(2) Notes - freehold land PDF

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freehold land...

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FREEHOLD LAND 

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Under our legal system, the monarch as head of state, owns the superior interest in all land in England Wales and Northern Ireland – even freehold land is not owned outright, as the monarch has a superior interest. This is not usually relevant, though it can become relevant if freehold land becomes ownerless Since 1925, English law has recognized two main ownership interests in land that can be enjoyed by those people who are not head of state – the freehold and the leasehold (s1(1) and s2.2.1 1925 Act) A freehold is a holding for an indefinite period (providing there is someone able to inherit the land under a will or through the rules of intestacy on the freeholder’s death) o This is the most complete form of ownership of land recognized by English law A leasehold is a holding for a fixed time (the maximum possible duration of the lease must be certain when the lease is granted) All other interests in land are granted out of these estates (rather than over the land itself), and the legal freehold estate is the basic concept of land ownership in both registered and unregistered land. Freehold estates pre-1925: (i) Fee simple (to the heirs), (ii) fee tail (to particular heirs), (iii) life estate (for lifetime only – the lifetime of the tenant or of some other person). (i) & (ii) potentially unlimited in time; (iii) only for a duration which is fixed but uncertain.

Pre-1925 – Fee Simple o The greatest estate in terms of rights and duration. o As near to absolute ownership as possible. o Lesser estates get cut out of fee simple. o An inheritable estate, and to the Crown in the event of failure. Fee Tail o Also an inheritable estate, but with the possibility of reversion in the event of failure. o A successive lifetime estate. o Inheritance limited – e.g. ‘to Douglas and the heirs of his body.’ Tail Male. Tail Female. Docking the Intail.

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Pre 1925 – Life Estate o Grant of an estate to the grantee for life. o Not inheritable. o Is NOT ‘fee’. o Now (TOLATA 1996, s.2) can only exist as an equitable ‘estate’, subject to trust. Pur Autre Vie o As above, but the estate is for the life of another (as in from A to B for the duration of C’s life). o Q. When would you create Pur Autre Vie? A. … Post 1925: In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. A "fee" is a vested, inheritable, present possessory interest in land. The only freehold estate that remains is fee simple absolute in possession (FSAIP). Life estate remains possible as an equitable interest. It is no longer possible to create new entailed interest after 1996 (per TLATA). Legal entails could get created before 1925 and from 1925-1996 entails could only exist as equitable interests. Pre-1996 entails continue to exist as equitable interest. The law in re entails is highly complex. The fee simple is the only surviving legal freehold estate; its proper name is fee simple absolute in possession. Each of these words has a particular significance. o Fee: this word comes from the feudal system. By the sixteenth century, a fee has come to the recognized as an estate that can be inherited. It did not automatically return to the feudal lord when the tenant died o Simple: the fee is simple because it does not suffer from the complications of the fee tail (also known as the entail). The fee simple can be inherited by anyone the owner wishes. The fee tail has to pass to a direct descendant, and it can be restricted only male children, for example. It has not been able to create entails after 1997 but the ones created beforehand are still valid. An anachronism, intended to distinguish with fee tail and estates that are less than fee. The simple means ‘unqualified’. o Absolute: The word absolute distinguishes this fee simple from others that are limited in some way. One type of limited fee is the fee simple upon condition. An example is where a mother gives land to her son, but if he marries a solicitor, the land will go to his cousin. A conditional fee must be distinguished from another type of fee, the determinable fee simple. Determinable fees are created by words such as until he marries a solicitor. The difference is very subtle but important. The importance of the distinction (where there is a CI the reverter will have the right of re-entry (which he or she may chose not to exercise) whereas if it is a DI the grantee is immediately denuded of their interest upon the taking place of the determining act or omission. Although only the simple absolute can be a legal estate (LPA 1925 (s1(1)), a special exception was made in 1926 for conditional fees simple (s7(1)). Conditional fees can not be legal, but the other limited fees simple (including determinable fees) can only exist in equity. o In possession: All interests in land can be in possession, in remainder or in reversion. In possession means that the owner is entitled to enjoy the interest now by occupying the land or collecting the rent (LPA 1925 s205(1)(xix)). The other two mean that the owner will have the right to enjoy the interest after another interest (such as an interest for life) has ended. For instance, a son has a conditional fee simple in possession, and the cousin has a fee simple absolute in remainder. However, if the mother gave land to her son on the condition that it would return to

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her if he married a solicitor, the mother would have a fee simple absolute in reversion. The importance of the distinction (where there is a CI the reverter will have the right of re-entry (which he or she may chose not to exercise) whereas if it is a DI the grantee is immediately denuded of their interest upon the taking place of the determining act or omission. New entails now closed off: o TOLATA 1996 prevents the creation of new entailed interests. o Any attempt to do so will result in the creation of a trust in land with the grantee enjoying absolute beneficial interest (and able to rely om TOLATA rights and remedies). Hence, of all the possible estates of indefinite duration, only the fee simple absolute in possession can be a legal estate (subject to eh exception for conditional fees), because of s1 of the LPA 1925. Other types of estate, such an entails and life interests, can only be equitable; that is held as beneficial interests behind a trust

Conditional Interests and Determinable Interests  ‘Absolute’ ≠Modified fees o Conditional Interests (CI). o Determinable Interests (DI). o The difficulty in distinguishing between the two. o The importance of the distinction (where there is a CI the reverter will have the right of re-entry (which he or she may chose not to exercise) whereas if it is a DI the grantee is immediately denuded of their interest upon the taking place of the determining act or omission. o Conditional interests – the problem of the rentcharge – the statute of 1926  Conditional – ‘on condition that’, providing that’, ‘but if’  Determinable – ‘until’, ‘as long as’, ‘while’, ‘for the duration of’  Of all the possible estates of indefinite duration, only the fee simple aslute in possession cba be a legal estate (subject to the exception for conditional), because of section 1 of the LPA 1925 (section 2.2.1). Other types of estate, such as entails and life interests, can only be equitable; that is held as beneficial interests behind a trust.  HRA and public policy issues: o “To David on the condition that he does not marry someone from Prudhoe”. CI. o “To David until he marries someone from Prudhoe”. DI.  But the thing is that as regards my marriage and property, as a matter of plain language, both have the same import!  In either case, what about HRA, Art.8 (‘respect for private and family life’). o “To Shula on the condition that she should espouse always the practice and principles of free love and psychedelic enlightenment”. Contrary to public policy? o “To Kate on the condition that she may never alienate the property”.  Agendas/attitudes in re restrictions on alienation?  Fees subject to CI are in consequence of s.7(1) of the Law of Property Act 1925 (inserted by the Law of Property Act 1926) regarded as absolute because in CI there is a right of the reverter to re-enter.  S.7(1) states “fee simple subject to a legal or equitable right of entry is for the proposes of this Act a fee simple absolute”. There are ‘bad drafting having unintended consequences’ issues here.

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Fees subject to DI are NOT covered by s.7(1). Such fees can only operate as equitable rights behind a trust. The conditional/determinate distinction is predicated upon forms or wording and the result is “little short of disgraceful to our jurisprudence” per Parker MR in Re King’s Trusts (1892) 29 LR Ir 401 at 410. If a condition attached to a Determinable fee is void (e.g. by considerations of public policy or non-compliance with HRA 1998) the whole grant fails. The inclusion of a determinable event – no matter how unlikely – has the effect of cutting down ab initio the period of enjoyment. If the fee is a Conditional fee and the condition is rendered void, the result is fee simple absolute (which it already was) with the granter losing any right in re re-entry. Courts are stricter in construing CI than DI (as the consequences are so great). Examples of void conditions: o Too Vague – Re Jones (1925), the donee should not associate with a certain named person. o Conductive to immoral behaviour - Zapletal v Wright (1957) Immorality is an ideal which changes/evolves over time therefore cannot be a condition to a transfer of property. See also Australian case of Andrews v Parker (1973) – excerpt from judgment “The picture which clearly emerges is that of a ruthless, cunning woman who came to realise that in the plaintiff she had found a man who would literally be as clay in the hands of a potter. They were not by any means evenly matched, and the situation became even more one-sided when her allegedly estranged husband came to the party. …” o Prevents alienation – Hood v Oglander (1865). Re Macleay (1872) allowing partial restriction. o Purports to exclude the operation of the bankruptcy statutes – Re Machu (1882). o Total restraint of marriage – Clayton v Ramsden (1943). Re Tepper’s Will Trusts (1986) permitting partial restriction; no marriage “outside the Jewish faith.” (But might HRA impact upon this?) In DI, where the determining event takes place, the (equitable) interest comes to an end and the grantee has no further right to the estate. In CI, where the qualifying condition is triggered (‘on condition subsequent’) will continue, possibly indefinitely, depending upon whether the right of re-entry is exercised by the grantee. Modified fee may become FSAIP in the event of the determining event becoming impossible, as in “from A to B until X marries”. This becomes impossible if X dies a bachelor or spinster. DI can only now exist in equity under a trust. o In unregistered land it would be an equitable interest (it cannot be a land charge), and as thus is binding on all but Equity’s Darling but is subject to over-reaching. o In registered land it would have to noted as an interest in title. CI = FSAIP with a right of re-entry (LPA 1925 s.7(1)). It is a legal interest. o In unregistered land, the right of re-entry would be in the deeds, and binding in rem. o In registered land it would be a registerable interest.

The 1925 Reforms  Number of Legal Estates in land reduced to two (LPA 1925 s.1(1) - fee simple absolute in possession and term of year absolute)

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Number of Legal Interests in land reduced to five (LPA 1925 s.1(2) – easement/right or privilege, rentcharge in possession, charge by way of legal mortgage, a statutory charge not created by instrument, a right of entry in re a legal TOYA or annexed to a legal rentcharge). EVERYTHING ELSE EQUITABLE! (NB – Special case: short leases not exceeding three years = Legal).

In Possession:  ‘In possession’ – distinguishing immediate enjoyment from future enjoyment.  Future interests – ‘conditional’ (AKA ‘contingent’) interests ≠ FSAIP. o * NB ‘conditional/contingent’ is used in this slide in a distinct manner than in earlier slides. Here we are considering the revertee/remainderee. In previous slides we have been considering the grantee.  ‘Possession’ includes receipt of or the right to receive rents and profits LPA 1925 s.205(1) (xix).  Reversions: Where a granter has granted a right that is shorter than his or her own estate, the reversion is what comes back to them.  Remainders: Where a granter disposes of all of his or her right, as in “to A for life, remainder to B in fee simple”. In this scenario, the granter is denuded but neither A nor B have FSAIP. The only rights that can be held by A and B are equitable, and there is in fact no legal estate, though third parties may hold legal interests in re the land. Rights of freeholders  “In theory, at common law the owner can do whatever he likes with his land (subject, of course, to any interests such as mortgages, easements and restrictive covenants that have already been granted).” Cursley and Davys, Land Law 7th ed. (Palgrave Macmillan 2011)  This may be limited by statute (e.g. planning law, environmental law &c) and by the law of tort (the doctrine of nuisance).  The freeholder may carve out and dispose of lesser rights from his overarching right:  "The collection of rights pertaining to any one land parcel may be likened to a bundle of sticks. From time to time the sticks vary in number (representing the number of rights), in thickness (representing the size or 'quantum' of each right), and in length (representing the duration of each right). Sometimes the whole bundle may be held by one person or it may be held by a group of persons such as a company or a family or clan or tribe, but very often separate sticks are held by different persons. Sticks out of the bundle can be acquired in different ways and held for different periods, but the ownership of land is not itself one of the sticks; it must be regarded as a vessel or container for the bundle, the owner being the person (individual or corporate) who has the right to give out the sticks, the 'right of disposal' as it can be called". S Rowton Simpson, Land Law and Registration (Cambridge University Press, 1976) Freehold estates in land:  1 Deeds and their execution – (1)Any rule of law which— . o (a)restricts the substances on which a deed may be written; . o (b)requires a seal for the valid execution of an instrument as a deed by an individual; or . o (c)requires authority by one person to another to deliver an instrument as a deed on his behalf to be given by deed is abolished.

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(2)An instrument shall not be a deed unless— . o (a)it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and . o (b)it is validly executed as a deed by that person or, as the case may be, one or more of those parties. . (3)An instrument is validly executed as a deed by an individual if, and only if— . o (a)it is signed— .  (i)by him in the presence of a witness who attests the signature; or .  (ii)at his direction and in his presence and the presence of two witnesses who each attest the signature; and . o (b)it is delivered as a deed by him or a person authorised to do so on his behalf. [… &c] See also s.2 in re land. 2. Contracts for sale etc. of land to be made by signed writing. o (1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each. . o (2) The terms may be incorporated in a document either by being set out in it or by reference to some other document. . o (3) The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract. o (4) Where a contract for the sale or other disposition of an interest in land satisfies the conditions of this section by reason only of the rectification of one or more documents in pursuance of an order of a court, the contract shall come into being, or be deemed to have come into being, at such time as may be specified in the order. A contract for the disposition of a freehold estate must satisfy requirements under s 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Where the contract is to be varied, s.2 LP(MP)A 1989 must be complied with when the variation is of a ‘material’ term. A valid and specifically enforceable contract for the transfer of a freehold estate will give the purchaser an equitable interest in the land to be purchased – an “estate contract”. Legal title to the land will not pass to the purchaser until completion, which involves execution of a valid deed (s.52 LPA 1925, s.1 LP(MP)A 1989) and registration of title. The point when legal title passes differs having regard to whether the land being purchased is registered (title passes upon registration of title) or unregistered (title passes upon execution of a valid deed). “Subject to contract” agreements/chains of agreements/Gazumping – the effect of an ‘agreement’ to make a contract (NB that in Scotland a contract to make a contract IS a contract). See The Chain: https://www.imdb.com/title/tt0088898/

Summary:  Freehold = a legal estate in land.  Freehold = FSAIP, which will last indefinitely, as long as there are persons entitled to take the property upon the death of insolvency of the particular freeholder. Freehold = as near to absolute ‘ownership’ as English law comes.

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The basic unit of ownership in modern law is the legal fee simple Fee simple absolute in possession means an interest in land which can be inherited by anyone, is not restricted by some future event and is enjoyed at the moment Other types of fee can only exist as equitable interests Although it has been asserted that the owner in fee simple absolute in possession has unlimited powers over his land, both common law and stature have greatly restricted his freedom of action A new form of land ownership, commonhold (a special type of freehold estate) was introduced in 2004...