This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
As to indemnity from purchaser on sale of bankrupt's leaseholds.
(d) Brown v. Paull, (1856) 2 Jur. N. S. 317; and see Prid. vol. i. 22nd ed. p. 509 for form of covenant.
(e) Bkcy. Act, 1914, s. 54 (1), replacing s. 55 (1) of the Bkcy. Act, 1883, and s. 13 of the Bkcy. Act, 1890. See sup. p. 272 et seq.
(f) S. 54 (2); Ex p. Allen, (1882) 20 Ch. D. 341; 51 L. J. Ch. 724; it also discharges a guarantor of rent, Stacey v. Hill, 1901, 1 Q. B. 660; 70 L. J. K. B. 435; Hastings Corp. v. Letton, 1908, 1 K. B. 378; and see generally as to disclaimer, Williams on Bkcy. 13th ed. p. 338 et seq.; and as to disclaimer of registered leases, see L. R. Act, 1925, s. 42 (2).
(g) Ex p. Dressier, (1878) 9 Ch. D. 252; 48 L. J. Bkcy. 20; Wilson v. Wallani, (1880) 5 Ex. D. 155; 40 L. J. Ex. 437. But he is not liable for any arrears of rent, or breaches of covenant which accrued due, or took place before his appointment; Titterton v. Cooper, (1882) 9 Q. B. D. 473; 51 L. J. Q. B. 472.
(h) Hopkinson v. Lovering, (1883) 11 Q. B. D. 92; 52 L. J. Q. B. 391; and see Fagg v. Dobie, (1838) 3 Y. & C. 96; Re Smith, (1890) 25 Q. B. D. 536; 59 L. J. Q. B. 554; Williams on Bkcy. 13th ed. p. 341.
(i) Wilkins v. Fry, (1816) 1 Mer. 244; Levi v. Ayers, (1878) 3 A. C. at p. 852; 47 L. J. P. C. 83. (k) See ante, p. 502.
Where an executor or administrator has satisfied all the liabilities of a lease granted or assigned to his testator or intestate, and has assigned the lease to a purchaser, he may now safely distribute the residuary estate, and, after such assignment, is no longer personally liable in respect of any subsequent claim under the lease (n): but the lessor may follow the assets into the hands of the persons among whom they have been distributed. On a sale by executors or administrators it is usual to indemnify them, as well as the estate of the deceased, from all future liability in respect of the rent and covenants of the lease.
On sale of leaseholds by executors, etc.
Independently of contract, the legal or equitable assignee of a lease is, as respects the time only during which he is in possession, bound to indemnify the lessee against liabilities under the lease (o); and where the equitable assignee has actually parted with the possession he is no longer liable to be sued by the landlord for breaches of covenant, or nonpayment of rent, during the period of his possession (p).
Indemnity by assignee of lease,
(l) Ex p. Buxton, (1880) 15 Ch. D. 289.
(m) Bkcy. Act, 1914, s. 54 (6); and see Williams on Bkcy. 13th ed. p. 346.
(n) Trustee Act, 1925, s. 26.
(o) Staines v. Morris, (1812) 1 V. & B. 8; Burnett v. Lynch, (1826) 5 B. & C. 589, 662; Close v. Wilberforce, (1838) 1 Beav. 112; 8 L. J. N. S. Ch. 101; Sanders v. Benson, (1841) 4 Beav. 350; Moore v. Greg, (1848) 2 Ph. 717; 18 L. J. Ch. 15; Rowley v. Adams, (1839) 4 M. & C. 534; Re Poole and Clarke, 1904, 2 Ch. 173; 73 L. J. Ch. 612; and see or freehold subject to quit-rent, or covenants for or upon which vendor is liable.
The rule that a purchaser must undertake his vendor's liabilities would, it is conceived, apply to the sale of freehold land subject to quit-rent (q), which the vendor has entered into a personal liability to pay. So, where a vendor of freeholds has, on his own purchase, covenanted to observe restrictive covenants entered into by a former owner, and to indemnify him in respect thereof, a purchaser who buys with notice of the restrictions must enter into similar covenants with the vendor; but his covenant to perform and observe the restrictive covenants and to indemnify should be prefaced with the words "with the object and intention of affording to the vendor, his heirs, executors and administrators, a full and sufficient indemnity in respect of the restrictive covenants, but not further or otherwise" (r). If the purchaser contracts without notice of the restrictive covenants he must elect either to rescind or enter into similar covenants (s).
It is important to bear in mmd that, m the case of restrictive covenants entered into after 1925, the same, unless registered under the L. C. Act, 1925, s. 10 (1), Class D (ii), are void as against a purchaser of the legal estate for money or money's worth (t). But if registered, such registration is to be deemed to constitute notice to all persons and for all purposes connected with the land affected (u). In a recent case (x) the vendor agreed to sell property at Eastbourne "free from incumbrances." Before the time fixed for completion it was ascertained that a resolution affecting the property had been passed by the Town Council of Easb-bourne, being the first step in the preparation of a town planning scheme. The fact that such resolution had been passed was unknown to both vendor and purchaser at the date of the contract, but it was registered as a land charge under the L. C. Act, 1925. It was held by Eve, J., and by the C. A., that, having regard to the terms of s. 15 (7) of the L. C. Act, 1925, as modified by the L. P. (Am.) Act, 1926, the resolution did not create an "incumbrance," but merely a local land charge. Eve, J., further held (but this point was not dealt with by the C. A.), that even if the resolution created an incumbrance, its registration under the L. C. Act, 1925, constituted notice to the purchaser at the date when he entered into the contract, by virtue of s. 198 of the L. P. Act, 1925, and the purchaser could not therefore complain. It would seem, however, that even if the purchaser had actual notice in fact of an existing incumbrance, there would, prima facie, be an implied term of the contract that the incumbrance should be removed or provided for; and in the present case it was not necessary to imply a term, the contract expressly providing that the sale was "free from incumbrances."
Moule v. Garrett, (1870) L. R. 5 Ex. 132; 7 Ex. 101; 39 L. J. Ex. 69; 41 L. J. Ex. 62; Johns v. Pink, 1900, 1 Ch. 296; 69 L. J. Ch. 98. A railway company is for this purpose in the position of an ordinary purchaser, Harding v. Metr. R. Co., (1872) 7 Ch. 154; 41 L. J. Ch. 371. Under a covenant to indemnify against all claims in respect of the covenants in a lease, costs properly incurred in reasonably defending an action, brought for breach of one of them, are recoverable as damages: Murrell v. Fysh, (1883) 1 C. & E. 80.