Compulsory acquisition affects every interest in the land
A worked RES examination question on compulsory acquisition, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
An owner's land is gazetted for compulsory acquisition to permit the widening of an arterial road. At the date of the notice he had granted a registered lease of the property to a manufacturing tenant with eleven years still to run, and the property was subject to a bank's registered mortgage securing a balance of some $900,000. The tenant has written asking what will become of its lease, and the bank has written asking what will become of its security. The owner had assumed the acquisition was a matter between himself and the State alone.
Consider the following statements.
- (i) The acquisition brings the owner's interest to an end.
- (ii) The tenant's leasehold interest is likewise affected.
- (iii) The bank's security is affected.
- (iv) Only the owner's interest is affected, the others being unconnected with the State's purpose.
The answer, and why
Answer: B
The rule. Compulsory acquisition affects every interest in the land — the owner's, the tenant's and the lender's alike.
Why B is correct. (i), (ii) and (iii) hold. (iv) is false.
The other options.
- A and D carry the false (iv).
- C drops the correct (i).
Exam note. The State takes the land, not one person's share of it. Everyone with an interest is affected.
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