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CELE SQE1 模拟练习

Examination Timing: 00H03M54S

In 2005, Lucy purchases the fee simple in Willow Farm, an old agricultural property, as an investment. The property is registered at the Land Registry. The previous owner, Mr. Green, retains a small cottage where he intends to live and includes in the transfer deed to Lucy a restrictive covenant stating that she will not use the land for anything other than a working dairy farm. Mr. Green does not ensure that the restrictive covenant is registered against Lucy's title. Lucy gifts the land to a developer who plans to build a large housing estate there. How would you advise Mr. Green?

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The restrictive covenant is contained in a deed and is an equitable interest. It binds the developer. A restrictive covenant can only exist as an equitable interest, even if it is contained in a deed, and cannot exist at law. The most effective way to ensure notice of such an interest is by registering it, as registration ensures that any purchaser has notice of the interest and therefore takes the land subject to it (section 32(3) of the Land Registration Act 2002). According to section 29(1) of the Land Registration Act 2002, if a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration postpones any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration, such as an interest protected by a notice in the register (section 29(2)(a)(i)). However, where the disposition is not made for value (i.e., it is a gift), the interest of the new owner will not take priority under section 29(1), whether or not he had notice of it. Therefore, since Lucy gifted the land to the developer, the developer takes the land subject to the restrictive covenant. 

Key Point: Restrictive covenants are equitable interests and must be registered to protect their priority. Under the Land Registration Act 2002, unregistered interests can be overridden by dispositions for valuable consideration unless they are registered. However, in cases of gifts, the new owner's interest does not take priority over the existing unregistered interest.



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