Referred to above, page 1088.

Search in Bankruptcy on the Sale of Registered Land.

The author's principal reason for advising that a search in bankruptcy should be made before completing a sale of registered land, is the enactment in the Land Transfer Act, 1897 (a), that, where a registered disposition would if unregistered be absolutely void, the register shall be rectified, and the person suffering loss by the rectification shall be entitled to an indemnity. When the registered proprietor of registered land is adjudged bankrupt, all his property, and the capacity to exercise all such powers over or in respect of property as might have been exercised by him for his own benefit at the commencement of his bankruptcy or before his discharge, vest in the trustee in the bankruptcy as from the date of the commission of the act of bankruptcy, on which the receiving order was made (b). The trustee is entitled to be registered as proprietor of the land in place of the bankrupt after it has been certified by the Court having jurisdiction in bankruptcy that the land is part of the bankrupt's property divisible amongst his creditors; and the official receiver is entitled to be registered pending the appointment of a trustee (c). Where the bankrupt is entitled to any land registered in his name for his own use, the legal estate therein appears to pass, with his other property, to the trustee: but until the trustee is registered as the proprietor, the bankrupt remains the registered proprietor of the land, and appears, ns such, to retain the statutory powers (d) of disposition of the land by way of registered transfer for value and registered charge (e). It seems therefore that, hut for the above mentioned enactment of the Land Transfer Act, 1807 (f), a purchaser of registered land would be enabled to rely on the extinguishing effect of a registered transfer for value (g) to destroy any estate or interest, which would be outstanding in the trustee, if the transferor were a bankrupt; and that the purchaser would not be obliged to search in bank-ruptcy. This enactment, however, raises a difficulty. No doubt if the sale were completed before the date of any receiving order made against the vendor and without notice to the purchaser of any available act of bankruptcy on the vendor's part, the transaction would be perfectly valid and unimpeachable by virtue of sect. 49 of the Bankruptcy Act, 1883 (h). This section however only protects payments and conveyances made before the date of the receiving order. If a receiving order should have been made against the registered proprietor of registered land, and he should afterwards execute a registered transfer for value, and should then be adjudged bankrupt, it appears that the registered disposition is one which if unregistered would be absolutely void (i). If so, it seems that the trustee in the bankruptcy would be entitled to claim rectification of the register under the above mentioned enactment (k), and the purchaser would have to give up the land and rest satisfied with his claim to an indemnity under the Land Transfer Act, 1897 (l). The same difficulty might arise if the registered proprietor of the land sold were an undischarged bankrupt at the date of the contract for sale, unless the property sold were a term of years, which had been acquired by or had devolved upon him since the commencement of the bankruptcy (m). Until these difficulties are dissolved by decision, it is thought to be advisable to search in bankruptcy before completing any sale of registered land; as the last thing that a purchaser would desire is to be immediately ejected and relegated to a claim for the statutory indemnity. It follows that, where a purchaser of registered land receives notice, before completion, of an act of bankruptcy committed by the vendor, he cannot safely proceed with the sale, except under the same conditions as would enable him to complete the contract it the land were not registered (n). It is thought that search in bankruptcy should certainly be made before advancing any money on the security of a registered charge on registered land; as no extinguishing effect is expressly given to such charges (o).

Effect of the bankruptcy of the registered proprietor of registered land.

(a) Stat. 60 & 61 Vict. c. 65, s. 7 (2); above, p. 1113.

(b) Stat. 46 & 47 Vict. c. 52, ss. 20, 43, 44.

(c) Stat. 38 & 39 Vict. c. 87, s. 43, amended by 60 & 61 Vict. o. 65, First Schedule; see Land Transfer Rules (1903), 193 - 200.

Where the vendor of registered land is an undischarged bankrupt.

(d) Above, p. 1074.

(e) Above, p. 1058, n. (c). (f) Above, n. [a).

(g) Above, pp. 1073, 1074. (h) Stat. 46 & 47 Vict. c. 52: above, p. 482.

(i) Above, p. 482, n. (o).

(k) Above, n. (a).

(l) Stat. 60 & 61 Vict. c. 6."), s.7. It should be noted that by sub-sect. 3 a person shall not be entitled to indemnity for any loss where he has caused or substantially contributed to the loss by his act, neglect, or default. This furnishes an additional reason for making the search. (m) See above, p. 483.

It is thought to be unnecessary to make any search for deeds of arrangement (p) on the sale or mortgage by transfer of registered land. If the trustee and creditors thereunder choose to be satisfied with an unregistered assurance (not protected by restriction or caution) of the debtor's estate in his registered land, and allow him to remain registered as the proprietor of the land, it is thought that any estate or interest outstanding in the trustee or the creditors would certainly be extinguished by the effect of any subsequent registered transfer for value executed by the debtor (q), and would be postponed to any registered charge which he might afterwards make (r).

Notice of an act of bankruptcy by the vendor, pending completion of a sale of registered laud.

Search in contemplation of a mortgage.

Deeds of arrangement.

(n) Above, pp. 480 - 482. (o) See above, pp. 1126 sq. (p) Above, pp. 525, 528.

(q) Above, pp. 1073, 1074. (r) Above, p. 1081, n. (r).