rules from Tulk v Moxhay (1848) must be satisfied. The covenant is restrictive in nature, it appears to benefit Kemi’s adjacent land (the stables), and an intention for the burden to run can be implied (s.79, LPA 1925).
In registered land, the crucial requirement is that the covenant must be protected by the entry of a notice on the charges register of the burdened land (s.32, LRA 2002). If a notice is registered, Calum will be bound (s.29, LRA 2002). If it is not registered, he will take the property free from the covenant, regardless of the fact that Kemi told him about it. A restrictive covenant cannot be an overriding interest.
Advice to Calum: This covenant is a major problem for Calum’s plan to open a hotel. His first and most important step is to check the charges register of Lancaster Hall. If there is no notice, he is not bound. If there is a notice, he will be bound and will not be able to use the property as a hotel unless he can negotiate a release of the covenant from Kemi, which may be costly or impossible.
(ii) Use of the Barn
The "exclusive right to use one of the barns" is harder to define. It cannot be a legal lease because Kemi cannot recall the duration, meaning it lacks the required certainty of term (Lace v Chantler [1944]). It could be a simple contractual licence, which is a personal right between Kemi and Borat and would not bind Calum.
However, it could also be an easement of storage. While an easement cannot grant exclusive possession of the servient land (Copeland v Greenhalf [1952]), the courts have been more flexible recently, and a right to use a defined space for storage can exist as an easement. Given that it is one of several barns, it may not be extensive enough to amount to exclusive possession of the whole barn area.
If it is an easement, its status as legal or equitable depends on the "written document". If it was created by deed, it is a legal easement. If not, but it complies with the requirements for a contract for land (s.2, Law of Property (Miscellaneous Provisions) Act 1989), it would be an equitable easement.
- If it is a legal easement, it should be registered (s.27, LRA 2002). If not, it will be an overriding interest under Schedule 3, Paragraph 3 because Calum has actual knowledge of it.
- If it is an equitable easement, it is not capable of being an overriding interest. It would only bind Calum if it were protected by a notice on the register.
Advice to Calum: Calum must inspect the register. He must also insist on seeing the "written document" to determine what kind of right was created. If it was created by deed, it is likely a legal easement that will bind him as an overriding interest. If it was just a written contract, it will only bind him if it is protected by a notice on the register.
Conclusion and Recommended Steps
Calum faces several potential third-party rights that could significantly impact his ownership and proposed use of Lancaster Hall. He may be bound by beneficial interests held by Walter and Lindy, an easement of way for Frank, and rights of covenant and storage for Kemi.
To protect himself, Calum must take the following steps:
- Thoroughly inspect the official copies of the Land Register for Lancaster Hall. This will reveal any registered restrictions, notices, or easements that will automatically bind him.
- Appoint a second trustee to receive the purchase money. This is the only certain way to take the property free from any beneficial interests held by Walter and Lindy by overreaching them.
- Make further enquiries. He must ask Borat about Walter’s status and intentions, and ask to see the written documents relating to Frank’s and Kemi’s rights.
- Accept Frank’s right of way. This easement is almost certainly binding, and Calum must factor this into his plans.
- Prioritise Kemi’s rights. The restrictive covenant is the greatest threat to his hotel business. If it is registered, the project is not viable unless he can negotiate a release. The status of the barn right also needs to be clarified by seeing the document.
Without taking these steps, Calum risks purchasing a property that is subject to numerous third-party rights which will restrict his use and enjoyment of the land.
References
City of London Building Society v Flegg [1988] AC 54
Chhokar v Chhokar [1984] FLR 313
Copeland v Greenhalf [1952] Ch 488
Dyer v Dyer (1788) 2 Cox Eq Cas 92
Lace v Chantler [1944] KB 368
Link Lending Ltd v Bustard [2010] EWCA Civ 424
Pettitt v Pettitt [1970] AC 777
Stockholm Finance Ltd v Garden Holdings Inc [1995] NPC 162
Tulk v Moxhay (1848) 41 ER 1143
Williams & Glyn's Bank v Boland [1981] AC 487
Land Registration Act 2002
Law of Property Act 1925
Law of Property (Miscellaneous Provisions) Act 1989
