Pre-1926 Enforceability of third party rights in the unregistered system
1) Legal rights in rem (i.e. legal proprietary rights/interest) bind 3rd parties
(transferees/purchasers) automatically.
In other words, if you buy unregistered land you will be automatically bound by the
legal rights in rem attached to the land.
This will materialise even if the transferee (i.e. purchaser) has no notice of the right in rem. In
other words, the purchaser of unregistered land will be bound by legal rights in rem over the
land even if he/she was not aware of their existence. Although, it is unlikely the purchaser
will not be aware of the existence of a legal right in rem as it would most likely be discovered
by the transferee's (purchaser's) investigation of title or on physical inspection of the land.
⇒ 2) Equitable rights in rem will also bind all 3rd parties, except Equity's darling.
So, the equitable interests arising under a trust and the pre-1926 restrictive covenants and equitable
easements will bind everyone except equity’s darling. The legal interests will bind the whole world.
The following shows where a transferee would not be Equity's darling(meaning that
equitable rights in rem over the land would bind them):
o Where the transferee/purchaser was not bona fide i.e. acted in bad faith.
o Where the transferee/purchaser didn't purchase the estate for value i.e. the land given to
him.
o Where the transferee/purchaser does not hold a legal estate in the land i.e.
his freehold or leasehold is equitable.
o Where the transferee had notice of the equitable right in rem. (Law of Property Act 1925,
section 199(1)(ii)) Actual notice: all matters the purchaser was aware of at the date of
purchase A person has actual notice of all facts of which they have (or have had) actual
knowledge, however that knowledge was acquired; but they are not regarded as having
actual notice of facts which have come to their ears only in the form of vague rumours.;
Constructive notice: A buyer is deemed to have constructive notice of any matter or fact
which ‘would have come to his knowledge if such inquiries and inspections had been made
as ought reasonably to have been made by him’ (Law of Property Act 1925, s 199(1));
Imputed notice: matters within the actual or constructive knowledge of his agents (e.g. the
purchaser’s solicitor).
Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783. The Kingsnorth case made it clear that the
purchaser or their agent must make all inquiries and inspections that, in the circumstances, ought
reasonably to have been made. Otherwise, the purchaser will not be equity’s darling, as they will be
deemed to have constructive notice of the interest.
⇒ So we distinguish between legal and equitable rights because before 1926 equitable rights would
not bind Equity's darling but legal rights always bind the transferee/purchaser of property.
⇒ Once an equitable right has been defeated by Equity's darling it cannot subsequently survive
against someone who isn't Equity's darling (Wilkes v Spooner [1911]).
1) Legal rights in rem (i.e. legal proprietary rights/interest) bind 3rd parties
(transferees/purchasers) automatically.
In other words, if you buy unregistered land you will be automatically bound by the
legal rights in rem attached to the land.
This will materialise even if the transferee (i.e. purchaser) has no notice of the right in rem. In
other words, the purchaser of unregistered land will be bound by legal rights in rem over the
land even if he/she was not aware of their existence. Although, it is unlikely the purchaser
will not be aware of the existence of a legal right in rem as it would most likely be discovered
by the transferee's (purchaser's) investigation of title or on physical inspection of the land.
⇒ 2) Equitable rights in rem will also bind all 3rd parties, except Equity's darling.
So, the equitable interests arising under a trust and the pre-1926 restrictive covenants and equitable
easements will bind everyone except equity’s darling. The legal interests will bind the whole world.
The following shows where a transferee would not be Equity's darling(meaning that
equitable rights in rem over the land would bind them):
o Where the transferee/purchaser was not bona fide i.e. acted in bad faith.
o Where the transferee/purchaser didn't purchase the estate for value i.e. the land given to
him.
o Where the transferee/purchaser does not hold a legal estate in the land i.e.
his freehold or leasehold is equitable.
o Where the transferee had notice of the equitable right in rem. (Law of Property Act 1925,
section 199(1)(ii)) Actual notice: all matters the purchaser was aware of at the date of
purchase A person has actual notice of all facts of which they have (or have had) actual
knowledge, however that knowledge was acquired; but they are not regarded as having
actual notice of facts which have come to their ears only in the form of vague rumours.;
Constructive notice: A buyer is deemed to have constructive notice of any matter or fact
which ‘would have come to his knowledge if such inquiries and inspections had been made
as ought reasonably to have been made by him’ (Law of Property Act 1925, s 199(1));
Imputed notice: matters within the actual or constructive knowledge of his agents (e.g. the
purchaser’s solicitor).
Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783. The Kingsnorth case made it clear that the
purchaser or their agent must make all inquiries and inspections that, in the circumstances, ought
reasonably to have been made. Otherwise, the purchaser will not be equity’s darling, as they will be
deemed to have constructive notice of the interest.
⇒ So we distinguish between legal and equitable rights because before 1926 equitable rights would
not bind Equity's darling but legal rights always bind the transferee/purchaser of property.
⇒ Once an equitable right has been defeated by Equity's darling it cannot subsequently survive
against someone who isn't Equity's darling (Wilkes v Spooner [1911]).
