CILEx L6 Property Law and Conveyancing — Questions and Answers
Question 1: Under the Land Registration Act 2002, what is the effect of an interest that qualifies as an overriding interest under Schedule 3?
- It must be registered to bind a purchaser
- It binds a registered disponee even though it does not appear on the register, overriding the normal principle that the register is conclusive (Correct answer)
- It is void against everyone unless protected by a notice
- It only binds the original parties to the transaction
Correct answer: It binds a registered disponee even though it does not appear on the register, overriding the normal principle that the register is conclusive
Overriding interests under Schedule 3 LRA 2002 bind a purchaser of registered land despite not appearing on the register. Key examples include short legal leases (para 1), interests of persons in actual occupation (para 2 — derived from s.70(1)(g) LRA 1925), and certain legal easements. These represent a significant qualification to the mirror principle that the register reflects all interests affecting the land.
Question 2: What are the requirements for the creation of a valid legal easement over registered land?
- A verbal agreement between the landowners is sufficient
- The easement must be created by deed (s.52 LPA 1925), satisfy the requirements in Re Ellenborough Park [1956] (dominant and servient tenements, the right must accommodate the dominant tenement, and be capable of forming the subject matter of a grant), and be completed by registration (Correct answer)
- An easement can be created by any written document
- Legal easements arise automatically when land is sold
Correct answer: The easement must be created by deed (s.52 LPA 1925), satisfy the requirements in Re Ellenborough Park [1956] (dominant and servient tenements, the right must accommodate the dominant tenement, and be capable of forming the subject matter of a grant), and be completed by registration
A legal easement requires: (1) compliance with s.1(2)(a) LPA 1925 (equivalent to a fee simple or term of years); (2) creation by deed (s.52 LPA 1925/s.1 LP(MP)A 1989); (3) satisfaction of the Re Ellenborough Park criteria — a dominant and servient tenement owned by different persons, the right must accommodate the dominant tenement, and it must be capable of forming the subject matter of a grant; (4) substantive registration under LRA 2002 to take effect as a legal interest.
Question 3: In conveyancing, what is the significance of the distinction between exchange of contracts and completion?
- Exchange and completion occur simultaneously and have no separate significance
- Exchange creates a binding contract and an equitable interest in the buyer; completion transfers the legal estate through execution and delivery of the transfer deed and payment of the purchase price (Correct answer)
- Exchange transfers the legal title; completion is merely administrative
- Exchange is optional; only completion is required for a valid transfer
Correct answer: Exchange creates a binding contract and an equitable interest in the buyer; completion transfers the legal estate through execution and delivery of the transfer deed and payment of the purchase price
Upon exchange of contracts, a binding agreement arises and the buyer acquires an equitable interest in the property (Walsh v Lonsdale). The contract must satisfy s.2 LP(MP)A 1989 (in writing, containing all terms, signed by both parties). Completion occurs later (typically 2-4 weeks after exchange) when the transfer deed (TR1) is executed, the purchase price is paid, and legal title passes upon registration at HM Land Registry.
Question 4: What is the effect of a restrictive covenant on freehold land and how does the burden pass to successors in title?
- The burden of a restrictive covenant automatically passes at common law to all subsequent owners
- At common law, the burden does not run with the land; in equity, the burden passes to successors in title provided the covenant is negative in substance, touches and concerns the dominant land, the original parties intended it to bind successors, and the successor had notice (or in registered land, the covenant is protected by a notice on the register) (Correct answer)
- Restrictive covenants only bind the original parties and can never affect successors
- The burden passes only if the covenant is registered as a legal charge
Correct answer: At common law, the burden does not run with the land; in equity, the burden passes to successors in title provided the covenant is negative in substance, touches and concerns the dominant land, the original parties intended it to bind successors, and the successor had notice (or in registered land, the covenant is protected by a notice on the register)
Under the rule in Tulk v Moxhay (1848), the burden of a restrictive covenant runs in equity to successors of the servient land if: (1) the covenant is negative/restrictive in substance; (2) it was made for the benefit of the dominant land; (3) it touches and concerns the dominant land; (4) the parties intended it to bind successors (s.79 LPA 1925 creates a presumption). In registered land, the covenant must be protected by a notice on the charges register.
Question 5: Under the Law of Property Act 1925, what formalities are required for the valid creation of a legal mortgage over registered land?
- An oral agreement is sufficient to create a legal mortgage
- The mortgage must be created by deed (a legal charge), comply with the requirements of s.52 LPA 1925 and s.1 LP(MP)A 1989, and be completed by registration at HM Land Registry, which enters a charge on the charges register and issues the lender with notification (Correct answer)
- A legal mortgage can be created by deposit of title deeds only
- Only a written agreement signed by the borrower is required
Correct answer: The mortgage must be created by deed (a legal charge), comply with the requirements of s.52 LPA 1925 and s.1 LP(MP)A 1989, and be completed by registration at HM Land Registry, which enters a charge on the charges register and issues the lender with notification
A legal mortgage over registered land is created as a legal charge by deed (s.23(1) LRA 2002, s.52 LPA 1925). The deed must comply with s.1 LP(MP)A 1989 (clear on its face, signed, witnessed, delivered). The charge must then be registered at HM Land Registry (s.27(2)(f) LRA 2002) — failure to register means the charge takes effect in equity only, not as a legal interest. The charge appears on the charges register of the borrower's title.
Question 6: What remedies are available to a buyer of residential property who discovers a defect in title after completion?
- The buyer has no remedies once completion has occurred
- The buyer may claim under the title guarantee covenants implied by s.76 LPA 1925 and the Law of Property (Miscellaneous Provisions) Act 1994, claim against the seller for misrepresentation or breach of contract, or seek indemnity from HM Land Registry under Schedule 8 LRA 2002 if the register was inaccurate (Correct answer)
- The buyer can only seek to rescind the contract
- The buyer must accept the defect and cannot claim compensation
Correct answer: The buyer may claim under the title guarantee covenants implied by s.76 LPA 1925 and the Law of Property (Miscellaneous Provisions) Act 1994, claim against the seller for misrepresentation or breach of contract, or seek indemnity from HM Land Registry under Schedule 8 LRA 2002 if the register was inaccurate
Post-completion remedies include: (1) covenants for title implied by the LP(MP)A 1994 when the seller transfers with 'full' or 'limited' title guarantee (right to dispose, freedom from encumbrances, quiet enjoyment); (2) claims for misrepresentation or breach of contract; (3) rectification of the register and/or indemnity from HM Land Registry under Schedule 8 LRA 2002 if there was a mistake in the register causing loss. The availability of each depends on the specific circumstances.
CILEx L6 Property Law and Conveyancing
Under the Land Registration Act 2002, what is the effect of an interest that qualifies as an overriding interest under Schedule 3?