Legal Updates

A land sharing agreement requires recording but may obligate a third party who did not examine the existence of such an agreement

August 9, 2017

Co-owners of real estate executed a real estate partnership agreement but did not record it, nor recorded a cautionary notice in respect thereof, with the Land Registry.  About five years later one of the owners sold his holdings to a third party in an agreement that does not give notice of the partnership agreement. The Court held that registration of a land partnership agreement gives it proprietary validity, i.e. validity also vis-à-vis third parties who were not a party to it. However, there are circumstances in which although a land partnership agreement was not duly recorded it will still apply to a third party if such third party about it or turned a blind eye. The purchase of land under joint tenancy is supposed to place a "warning sign" for the purchaser, and therefore an examination of the land registry alone may provide a very partial and sometimes incorrect picture regarding agreements as to the state of the rights in the land and the purchaser should check whether there is any land partnership agreement. In this case the purchaser purchased a specific part of the land and was expected to know that the real estate is shared and thus he cannot purchase a specific part unless there is a land partnership agreement and therefore the land partnership agreement applies to the purchaser.