Lyus v Prowsa Developments [1952] 1 WLR 1044 Chancery

Mr & Mrs Lyus agreed to purchase plot 29 on a new estate being built on registered land. The developer became insolvent before the house was finished and the bank sold the estate including plot 29 to Prowsa Developments with a clause stating they took subject to and with the benefit of the contract affecting plot 29. Three months later the land was sold to the second defendant. A term of the contract being that the sale was subject to the contract relating to plot 29 so far as it was binding on the first defendant. The transfer was registered, however, no mention was made of the claimant's contract.

Held:

The defendants took the land subject to the claimant's contract. By expressly agreeing to take subject to the contract, it would be unconscionable for them to deny its existence. A constructive trust was imposed to allow the unprotected contract to bind the defendants in equity.

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