4.5 Proprietary Rights

Question 1

What is an easement?

Answer 1

An easement is a right benefitting one piece of land that is enjoyed over the land of another.

Grant of easement - for the benefit of land being sold

Reservation of easement - for the benefit of land being retained by seller

Question 2

What are the requirements for an easement (Re Ellenborough Park)?

Answer 2

These are laid down in Re Ellenborough Park:

1) [dominant and servient] There must be a dominant and servient tenement

2) [benefits dominant] The easement must accommodate the dominant tenement

3) [separate ownership] Both pieces of land must be in separate ownership

4) [exact description] The rights must be capable of reasonably exact description

Question 3

How can an easement be created?

Answer 3

In various ways:
- By express grant reservation
- By implication, such as necessity
- Under the rule in Wheeldon v Burrows (grant only)
- Under s62 of the LPA 1925
- By prescription (long use)

Question 4

What are the characteristics of an easement?

Answer 4

An easement can be legal or equitable.

An easement can be extinguished, although abandonment is difficult to prove.

Question 5

What is a covenant?

Answer 5

A covenant is a promise made by one party for the benefit of another which is usually contained in a deed.

Question 6

What is the importance of privity of contract for covenants?

Answer 6

A covenant will always be enforceable between the original contracting parties due to the doctrine of privity of contract.

Question 7

How can successor covenantees enforce covenants in a contract?

Answer 7

The covenants can only be enforced if the benefit enjoyed by the predecessor covenantees passes, and…

If the burden agreed to by predecessor covenantors passes to successor covenantors, because there is no longer privity of contract between the parties

Question 8

What is the rule with freehold covenants passing at common law?

Answer 8

The burden of a freehold covenant is unlikely to pass at common law - the only exception is the mutual benefit and burden rule.

Question 9

Can the burden of a (restrictive) covenant pass in equity?

Answer 9

Yes. However, the requirements of Tulk v Moxhay 1848 should be met:

1) [negative] The covenant is negative in nature
2) [benefits dominant] The covenant must accommodate the benefitted tenement
3) [intention by original parties] The original parties intended the burden to pass
4) [registration] The covenant has been registered on the charges register or as a D(ii) land charge

Question 10

What other requirements are needed for the burden of a freehold covenant to pass in equity?

Answer 10

1) [touches and concerns] The covenant touches and concerns the benefitted tenement;

2) [benefit came to be] The covenantees successor-in-title became entitled to the benefit of the covenant either by annexation, assignment or a scheme of development

Question 11

What are the characteristics of a freehold covenant?

Answer 11

A freehold covenant can only be an equitable interest so must be protected to bind a successor.

A notice must have been entered on the charges register of the burdened freehold if the title is registered.

If unregistered, the freehold covenant should be registered as a D(ii) land charge.

Question 12

How can freehold covenants be modified?

Answer 12

A freehold covenant can be extinguished or modified by:

1) Express agreement
2) Implied agreement, and
3) Under s84 of the LPA 1925.

Question 13

What is a mortgage?

Answer 13

A mortgage is a proprietary interest in land given by the mortgagor (landowner) as security for a loan.

The mortgagor receives a loan in return for giving the mortgagee (often a bank) security over the land.

Question 14

What are the characteristics of a legal mortgage?

Answer 14

A legal mortgage must be created by deed and must be protected by registration.

For unregistered land, a first legal mortgage will be protected by deposit of the title deeds. A second charge of unregistered land will be protected by registration of a C (i) land charge (puisne mortgage)

Question 15

How can a legal mortgage be enforced?

Answer 15

A legal mortgage can be enforced by:

1) Debt action;
2) Foreclosure;
3) Appointing a receiver;
4) Right to take possession;
5) Power of sale

Question 16

What are the characteristics of an equitable mortgage?

Answer 16

An equitable mortgage can be enforced in the specified methods but an equitable mortgagee does not have any statutory power to convey or transfer the legal estate.

Question 17

What happens if there is more than one mortgage?

Answer 17

A legal mortgage of registered land must be repaid in full before any other mortgages.

Question 18

What should lenders be cautious about with co-ownership situations?

Answer 18

Lenders must ensure that consent to a mortgage by a co-owner is not obtained as a result of undue influence otherwise the mortgage will be set aside.

Question 19

Explain method 1 of creating an easement: express grant or reservation
[express creation]

Answer 19

To be a legal easement, it must be:
(1) created for the duration of the subject freehold or leasehold
(2) acquired by deed, and
(3) registered at HM Land Registry

Question 20

Explain method 2 of creating an easement: implied grant or reservation
[implication]

Answer 20

Two elements must be present:
(1) necessity - must be completely impossible to use the land without the easement, and
(2) common intention - where both parties intend the property to be used in a specific way

Question 21

Explain method 3 of creating an easement:
Under the rule in Wheeldon v Burrows 1879

N.B: Only applies to grants, not reservation of easements

Answer 21

Easement granted by implication if immediately prior to the sale of one of the tenements, there was a common owner-occupier of both tenements and if it can be shown that it:

(1) continuous and apparent, that is, obvious (like a worn pathway)
(2) necessary to the reasonable enjoyment of the property - not as strict as necessity but must be more than simply beneficial
(3) in use at the date of the transfer

Question 22

Explain method 4 of creating an easement: under LPA 1925 s62

Answer 22

s62 can be used to convert quasi-easements (easements where the two tenements are owned by the same person) on sale of one of the tenements into full easements.

Note that the provisions of this section can be expressly excluded.

Question 23

Explain method 5 of creating an easement: by prescription

Answer 23

20 years of continuous uninterrupted use - easement will be acquired by implication (due to long user).

1) The use must be known to the landowner
2) After 20 years of continuous uninterrupted use there is a judicial presumption of a lost modern grant - court can enforce the easement as if it had been expressly granted.

Question 24

When will the burden of an easement pass in registered land?

Answer 24

1) If it is a legal and expressly acquired easement OR
2) It is a legal easement acquired impliedly or by prescription, which is capable of being an overriding interest. It does not need to be registered, and will bind if it is known about, obvious on a reasonable inspection, or exercised within a year.

Question 25

How can an equitable easement be protected?

Answer 25

Registered land: Protected by a notice on the charges register of the servient tenement

Unregistered land: Equitable easement must be registered as a D(iii) land charge in order to bind purchasers for value. Doctrine of notice will apply for easements created before 1926.

Question 26

What steps should be considered for looking at the implications of an easement?

Answer 26

• Is the right capable of being an easement?
• If so, has the easement been validly created and formalities complied with?
• If there is an easement, can it be enforced by or against successors-in-title?

Remedies: Damages or an injunction

Question 27

What are the remedies for breach of a restrictive covenant?

Answer 27

The benefit and burden can run in equity and the successor covenantee can enforce them in equity and apply for equitable remedies such as injunctive relief.

Injunction - attractive remedy as this prevents or remedies breach but is a discretionary tool used by the court.

Damages - only available at common law.

Question 28

What are the remedies for breach of a positive covenant?

Answer 28

The benefit will pass in law and equity, but NOT the burden. It is difficult in English law to force someone to take a positive step or to pay money.

Lawyers have to find other ways of trying to enforce positive obligations in freehold land.

Question 29

What are some methods to enforce positive obligations in freehold land?

Answer 29

1) Pursue the original covenantor - limited to damages

2) Indirectly pursue the successor covenantor by a chain of indemnity covenants

3) Covenantee could place s40 LRA 2002 restriction on the register of the servient land

4) Grant a lease

5) Set up a commonhold scheme

6) Right of re-entry coupled with a rent charge

Question 30

How can freehold covenants be protected?

Answer 30

They are equitable interests - must be protected to bind a successor owner of the servient land. Otherwise, only those acquiring title to the land by way of gift will be bound.

Registered land - notice must be entered on the charges register of the burdened freehold if the title is registered.

Unregistered land - Class D(ii) land charge must have been registered against the name of the estate owner taking the burden, prior to sale of the burdened land.

Question 31

What are the formalities for creating a mortgage?

Answer 31

A mortgage can be a legal interest in the land. It must be created by deed.

Any contract to create a legal mortgage will be regarded as giving rise to an equitable mortgage from the date of the contract (complying with s2 of LP(MP)A 1989).

Question 32

How can a mortgage be protected?

Answer 32

Registered land: Legal mortgage must be completed by registration if mortgagee is able to exercise power of sale. Can be registered against the charges register. Equitable mortgage must be protected by registration of a notice or restriction.

Unregistered land: First legal charge will be protected by deposit of the title deeds with the mortgagee. Should be protected by registration as class C (iii) land charge.

A second or subsequent mortgage is called a puisne mortgage, must be registered as a C(i) land charge to be binding.

Question 33

What happens when a new mortgage is created over unregistered land?

Answer 33

Creation of the mortgage triggers registration of the affected land. Once the register is created by HM Land Registry, the mortgage will be registered on the charges register of title.

Question 34

How can power of sale be enforced if the borrower (mortgagor) defaults on the loan?

Answer 34

Power of sale arises as soon as the first payment of capital is due under mortgage deed.

Legal mortgagee has the power to sell mortgaged property without the need to apply to a court, provided the mortgage was created by deed and contractual date set to redeem the mortgage has passed (normally 6 months after creation of the mortgage).

1 or more of the following criteria should be satisfied:

• Interest payments are more than 2 months in arrears
• There has been a written request for repayment of the capital and 3 months have passed without payment
• There is a breach of some other term of the mortgage (e.g mortgagee has failed to keep the property insured)