Protecting a beneficial interest under a trust of land: restriction, not notice (LRA 2002 s.33)
Ana and her brother Femi bought a freehold flat in Leeds, England, as an investment. Ana alone is the registered proprietor, but Femi paid half the price and they agreed in writing that he owns half the beneficial interest. Femi does not live at the flat, which is let to a tenant. Femi wants to make sure that Ana cannot sell or mortgage the flat without his interest being protected.
Which entry should Femi seek on the register of Ana's title?
Choose one answer to see the reasoning.
Worked answer
Correct answer B: A restriction, because no notice may be entered in respect of an interest under a trust of land.
THE RULE TO REMEMBER
No notice may be entered for an interest under a trust of land; a beneficiary protects the interest by a restriction on the register.
Protecting a beneficial interest under a trust of land: restriction, not notice (LRA 2002 s.33)
Section 33(a)(i) of the Land Registration Act 2002 provides that no notice may be entered in the register in respect of an interest under a trust of land. Femi's half share is a beneficial interest under a trust of land, so neither an agreed nor a unilateral notice is available. The correct protection is a restriction, which regulates the circumstances in which a disposition may be registered. Section 42(1)(b) recognises a restriction's purpose of securing that interests capable of being overreached on a disposition are overreached; in practice a restriction ensures that capital money is paid to at least two trustees, so that Femi's interest is overreached into the proceeds rather than lost. Femi cannot rely on an overriding interest, because he is not in actual occupation of the flat.
Why A is wrong: Section 33(a) prohibits any notice, agreed or unilateral, for an interest under a trust of land.
Why C is wrong: A unilateral notice is still a notice and is barred by s.33(a).
Why D is wrong: An interest can override under Sch 3 para 2 only if its owner is in actual occupation, and Femi is not.
Why E is wrong: New cautions against dealings cannot be entered under the 2002 Act; restrictions and notices replaced them.
A little more practice done.
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