Land Charges
Some interests in unregistered land are capable of being protected by registration as land charges. The register is a names based system rather than a land based system which has caused difficulties. S. 2 Land Charges Act 1972 sets out the classes of land charges:
Classes of Land charges
Class A Land charge
A right arising from an Act of Parliament to receive money from the estate owner where the right requires an application by the person entitled.
Class B Land charge
A right to receive money from the estate owner arising automatically by an Act of Parliament without the need to apply.
Class C(I) Land charge
A puisne mortgage - a legal mortgage which is not protected by the deposit of documents relating to the legal estate - usually a second mortgage.
Class C (II) Land charge
A limited owner's charge - an equitable charge acquired by a tenant for life or statutory owner under the Inheritance Tax Act 1984 or under any other statute by reason of the discharge by him of anycapital transfer tax or other liabilities and to which special priority is given by statute.
Class C (III) Land charge
A general equitable charge - a general equitable charge is any equitable charge which is not secured by a deposit of documents relating to the legal estate and does not arise under a trust of land or settlement and is not a charge by way of indemnity and is not included as any other class of land charge.
Class C (IV) Land charge
Estate contracts - this includes a contract for the transfer of the legal estate, options to purchase and contract for a right of pre-emption.
Class D (I) Land charge
Inland Revenue Charge
Class D (II) Land charge
Restrictive covenants - only those entered on or after 1st January 1926. Restrictive covenants entered before this date are governed by the doctrine of notice.
Class D (III) Land charge
Equitable easements -
only those entered on or after 1st January 1926.
Class E Land charge
Annuities created prior to Jan 1st 1926 and not registered in the register of annuities
Class F Land charge
Right of occupation under Part IV Family Law Act 1996
Registration of land charges
S. 3(1) Land Charges Act 1972 provides that the land charge shall be registered in the name of the estate owner.
The name should be the same as that found in the conveyance by which the estate had been conveyed:
Standard Property Investment Plc v British Plastics Federation 1985 53 P & CR 25
Where a land charge has been registered in the correct name, this serves as actual notice of its existence (S.198(1) Law of Property Act 1925) however, where a purchaser has entered a contract to buy the land and a search of the register later reveals a land charge of which he was unaware the purchaser is not obliged to complete the contract (s.24(1) Law of Property Act 1969).
Registration in incorrect name
Where a land charge is registered in an incorrect name, a subsequent interest may take priority:
Diligent Finance v Alleyne (1972) 23 P & CR 346 Case summary
However, if the subsequent search was also erroneous the land charge may be effective:
Oak Co-operative Building Society v Blackburn [1968] Ch 730 Case summary
Searches
Searches of the land charges register may be personal or official. An official search offers greater protection. Under s.10(4) Land Charges Act 1972 an official search certificate is conclusive even if a mistake was made by the Land Registry. This means a purchaser can rely on the certificate and take priority over any land charges not disclosed on the certificate (subject to certain statutory criteria being absent). The holder of the land charge may have a remedy against the Land Registry for negligence.
Unregistered land charges
Where a land charge is not registered, the land charge will be void where the statutory conditions are met. A person meeting the statutory criteria will acquire the land free of the unprotected interest. The statutory conditions are different for depending on the class of land charge.
Class A
Under s.4 (2) Land Charges Act 1972, a land charge of Class A created after 31st December 1888 is void against a purchaser of the land or of any interest in the land unless the charge is registered in the appropriate register before the completion of the purchase - A purchaser is defined in s.17 Land Charges Act 1972 as any person (including a mortgagee or lessee) who for valuable consideration takes any interest in the land or in a charge on land.
Class B, C (I), C(II) C(III)
Under s.4 (5) Land Charges Act 1972, a land charge of class B or Class C other than an estate contract, created on or after 1st January 1926, is void against a purchaser of the land or of any interest in the land unless the charge is registered in the appropriate register before the completion of the purchase - A purchaser is defined in s.17 Land Charges Act 1972 as any person (including a mortgagee or lessee) who for valuable consideration takes any interest in the land or in a charge on land.
Class C (IV) & Class D
S.4(6) Land Charges Act 1972 provides that an estate contract and a land charge of Class D created or entered into on or after 1st January 1926 shall be void as against a purchaser for money or money's worth of a legal estate in the land charged with it, unless the land charge is registered in the appropriate register.
The meaning of money or money's worth was considered in Midland Bank v Green [1981] AC 513 case summary
Note also the case of Lloyds Bank v Carrick [1996] 4 All ER 630 Case summary
Class F
S. 4 (8) Land Charges Act 1972 provides a land charge of Class F is void against a purchaser of the land or of any interest in the land unless the charge is registered in the appropriate register before the completion of the purchase - A purchaser is defined in s.17 Land Charges Act 1972 as any person (including a mortgagee or lessee) who for valuable consideration takes any interest in the land or in a charge on land.
Exceptions - void land charges may be binding
A void land charge may be held to be binding in instances of fraud, express agreement and estoppel
Fraud
A void land charge may be binding due to purchaser's fraud. Actual knowledge of the existence of the land charge and a deliberate attempt to defeat the land charge will not always indicate fraud:
Midland Bank v Green [1981] AC 513 case summary
Express agreement
It is considered the same principle that relates to registered land is likely also to apply to unregistered land.
Lyus v Prowsa Developments [1952] 1 WLR 1044 Case summary
Estoppel
A purchaser may be estopped from denying the existence of the land charge:
ER Ives Investment Ltd v High [1967] 2 QB 379 Case summary
Taylor Fashions Ltd v Liverpool Victoria Friendly Society [1981] 2 WLR 576 Case summary