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Land Law Lecture Notes Topic 1 Estates and Interests in Land After 1925 Estates in Land There were many different estates in land, e.: Fee tail owned for as long as there are direct lineal descendants Life estate owned for life It had become difficult to determine what interests existed Very complex...

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Land Law Lecture Notes Topic 1 – Estates and Interests in Land After 1925 Estates in Land pre-1926  There were many different estates in land, e.g.: – Fee tail – owned for as long as there are direct lineal descendants – Life estate – owned for life  It had become difficult to determine what interests existed – Very complex to investigate ownership before buying land Law of Property Act 1925  Key statute within a range of 1925 property-related legislation  Aimed to simplify and codify land law  Reduced the number of legal estates to two  Reduced the number of legal interests to five (only four are relevant)  All other estates and interests are equitable only  S. 1(1) The only estates in land which are capable of subsisting or of being conveyed or created at law are: (i) An estate in fee simple absolute in possession (ii) A term of years absolute The Fee Simple Absolute in Possession (Freehold)  Fee simple: the estate continues for as long as the owner has someone to succeed him (under will or intestacy)  Absolute: the estate is perpetual; nothing will terminate it prematurely  In Possession: the estate must be immediate, not arising in the future – Includes receipt of rents and profits The Term of Years Absolute (Leasehold)  Term of Years (s. 205 LPA 1925): A term for any period with a fixed and certain duration as a minimum  Includes: – Lease for specified number of years – Leases for less than a year – Periodic tenancies, e.g. weekly or monthly tenancies  Does not include leases for life S 1 (2) Law of Property Act 1925  The only interests...in or over land which are capable of subsisting or of being conveyed or created at law are: (i) An easement, right or privilege... (ii) A rentcharge in possession... (iii) A charge by way of legal mortgage (iv) [any other similar charge on land] (v) Rights of entry... Easement, right or privilege  Includes easements and profit à prendre

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– E.g. Rights of way, drainage, right to fish Must be for a period equivalent to one of the legal estates: – Fee simple absolute in possession, or – A term of years absolute

Rentcharge  i.e. A regular financial payment – Must be in possession – Issuing out of or charged on land – Perpetual or for a term of years absolute  Rentcharges Act 1977 – No new rentcharges created since 22 August 1977 – Existing rentcharges end on the later of 60 years after the date of the Act (22 July 1977) or the date of first payment Legal Mortgage and Rights of Entry  Charge by Way of Legal Mortgage – Most common form of legal mortgage  Right of Entry – i.e. Right to recover property if money is not paid / terms are breached – Can be: • Exercisable over a term of years absolute (i.e. a lease), or • Annexed to a legal rentcharge Co-existences of Different Estates and Interests  Ownership of land is complex  Numerous estates and interests can exist over one piece of land  E.g. – Freehold and leasehold estates – Legal interests (easements etc) – Equitable interests (covenants, contracts, interests under a trust)  Examples...

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Sales of the Freehold

A – fee simple owner A had an interest in possession A now has no interest

Sells to B

B has an interest in possession B is now the fee simple owner

Grant of a Lease for 5 years

A – fee simple owner

A had an interest in possession A now has an interest in reversion A still has a legal estate as they are in receipt of rents (s 205 LPA 1925)

Grant of a perpetual Easement

Lease to B for 5 years

B has a leasehold interest, so a legal estate (s.1(1)(b) LPA 1925)

A – fee simple owner

A still has an interest in possession A still has a legal estate

Grants B an easement

B has a legal interest (s.1(2) (a) LPA 1925)

Grant of an Easement for Life

A – fee simple owner

A still has an interest in possession A still has a legal estate

Grants B an easement for life

B has an equitable interest (s.1(3) LPA 1925)

The concept of a Trust  Legal owner may hold land “on trust” for another  The beneficiary is not the legal owner, but has an equitable interest in the land – The legal owner needs to act in the beneficiary’s best interests – The legal owner should consult with the beneficiary before acting

Land held on Trust for another Division of legal and equitable ownership

A and B Trustees

A and B are the legal owners

A and B hold on trust for C

C - Beneficiary

C is the equitable

Creation of Legal Estates and Interests  An estate or interest can only be legal if the correct formality has been used for its creation  Option 1: A deed (signed, witnessed and expressed to be a deed)  Option 2: Writing (“simple” writing)  Option 3: No formalities (oral) s. 52 Law of Property Act 1925 s. 52(1): All conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed s. 52(2): This does not apply to leases or tenancies...not required by law to be in writing s. 54 (2) Law of Property Act 1925  Leases which: – Take effect in possession – For a term not exceeding 3 years – At the best rent reasonably obtainable without taking a fine CAN be created by parole, i.e. orally, with no formalities  Sales (assignments) of such leases must still be by deed

s.53 Law of Property Act 1925

s. 53(1): No interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent, or by will, or by operation of law Contracts for the Sale of Land  Usually the prelude to formal completion of a sale – i.e. When the transfer deed is completed  Other types of contract include: – Option to purchase the fee simple – Option to renew a lease – A right of pre-emption (right of first refusal)  Equitable only (not a legal interest) (s 1(3) LPA 1925)  Writing required by s. 53(1) LPA 1925 Law of Property Act (Miscellaneous Provisions) Act 1989  s. 2 LP(MP) Act 1989:  A contract for the sale...of an interest in land can only be made – In writing – Which contains all expressly agreed terms either in the document or incorporated into it by reference – Signed by or on behalf of both parties Non-compliance with Formalities  S. 2 LP(MP)A 1989: – Non-compliance renders the contract void – Completed contracts cannot be avoided – Estoppel may be argued  S. 52 LPA 1925: – General rule: No deed = no creation / disposition of a legal interest or estate – Possible solutions at common law and in equity

Leases without deeds  No deed = no legal lease  BUT If the tenant goes into occupation => a tenancy at will  If tenant starts paying rent => a periodic tenancy  Periodic tenancy = a legal lease – No writing necessary (s. 54 LPA 1925) Walsh v Lonsdale  Equity will treat as done that which ought to have been done – Cannot turn an imperfect lease into a lease – BUT can turn an imperfect lease into an agreement to grant a lease  Specific performance is possible if: – There is value, and – There is s. 2 LP(MP)A 1989 compliant writing

Recent Cases on s.54 LPA 1925  Fitzkriston LLP v. Panayi [2008] – One year lease – No deed – written document setting out key terms – Term did not exceed 3 years, and took effect in possession, – BUT held that it was not at the best rent reasonably obtainable – Therefore no legal lease  Hutchinson v. B&DF Ltd [2008] – Various oral agreements to renew leases – Most leases were to be for 3 years, at best rent, T was in possession  No requirement for writing; oral agreements valid (s. 2(5) LP(MP)A 1989) – One lease was for more than 3 years  Agreement should have complied with s. 2 LP(MP)A 1989  Void agreement, but periodic tenancy due to T’s occupation Topic 2 – Estates and Interests in Land After the Land Registration Act 2002 The creation of a legal estate or interest  Is the estate or interest capable of being legal (s 1 LPA 1925)?  Has the correct formality been used for its creation at law (s 52 LPA 1925)?  In the context of registered land only, is it a registrable disposition under s.27(2) LRA 2002? – If so, substantive registration is required before it can take effect at law Registered land – the Hallmarks  Simplification and reduced costs  State guarantee of title – The insurance principle  Accurate reflection of the interests and estates affecting a registered land title – The mirror principle – What about interests which override?  Equitable interests are hidden – The curtain principle Registered vs Unregistered Land  Example of register of title – see Study Guide – Property Register – Proprietorship Register – Charges Register  Unregistered land – Collection of deeds – (Usually) separate deed for each event

Land Registration Act 2002

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Four different types of interest: – Registrable interests • Interests / estates capable of being registered with a separate title – Registered charges – Interests which are subject to an entry on the register – Interests which override first registration or registered dispositions

S.29 Land Registration Act 2002  A purchaser of a registered estate for valuable consideration buys subject to: – Registered charges – Prior interests protected by entry on the register – Interests which override the disposition  Registration of an interest on the Title Register = protection Registrable Interests  These can be registered with their own title: – Legal freeholds – Legal leases over seven years – Legal leases of any duration which take effect more than 3 months from grant – Legal discontinuous leases of any length – Rentcharges – Franchises – Profits à prendre in gross Compulsory First Registration  Trigger events: – Transfer for value (a sale) – Transfer by way of gift – Transfer by means of assent – Grant of a legal lease for more than 7 yrs – Transfer of a legal lease with more than 7 yrs unexpired – Grant of a future legal lease – First legal mortgage What Compulsory Registration Means  Application for registration to be made within 2 months of the trigger event  Failure to register => transaction is VOID as regards the legal estate – Takes effect in equity only  All subsequent “registrable dispositions” of that land must be completed by registration (s. 27 LRA 2002)

Registrable Dispositions (s.27 (2) LRA 2002)  A transfer of a freehold or leasehold estate

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Grant of: – A legal lease of more than 7 years – A legal future lease of any length – A legal discontinuous lease of any length Grant of a legal charge An express grant of a legal easement or profit à prendre

Registrable Charges  Formal name for Legal Mortgages  Noted in the Charges Register  These are registrable dispositions under s. 27 LRA 2002 – Must be registered in order to take effect in law • If not – takes effect in equity only – NOT possible to create a legal mortgage by way of demise in registered land Interests Subject to an Entry on the Register – Notices (s.32 LRA)  Usually in the Charges Register  Protects interests which are not capable of substantive registration: – Equitable interests, e.g. Covenants, Contracts – Legal interests which are not Registrable Interests, e.g. • Legal easements • Legal charges  Registrable leases are “noted” on the freehold title in addition to substantive registration Interests Subject to an Entry on the Register – Restrictions (s.40 LRA)  Entered in the Proprietorship Register  Prevents disposals other than in accordance with the terms of the restriction – Controlling the sale of trust property • To ensure overreaching takes place – Compliance with other agreements • E.g. No sale without the consent of a third party Overreaching – what is it?  The interests of beneficiaries under a trust are transferred from the property to the sale proceeds (S.27 LPA 1925) – i.e. The value of the property received by the trustees  The purchaser takes free from the beneficiaries’ interests Beneficiaries can only sue trustees Overreaching – rules  Only applies to equitable interests held under trusts of land – Other equitable interests cannot be overreached  Purchaser must pay the money to 2 or more trustees – All trustees if more than two? Interests which Override  Set out in Schedules 1 and 3 LRA 2002

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– Schedule 3: interests which override a registered disposition – Schedule 1: interests which override a first registration Interests which Override do not require entry on the register in order to bind a purchaser

Schedule 3 paragraph 1  Legal leases not exceeding 7 years – Only includes legal leases, not equitable  Does not include: – Future leases (i.e. Those taking effect in possession more than 3 months after the date of grant) – Timeshare (discontinuous) leases  These are registrable (s 27 LRA 2002) so do not override  Interests of a Person in Occupation – Limited to the land you are occupying – Person must be in actual occupation – Cannot be claimed if:  Occupier did not disclose his interest when asked by the purchaser, or  Occupation would not have been obvious on a reasonably careful inspection of the land, AND purchaser did not know of the interest  Legal easements and legal profits à prendre which have not been expressly granted – Equitable easements / profits do not override  Does not include those which are granted expressly (i.e. By deed) – These MUST be registered (s 27 LRA 2002) S.29 Land Registration Act 2002  A purchaser of a registered estate for valuable consideration buys subject to: – Registered charges – Prior interests protected by entry on the register – Interests which override the disposition  Does the purchaser’s good faith have any effect? Unregistered land  No central record of titles  Ownership, and incumbrances, evidenced by deeds  How can you ensure a purchaser is bound? – Registration of Land Charges – registration binds all – Where registration is not possible: • Rules for legal interests • Rules for equitable interests Registration of Land Charges  Key Classes for Registration: – Class C(i) - Puisne (second / subsequent legal) mortgages – Class C(iv) – Estate contracts

– Class D(ii) – Post 1925 freehold restrictive covenants – Class D(iii) – Post 1925 equitable easements and profits – Class F – Rights under the Family Law Act 1996 Protection of Other Interests  Legal estates and interests bind the whole world  Equitable interests bind the whole world EXCEPT the bona fide purchaser for value of a legal estate without notice – Burden of proof is on the purchaser – Constructive notice if fail to make adequate enquiries Bona Fide Purchaser for Value of a Legal Estate without Notice  Bona fide = acting in good faith  Purchaser for value = paid money or money’s worth  Of a Legal Estate = has bought a freehold or leasehold (the only legal estates)  Without Notice = does not know of the interest being claimed Topic 3 – Contributory Occupiers (1) Occupiers  Anyone not named in the deeds (unregd. land) or in the Title Register (regd. land) who contributes to the purchase price of a property or to the mortgage repayments may have an equitable interest in the property.  We have already seen that they will not have a legal estate or a legal interest in the land and as such a purchaser of the land with no notice of any such equitable interest will not take the land subject to such interests. Similarly a mortgage lenders rights will not be adversely affected by such equitable interests unless the lender had notice of them at the time the mortgage took effect.  However if the person buying the property or lending on mortgage has notice of such equitable interests they take subject to them and the occupation of the property by a person who has an equitable interest in it may be in itself be sufficient notice of that equitable interest  Further, in the case of Registered Land Schedule 3 para. 2 of the LRA 2002 specifically provides that [equitable] interests of anyone in actual occupation of the property will override a registerable disposition such as a sale or mortgage and the buyer or mortgage lender will take subject to them The Contribution  

First we need to determine whether or not the contributor has gained an equitable interest in the property as a result of their contribution. Mum wins lottery and gives her son £200,000 – part of her winnings – perhaps on advice that she should now make lifetime gifts to reduce the potential charge to IHT. Son decides to buy a house with the money. On these

facts Mum would not be considered to be a contributor to the purchase of the property and would have no equitable interest in it.  However the courts are quick to presume that when money is given to and used by another to buy property it was intended as a contribution to the purchase price, giving the person who provided the money an equitable interest in the property. - Dyer v Dyer 1788 - Sekhon v Alissa 1989 – mother gave daughter £22,500 – virtually the whole of her life savings – to enable daughter to buy house. There were two other children. Daughter argued this was merely a gift. Court held mother had an equitable interest in the property under a resulting trust In the modern world  1 in 6 adults in England and Wales live co-habit with another adult in a close personal relationship (Office for National Statistics – Sept. 2011) In many of these households only one of the co-habitees is the legal owner of the property. What rights (if any) do non-owning co-habitees – or non-owning spouses - have in the property? • The issue of whether or not a contributor has an equitable interest can be of huge importance if only one of the parties to a marriage, civil partnership or other long term relationship is the legal owner of the property occupied as a home. • A case from real life: Steve and Debbie

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Steve and Debbie Debbie was a divorcee living with her children in a council house of which she had a tenancy. Steve was a single man living alone in a house which he owned. Steve meets Debbie. Steve and Debbie decide they want to marry each other. Steve wants Debbie and her children to move in with him but Debbie thinks this will disrupt the children and that Steve should move in with her. Steve does not want to live in a council tenancy and they agree that Steve will sell his house and use part of the proceeds to buy Debbie’s house from the Council. It is agreed that they will buy Debbie’s house in their joint names. Debbie has a “right to buy” but Steve has not and the council refuses to sell the property to both of them jointly. Plan B – Debbie will buy the property in her own name alone but still using the proceeds of sale of Steve’s house. Steve and Debbie – a resulting trust June 200x Steve sells his property and moves in with Debbie. July 200x Debbie buys her property from the Council in her name alone using the proceeds from the sale of Steve’s house and a mortgage loan from

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GMac finance. GMac is aware that Steve has contributed to the purchase price and is living at the property. Steve has acquired an equitable interest in the property. He is the one of the beneficiaries of a Resulting Trust – a trust resulting from his contribution to the purchase price. Debbie is the trustee and the other beneficiary.

Steve and Debbie – a constructive trust When Debbie buys the house it is worth £ 150 K but she is entitled to a one-third discount under the terms of her right to buy and pays £ 100 K of which Steve provides £ 50K and GMac provides £ 50 K. Under the terms of the resulting trust Steve has a one-third interest in the property – Debbie two-thirds. • From July 200x Steve makes substantial contributions to the family finances until September 200y. These are general contributions to living expenses. They do not increase the value of his equitable interest in the property under the terms of the resulting trust. • Ho...