Abc 1692523001157
Abc 1692523001157
Abc 1692523001157
LAND LAW
Note: This ‘Points to Note’ document is not a model answer. It does not
represent the sort of detailed and in-depth answers you should be producing
in your assessment. It is designed to indicate the basic content of answers - in
relation to critical evaluation questions it gives you only an outline of the
answer. Critical evaluation and critical analysis are skills that you need to
demonstrate independently at Level 7. Finally in written assessments you
should make the most of the permitted word limit.
Assessment Criteria:
With the exception of SBAQ assessments, all assessments on the PgDL and on the
Conversion Component of both MA Law programmes will be marked according to
the Assessment Criteria. These can be found in the Assessments area of the
Handbook module on ELITE.
(a) Can Weston Bank plc exercise its power of sale and how should it deal
with the sales proceeds?
Explain how the power of sale is implied into every mortgage deed. Explain how it
arises when the legal date of redemption has passed and how it becomes
exercisable Back up with statutory authority and then apply to the facts.
The next stage is to set out the selling mortgagee’s duties (for example to act in
good faith – and again back up with statutory authority). Finally explain and apply to
the facts the rules of priority of mortgages and the order in which the proceeds of
sale are paid out.
(b) if Weston Bank plc can exercise its power of sale, the possible nature of
the third party interests that exist in the Property and whether the rights
would be binding on a buyer from Weston Bank plc
If Weston Bank plc exercises its power of sale, the buyer will take subject to
estates/interests which have priority over Weston’s interest but free from ones which
do not: s104(1) LPA 1925.
April 2017 (Northern Bank plc) – set out the rules for the creation of mortgages
using the structure used in Units 1 to 3 – are mortgages capable of being legal, what
formalities are required to create a mortgage and how are mortgages enforceable
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against a buyer. At each stage back up your answers using the relevant authority. As
this is a Part A question, higher marks are awarded by applying the facts to the
advance documentation – in this case the official copies. So for example here, this is
a legal mortgage duly completed by registration before Weston was registered as
proprietor of its charge (see official copies – charges register).
January 2018 (Martha) – It is necessary to decide whether the deed has created a
lease or a mere licence. A lease is an interest in land and potentially can bind a
purchaser; a licence is not an interest in land and therefore cannot bind a purchaser.
Set out what the characteristics of a lease are and apply to the facts using authority
to justify your answer to reach a conclusion.
Sam has therefore potentially granted Martha an eight year lease of the basement
flat. In order to bind Weston (and subsequently a purchaser from Weston), this
lease must have been created and protected properly.
As with the mortgage above, using the structure used in Units 1 to 3 – are leases
capable of being legal, what formalities are required to create a lease and how are
leases enforceable against a buyer. At each stage back up your answers using the
relevant authority.
To be legal, the lease must have been created properly. Leases are capable of being
legal estates under s1(1) LPA 1925. To be legal, the lease must have been created
by deed (s52 LPA 1925 and s1(1) LP(MP)A 1989). We are told that the lease was
created by deed. However, legal estates/ interests must also be registered to be
legal if they appear in the list of registrable dispositions in s27 LRA 2002. That list
includes leases granted for a term exceeding seven years and so Martha’s lease
needs to be registered to be legal and will only bind a purchaser from Weston if it
took priority over Weston’s mortgage if protected by entry of a notice in the Charges
Register of the Property by the date of registration of the Weston mortgage. This
has not happened – see official copies.
You therefore need to consider what would happen then i.e. the lease would exist in
equity and would be an IARE which would then need to be registered. This is not the
case. Therefore have to consider whether it may be elevated to overriding status by
virtue of Schedule 3 paragraph 2. Set out the relevant date when Martha would have
to establish her interest in order for it to be binding i.e. at the date of completion of
Weston’s mortgage. Apply the conditions for Schedule 3 paragraph 2 to apply
require that the person claiming the overriding interest is in “actual occupation” –
discuss e.g. Boland, Cann etc., and either that her occupation is obvious on a
reasonably careful inspection of the land or that the purchaser (or here, the
mortgagee, Weston) had actual knowledge of the interest. There is nothing on the
facts to suggest that Martha’s lease would not have fallen within Schedule 3
paragraph 2 LRA 2002 at date of completion of Weston’s mortgage. As such this
lease would be binding on a buyer from Weston.
March 2018 (Anton) – Set out what type of interest Anton might have (he is not a
registered proprietor and so does not have a legal interest in the Property (see
official copies – proprietorship register) and there is nothing to suggest that Anton
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has a trust interest). He may have a statutory right to occupy the property under FLA
1996 and set out the conditions required. A FLA right to occupy is an IARE. This
interest will only bind a purchaser from Weston if it took priority over Weston’s
mortgage; i.e. if protected by entry of a notice in the Charges Register of the property
by the date of registration of the Weston mortgage. A FLA right to occupy is
incapable of becoming an overriding interest under Schedule 3 paragraph 2 LRA
2002 (s31 FLA 1996). There is no such notice (see official copies - charges register)
and therefore the FLA will not be binding on a purchaser from Weston.
December 2019 (Heath) - Heath may have a lease of the loft flat. Set out what the
characteristics of a lease are and apply to the facts using authority to justify your
answer to reach a conclusion.
As with the mortgage and lease above, using the structure used in Units 1 to 3 – are
leases capable of being legal, what formalities are required to create a lease and
how are leases enforceable against a buyer. At each stage back up your answers
using the relevant authority.
This lease has not been created by deed but the parol lease exception under s54
LPA1025 may apply so set out the conditions: three years or less, in possession,
market rent, no fine/premium. The facts imply that rent is being paid and so it would
appear that the s.54(2) conditions are fulfilled so it is a legal lease. Although Heath
has an overriding interest under Schedule 3 para 1 LRA 2002, this cannot bind
Weston as it was not in existence at the time that the mortgage deed is completed
(i.e. dated). As the mortgage with Weston Bank was granted in August 2019 and
Heath’s lease was not granted until December 2019, Heath’s lease will not bind
Weston (or a buyer from them) under s.104 LPA 1925.
2021 (Easy Credit Bank Ltd) –mortgages must be created by deed and registered
as a registrable disposition (see above). The mortgage has been registered (see
official copies - charges register). However, it is a subsequent encumbrance and so
Weston has priority. If Weston sold, it would sell free of Easy Credit’s mortgage.
Question B1
To get a very good mark, you must critically evaluate the statement and discuss
the relevant law in the context of the quotation.
There is not one way to answer essay questions but we would expect good answers
to cover the following in the context of the quote.
Introduction
Explain what the Gray and Gray statement means i.e. what the intention of the LRA
2002 was.
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In practical terms therefore, this objective seems to suggest that carrying out an
inspection of the land and raising enquiries with the seller (and any occupier) would
not be necessary when a buyer is investigating title to registered land.
Ensure that you look carefully at the meaning of wording of the statement for example,
Gray and Gray refer to the register providing a “fairly accurate” picture of the title
rather than a “comprehensively accurate” picture.
Buyers are particularly keen to identify whether there are any incumbrances affecting
the land that they wish to buy and the legislative reason for that comes from s29 LRA
2002. You should explain what s29 is i.e.buyers will be bound not only by those
interests that appear on the register but also those interests that override registered
dispositions. (i.e. “overriding interests”). These are interests which can therefore bind a
buyer notwithstanding the fact that they are unregistered and therefore do not appear
on the register.
You should then move on the look at those interests that appear on the register
The third party interests that should be protected by notice on the register are
registrable dispositions and interests affecting a registered estate (IAREs).
s27 LRA 2002 gives details of the interests that fall within the registrable disposition
category. Explain what these interests are (for example, expressly created legal
easements, legal mortgages, leases over 7 years etc), when they should be registered
and the consequences if the interest are not registered (i.e. they will not be
enforceable against a buyer (or they may not be fully legal)).
Explain that leases of over 7 years if not registered will not be legal but may still be
enforceable against a buyer if the requirements of Schedule 3 paragraph 2 of the LRA
2002 are satisfied at the date of completion of the sale to the buyer (see below).
Explain what third party rights and interests fall within the IARE category (for example
FLA 1996 rights of occupation, restrictive covenants, etc) when they should be
registered and the consequences if the interest are not registered. Explain that
equitable leases and options might still be enforceable against a buyer if they are not
registered and the requirements of Schedule 3 paragraph 2 of the LRA 2002 are
satisfied (see below).
Explain how the other types of IARE’s are not capable of being overriding interests
under Schedule 3 paragraph 2 if they are not registered
Note that interests under a trust are registered by way of a restriction rather than a
notice. Registering a restriction does not guarantee the protection of a trust interest
because it actually flags up to a buyer the need to ensure that overreaching takes
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place. If the trust interest is overreached, the buyer will not take the land subject to that
trust interest.
Although the LRA 2002 did reduce the number of interests that were capable of being
overriding, it did not remove overriding status from all of them.
Schedule 3 LRA 2002 provides for the following interests to be overriding: legal leases
for a term not exceeding 7 years (paragraph 1), the interests of persons in actual
occupation (paragraph 2) and implied and prescriptive legal easements (paragraph 3).
If these interests exist and the requirements of the relevant paragraphs are satisfied at
the date of completion of sale to the buyer, these interests will be enforceable against
the buyer.
Schedule 3 paragraph 1 – if they have been granted for a term exceeding three years,
they will not be legal unless they have been granted by deed. This means that there
should be documentary evidence that the lease exists, notwithstanding the lack of an
entry on the register. However, a buyer would only be likely to discover that there was
such a lease in place if they carried out an inspection of the land (and came across the
tenant) and/or raised relevant enquiries with the seller.
Parol leases would also fall within paragraph 1. A potential difficulty for a buyer here is
that such leases can be created orally and there may not even be a document
recording the lease. However, inspecting the land and/or raising enquiries with the
seller should still reveal the existence of the lease.
Schedule 3 paragraph 2 provides that “an interest belonging at the time of the
disposition to a person in actual occupation” of land is capable of being overriding. As
indicated above, the “interest” in question could be a legal lease for a term exceeding
7 years that is not yet registered, an equitable lease or an option. In addition, an
interest under a trust could also be an “interest” for the purposes of Schedule 3
paragraph 2, as seen in William & Glyn’s Bank v Boland .
Carrying out an inspection of the land and raising enquiries with the seller would be
essential for a buyer to establish whether there were any persons in actual occupation
who might also have a proprietary interest in the land. Note that whether the
occupation would be obvious is determined objectively by reference to a “reasonably
careful inspection of the land”. This reinforces that it is effectively essential for buyers
to investigate title to the land comprehensively.
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Conclusion
Discuss and critically evaluate the above statement and reach a reasoned
conclusion
Question B2
a) The effect of the events on the legal and equitable interests in the
Property
2018 purchase: Any land subject to co-ownership is held on trust (ss 34 & 36
LPA 1925 as amended by TLATA 1996). The purchase of the Property results
in a trust of land governed by TLATA 1996 which means the legal and
equitable interests will be separated and must be looked at individually.
Explain how the legal estate can be held and who can be the trustees. Ensure
that you back up with statutory authority and apply to the facts i.e. The legal
estate can only be held on a joint tenancy. (ss 1(6) and 36(2) LPA 1925) and
can be vested in no more than four joint tenants (s 34(2) LPA 1925) of full age.
Xavier was only 16 at the date of the purchase and cannot be a trustee. The
trustees are Violet, Wallis and Yvette.
Then explain the equitable interest may be held on a joint tenancy or a tenancy
in common. There is no limit as to numbers. Apply the tests to the facts to
decide if the beneficiaries are joint tenants or tenants in common.
2019 mortgage by Wallis: When Wallis mortgages her interest this has no
effect on the legal title which cannot be severed (s36(2) LPA 1925) and so
remains as above. Then explain what happens to the equitable interest. This
can be severed by one of the methods of severance – in this case alienation.
Apply the formalities required (signed writing in accordance with s53(1)(c) LPA
1925). When Wallis repaid the mortgage, her interest remained severed. It is
important to explain what each beneficial owner now holds and in what share
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so now Wallis has one quarter of the equitable interest as a tenant in common.
The remaining three quarters are held by Violet, Xavier and Yvette as equitable
joint tenants. You should do this at each stage of the devolution of title.
2020 Violet’s letter: Explain what method of severance this is - the letter sent
by Violet’s solicitor was severance of the equitable interest by written notice
The legal estate cannot be severed – s36(2) LPA 1925. You should set out the
requirements of this method including the method of service of the notice (for
example intention to sever immediately etc). Apply to the facts of the question
and use authority (statutory and cases) to back up your answers. The
equitable interest is held by Wallis and Violet as tenants in common as to one
quarter each and the remaining half is held by Xavier and Yvette as joint
tenants.
2020 Violet’s death: When Violet died, she was a trustee. The rule of survivorship
applies and Wallis and Yvette survive her. On her death Violet held the
equitable interest as a tenant in common. Survivorship would not apply and her
equitable interest would pass to her estate by her will. Zara would therefore
hold one quarter as a tenant in common. Explain how the legal and beneficial
interest are now held (Legal estate: Wallis and Yvette. Equitable interest: Wallis
and Zara one quarter each as tenants in common and Xavier and Yvette as
joint tenants of the remaining half).
As sole trustee, Wallis has all the powers of a beneficial owner including the
power to sell – see s6.
If Wallis pushes to sell, Xavier and Zara may apply for an order under s14 to
prevent a sale. Set out what the requirements of ss14 and 15 are and apply to
the facts. Conclude as to whether you think a court may order a sale.
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