The Gazette 1985

GAZETTE

APRIL 1985

which he is taking a mortgage. This view can have no

relevance to registered land because the doctrine of notice

does not apply to registered land. Even in relation to

unregistered land, its validity must be bpen to doubt. The

case of

Hunt

-v-

Luck

itself involved a mortgage and no

distinction was or has been drawn between mortgagees

and purchasers. No doubt few institutional lenders would

consider it practicable to inspect every property offered as

security in order to discover possible occupiers. The

altruistic "reasonable purchaser" does not, however,

determine the scope of his inquiries by reference to

"business prudence". Lenders should bear in mind the

chilling words of Russell L.J. in

Hodgson

-v-

Marks,

"As

to the Building Society, it is plain that they made no

inquiries on the spot save as to repairs; they relied on the

[mortgagor] who lied to them; and I waste no tears on

them."

To secure the protection of the proviso to s.72(l)(j)

purchasers and mortgagees should make inquiry of any

person whom they know to be in actual occupation of all

or part of the property. If necessary, the contract should

stipulate that the property is to be free of proprietary

rights protected by occupation and that the purchaser is

to get vacant possession. In addition, responsibility for

obtaining the consent of any occupiers to the transaction

should be put on the vendor, and he should warrant that

all persons who might have claims are accounted for.

As Hayton points out, to rely on the proviso it will in

practice be necessary to show that the occupier received

the inquiry. He suggests that all inquiries be sent by

registered post.

If mquiry is made of an occupier, the proviso appears to

oblige him or her to disclose any rights which he or she has

or claims. Certainly, a purchaser or lender, if deliberately

misled by the occupier, could rely on an estoppel or on the

principle that statutes may not be used as instruments of

fraud. One difficulty, however, is that no time limit is

stipulated within which the occupier must reply. It would

seem that a reasonable time should be allowed for this

purpose. What is reasonable will depend on the circum-

stances and a balance must be struck between the

purchaser's wish for a speedy reply and the occupier's

possible desire to seek legal advice. The latter is an

especially potent consideration in view of the uncertainty

surrounding the acquisition of beneficial interests as a

result of contributions. The reasonable period should be

stipulated in the inquiry.

If no reply is received within the stated time then

arguably the proviso is satisfied. If the occupier's reply is

incomplete, clarification should be sought within a

reasonable time. If he refuses to clarify his reply then

again the proviso is satisfied. If a full and complete reply is

obtained and the purchaser has no reason to suspect its

accuracy, the transaction can proceed.

These precautions will only clear the position as at the

date of the contract or requisitions. Under the 1964 Act a

purchaser or mortgagee will take subject to burdens

affecting the land at the date of registration. Under Rule

63 of the Land Registration Rules, the date of registration

is the date on which the instrument or application is

received for registration. Since this is the relevant date,

and not the earlier date of the transfer or charge, there is a

risk here since it is possible (though not likely) that rights

of persons in actual occupation may arise between

completion and the date of registration of the instrument.

The obvious precaution is to ensure that the

application for registration is delivered to the Land

Registry as soon as possible after completion. It is also

worth noting that the priority given to prospective

purchasers and mortgagees by the Registrar's certificate

of the result of an official search

is only over subsequent

transactions requiring registration — not over s.72

burdens.

Whether the land is registered or unregistered,

purchasers and mortgagees may feel it necessary to oblige

all occupiers of the property to consent to or to join in the

mortgage or sale. If the mortgagor or vendor is married

and title to the property is in his name alone, then he

should be required to transfer the property into the joint

names of himself and his spouse. Both spouses can then

join in the mortgage.

A brief comment on the question of infant occupiers. If

an infant is entitled to a beneficial interest in property, a

purchaser wishing the infant to join in the purchase to

release or transfer his interest should utilise the procedure

under sections 59 and 60 of the Settled Land Act, 1882.

Mortgagees in a similar position should bear in mind the

general incapacity of infants to grant mortgages.

Moreover, on the question of inquiries, they should note

that s.4 of the Betting and Loans (Infants) Act, 1892

makes it a criminal offence for anyone, except under the

authority of any court, to solicit an infant to make an

affidavit or statutory declaration for the purpose of or in

connection with any loan.

Conclusion

It is clear from the foregoing discussion that registered

conveyancing puts a heavier burden on purchasers and

lenders than does unregistered conveyancing. In the case

of registered land, "rights plus occupancy equals

protection with no investigation, however detailed,

effective to give protection if it fails to reveal the true

situation, while for unregistered land, all necessary

inquiries and inspections will give protection."

This is

obviously unsatisfactory. The

Boland

development

undermines the system of registered conveyancing. It

creates new sources of complication and delay for

purchasers and lenders which will inevitably increase

conveyancing costs. In its report on the implications of

the

Boland

decision, the English Law Commission

concluded that it was productive of uncertainty, that it

undermined the security of titles and the ready

marketability of land, and that it increased the complexity

and cost of transactions.

In this writer's view statutory reform is necessary.

There should be an amendment to the 1964 Act to make it

clear that s.72(l)(j) does not extend to interests under

trusts acquired as a result of contributions or otherwise.

This should be coupled with a new registration require-

ment whereby an equitable co-ownership interest must

be registered if it is to be enforceable against a purchaser

or mortgagee. This will restore the register as the primary

arbiter of what interests are binding on third parties,

and will better promote the objectives of the system.

There can be no objection to this based on a policy of

protecting married women or the family home. Non-

owning spouses are already adequately protected by

the right of veto under the Family Home Protection Act,

1976. Furthermore, the Government recently announced

its intention to introduce legislation which will give

spouses equal rights of ownership in the family home and

contents.

•