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"Subject to" clause in Land Law -> Any effect

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    Assuming I have an equitable right to live in an house for life. It's registered land, but my interest is not entered as a notice. The house is sold to a third party (C) who registers his title Following s. 29 my interest will not bind him, unless I could show that i have an overriding interest (e.g. interest + actual occupation). However, what happens if:

    the purchaser (C) agrees to take house "subject to" my rights with the purchase price being reduced 10% to reflect.

    Would such a clause have any binding effect? Of course I could use the Third Party's Rights Act to, but I am not sure to what extent such a clause would make a difference.
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    (Original post by Qoph)
    Assuming I have an equitable right to live in an house for life. It's registered land, but my interest is not entered as a notice. The house is sold to a third party (C) who registers his title Following s. 29 my interest will not bind him, unless I could show that i have an overriding interest (e.g. interest + actual occupation). However, what happens if:

    the purchaser (C) agrees to take house "subject to" my rights with the purchase price being reduced 10% to reflect.

    Would such a clause have any binding effect? Of course I could use the Third Party's Rights Act to, but I am not sure to what extent such a clause would make a difference.
    Effectively, he can't say he didn't know of your occupation so your interest would override under S3P2. (Assuming you're in Actual Occupation I think)
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    (Original post by Qoph)
    Assuming I have an equitable right to live in an house for life. It's registered land, but my interest is not entered as a notice. The house is sold to a third party (C) who registers his title Following s. 29 my interest will not bind him, unless I could show that i have an overriding interest (e.g. interest + actual occupation). However, what happens if:

    the purchaser (C) agrees to take house "subject to" my rights with the purchase price being reduced 10% to reflect.

    Would such a clause have any binding effect? Of course I could use the Third Party's Rights Act to, but I am not sure to what extent such a clause would make a difference.
    Above answer is correct.

    On an unrelated note, I love you. I am a Kantian and I love CSM. We are rare breeds!
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    (Original post by gethsemane342)
    Effectively, he can't say he didn't know of your occupation so your interest would override under S3P2. (Assuming you're in Actual Occupation I think)
    Hi Gethsemane, sorry to revive this thread but I am practising past questions and (suspiciously!) the exact situation came up as in the original post, but I think the original poster has missed out on something important; I'll reiterate the facts for you:

    - Blackacre is registered land. A is freeholder and registered proprietor of Blackacre. A grants B (B is A's cousin) by written agreement the right to live in Blackacre rent-free for life. B does not register this. A then transfers Blackacre to C, who takes the transfer "subject to the rights of B" with the purchase price being reduced by 10% to reflect this.
    If it's a lease
    One argument could be that B has acquired a lease, if the requirements for a lease are satisfied. It could be a lease because we know that under s.149(6) leases for life take effect as leases for 90 years i.e. for a term certain. Non-payment of rent we know is immaterial (Ashburn Anstalt v Arnold). But we don't know if she has exclusive possession. Assuming all the requirements for a valid lease are met, we can proceed to see if B is protected. Leases are legal estates in land (s.1(2) and (3) LPA) and legal interests need to be made by deed S.52. Only a written agreement; s.2LP(MP)A 1989 + doctrine of Walsh v Lonsdale will give B an equitable lease. As it's an equitable interest in registered land, it needs to be entered as a notice under S.32 LRA 2002; B hasn't done this. The equitable lease won't bind BUT because B has a proprietary right in the land this means that B could rely on actual occupation to assert priority against C.

    If it's a licence
    BUT we don't know whether there is exclusive possession and B and A are cousins so you could argue there is no intention to create legal relations, so this cannot be a lease; it must be a licence. Binions v Evans tells us that even if B has a contractual licence to be on the premises, if A transfers the freehold to C and C takes the freehold subject to B's rights and the purchase price is reduced to reflect that, then C cannot evict B and B takes priority despite the fact that B's rights are purely personal as a licence.

    This is how I would interpret it anyway... to summarise:
    (1) If it's an equitable lease - it won't bind anyway because B hasn't entered it as a notice. But if B is in actual occupation, as you pointed out, she could take priority over C.

    (2) If it's a licence - Binions v Evans tells us that C will still be bound by B's mere contractual licence.

    I hope that make sense! Basically, I think this part of the question turns more on the lease/licence distinction.
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    (Original post by suffocation1992)
    If it's a lease
    One argument could be that B has acquired a lease, if the requirements for a lease are satisfied. It could be a lease because we know that under s.149(6) leases for life take effect as leases for 90 years i.e. for a term certain. Non-payment of rent we know is immaterial (Ashburn Anstalt v Arnold). But we don't know if she has exclusive possession. Assuming all the requirements for a valid lease are met, we can proceed to see if B is protected. Leases are legal estates in land (s.1(2) and (3) LPA) and legal interests need to be made by deed S.52. Only a written agreement; s.2LP(MP)A 1989 + doctrine of Walsh v Lonsdale will give B an equitable lease. As it's an equitable interest in registered land, it needs to be entered as a notice under S.32 LRA 2002; B hasn't done this. The equitable lease won't bind BUT because B has a proprietary right in the land this means that B could rely on actual occupation to assert priority against C.

    If it's a licence
    BUT we don't know whether there is exclusive possession and B and A are cousins so you could argue there is no intention to create legal relations, so this cannot be a lease; it must be a licence. Binions v Evans tells us that even if B has a contractual licence to be on the premises, if A transfers the freehold to C and C takes the freehold subject to B's rights and the purchase price is reduced to reflect that, then C cannot evict B and B takes priority despite the fact that B's rights are purely personal as a licence.

    This is how I would interpret it anyway... to summarise:
    (1) If it's an equitable lease - it won't bind anyway because B hasn't entered it as a notice. But if B is in actual occupation, as you pointed out, she could take priority over C.

    (2) If it's a licence - Binions v Evans tells us that C will still be bound by B's mere contractual licence.

    I hope that make sense! Basically, I think this part of the question turns more on the lease/licence distinction.
    S. 149 (6) LPA 1925 cannot operate for a lease for life without payments of rent. So assuming that there is no rent, we know from Prudential that the uncertain term means that it is no lease. Apart from this point, your analysis is good.
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    (Original post by suffocation1992)
    Hi Gethsemane, sorry to revive this thread but I am practising past questions and (suspiciously!) the exact situation came up as in the original post, but I think the original poster has missed out on something important; I'll reiterate the facts for you:



    If it's a lease
    One argument could be that B has acquired a lease, if the requirements for a lease are satisfied. It could be a lease because we know that under s.149(6) leases for life take effect as leases for 90 years i.e. for a term certain. Non-payment of rent we know is immaterial (Ashburn Anstalt v Arnold). But we don't know if she has exclusive possession. Assuming all the requirements for a valid lease are met, we can proceed to see if B is protected. Leases are legal estates in land (s.1(2) and (3) LPA) and legal interests need to be made by deed S.52. Only a written agreement; s.2LP(MP)A 1989 + doctrine of Walsh v Lonsdale will give B an equitable lease. As it's an equitable interest in registered land, it needs to be entered as a notice under S.32 LRA 2002; B hasn't done this. The equitable lease won't bind BUT because B has a proprietary right in the land this means that B could rely on actual occupation to assert priority against C.

    If it's a licence
    BUT we don't know whether there is exclusive possession and B and A are cousins so you could argue there is no intention to create legal relations, so this cannot be a lease; it must be a licence. Binions v Evans tells us that even if B has a contractual licence to be on the premises, if A transfers the freehold to C and C takes the freehold subject to B's rights and the purchase price is reduced to reflect that, then C cannot evict B and B takes priority despite the fact that B's rights are purely personal as a licence.

    This is how I would interpret it anyway... to summarise:
    (1) If it's an equitable lease - it won't bind anyway because B hasn't entered it as a notice. But if B is in actual occupation, as you pointed out, she could take priority over C.

    (2) If it's a licence - Binions v Evans tells us that C will still be bound by B's mere contractual licence.

    I hope that make sense! Basically, I think this part of the question turns more on the lease/licence distinction.
    Um... OK... I was just answering what the OP asked, not answering the question for them. I've already passed land law anyway...
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    (Original post by Qoph)
    S. 149 (6) LPA 1925 cannot operate for a lease for life without payments of rent. So assuming that there is no rent, we know from Prudential that the uncertain term means that it is no lease. Apart from this point, your analysis is good.
    Hmm that is interesting, thanks for pointing it out. So in this example, she's been given a life interest rent-free. S.149(6) won't apply... but perhaps using Mexfield we can still get her a lease?
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    (Original post by gethsemane342)
    Um... OK... I was just answering what the OP asked, not answering the question for them. I've already passed land law anyway...
    Sorry if I have offended you, that wasn't intended. Only you posted in November 2011, I assumed you were taking land law.

    Also, I noticed your original comment is possibly wrong: notice can only be relevant, if B is in actual occupation, in order to protect a purchaser who needs to inspect the land to make sure that actual occupation is not discoverable on a reasonably careful inspection of the land. This is what is required by Sch 3 Para 2. If you could determine notice by reference to a 'subject to' clause, would it not be in the list of relevant factors in Sch 3 Para 2? I don't think that you can use a 'subject to the rights of B' clause to determine notice. The subject-to clause, as illustrated above, is relevant if it was a contractual licence, under the doctrine in Binions v Evans and I think this is why the subject-to clause is important. Sorry for nit-picking, but once these things are posted, I guess they stay on the forum. I applied what you had written in my practise essay and my tutor when I emailed him told me it was wrong :/

    I am glad you passed, it can be a tricky module for even the best students at times.
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    (Original post by suffocation1992)
    Sorry if I have offended you, that wasn't intended. Only you posted in November 2011, I assumed you were taking land law.

    Also, I noticed your original comment is possibly wrong: notice can only be relevant, if B is in actual occupation, in order to protect a purchaser who needs to inspect the land to make sure that actual occupation is not discoverable on a reasonably careful inspection of the land. This is what is required by Sch 3 Para 2. If you could determine notice by reference to a 'subject to' clause, would it not be in the list of relevant factors in Sch 3 Para 2? I don't think that you can use a 'subject to the rights of B' clause to determine notice. The subject-to clause, as illustrated above, is relevant if it was a contractual licence, under the doctrine in Binions v Evans and I think this is why the subject-to clause is important. Sorry for nit-picking, but once these things are posted, I guess they stay on the forum. I applied what you had written in my practise essay and my tutor when I emailed him told me it was wrong :/

    I am glad you passed, it can be a tricky module for even the best students at times.
    *shrugs* I occasionally answer questions on stuff I've done. S3P2, IIRC (bear in mind it's been a year since I did this) requires you to have knowledge for it to override or have been able to have knowledge. Indeed, this is disclosing a right when he reasonably could have done so (see S3P2). Following this, if I know you have a right, I shouldn't, in the spirit of the Act, be able to argue I didn't know. But I also dropped leases.
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    (Original post by suffocation1992)
    Hmm that is interesting, thanks for pointing it out. So in this example, she's been given a life interest rent-free. S.149(6) won't apply... but perhaps using Mexfield we can still get her a lease?
    Unlikely - In Mexfield, s. 149 (6) could only be used because rent was paid.

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