C2: Basic Principles of Land Law

Question 1

What is an legal estate?

Answer 1

Legal estates: An estate in land is the rights which a person has to control and use the land. An estate in land describes how long the land is to be held.

There are only two legal estates in land recognised by law under s1(1) Law of Property Act 1925 (LPA 1925):

the fee simple absolute in possession (freehold); and
the term of years absolute (leasehold).

Question 2

What is a legal or equitable interest, compared to a legal estate?

Answer 2

An interest in land is a right which a person has over another’s land.

An estate in land is a right which a person has over his or her own land.

Question 3

What is the difference between legal and equitable rights and how they bind?

Answer 3

Legal rights are binding in rem, against all the world, but equitable rights are not

Question 4

Why are legal rights referred to as rights “in rem”?

Answer 4

In rem means enforceable against anyone in the world e.g. legal rights in land bind in rem: they bind the world. If a person has a legal right over someone else’s land, that legal right will be binding on a subsequent buyer of the land.

Question 5

How is the enforcement of equitable rights different to legal ones?

Answer 5

Legal rights are binding in rem, against all the world, but equitable rights are not.

Question 6

Does the timeframe of the interest depend on whether it is a legal interest or a equitable interest?

Answer 6

Yes. In order for it to be a legal interest, it needs to be held for an indefinite time (forever, equivalent to fee simple) or for a definite time (e.g. 10 years, equivalent to a term of years).

If it is held as for ‘the rest of X’s life’, that is not a definite time, and is also not held indefinitely (forever).

Question 7

Do you need a deed for an interest to be legal? What is the exception to this?

Answer 7

Yes, a deed is required to create a legal estate or interest in land.

Easements created by implied grant or prescription (long use) are legal easements. Under the rules on implied grant and prescription, a claimant has the burden of proving the existence of the easement. If there is sufficient evidence to that effect, the court will declare that the easement exists, and it will be deemed to be a legal easement despite the fact that it is not created by deed and is not even in writing.

Question 8

What are the five legal interests in land?

Answer 8

1. Easements
2. Rentcharges
3. Mortgages
4. Other financial charges
5. Rights of entry

Question 9

What is overreaching?

Answer 9

The process by which equitable rights that exist under a trust of land are removed from the land and transferred to the money that has been paid to purchase the land.

It can only happen is the transaction is made by at least two trustees.

Question 10

What does ‘equity’s darling’ mean?

Answer 10

A category of person (equity’s darling) is someone who can buy the property free of any rights, or claims.

Maitland’s Equity defines equity’s darling as “Legal rights are good against all the world; equitable rights are good against all persons except a bona fide purchaser of a legal estate for value without notice, and those claiming under such a purchaser.”

A bona fide purchaser (a good faith buyer) of a legal estate for value (buying a property for money) without notice (without knowing about anyone else’s claims to the land).

Question 11

What is the difference between a “legal remedy” and an “equitable remedy”? Give examples.

Answer 11

Legal remedies (common law remedies) are given to the winning party to put them back in the same place as before the injury. They are entitled to these.
- Damages (must be given if won)

Equitable remedies (equitable remedies) are available at the discretion of the court.
- Injunction (stopping a house being built)
- Specific performance (contract of sale must go through)
Must follow equitable maxims (e.g. must come with clean hands)

Question 12

What is a legal owner?

Answer 12

A legal owner is the ones that appear on the HM Land Registry and have the right to possess the property, use it and sell it. When acting for a seller in a conveyancing translation, you are acting for the holder of the legal estate.

Question 13

What is a beneficial owner?

Answer 13

A beneficial owner is someone who has the right to take the benefit of the property, e.g. who has the right to the money when the property is sold?

Question 14

What is the difference between a “legal owner” and a “beneficial owner”?

Answer 14

The ownership of land is split between those who hold the legal estate and those who hold the behind-the-scenes beneficial interest in the property.

Legal: has the right to possess the property
Beneficial: has the right to take benefit of the property

Question 15

What is the principle of the ‘curtain’?

Answer 15

The ownership of land is split between those who hold the legal estate and those who hold the behind-the-scenes beneficial interest in the property.

This is known as the principle of the ‘curtain’, the idea that the equitable interests are hidden behind the legal ownership.

Question 16

In a trust, what are the legal owners and beneficial owners called?

Answer 16

Legal owners: Trustees
Beneficial owners: Beneficiaries

Question 17

What is the maximum number of legal owners and how old must they be?

Answer 17

Max 4 legal owners over the age of 18.

Question 18

Provide the legal owner(s) and beneficial owner(s):

Alan and Jane have contributed equally to the purchase.

Answer 18

Legal: Alan and Jane

Beneficial: Alan and Jane

Question 19

Provide the legal owner(s) and beneficial owner(s):

Peter and Darren have contributed equally, but Darren doesn’t want to be on the legal title.

Answer 19

Legal: Peter

Beneficial: Peter and Darren

Question 20

Provide the legal owner(s) and beneficial owner(s):

Andrew bought the property but doesn’t want to be on the legal title and Morag lives there.

Answer 20

Legal: Morag

Beneficial: Andrew

Question 21

In relation to the statutory definition of land under s205(1)(ix) Law of Property Act 1925, define the meaning of the following:

(i) tenure

Answer 21

Tenure: Freehold or Leasehold

Question 22

In relation to the statutory definition of land under s205(1)(ix) Law of Property Act 1925, define the meaning of the following:

(ii) corporeal hereditaments

Answer 22

Corporeal hereditaments: physical or tangible objects, e.g. buildings

Question 23

In relation to the statutory definition of land under s205(1)(ix) Law of Property Act 1925, define the meaning of the following:

(ii) incorporeal hereditaments

Answer 23

Incorporeal hereditaments: intangible rights, one person’s rights over another person’s land, e.g. easements (such as rights of way), profits a prendre, rentcharges.

Question 24

What are the two common law presumptions which define how much of the land the owner actually owns?

Answer 24

1. “he who owns the land owns everything extending to the heavens and to the depths of the earth”; and
2. “whatever is attached to the ground becomes part of it”.

Question 25

Define our rights to airspace and give the exceptions.

Answer 25

The owner is only allowed rights in the airspace to such a height as is necessary for the ordinary use and enjoyment of their land and structures on it.

(not ‘to the he avens’), see s76 Civil Aviation Act 1982, owner can’t object to the passage of aircraft during normal flight over land, at reasonable height (depends on weather conditions)

Question 26

When a jib of a crane trespassed in the airspace above a claimant’s property, what was the verdict? Anchor Brewhouse Developments v Berkley House (Docklands) Developments [1987]

Answer 26

Anchor Brewhouse Developments v Berkley House (Docklands) Developments [1987]

The jib of a crane trespassed in the airspace above the claimant’s property. An injunction was granted to prevent this happening in the future.

Question 27

Define our rights to what is underground our land and on the surface, and give the exceptions.

Answer 27

Tunnelling under a neighbour’s property is trespass. However, an owner is not entitled to all minerals under their land.

Surface is part of land, but if the owner wants to reserve mineral rights, they must do so expressly. Trees/Plants are on the surface, so the owner owns them, but planning regulations like tree preservation orders can affect landowner’s rights.

Question 28

Who owns the following minerals under an owner’s land?

Gold/Silver
Treasure
Oil
Fracking rights
Coal

Answer 28

GOLD/SILVER: mines belong to the Crown
TREASURE: belongs to Crown (Treasure Act 1996)
OIL: belongs to Crown (Petroleum Act 1998)
FRACKING: drilling for shale gas is permitted by oil and gas companies to take place below 300 metres under negihbouring land without landowner’s permission (Infrastructure Act 2015)
COAL: belongs to Coal Authority (Coal Act 1928)

Question 29

What is the distinction between “real” and “personal” property?

Answer 29

Real property (realty) is freehold land. Action taken for realty is called real action or action in rem.

Personal property (personalty) is a person’s personal property (including leasehold land). Action taken for personalty is called personal action or action in personam.

Question 30

What is the distinction between “chattels real” and “chattels personal”?

Answer 30

Chattels real is leasehold property.

Chattels personal is all personal property other than leasehold property. Can be broken down into choses in possession or choses in action.

In modern law, chattels real (leasehold) and realty (freehold) are treated basically the same way, but the distinction is important in the law of succession (private client, wills).

Question 31

Distinguish a “chose in action” from a “chose in possession”.

Answer 31

Chose in action: tangible items, like a pen or a car

Chose in possession: intangible property, like copyright, shares and debts.

Question 32

Fixtures and fittings, which one is attached to the land?

Answer 32

Fixture: attached to land
Fitting: not attached to land

Question 33

In terms of fixtures and fittings, what are the following tests used by the courts to distinguish the two?

Answer 33

(i) degree of attachment

(ii) purpose of attachment,

(iii) permanence of attachment - not a test, but a clarification of (i)

Question 34

Explain the rule, case and problem with the DEGREE of attachment rule, in regards to fixtures and fittings.

Answer 34

RULE: If it is attached to the land other than by its own weight, it is likely to be a fixture.

CASE: E.g. Holland v Hodgson [1872] spinning looms were bolted to the floor of a mill. They are attached other than by their own weight, they were held to be fixtures.

PROBLEM: Not conclusive, as it could be argued that pictures and curtains are part of the land. Must also consider purpose test.

Question 35

Explain the rule, case and problem with the PURPOSE of attachment rule, in regards to fixtures and fittings.

Answer 35

RULE: Was the object attached for its own benefit – in which case it is likely to remain a fitting or chattel – or was it attached for the benefit of the land as a whole – in which case it may well be a fixture?

CASE: Leigh v Taylor [1902] a tapestry that was nailed to the wall of the premises was held to be a fitting. Hanging was for the sake of showing the object’s best, not the house.

PROBLEM: Exceptions when general decorative scheme, e.g. D’Eyncourt v Gregory [1866], the court held that marble statues of lions in a garden were fixtures as they were there to increase the owner’s enjoyment of the land.

Question 36

Explain the rule and case with the PERMANENCE of attachments NON-test, in regards to fixtures and fittings.

Answer 36

Not itself a test, but a consideration to the degree of attachment.

RULE: How long the object is likely to be attached to the land is a separate issue from the degree of attachment.

CASE: Botham v TSB Bank plc [1996], it was decided that ‘if the item viewed objectively is intended to be permanent and is a lasting improvement to the building, it is a fixture. If attachment is temporary and is no more than necessary for the item to be used and enjoyed, then it will remain a chattel.’

Question 37

Why is the distinction between a fixture and fitting important?

Answer 37

Anything attached to the land becomes part of it.

A fixture (attached to land, and therefore part of it) must be transferred by deed.

A fitting (not attached to land, and therefore not part of it) does not get transferred by a deed - sale of goods will usually be valid even though the transaction is verbal or merely written.

Must fill out a Fittings and Contents Form to avoid disputes over garden sheds etc.

Question 38

Who is the ultimate owner of all the land in England and Wales?

Answer 38

The Crown is the ultimate owner of all land in England and Wales. Individual owners ‘hold’ their land from the Crown.

Question 39

If someone dies without a will (intestate), where will the title to that property pass to?

Answer 39

If someone dies without a will (intestate), the title to that property will pass to the Crown if there is no one who has an entitlement to inherit the land in question. This is known as “bona vacantia”.

Question 40

What are the two estates in land?

Answer 40

There are two legal estates in land, under s1(1) Law of Property Act 1925 (LPA 1925):

The fee simple absolute in possession (freehold)

The term of years absolute (leasehold)

Question 41

For freehold, define “fee simple absolute in possession”.

Answer 41

The technical definition of freehold ownership of land is a “fee simple absolute in possession”.

Fee: can be inherited
Simple: by anyone
Absolute: no limitations (e.g. not to my widow until she marries)
In possession: immediate right to possession (not when my son turns 30)

Otherwise not a legal estate.

Question 42

For leasehold, define “term of years absolute”.

Answer 42

A lease is an estate which exists for a fixed maximum duration or a period of time. (Absolute has no real meaning here)

Question 43

For a leasehold, does the lease need to be ‘in possession’ when created?

Answer 43

No, lease can start in future and still be a legal estate, but must come into effect in possession within 21 years of its creation s149(3) LPA 1925

Question 44

Does a lease need to be created by deed to be legal?

Answer 44

Yes, unless a lease takes effect immediately for three years or less at a market rate. That can be made in writing or orally. The tenant under such a short-term lease has a legal estate in land despite the lack of any formal creation.

Question 45

What is ‘commonhold’?

Answer 45

Commonhold is a third, hybrid way of owning land, which didn’t gain much traction when it was first introduced by the Commonhold and Leasehold Reform Act 2002 (CLRA 2002).

It was made to meet the needs of owners of flats/apartments where the owners are interdependent (e.g. Retirement homes, business parks).

Question 46

Is ‘commonhold’ a new estate in land?

Answer 46

No, it is a type of absolute freehold registered estate. It is registered at the Land Registry as ‘commonhold land’.

Question 47

What is the owner of each individual unit called in a ‘commonhold’? And what are they registered as?

Answer 47

Owner of each individual unit is called ‘unit-holder’ and is registered as its freehold owner.

Question 48

What are the five legal interests in land?

Answer 48

There are 5 legal interests, under s1(2) LPA 1925:

1. Easements
2. Rentcharges
3. Mortgages
4. Other financial charges
5. Rights of entry

Question 49

What are legal interests and what are legal estates? What are equitable interests?

Answer 49

Legal interests are rights over someone else’s land. They bind the world.

Legal estates are either fee simple absolute in possession or term of years absolute.

Equitable interests are all other estates, interests or charges in or over land. They do not bind the world. s1(3) LPA 1925

There are 5 legal interests, under s1(2) LPA 1925.

Question 50

Explain the following legal interest under s1(2) LPA 1925:

Legal easements

Answer 50

Easement = a right over a neighbour’s piece of land, e.g. right of way, rights to use drains.
Profit = a right to take something from another’s land, e.g. grazing, fishing and shooting rights.
Only legal if it is equivalent to one of the two legal estates (i.e. definite period of time or in perpetuity) and be by deed. (Some exceptions to rule)

Question 51

Explain the following legal interest under s1(2) LPA 1925:

Legal rentcharges

Answer 51

Rentcharges = third party collects sum of money from owner, often annually.
Constitutes a legal interest in land if done by period of time/perpetuity and by deed.
The Rentcharges Act 1977 restricted creation of new rentcharges.

Question 52

Explain the following legal interest under s1(2) LPA 1925:

Mortgages

Answer 52

One of the ways of creating a legal mortgage.
Constitutes a legal interest in land if done by period of time/perpetuity and by deed.
Gives mortgagee (lender) the right to take possession of and sell the land if the mortgage is not paid.

Question 53

Explain the following legal interest under s1(2) LPA 1925:

Rights of entry

Answer 53

Where a landlord reserves the right to retake possession if the tenant doesn’t comply with obligations in the lease, e.g. pay rent on time.
Similar right of entry is usually contained in rentcharge deeds to ensure payment of rentcharge.

Question 54

What is an “equitable” interest? Give three examples

Answer 54

Equitable interests are interests which were developed by the courts of equity and are based on the principle of fairness. Not all buyers will be bound by equitable interests. Generally speaking, for a buyer to be bound by an equitable interest, they need to be given notice of the interest.

Examples of equitable interests:

• A trust, where property is held on behalf of another.
• Interests that don’t comply with required formalities, e.g. 7 year lease not created by deed,
• Restrictive covenants, e.g. can’t use land for business purposes.
  Following exchange of contracts, an estate contract arises – this is regarded as an equitable interest

Question 55

How old does someone have to be to hold an equitable interest and how must they be legal?

Answer 55

An equitable interest can be held by someone of any age, legal estates in land can only be held by someone ages 18 or older.

Equitable interests must be created in writing (unless they are implied trusts, called resulting or constructive trusts).

Question 56

What are the names of the party creating the lease and the party occupying under the terms of a lease?

Answer 56

The party creating the lease is called a landlord/lessor, party occupying under the terms of a lease is called the tenant or lessee.

Question 57

If someone is sub-letting, what is the name of the original lease?

Answer 57

The head lease

Question 58

What if a tenant transfers their whole interest in the demised premises?

Answer 58

If a tenant transfers their whole interest in the demised premises, this is known as “assigning” the lease. In its simplest terms, this means that the tenant has sold the demised premises.

Question 59

What are the requirements of a lease?

Answer 59

For a valid lease to exists, the following criteria need to be met:

The tenant must have a certain term (see Lace v Chantler [1944] where ‘duration of the war’ was not validly certain at the time)

The tenant must have ‘exclusive possession’ of the demised premises.

A legal lease must be made by deed, but if not, equity will come to the aid of the parties and a valid equitable lease will have been created in favour of the tenant.

Question 60

Is rent an essential requirement of a lease?

Answer 60

No, it is not.

Question 61

When is there a licence rather than a lease?

Answer 61

If a certain term and exclusive possession are not met, it would more likely be at best a licence, not a legal lease.

A licence is merely the permission to be on the land.

A licence is not usually a proprietary interest in land, so it cannot bind third parties.

Question 62

What is the rent paid under a long residential lease of a flat in a block called?

Answer 62

Ground rent

Question 63

What is the money paid for a lease called?

Answer 63

A premium

Question 64

Why is the rent low for long residential leases of flats in a block?

Answer 64

Rent is low because the length of lease is considerable and will sell to prices similar to freehold land.

Question 65

What is a demised property?

Answer 65

The property subject to the lease. It is called the ‘demised land’ or ‘demised premises’.

Question 66

What is forfeiture?

Answer 66

Most leases obtain provision for the landlord to end the covenant if tenants default on payments - known as ‘forfeiture’. This isn’t implied and must ensure that a specific provision is included.

Question 67

What is the difference between unregistered and registered title?

Answer 67

Unregistered land: traditional form of demonstrating ownership of land, e.g. producing an unbroken chain of documents goingback at least 15 years.

Registered land: Land that has been registered with HM Land Registry in the form of an official copy of the land register.

Land which is currently unregistered will eventually be registered.

Question 68

What is a good root of title?

Answer 68

Only certain types of deed can satisfy the root. The main ones are:
- Conveyance
- Legal Mortgage
- Deed of Gift

Question 69

How does a seller prove title in unregistered land?

Answer 69

They must produce a deed or set of deeds establishing ownership if the land is unregistered, which go back for an unbroken chain of at least 15 years.

Question 70

Give three examples of documents found in unregistered land.

Answer 70

The most common forms of unregistered title deeds are as follows:

A conveyance on sale – this is the legal deed which transfers the ownership from a seller to a buyer.

A legal mortgage – this is the deed which creates a legal charge over land where a lender has lent money to assist with the purchase of a property.

A deed of gift – as the name implies, this is a document which transfers the ownership of a piece of land from someone who is gifting land to the recipient.

Question 71

Should a conveyancer request a copy of a will when dealing with a conveyancing matter?

Answer 71

Do not fall into the trap of requesting a copy of a will when dealing with a conveyancing matter. A will is not a document of title whether in the unregistered or registered system. A buyer of a property which is being sold by personal representatives is not entitled to request a copy of the will. It is not of concern to the buyer who is ultimately entitled to the proceeds of sale of the property.

Question 72

How does a seller prove title in registered land?

Answer 72

They must give details showing that the land is registered at HMLR in the form of an official copy of the land register.

Question 73

What are the triggers for compulsory registration?

Answer 73

Since 1990 all sales of land must be registered. Land becomes registered only on a “disposition” of the land. Since the introduction of LRA 2002 in October 2003, a disposition is either:

• a sale of the legal freehold; or
• creation or sale of the legal lease with more than seven years left to run.

Since 1998, as well as sales, the following also trigger compulsory first registration:
gifts;
- assents by personal representatives (whereby property is transferred to those entitled on a person’s death);
- court orders (e.g. transferring property on divorce); and
- first legal mortgages of property.

Question 74

How quickly must the buyer’s conveyancer make the application to HMLR for first registration of an unregistered title?

Answer 74

Within two months of completion.

Question 75

What can be substantively registered at HM Land Registry?

Answer 75

When HMLR creates a register of title on an application for first registration, this is known as a “substantive registration”. This means that HMLR is creating a new register of title. The two most common registrations resulting in the creation of a new register of title are:
- the registration of a freehold estate; and
- the registration of a leasehold estate where the original term of the lease is over seven years.

This means that a lease which is granted for 5 years cannot be substantively registered in its own right.

Question 76

In relation to the title register, explain: (i) property register

Answer 76

(i) property register

• contains a description of the property, plus a the title plan
• states whether freehold or leasehold
• includes details of any interests which benefit the registered land (e.g. details of any easements which benefit the land)

Question 77

In relation to the title register, explain: (ii) proprietorship register

Answer 77

(ii) proprietorship register

• sets out who owns the land
• class of title (e.g. absolute title, possessory title etc)
• includes the name and address of the registered proprietor and any restrictions affecting their right to deal with the land (where there are co-owners for overreaching)

Question 78

In relation to the title register, explain:(iii) charges register.

Answer 78

(iii) charges register

• contains details of all incumbrances or charges affecting the property. e.g. mortgages or restrictive covenant/easements which burden the land.

Question 79

What are the different classes of title in registered land?

Answer 79

• Absolute title is best form of title
• Possessory title is given when HMLR is based on mere physical possession rather than on documentary evidence
• Good leasehold (lesser than title absolute), means HMLR hasn’t checked the landlord’s freehold title on application to register leasehold title.

You can upgrade on production of evidence to HMLR.

Question 80

What is a title plan?

Answer 80

A title plan is a large scale Ordnance Survey map showing boundaries of property. HMLR will produce a title plan, with outline in red. Also may have coloured markings to show route of things like rights-of-way/drainage rights.

Question 81

What are “overriding interests”?

Answer 81

Overriding interests are capable of binding a buyer despite the fact they do not appear on the register of title. This means that a registered proprietor or a buyer from them might be bound by an interest that they do not know about.

There are similar interests which affect unregistered land although in the unregistered context, these are not described as “overriding interests”.

E.g. leases less than 7 years or adult occupiers.