An unpaid vendor’s lien was not subordinated to the plaintiff’s charge without clear consent.
Millett LJ said: ‘As soon as a binding contract for sale of land is entered into the vendor has a lien on the property for the purchase money and a right to remain in possession of the property until payment is made. The lien does not arise on completion but on exchange of contracts. It is discharged on completion to the extent that the purchase money is paid: In re Birmingham, decd.; Savage v. Stannard [1959] Ch. 523, cited with approval in London and Cheshire Insurance Co. Ltd. v. Laplagrene Property Co. Ltd. [1971] Ch. 499, 514. Even if the vendor executes an outright conveyance of the legal estate in favour of the purchaser and delivers the title deeds to him, he still retains an equitable lien on the property to secure the payment of any part of the purchase money which remains unpaid. The lien is not excluded by the fact that the conveyance contains an express receipt for the purchase money.
The lien arises by operation of law and independently of the agreement between the parties. It does not depend in any way upon the parties’ subjective intentions. It is excluded where its retention would be inconsistent with the provisions of the contract for sale or with the true nature of the transaction as disclosed by the documents. It is also excluded where, on completion, the vendor receives all that he bargained for: Capital Finance Co. Ltd. v. Stokes [1969] 1 Ch. 261 and Congresbury Motors Ltd. v. Anglo-Belge Finance Co. Ltd. [1971] Ch. 81. In each of those cases the vendor took a legal charge to secure payment. The unpaid vendor’s lien was held to be excluded notwithstanding that the charge later became void for want of registration.’
Judges:
Millett LJ
Citations:
Gazette 20-Mar-1996, [1997] 1 WLR 415
Jurisdiction:
England and Wales
Cited by:
Cited – Cook v The Mortgage Business Plc CA 24-Jan-2012
The land owners sought relief from possession orders made under mortgages given in equity release schemes: ‘If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee’s right to . .
Lists of cited by and citing cases may be incomplete.
Land
Updated: 08 April 2022; Ref: scu.78199