Is a 'mere equity' arising through estoppel capable of binding a purchaser, and which section of the LRA 2002 confirms this status?

Question

Quizplus · Accepted Answer

The Answer is In English law, a 'mere equity' is a right or claim that is recognized in equity but does not amount to an equitable interest in property. One way in which a mere equity can arise is through the doctrine of estoppel, particularly proprietary estoppel. Proprietary estoppel can prevent a legal owner of property from asserting their legal rights against a person who has relied on the owner's representations and suffered a detriment as a result.

Whether a mere equity arising through estoppel is capable of binding a purchaser depends on the circumstances, including whether the purchaser has notice of the equity and the nature of the equity itself. Generally, for an equity to bind a purchaser, it must be an interest that is capable of being an overriding interest under the Land Registration Act (LRA) 2002.

The relevant section of the LRA 2002 that deals with overriding interests is Section 29. This section provides that, upon the disposition of a registered estate, all interests and rights affecting the estate that are not protected on the register will be overridden by the disposition, except for certain overriding interests listed in Schedule 3 of the Act.

Schedule 3 of the LRA 2002 sets out the interests that have the status of overriding interests and thus have the potential to bind purchasers even if they are not entered on the register. These include, for example, the rights of people in actual occupation of the property (subject to certain conditions), certain legal easements, and certain other rights.

However, mere equities such as those arising from estoppel are not explicitly listed as overriding interests in Schedule 3. Therefore, they do not automatically bind a purchaser. For a mere equity to bind a purchaser, it would generally need to be the case that the purchaser has actual knowledge of the equity, or it is obvious on a reasonably careful inspection of the land, or the purchaser has been notified of the equity in some other way.

In practice, if a person has a claim based on proprietary estoppel, they would be well advised to protect their position by either seeking a court declaration or by registering a notice or a restriction against the property title if possible. This would ensure that their interest is known to potential purchasers and is more likely to be binding upon them.

It is important to note that the application of these principles can be complex and fact-specific, and the outcome can vary depending on the individual circumstances of the case. Legal advice should be sought in any situation where the application of estoppel and its effect on property rights is in question.

Is a 'Mere Equity' Arising Through Estoppel Capable of Binding