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- Beneficial Interest and Its Consequences
The legal owner of the property (6 Plough Lane), according to the given case study is Barney, while Talia owns a beneficial interest in the property. The ownership of the land in England and Whales is specifically dealt with in two main ways-legal ownership and beneficial ownership. A legal owner is one under whose name the land is registered in the land registry, while a person with the beneficial owner in the property is one, who has the right to enjoy or benefit through the property. The beneficial interest in the property is also related to the economic benefit of the property.
For Alpha, it is important to understand their beneficial interest in Talia before she buys the property. If only one of the partners has the legal ownership of the property, the partner with beneficial interest still may has the share in the property and he or she can claim their share in the proceeds of the sale. The beneficial interest of Talia in the property can be related to her contribution to the purchase of the property or in its maintenance or the intentions of the partners when the property was bought[1]. The beneficial interest of Talia in the property provides her with the right to occupy the property, preventing it from the sale or obtaining shares from the proceeds.
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The interest of the beneficial owner in the property depends on the terms that were expressly agreed by the parties and if such an agreement is absent, then inferred agreement between them is used. Therefore, Alpha have to identify the what kind of agreement has been established between Barney and Talia, because it is important for identifying the size of beneficial interest of the parties in the land[2]. The consequence that can arise for Alpha is that, in the case of the absence of any such agreement, the case has to be taken to the court, where the court will be required to look into the details of the whole course of the dealings to understand the size of beneficial interest of the intended parties[3]. Therefore, Alpha will be required to take help from the court and court proceedings can delay the purchase of the property.
Talia is also the co-habitant of the property, as she occupies the basement flat of 6 Plough Lane. Therefore, she can prevent the sale of the property, which could be a significant problem for Alpha. Though, in most cases, a freehold owner can dispose of his or her property. However, the beneficial interest of a cohabitant can prevent the sale of the property. In such a case, the property can be subjected to legal proceedings and the non-owning cohabitant can have the injunction to prevent the sale of the property. In the case of Walker v Hall CA ([1984] FLR 126) court has asserted that when an unmarried couple separated from each other, disputes about the share in the property are likely to arise.
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Another consequence that Alpha may face is associated with the overriding interest of Talia. According to “If the non-owning cohabitant has not protected her/his interest by registering a notice or restriction, but is occupying the property, s/he may be able to establish an overriding interest”[4]. Such beneficial interest of the occupier is binding for the buyer, whether they might know about the interest of the beneficial owner. Therefore, if Alpha knows or not about the beneficial interest of Talia, or if she fails to enquire about the beneficial interest of Talia and does not conduct a reasonable and careful inspection of the property, then Talia can establish her overriding interest[5].
The beneficial or the equitable interest can be held by the parties either as the joint tenant or as the tenant in common. The joint tenants have the right to an equal share of the property, while in the case of beneficial interest of parties as tenants in common may require the declaration of trust[6] to understand and know their share in the property. Therefore, a significant problem for Alpha would be to understand the beneficial share of Talia, if the declaration of trust is absent and the intentions of the parties are not clear, then court proceedings may be involved. Such as in the case of Oxley v Hiscock [2005] Fam 211, the court of appeal held that amount of the respective share will be based on “the whole course of dealing between them about the property” and their share is also limited to the amount of their respective contribution[7].
Tenancy in common and occupation of the property gives them the right to Talia that could not be forced to sell the property. Another consequence could arise in the case of ‘Notice of Beneficial Interest’. Actual notice can be provided to Alpha by Talia informing her about her interest in the property. Another type of notice is constructive notice and a buyer would have discovered the beneficial interest of the non-owning occupant by inspecting the land and making reasonable inquiries [8]. Therefore, these are some of the most significant consequences that Alpha might have to face for buying 6 Plough Lane.
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- Right of Way Easement
The right of way is an easement that was specifically based on the principles of common law. The right of way provides the right to a person to access the assigned land of the other owner. The given case scenario informs that Habib has permission for accessing the path (permissive access) in the back garden. Therefore, the first thing that Alpha requires to do is to enquire about the right of way and check the deed of the right of way. In the case of t registered land, the right of way deed is recorded for the Title Register and Land Registry that informs about the ‘dominant tenement’ and ‘servant tenement’[9]. This is also considered an expressed easement. Recording the deed or the registration of the easement protects the profit and also binds the purchaser[10].
Therefore, if the deed of easement or the right of way is registered in the Land registry, then Alpha will be bound by this expressed easement. Sch. 2, para 9 of the Land Registration Act 2002 also informs that “If an easement or profit is not protected by registration but was created before the Act was brought into force and was an overriding interest at that time, its overriding status will be retained”. For the easement, the most significant requirement is the dominant and servient land[11]. Therefore, according to the aforementioned evidence Alpha would be bound by Habib’s right of way.
[1] Turton v Turton CA ([1988] Ch 542)
[2] Oxley v. Hiscock [2004] EWCA Civ 546
[3] Sukhninder Panesar, ‘Family law/land law: quantifying a beneficial interest in non-marital cohabitation’ (2004), 38(3) Law Teacher https://pureportal.coventry.ac.uk/files/4054559/Quantifying%20a%20Beneficial%20Interest.pdf Accessed 21 November 2018
[4] ss.29-30 and para 2, Sch.3 Land Registration Act 2002
[5] para 2(b) and (c), Sch.3 Land Registration Act 2002.
[6] Trusts of Land and Appointment of Trustees Act 1996
[7] Gissing v Gissing [1971] A.C. 886
[8] s.199(1) Law of Property Act 1925
[9] Law Commission, Making Land Work: Easements, Covenants and Profits à Prendre (Law Com No 327 2011), Part 2
[10] Land Registration Act 2002, s 29(2)(a)
[11] Wall v Collins [2007] EWCA Civ 444, [2007] Ch 390 in Part 3; para 3.232
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