The Gazette 1985

APRIL 1985

GAZETTE

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. 31 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. 32 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, 33 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 34 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. 35 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." 36 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. 37 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. 38 • 65