A common scenario which I have come across when acting for
mortgagees in connection with property sales by them involves the
following entries at the land registry:
Charges Register:
1. Equitable charge in favour of Random Name
Limited.
2. Legal charge in favour of our client.
The question is which one has priority and will be entitled to
take the funds due to it first when the property is sold? Many
conveyancers do not know the answer to this and the position is not
as simple as it may seem.
In the above scenario, the answer is: it depends. It depends on
the date each charge was created and the type of charge, i.e.
whether the charges are legal or equitable. Notice that I said
"created", not "registered". Unlike Registered
Legal Charges, an equitable charge is not afforded any priority
against competing financial charges on the basis of when it was
registered against the title alone.
