Nevertheless, Alf is able to take free of Deirdre’s interests using Hypo-Mortgage Services Ltd v Robinson [1997] as authority. This case established that children living with a parent who was the legal owner of a property, could not have an overriding interest protected under the Land Registration Act 1925 s. 70(1)(g) by virtue of actual occupation because they had no rights of their own to occupy and were present only because their parents were the occupiers. In this case the defendant wife and husband had an oral agreement that the wife’s beneficial interest should be held on trust for her two existing children. When she had no right to remain in possession against the plaintiff the children lost their right too. The husband was also unable to use his children’s beneficial interests to shield him from an order of possession against him. Furthermore, this case shows that children living with a parent who was the legal owner of a property, could not have an overriding interest protected under the Land Registration Act 1925 s. 70(1)(g) by virtue of actual occupation because they had no rights of their own to occupy and were present only because their parents were the occupiers. Applying this principle, Deirdre will loose her beneficial right and Alf will take free of it.
It is also possible that Deirdre may try to prevent the sale. It is for the trustee to act in the interests of the trust as a whole and not to gain any personal advantage as this is a breach of trust. He should also have regard to Deirdre’s rights when exercising his powers. If he did not consult her he is not acting in her interest and it is possible that the dispute between the beneficiary and trustee can be resolved by the court under section 14 of The Trusts of land and appointment of Trustees Act 1996. The court has the power to decide whether sale should proceed or not. It looks at three factors when making its decision. Firstly, the intention of the person who created the trust. Secondly, purposes for which the property subject to the trust is held. Thirdly, the welfare of any minor occupying the land subject to the trust as his home. It is likely that Ben’s intention was to provide a future home for his daughter. If the property was sold the purpose of giving his daughter a home could still be met since she could still live in his new house. Furthermore, her welfare would still be taken care of. It would therefore be unlikely that she could prevent the sale of Lodge House and would have to get compensation from her father.
An option to purchase should be registered as a Class C(iv) estate contract. This is any contract to convey or create a legal estate or any option to purchase a legal estate. Registering a right as a land charge ensures that anyone taking a later estate or interest in the land will take it subject to that right. Furthermore, if it has been registered he will take subject to it since Developers Ltd could serve a notice requiring him to sell.. Further information may need to be acquired such as the duration of the option. It could be that it expires before he purchases the house, which will mean he will not be bound by it. If the option has not been registered estate contracts are void against a purchaser for money or money's worth of a legal estate in the land. This is illustrated in Midland Bank Trust Co Ltd v Green [1981] where it was considered that the purchaser can take free of the option regardless of the amount of money. The facts of the case were that Green gave his son Geoffrey an option to purchase farmland he owned for 21000 over the next 10 years. However, before that time expired he sold it to his wife for £500. By this time he had not registered the charge. Geoffrey sought to enforce his option against his mother. However, Lord Wilberforce said that £500 is money and it does not matter if it was an undervalue. Using this authority it is possible for Alf to take free of the estate contract.
Restrictive covenants should be registered as a class D (ii) land Charge if it entered into after 1925. However, it was entered into 1894 making it an equitable easement, which if he is to take free of, needs to comply with the doctrine of notice. He has actual notice of this restrictive covenant so he will therefore be bound by it. This is also shown in Tulk v Moxhay 1843. In this case Tulk sold land in Leicester square to a Moxhay who covented in effect not to build. Tulkin sought an injunction. Was held that Moxhey, having bought property with notice took subject to it . This portrays how it would be Against Alf’s conscience to go back on obligation entered into by predecessor in title.
The equitable easement, unlike the restrictive covenant, was created after January 1926 which means it is registerable as a Class D (iii) equitable easement. Section.198 (1) LPA 1925 says any registration of any instrument or matter under the land charges act shall be deemed to constitute actual notice of that matter. This means that he will take subject to the easement. However, if it is not registerable the same will apply as with the previous Developers Ltd’s option to purchase; it will be void against a purchaser for money or money's worth of a legal estate in the land.
The lease is not a legal lease so it will take effect in equity. To take effect as a legal lease it must be created by a deed if it is longer than 3 years but not more than seven. The Miscellaneous Provisions Act 1989, s 1 introduced the present requirements that a deed must be signed by the witness and grantor, witnessed and delivered. There is no mention of the written agreement being witnessed suggesting that it is a contract. A contract for a lease will be an estate contract, a C(iv) land charge, under LCA 1972, s.2(4) and will bind the Alf only if it was registered as a land charge before the date of the conveyance to him (LCA 1972 s.46). If not registered and he knew about the agreement he is still not bound by it as notice is irrelevant in the case of registrable but unregistered land charges.
However, if not registered it is possible for Charlotte to raise an alternate argument. She could argue that in fact a legal lease is in operation in the form of a periodic tenancy. This may be created by a simple oral or written agreement, which she has created. Because a legal lease for not more than there years may be created without any formalities, it is possible for certain leases to arise by implication. Where it could be shown that a person was in possession of land with the owners consent and that rent calculated on a periodic basis was paid and accepted, the common law would presume the existence of a periodic tenancy. Moreover, she is paying an annual sum of £10000 and moved in immediately showing that she is in possession of the land. Can seek an order for specific performance of the contract which if awarded would result in the proper execution of a legal lease. Furthermore, a legal lease is “binding against the whole world” which would mean Alf would take the estate subject to the ending of Charlotte’s lease.
(b) How would your advice differ if the title to the Elms Estate were already registered?
Deirdre’s beneficial interest under a trust should be registered as a restriction in the proprietorship register. This will give notice of the trust and he will have to insist on the appointment of a second trustee for his own protection, otherwise her beneficial interest will be binding upon him. As she is a minor it is the trustees duty, her father Ben, to enter the restriction. If he has not it is not binding upon Alf since she is unable to use the argument that she is in actual occupation.
The option to purchase a strip of land has to be registered as a notice on the charges register since it is not excluded under section.33 of the Land Registration Act 2002. This will mean any disposition of the land made thereafter takes effect subject to the right protected by the notice. However, if she has not put a notice in the register he may still not be able to take free of the interest. This is because they may have an overriding interest if the interest belongs “to a person in actual occupation, so far as relating to land of which he is in actual occupation”. Furthermore, if the Developers Ltd were in actual occupation then Alf would be bound by their interests, otherwise he would take free if the option is not registered.
The equitable easement entered into in 1891 must also be registered if it is to be binding upon Alf. It is also unable to be overridden since only legal easements can be overriding and not those that are equitable. The restrictive covenant is not able to be protected by the entry of notice so he will take free of it.
If title to land is registered the purchaser taking the estate for valuable consideration will take free of the leaseholders equitable lease unless it has been protected by a notice on the charges register or is capable of taking effect as an interest that overrides a registered disposition . It’s unlikely that an equitable lease will be treated as an overriding interest under Sch. 3 para. 1, which is likely to be limited to a legal lease. However, if at the time of the transfer to the purchaser, Charlotte was occupying the property and could satisfy the other requirements of Schedule. 3 Paragraph 2 she could claim that her equitable lease was overriding as the interest of a person in actual occupation. The requirements are that her occupation must have been obvious on a reasonably careful inspection of the land at the time of the disposition and must not have taken effect in possession after the end of the period of three months beginning with the date of the grant and which has not taken effect in possession at the time of the disposition. Furthermore, if she meets these requirements than she is able to carry on living in Cowslip Cottage for the remaining duration of her lease even if it is not protected by a notice.
Trusts of Land and Appointment of trustee Act 1996 sch 1 para 1(1)
Hypo-Mortgage Services Ltd v Robinson [1997] 2 FCR 422
Trusts of Land and Appointment of trustee Act 1996, S. 6(5)
Trusts of Land and Appointment of trustee Act 1996, s. 15
Land Registration Act 1972, s 4(5)
Midland Bank Trust Co Ltd v Green [1981] AC 513 (HL).
Tulk v Moxhay (1843) 2 Ph 773
Land Registration Act 1925, s 52(1)
Hammond v Farrow [1904] 2 K.B. 332 1904 WL 12910
Land Registration Act 2002 sch3 para 2
Land Registration Act 2002, Sch 3, para 3
Land Registration Act 2002 S.33
Land Registration Act 2002 s.29 and Sch.3
Land Registration Act 2002, Sch 3, para 2c(I)
Land Registration Act 2002, Sch 3, para 2 (d)