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