Priorities

Question 1

Where are priorities set out in statute?

Answer 1

• LRA
• s.28
• s.29
• s.30
• s.116
• s.132
• Sch 3

Question 2

What does Dixon say about LRA

Answer 2

enhances transactional certainty

Question 3

What is s.28?

LRA

Answer 3

• Basic rule of priority- 1st in time
• Applies unless disposition falls under s.29
• Abbey National Case (1991)

Question 4

What is s.29?

LRA

Answer 4

• If purchaser acquires interest for valuable consideration and registers it, it takes priority over unprotected earlier interests
• Gardner (2012)- s.29 renders “most unregistered equitable rights vulnerable”
• HOWEVER- earlier interests may still bind if protected by registration under s.32 or overriding interests under sch3
• In Halifax v Curry Popeck the fraudulent mortgage was protected under s.29

Question 5

s.30 LRA?

Answer 5

• If a mortgage is created and registered, it takes priority over unprotected earlier interests
• In Barclays v Zaroovable the unregistered mortgage did not take priority

Question 6

s.116 LRA?

Answer 6

• Certain equitable interest may still affect registered land even if not registered
• In Lloyds Bank v Carrick (1996) it was held that equitable interests do not take priority over legal titles if they are unregistered and if they do not override under sch3

Question 7

s.132 LRA?

Answer 7

• Consideration must be of value (eg. money)
• Gifts do not qualify as valuable consideration
• Midlank Bank v Green (1981)- Man gave his son an option in relation to a property, but transferred it to his wife for a large sum- held the transfer took priority as it has more valuable consideration

Question 8

Sch 3 LRA?

Answer 8

• Overriding interests bind purchasers even if unregistered
• Williams and Glyn’s Bank v Boland (1981)
• Cooke (2003)= “challenges the principle of registration-based certainty”

Question 9

what are the priority rules in the LPA?

Answer 9

• s.2
• s.27(1)

Question 10

What is s.2

LPA

Answer 10

• Certain equitable interest bind ourchasers unless they are bona fide purchasers w/out notice
• In Tulk v Moxhay (1848) it was held that equitable covenants bind successors unless the buyer is a bona fide purchaser

Question 11

What is s.27(1)

LPA

Answer 11

• If a property is held on a trust, equitable interests are overreached if proceeds are paid to at least two trustees
• In City of London Building Society v Flegg (1988) a property was held on a trust but a mortgage was taken out on it- the lendor sought possession and took priority as equitable interests were overreached
• Gray and Gray (2009)= “Protects purchasers by ensuring beneficial interests under a trust do not burden the land itself”

Question 12

Problems with sch3 para2 LRA 2002

Answer 12

• What is the degree of presence needed? How do we measure actual occupation if the definition is not in statute?
• McFarlane (2008)= “Factual nuances dictate different results”
• In Williams and Glyn’s Bank v Bolard, the wife’s actual occupation was her physical presence
• In Chhokar v Chhokar (1984)- Lady was not physically present but it was held that a temporary absence does not defeat actual occupation where there is the intention to return
• Courts apply subjective tests leading to inconsistent rulings
• Cooke (2003)= “Undermines the predictability of land registration”

Question 13

Registered v Equitable interests in overreaching

Answer 13

• Under s.2 and s.27 LPA, overreaching allows equitable interests on land to be converted into money
  -> ensures that buyer is free of those interests
• Certainty for purchasers but disregards interests of the beneficiary (eg. City of London Building Society case)
• In State Bank v Sood (1997) no capital sums were paid to trustees because the property was used as security for a loan= was held that overreaching applied even though no money was transferred
• So overreaching is not dependent on monetary exchange

Question 14

Opinions on overreaching?

Answer 14

• Gray and Gray (2008)= “Overreaching offers a crude but effective means of clearing titles”
• Gardner (2012)= “Beneficial for marker efficiency” BUT “leaves vulnerable beneficiaries without any direct remedy against purchasers”
• Principle of overreaching leads to beneficiaries losing their land rights
• In Flegg Case it was held that even if a beneficiary is in actual occupation, overreaching prevails and sch3 does not apply
• Is this fair? Vulnerable occupiers may lose their home without knowledge!

Question 15

Doctrine of consent

Answer 15

• Consent can determine whether an unregistered interest can still be enforced against a purchaser
• If a beneficiary expressly or impliedly consents to a transaction they may lose their priority
• Paddington Building Society v Mendelsohn (1985)
  -> Mum and son jointly purchased a house- mortgage in son’s name but he defaulted
  -> Held that mother impliedly consented to the mortgage and so was bound by it
• Bristol and West Building Society v Henning (1985)
  -> A lived in house bought with the mortgage in her parents’ names
  -> Held that she assumed to have consented to the mortgage despite her equitable interest

Question 16

Opinions on consent

Answer 16

• Dixon (2022)- “Creates a blurred line between voluntary agreement and implied acceptance”
• Bogusz and Sextown (2021)- “Problematic as it places a burden on equitable interest holders to actively protect their rights rather than on ourchasers to check for such interests”
• Courts infer consent based on context so difficult to challenge
• Weaker parties may not fully understand they are giving up their rights
• Brocklesby Principle- consensual agreement to have an agent (eg. a solicitor) gives implied consent for an agent’s actions to be imputed onto client (even if client is unaware)