This advice will address the claims of Stephen, Dawn, Roger, and Nick against Iggy, the new registered owner of Blackacre. The central issue is whether the rights they acquired from the previous owner, Alastair, are binding on Iggy. The advice is divided into two parts: first, under the current system of registered title, and second, under the old system of unregistered title.
(a) Advice based on Registered Title
As Blackacre is registered land, the enforceability of third-party rights against a new owner, Iggy, is governed by the Land Registration Act 2002 (LRA 2002). A purchaser for valuable consideration, like Iggy, takes the property subject only to registered interests and charges, and overriding interests listed in Schedule 3 of the Act (LRA 2002, s.29).
Advice for Stephen
Stephen has an oral agreement to rent White Field for three years. The issue is whether this creates a lease that is binding on Iggy.
A lease is an interest in land which can be legal or equitable. To be a legal lease, it must generally be created by deed (Law of Property Act 1925 (LPA 1925), s.52). However, there is an exception under s.54(2) of the LPA 1925 for leases that are for a term of three years or less, take effect in possession, and are for the best rent reasonably obtainable. Stephen's agreement is for three years and appears to have taken effect in possession. Assuming the £1,000 annual rent is the "best rent", Stephen has a legal lease.
Under the LRA 2002, a legal lease for a term not exceeding seven years is an 'overriding interest' (LRA 2002, Sch. 3, para. 1). This means it automatically binds a new owner of the land even though it does not appear on the register.
Conclusion: Stephen’s three-year legal lease is an overriding interest. It is therefore binding on Iggy, who cannot require Stephen to leave White Field until the lease expires. If the rent was not the 'best rent', Stephen would not have a legal lease, and as his agreement was not in writing, he would not have an equitable lease either and would likely only have a personal licence, which would not be binding on Iggy. However, based on the facts provided, the stronger argument is that he has a binding legal lease.
Advice for Dawn
Dawn was granted a right of way by deed. This is likely an easement. The question is whether this easement is binding on Iggy.
An easement is a legal interest if created by deed and it is for an interest equivalent to a fee simple or a term of years (LPA 1925, s.1(2)(a)). Dawn's right was granted by deed, so it is capable of being a legal easement. However, for an expressly created legal easement to bind a purchaser under the LRA 2002, it must be completed by registration (LRA 2002, s.27(2)(d)). The facts do not state that the easement was registered. The failure to register means it cannot be a legal easement and can only take effect as an equitable easement (LRA 2002, s.27(1)).
An equitable interest will only bind Iggy if it was protected by a notice on the register (LRA 2002, s.32) or if it qualifies as an overriding interest. As no notice was mentioned, Dawn must rely on Schedule 3, paragraph 3 of the LRA 2002. An equitable easement will override if it was either obvious on a reasonably careful inspection of the land, or if the purchaser (Iggy) had actual knowledge of it. Given it is a "shortcut", it is likely that a physical path exists which would be obvious on inspection.
Conclusion: Dawn has an equitable easement. It is very likely that this right is an overriding interest under Schedule 3, paragraph 3 because the shortcut would be obvious on inspection. Therefore, Dawn’s right of way is binding on Iggy.
Advice for Roger
Roger has a written agreement giving him the right to purchase Blackacre. This is an option to purchase, which is a type of estate contract and a valid proprietary interest (it is in writing, satisfying s.2 of the Law of Property (Miscellaneous Provisions) Act 1989).
For this interest to be binding on a purchaser of registered land like Iggy, it must be protected by the entry of a notice on the charges register of Blackacre (LRA 2002, s.32). An option to purchase is not an overriding interest. If Roger did not enter a notice on the register, his interest is not protected. Section 29 of the LRA 2002 provides that a purchaser for value takes the land free from all unprotected interests.
Conclusion: As there is no evidence that Roger protected his option with a notice, Iggy has purchased Blackacre free from this interest. Roger cannot force Iggy to sell him the farm. Roger’s only remedy is to sue Alastair for breach of contract, though this will be difficult as Alastair has disappeared.
Advice for Nick
Nick contributed to the purchase price of Blackacre, giving him a beneficial interest in the property under a trust of land. The issue is whether this interest binds Iggy.
Nick’s interest could be binding in two ways. First, by a restriction entered on the register (LRA 2002, s.40), which would prevent Alastair from selling the property as a sole owner. As the sale to Iggy has gone through, we must assume no restriction was entered.
Second, Nick's interest could be an overriding interest under Schedule 3, paragraph 2 of the LRA 2002, which protects the interest of a person in "actual occupation". Nick's interest under the trust has not been overreached, because overreaching requires payment of the purchase price to at least two trustees (LPA 1925, s.2(1)(ii)), and Alastair sold alone. The key question, therefore, is whether Nick was in "actual occupation" at the time of the sale.
The courts require occupation to have a degree of permanence and continuity (Abbey National BS v Cann [1991]). A temporary absence does not necessarily negate occupation, especially where the person has an intention to return, as in Chhokar v Chhokar [1984] where a wife was in hospital. However, Nick was in Tibet for an "indefinite period". This suggests a more permanent absence, similar to Stockholm Finance Ltd v Garden Holdings Inc [1995], where a person who had not been to the property for over a year was held not to be in actual occupation.
Conclusion: It is highly unlikely that a court would find Nick to be in actual occupation, given his long and indefinite absence. Therefore, his beneficial interest is not an overriding interest and does not bind Iggy. Nick's remedy is to claim his share of the sale money from Alastair.
*
(b) Advice if Title were Unregistered
If Blackacre’s title were unregistered, a different set of rules would apply. The basic principle is that legal rights bind the whole world, whereas equitable rights bind everyone except a bona fide purchaser of a legal estate for value without notice (often called 'equity's darling'). This is modified by the Land Charges Act 1972 (LCA 1972).
Stephen: His interest is a legal lease created under s.54(2) LPA 1925. As a legal interest, it binds the whole world. The advice would be the same: his lease is binding on Iggy.
Dawn: Her right of way was created by deed, making it a legal easement (LPA 1925, s.1(2)(a), s.52). In unregistered land, a legal easement binds the whole world. It does not need to be registered. Therefore, the advice would change: Dawn’s easement would be legal and would automatically bind Iggy, without needing to satisfy any test of being obvious on inspection.
Roger: His option to purchase is an estate contract. In unregistered land, this is an equitable interest registrable as a Class C(iv) land charge under the LCA 1972 against the name of the estate owner (Alastair). If registered, it provides notice to the whole world and would bind Iggy (LPA 1925, s.198). If not registered, it is void against a purchaser of a legal estate for money or money's worth (LCA 1972, s.4(6)). Iggy is such a purchaser. The outcome is therefore the same as in registered land: if Roger did not register his interest (as a land charge), Iggy is not bound by it.
Nick: His beneficial interest under a trust cannot be registered under the LCA 1972. Its enforceability depends on whether it has been overreached or on the doctrine of notice. As Alastair sold alone, the interest has not been overreached. Therefore, it will bind Iggy unless Iggy is a bona fide purchaser for value without notice. 'Notice' includes actual, imputed, and constructive notice. Constructive notice is what a purchaser would have discovered if they had made reasonable inquiries (LPA 1925, s.199). A reasonable purchaser would inspect the property. Although Nick was in Tibet, his belongings would likely still be at the farm. The presence of a second person’s belongings should have put Iggy on notice that someone else might have an interest, requiring him to make further inquiries (Kingsnorth Finance Co Ltd v Tizard [1986]). Failure to do so would fix him with constructive notice of Nick’s interest.
Therefore, the advice for Nick would be significantly different. In unregistered land, he has a strong argument that Iggy had constructive notice of his interest, meaning Iggy would be bound by it. This is a much better position for Nick than under the registered land system, where the strict test of "actual occupation" is harder to meet.
*
References
Cases
- Abbey National Building Society v Cann [1991] 1 AC 56
- Chhokar v Chhokar [1984] FLR 313
- Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783
- Stockholm Finance Ltd v Garden Holdings Inc [1995] NPC 162
Legislation
- Land Charges Act 1972
- Land Registration Act 2002
- Law of Property Act 1925
- Law of Property (Miscellaneous Provisions) Act 1989
