Podcast: the Ugly
Jeremy, Keith and Lucy, good friends at university, agreed after they graduated in 2009 to club together to buy a house in London. Malcolm, an uncle of Lucy, had recently moved into sheltered accommodation and offered to sell his house to her for £200,000, a price which represented a £25,000 discount on the market value at the time. The friends were delighted. Jeremy contributed £25,000 in cash and Keith contributed £25,000 that he obtained from his father, Freddy. The balance of the purchase price, £150,000, was raised by way of mortgage with Southern Rock Bank. At the bank's insistence, the house was registered in the joint names of Jeremy, Keith and Lucy, with each of them undertaking joint and several liability for the mortgage repayments.
Malcolm hated life in sheltered accommodation, and in 2010 he moved back to the house, living in an extension that was built using some of the money he had received from the sale of the house in 2008. Keith initially objected to the arrangement, saying that the presence of an elderly man would cramp their lifestyles, but reluctantly accepted when Jeremy and Lucy insisted and pointed out that the extension would increase the value of the house.
Keith has suddenly disappeared without telling anyone he was leaving. The others have just discovered that some months ago Keith forged the signatures of Jeremy and Lucy on a mortgage in favour of Tealeaf Building Society to secure an advance of £250,000. Part of this money was used to redeem the mortgage in favour of Southern Rock Bank; the rest has vanished with Keith.
Jeremy, Lucy and Malcolm cannot afford to shoulder this unexpected debt and are fearful of losing the house.
Advise them as to their legal position.
Podcast: the Ugly
The transfer of legal title to J, K and L will mean that they all own the house.(1) There is no mention of a trust at all. They might be legal or equitable owners of the land and it depends on how the house was sold to them. (2) No recognition of the importance of the legal/equitable distinction in relation to co-ownership and little evidence of awareness of the details. I am going to assume that there is no declaration by the parties regarding their interests and so everything now depends on the facts. This looks like a domestic arrangement and so Stack v Dowton(3) Wrong case name. Illustrates lack of attention and disconnection with the subject matter of the problem. applies to it. (4) There is no attempt to introduce the topic and the answer "jumps in" to the problem without evidence of thought or structure. The candidate makes the great error of assuming something. "I am going to assume" are words that should never be written in a land law answer. In that case, which was very like Lloyds Bank v Rosset,(5) A case thrown in. Stack and Rosset are not alike. The first involves a transfer to joint-tenants and the issue is about quantification of share: the second is about acquisition of share. an unmarried couple lived together and one of them tried to claim a share of the house. (6) Unspecific, giving the impression of lack of knowledge. The court(7) Which court? decided that they did not own it equally because on of them had done more than the other.(8) Vaguely correct, but completely lacking in analysis and detail. No identification of underlying principles of law.
In our problem, J and K may try to claim a larger share than L because they paid more money when the house was bought. The court in Stack(9) The candidate gives no analysis of Stack, nor explains its significance. suggested that this depended on all the facts,(10) It could be said of most legal problems that they "depend on the facts". This is a frequent error made in examinations and gives the impression that the candidate does not understand the principles behind the law. To say that "the judge must decide" or "it depends on how the facts are viewed" is not a substitute for you're your own analysis. It makes the answer appear weak. which included how much money they had paid for the house. It is up to J and K to prove that they have a larger share based on all these facts. I think it is likely that J and K will have a larger share because it does not seem fair that they have the same as Lucy when they paid more money.(11) What are the reasons for this conclusion, and what case law supports it? General unsupported statements gather very few marks. L might argue that she has also done a lot – by getting her uncle to sell them the house – but it is not certain that this will count.(12) Again, why and on what basis? This means that J and K may be entitled to a larger share of the property than L.(13) Does this mean of the equitable title? Are they now tenants in common? In fact, it is possible that the uncle might(14) This gives the impression of uncertainty – what conclusion do you reach, and why? be able to claim a share of ownership because he sold them the house cheaply and he paid for the extension. In a number if cases,(15) References to "a number of cases" does not impress an examiner: it could be said of everything! Case names must be given, although there is usually no need to recite the facts. this has been found to be sufficient to get an interest in property. There have been cases after Stack, but these have been unclear.(16) Give examples and explain the uncertainty. Consequently, the judge will have to decide. Overall, I think that J and K have a larger share than L and that M also has a share. They now have to decide what to do with the house.(17) Explain the context and exactly who has power to deal with the land.
When the house is mortgaged by K, this is a fraud because the others have not signed the mortgage. This means that the Building Society has a problem, but they can always go to court.(18) Lacking in any details at all. Gives the impression of a guess. They will have to sue K, if they can find him. The Building Society will want to get their hands on the property in order to sell it, but because they don’t have a mortgage,(19) This is incorrect. They do not have a legal mortgage, but they may have an equitable mortgage over K's interest. this is going to be difficult. They can apply to the court, and they might be successful.(20) Repetition and no detail, case law or explanation.
Because of K’s fraud, J and L and M are lucky because they may be able to stay in the property. Keith owes the Building Society a large amount of money so he might be bankrupt.(21) Failure to mention any law – here TOLATA 1996 – creates a very poor impression. This is especially so if you have been permitted to take the statute book in to the examination with you. No real idea that a person is made bankrupt on the application of a creditor – the bank – or what this might mean for the bank's mortgage.