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Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783

T61: Ken Dao (53774105)

Constructive Notice

-A purchaser and his agents should discover the equitable interests of other people if they have carried out prudent and reasonable enquiries.

-The difficulty in ascertaining what falls within the ambit of constructive notice is to determine what enquiries a reasonable prudent purchaser should make.

The judgment is interesting for its practical guidance as to the sort of enquiries a purchaser or lender should make to avoid being fixed with constructive notice of unwritten equitable interests.

-It was held that the lender’s mortgage was subject to the wife’s equitable interest.

-She was in occupation even though she did not live at the matrimonial home all the time.

-The discrepency between the statement on the application form that the lender was single and his disclosure to the valuer that he was married put the lenders on notice.

Equitable interests

Equitable interests bind everybody except the bona fide purchaser for value of the legal estate without notice of the equitable interest.

-The same could be said of the presence of the son and daughter. The lender should have made further inquiries.

-The inspection was inadequate since it was at a pre-arranged time.

-Since it could not show that, given its knowledge, no further inspection was reasonably necessary it was subject to Mrs Tizard’s equitable interest.

Facts

-He knew that the couple were separated and that Mrs Tizard lived nearby but did not note this in his report.

-The loan was made and was secured by a mortgage on the matrimonial home.

-Mr Tizard did not keep up with the repayments

-The lender brought proceedings seeking possession or an order for sale and directions as to how the sale proceeds should be distributed.

Facts

-The matrimonial home was in Mr Tizard’s name but the wife made substantial contribution and had a 50% equitable interest in it.

-When the marriage broke down she moved out of the home. She returned each day to look after the children and stayed the night if her husband was away.

-Mr Tizard applied for a loan. In the application form he stated he was single. The valuer who visited the property on behalf of the lender noted in his report to the lender that the occupants were Mr Tizard and the two children.

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