The Learning & Resource Section

Unregistered Land

The Doctrine of Notice:

The doctrine of notice applies in unregistered land in order to determine the priority of equitable interests that are not governed by the Land Charges Act of 1925. A bona fide purchaser of a legal estate for value takes priority over any pre-existing equitable interest which is not registrable as a land charge provided they did not have actual, constructive or imputed notice of their existence. The doctrine of notice is only relevant in unregistered land because in registered land, priority is determined by separate rules. A purchaser must prove all four elements if he or she is to take a piece of property free from equitable interest affecting the property in question. The four elements that must be proved are as follows:

1. Bona fide :

  • A person acts in good faith if he acts honestly and without any fraudulent intent. This is usually easy to establish.

2. Purchaser for value :

  • It means that something of value must have been given; it does not have to be money and it does not have to be what the property is worth.
  • Essentially, this involves consideration. ( Midland Bank v Green [1981] this case made it clear that consideration doesn’t have to be adequate; it can be nominal)

3. Purchaser of a legal estate or legal interest :

  • If you are a purchaser of a legal estate, you are in absolute possession.
  • What if you are a purchaser of an equitable estate? Equitable estate probably that you have not fulfilled the formalities; as a consequence, you are bound by pre-existing equitable interests that exists because you have not fulfilled the requirements of being a bona fide purchaser for value of a legal estate who’s without notice
  • If there are two or more equitable interests affecting the same piece of land the rule is ‘First in Time, First in Right’ or in other words, the first interest created has the first claim.

4. Without Notice of the equitable interest .

  • You have to be without notice as the final element of the Doctrine of Notice

Three types of Notice:

1. Actual Notice

  • A purchaser had actual notice if, at the time of the purchase, he actually knew of the existence of the equitable interest
  • Lloyd v Banks [1863]

2. Constructive Notice

  • ·Purchaser has constructive notice if they would have discovered the equitable interest had they made those enquiries, which a reasonable and prudent purchaser would make
  • ·There is an obligation on the purchaser to act wisely and check details and if not, they are bound by pre-existing interests (i.e. if they don’t bother to look into documents, they are bound by constructive notice).
  • There are two types of enquiry which every purchaser is expected to make:

o Inspect the land

You must physically walk into the land and you must make reasonable enquiries into who is in possession of the land in question or if there are any easements on the land. Thus, you would be able to identify any third party rights (Hunt v Luck [1902]).

A purchaser must make enquiries to all occupants of the land as there may be both legal and equitable owners. For example, a married couple where one legally has title but the other own the house in equity. ( Williams & Glyn’s Bank v Boland [1981])

o Investigate the Vendor’s Title

All deeds & other documents must be inspected going back toroot of title (usually back 15 years, s. 23 LPA 1969) . There is no general duty to investigate anything beyond the root of title.

If you fail to inspect the title deeds, you will be fixed with constructive notice

3. Imputed Notice

If an agent, while acting for a particular purchaser, receives actual or constructive notice of an equitable interest, that notice is ascribed to the purchaser himself. You are deemed to know what your agent knows.

Your Are Correct !
Your Are Incorrect !