In this case study, the facts to be observed is with regard to provisions of Land Registration 2002 which was operationalised from 2003. Section 29 (1) of the Land Registration Act 2002 states, interalia, "if a registrable disposition of a registered charge is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the charge immediately before the disposition whose priority is not protected at the time of registration." (Disposition of Registered Land. 2002).
The aspects of restrictions, as is evident in this case study are found under Sections 40 and 41 of Land Registration Act 2002. Section 40 circumscribes the circumstances under which certain restrictions could be imposed with regard to mortgage and they seek to place restrictions on the making of any entries, either for a specified or unspecified period of time or depending upon the happening of any event. The law under Section 40 (2) states that "A restriction may, in particular
(3) Without prejudice to generality of subsection (2)(b)(iii), the events which may be specified include- (a) the giving of notice,(b) the obtaining of consent, and (c) the making of an order by the court or registrar. (Notices and restrictions. 2002).
In this case of Nicole and Silky Smooth Limited, it is seen that the following restrictions were placed by the mortgagee (lender) Silky Smooth Limited while negotiating a Registered 1st Charge on the property of Nicole, the mortgagor as pre-conditions for giving of the loans: 1. She would be the sole supplier for the Nicole's beauty product Company until year 2034. 2. There would be no repayment of the loan amount of 100,000 from the loanee, or demands from loaner for a period of 25 years. 3. The interest rate would be at 3% more than the prevailing bank rate.
The effect of these registered charges now binds both the mortgagee and the mortgagor as per Section 40 of the Registration of Property Act. The aspect of "restrictive covenant "that was seen in the case of Tulk v. Moxhay 1848 and it is said that this established that the burden of a covenant which was restrictive in nature could run with the land', despite privity of contract. (Tulk v Moxhay (1848). 2006).
The aspect of higher interest rate that is seen in this case study cannot be termed as unconscionable since as per the legal framework, there are no restrictions on the rate of interest that may be charged on mortgages, and in the absence of disagreement or protest on the party of the mortgagor regarding higher interest rates, there is a valid agreement.
(Are there limits on the interest rate that can be charged: (How to know your rights and obligations as mortgagee (lender) 2006).
Thus it could be seen that as per Section 40 of the Registration of Property Act, once the restrictions have been registered as charge, as is evident in this case, it should be enforceable on the parties and except,