TOPIC 6 PRIORITIES AND CAVEATS FEEDBACK TO ONLINE ACTIVITIES ACTIVITY 6.1 CHECK YOUR UNDERSTANDING Explain the rules for determining priority between the following competing interests under the Land Title Act 1994 (Qld). Include discussion on whether the Torrens system altered the common law priority rule. a. Legal interest followed by a later legal interest b. Legal interest followed by a later equitable interest c. Equitable interest followed by a later legal interest d. Equitable interest followed by a later equitable interest. FEEDBACK Legal interest followed by a later legal interest Priority is given to the interest created first in time · s 182 - An interest is created or transferred upon registration · s 178 - Priority based on time registered instruments lodged · s 18fi - proprietor of an interest in a lot holds the interest subject to registered interests This alters the common law priority rule which is you cannot give what you do not have - nemo dat quod non habet. Legal interest followed by a later equitable interest Priority is given to the legal (registered) interest and the registered proprietor is not subject to later equitable interests unless an exception to indefeasibility applies. · s 18fi - registered proprietor holds the interest subject to registered interests affecting the lot but free from all other interestsdoes · s 18fi(3) - registered proprietor may be subject to a later equitable interest if there has been fraud by the registered proprietor (fraud exception) · s 185(1)(a) -if the registered proprietor creates a contractual obligations subject to a remedy in equity (in personam exception) This is similar to the common law priority rule that the earlier legal interest prevails unless it should be postponed because of fraud, blameworthy conduct or an estoppel by the legal owner.
2 Equitable interest followed by a later legal interest The registered proprietor has priority unless an exception to indefeasibility applies. · s 182 - an interest is created in law upon registration · s 18fi(1) - registered proprietor of a lot is free from all other interests UNLESS any of the exceptions to indefeasibility apply · s 18fi(2) - registered proprietor's interest is not affected by notice of an earlier unregistered interest. · ss 18fi(3), 185 - registered proprietor may be subject to earlier equitable interests if: o there has been fraud by the registered proprietor (fraud exception): s 18fi(3). Mere notice that registration would defeat an unregistered interest is not fraud o the registered proprietor creates a contractual obligations subject to a remedy in equity (in personam exception): s 185(1)(a) o The prior interest is a short term lease: s 185(1)(b) .... etc This alters the common law position which is that If the holder of a later legal estate has actual, constructive or imputed notice of a prior equitable estate, he or she takes subject to that prior equitable estate. Equitable interest followed by a later equitable interest. Where there is notice of the earlier interest the holder of the second interest