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Enforceability of Third Party Rights in the Unregistered System - The Pre-1926 Rules: Equitable Interests

Q: Explain the third recognised form of notice, imputed notic e?

His solicitor (or other agent ) had actual or constructive notice

Q: How can the purchaser avoid being fixed with constructive or imputed notice of an equitable interest under s(44(1) of the Law of Property Act 1925) ?

(s44(1) LPA 1925) allows the purchaser to inspect the seller's title deeds back to a good root of title , which is at least 15 years old. The purchaser could also check who is in occupation of the property.

12 important questions on Enforceability of Third Party Rights in the Unregistered System - The Pre-1926 Rules: Equitable Interests

Are equitable interests enforceable against a bona fide purchaser ('equity's darling')?

Equitable interests (e.g. restrictive covenant and equitable easement) are enforceable against everyone except bona fide purchaser of the legal estate for value without notice ('equity's darling').

STEP 1 DEFINITION: What is the definition of bona fide when referring to an equity's darling?

A person is acting in good faith (without fraud)

EXTENDED STEP 2: What are the examples of receiving property by operation of law and why does that prevent you from being a purchaser and equity darling?

If A died intestate (without leaving a valid will) and X inherited A's property through intestacy rules, then X would not be a purchaser. Another example, if A went bankrupt and passed his property to this trustee, T, then T would not be a purchaser.

STEP 3: Explain how the buyer purchases the property for value by giving consideration for the purchase of the estate?

Value can be classed as any form of valuable consideration = money, money's worth (land, stocks and share), marriage or the promise of marriage, and payment of existing debt.

Does the consideration have to amount to full consideration in order to be classed as valuable consideration?

Does not have to amount to full consideration.

What is the name of a person who gives no valuable consideration?

Volunteer

STEP 4: What must the buyer purchase (LPA 1925) to take the legal estate in the property?

He must have purchased a fee simple absolute in possession or a term of years absolute (Law of Property Act 1925, s1(1)).

STEP 5: what are the first recognised forms of notice prevents the buyer from taking the land free from an equitable interest?

Actual notice is when the person hass actual notice of all the facts and has actual knowledge, regardless of how that knowledge was acquired. This does not take the form of vague rumours.

Explain second recognised forms of notice, constructive notice?

Constructive notice means that the person had made necessary enquiries and inspections that any prudent purchaser would have reasonably made to ensure that you do not have notice of an equitable interest (s 199(1)) LPA 1925).

Explain the third recognised form of notice, imputed notice?

His solicitor (or other agent) had actual or constructive notice

How can the purchaser avoid being fixed with constructive or imputed notice of an equitable interest under s(44(1) of the Law of Property Act 1925)?

(s44(1) LPA 1925) allows the purchaser to inspect the seller's title deeds back to a good root of title, which is at least 15 years old. The purchaser could also check who is in occupation of the property.

Explain how Kingsnorth Finance v Tizard made it important for the purchaser or his agent to make all inquiries and inspections that ought reasonably to have been made?

A man mortgaged a home in which his wife had a beneficial interest without telling her. The bank had imputed notice of her interest as the bank's agent visited the property and saw children occupying the home. The agent did not make sufficient enquiries. The purchaser will not be equity's darling as he will be deemed to have constructive notice of the wife's equitable interest in the house.

The question on the page originate from the summary of the following study material:

WS2 Overview of the Unregistered System

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Enforceability of Third Party Rights in the Unregistered System - The Pre-1926 Rules: Equitable Interests

12 important questions on Enforceability of Third Party Rights in the Unregistered System - The Pre-1926 Rules: Equitable Interests

Are equitable interests enforceable against a bona fide purchaser ('equity's darling')?

STEP 1 DEFINITION: What is the definition of bona fide when referring to an equity's darling?

EXTENDED STEP 2: What are the examples of receiving property by operation of law and why does that prevent you from being a purchaser and equity darling?

STEP 3: Explain how the buyer purchases the property for value by giving consideration for the purchase of the estate?

Does the consideration have to amount to full consideration in order to be classed as valuable consideration?

What is the name of a person who gives no valuable consideration?

STEP 4: What must the buyer purchase (LPA 1925) to take the legal estate in the property?

STEP 5: what are the first recognised forms of notice prevents the buyer from taking the land free from an equitable interest?

Explain second recognised forms of notice, constructive notice?

Explain the third recognised form of notice, imputed notice?

How can the purchaser avoid being fixed with constructive or imputed notice of an equitable interest under s(44(1) of the Law of Property Act 1925)?

Explain how Kingsnorth Finance v Tizard made it important for the purchaser or his agent to make all inquiries and inspections that ought reasonably to have been made?

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