Equity

equity

Apart from equitable interests arising under a trust, equity also recognised and enforced by means of its own special remedies certain other interests to which the common law refused to give effect because due form had not been observed in theft creation. In general any estate or interest in land such as a fee simple, a lease, a mortgage or an easement was (and still is) valid at law only if granted by deed'; and although a contract to create such an interest could be enforced at law to the extent of recovering damages for its breach, this would often be an ineffectual remedy.

Equity, on the other hand, applying its maxim that "equity looks on that as done which ought to be done," treated such a contract as at once creating an equitable interest in the land; and an attempt to create or convey an interest in land which failed at law through lack of a deed was treated in the same way, provided that the grantee had given valuable consideration.

Thus, under a contract for the sale of a fee simple, or for the grant of a lease or a mort�gage or an easement, the purchaser, the lessee, the mortgagee or the grantee of the easement was regarded in equity as having an immediate interest equivalent to a fee simple, lease, mort�gage or easement respectively. His interest, however, being merely equitable, was subject to the same defect as indicated above in relation to interests under a trust, namely that it was not enforceable against a bona fide purchaser without notice (as we may call him for short). Three further species of equitable interest may be briefly mentioned here: first, the mortgagor's equity of redemption; secondly, the restrictive covenant, the burden of which may in equity (though not at common law) run with the covenantor's land; thirdly a form of interest based upon a principle some�times referred to as equitable, or proprietary estoppel.

All three will be discussed more fully in due course. We may now compare an equitable interest in land with a legal interest. Every legal right is a right in rem, i.e. once it attaches to land it binds that land in the hands of everyone who afterwards acquires it, regardless of notice. For example, if A has a legal right of way against the land of B and B sells the land to C, who acquires it for value in good faith and without notice of the legal right of way, A may still exercise his right against the land. In theory an equitable interest is a mere right in personam, i.e. a right which is enforceable only against certain classes of persons; but from the practical point of view it has become almost a right in rem not quite, because it is not enforceable against the bona fide purchaser without notice.

The expression "constructive notice" requires a few words of explanation. A purchaser of land has constructive notice of any interest in the land which he would have discovered if he had made the customary investigation of his vendor's tide for the full statutory period (which is now fifteen years'). This investigation of title involves an inspection of the documents of title to the land for the period in question. A purchaser also has constructive notice of any interest in the land which he would have discovered if he had made those other enquiries and inspections (such as an inspection of the land itself) which a prudent purchaser customarily makes.


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