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Review Your SQE 1 Practice Records

Examination Timing: 00H03M06S

John owns a freehold estate in Maple House. He decides to grant a life interest to his aunt, Margaret, allowing her to live in Maple House for the rest of her life. Unbeknownst to Margaret, John later sells the freehold estate to Paul. Which of the following statements best describes the legal position of Margaret's interest?

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Margaret has an equitable interest in Maple House which only binds Paul if he has notice of her interest. Since 1 January 1926, under section 1 of the Law of Property Act 1925 (LPA 1925), the only legal estates in land capable of existing at law are a fee simple (freehold) and a term of years absolute (leasehold). All other interests, such as Margaret's life interest, are equitable. The question of whether Margaret's interest binds Paul is governed by the Doctrine of Notice. If Paul had notice of Margaret's interest at the time of the purchase, he would be bound by it. Notice can be actual, constructive, or imputed, and the purchaser must make reasonable inquiries to uncover such interests. 

Key Point: Understanding the distinction between legal and equitable interests in land is crucial, as is the application of the Doctrine of Notice in determining the binding nature of such interests on subsequent purchasers. The LPA 1925 significantly reformed property law in England and Wales, streamlining the types of legal estates and emphasizing the role of equity.

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