Bank takes subject to beneficial interest

The court found that the bank took subject to the occupier’s beneficial interest in the property as they failed to make inquiry of him.  Paragraph 2 of schedule 3 to the Land Registration Act 2002 provides that a beneficial interest would bind a successive mortgagees unless inquiry was made of him and his interest would not have been obvious on a reasonably careful inspection of the land.  In this case,  the bank had been given a tenancy agreement, but it transpired that the tenancy agreement was a forgery. 

As the Judge acknowledged,  the risk of the tenancy being a forgery was remote, but if no inquiries are made of those in occupation then the bank “misses out because of it.”

HSBC Bank PLC v Amanda-Jane Margaret Dyche Alfonso Collelldevall  [2009] EWHC 2954 18 November 2009