Chapter 1: Nature of Land Flashcards
- Introduction to Land Law
1.1 The importance of land
In society, the ownership of land has a special place owing to land’s permanence in an otherwise
uncertain world and its high economic and social value throughout the history of mankind.
Land is a uniquely fixed resource that can neither be consumed nor produced, moved nor physically lost. Land is everywhere – we rely on land to live, work and sustain ourselves; a piece of land is often the most valuable asset an individual will buy.
English law therefore draws a distinction between:
- The rules that apply to land (real property); and
- The rules that apply to every other type of property eg cars, books, televisions, copyright, shares (personal property).
1.2 History of land ownership
Land law has evolved from the Norman Conquest in 1066, which introduced the rule that all land
in England and Wales belongs to the Crown as sovereign. This rule is still valid today. This means that, when we use everyday language and say that we ‘own’ a piece of land today,
we are technically incorrect. To be accurate, what we own is a right in the land, one of the most powerful being the right to possess and use the land. The focus of land law is therefore the rights that exist over land, rather than the physical land
itself. Modern land law is the study of proprietary (also called property) rights in the la, the transfer of
land and the responsibilities and duties in land related relationships.
1.3 Key legislation
Land law was radically overhauled by a statute called the Law of Property Act 1925 (LPA). This is the reason that the majority of land law has its roots in statute rather than case law. The LPA 1925 is the real foundation of modern land law. The other key piece of legislation is the Land Registration Act 2002 (LRA), which governs the
system of land registration, a national record of land ownership in England and Wales. The national record of land ownership is managed by HM Land Registry, a government
department
1.4 Summary
- A piece of land is often the most valuable asset an individual or company will own. The rules
that govern land ownership, the transfer of land, and land-related relationships are ‘land law’. - Land law is one branch of the wider discipline of property law.
- Land law is the study of rights over the land, rather than the land itself. This has historical roots
dating back to the Norman Conquest of 1066. - Modern land law has its roots in statute. The key pieces of legislation you will encounter are the
LPA 1925 and the LRA 2002.
2 Proprietary rights in land
2.1 Rights in land
Land law is the study of rights in the land rather than the physical land itself.
A right which relates to the land can either be proprietary or personal in nature.
The distinction between proprietary and personal rights is important in the context of:
* The remedy available to someone who is deprived of their right; and
* The enforceability of the right against third parties.
Third party
A third party in the context of land law is a new owner of the land burdened by the right.
Proprietary rights
A proprietary right in land (also sometimes referred to as a property right) can be enforced by an action in rem, meaning that use or possession of the land can be recovered. The holder of the right does not have to settle for damages if they are deprived of their right. A proprietary right is also capable of being enforced against a third party.
Personal rights
A personal right in land can only be enforced by a personal action for
damages if the right is breached. Use (or occupation) of the right cannot be recovered. Personal rights will bind only the original parties to the right, there can be no recourse against
a third party. A frequently encountered example of a personal right in land is a licence.
Distinguish a proprietary right in land from a personal one
It is important to be able to distinguish a proprietary right in land from a personal one. Whether a
disputed right is capable of being recovered and enforced against a new owner of the burdened
land will depend upon determining this point. If you are currently sitting using the law library at university then you have a right to be there – is
this a proprietary right over the land or just a personal one?
How do you tell whether a right exercised over land is a proprietary one or not?
There is a fixed list of the rights which are capable of being proprietary. This list is (unfortunately!) not written definitively anywhere, rather there are a number of statutory sections and case law judgments which together inform us of the rights that have proprietary status. Therefore, some rights over the land will never be proprietary in nature; they will only operate as a personal
permission.
Example: Personal right in land
A postal worker crossing your land to deliver post will never have a proprietary right in your land,
nor are they a trespasser. The postal worker has a licence (a personal right) to cross your land for the purpose of delivering the post.
2.2 Rights that have proprietary status
The rights that are on the ‘fixed list’ of rights that have proprietary status are:
* The freehold estate
* The leasehold estate
* An easement
* A mortgage
* A restrictive covenant
* An estate contract
* A beneficial interest in a trust of land
The holder of a proprietary right in the land will have a right to occupy or use or restrict what can be done on the burdened land in some way.
2.3 Is a right proprietary or personal?
Just because a particular use of land has been recognised as having proprietary status (ie is on
the fixed list) it does not mean that the actual right under consideration will have proprietary status. Land law is all about looking at the nature, creation and protection of rights in land to determine if they are proprietary or personal in the circumstances.
Example: Determining the status of the right
A right to park a car in a neighbour’s garage may be an easement, which is a right that has proprietary status. However, the ability to park a car in a neighbour’s garage is not always going to be an easement. Essentially, the same use could be either proprietary or personal, depending
upon the circumstances in which it has arisen. So even if the use in question has been recognised
as proprietary whether it is in fact proprietary will depend upon other factors.
2.3.1 The nature of a right
For a right in question to have proprietary status it may need to satisfy certain substantive (definitional) characteristics. These substantive characteristics differ depending upon the right in
question
Example: Substantive characteristics
A right to park in a neighbour’s garage could be an easement, but if the neighbour is locked out of
the garage and unable to use it, then it will not be an easement as this is not tolerated within the definition of an easement.
2.3.2 The creation of a right
Substantive characteristics alone may be enough to work out whether the right in question is proprietary although usually we will have to look further and examine the issue of formalities. Most proprietary rights in land are subject to strict requirements as to the formalities for their acquisition/creation. Compliance, or otherwise, with such formalities may ultimately determine
whether the right is proprietary or not.
Formalities
Formalities in land law are the rules procedure that must be observed in order to validly create or transfer a proprietary right. Given their powerful nature, there is often a high
degree of formality that must be met in order to transfer or create a proprietary right in the land. The formalities differ depending upon the right in question.
2.3.3 The protection of a right
How do you find out if a piece of land is subject to a proprietary right?
An obvious characteristic of proprietary rights is their invisibility – you cannot see a mortgage or
an easement or a lease when you look at a piece of land. In order to minimise this risk to a purchaser, while at the same time protecting those holding a proprietary right in the land, systems have been developed by which proprietary rights in land must be made apparent by registration if they are to bind a purchaser of subsequent rights in the same land.
Example: A proprietary right
A person has a right of way over their neighbour’s back yard. This right of way could be an easement, which is a recognised proprietary right in the land – it is on the fixed list of rights
recognised as having proprietary status. Whether the right of way will be an easement depends on whether the right in question satisfies
the substantive requirements of an easement (these are the Re Ellenborough Park capability
criteria that will be considered in the easements chapter). Even if the right of way does satisfy the substantive requirements of an easement, it will have had to be created using the correct formalities in order to have proprietary status
Registered at the Land Registry.
If the right of way is an easement, then the person will be able to recover use of the right of way if
their neighbour blocked the right of way so to prevent the person from using it, they would not have to settle for damages as compensation for loss of a right. In addition, if the right of way is an easement, the person would be able to enforce the right of
way against any new owner of their neighbour’s back yard providing the easement is registered at the Land Registry.
Example: A personal right
A person owns a house by the sea. From this house, the owner runs a guesthouse and people pay to stay in one of the bedrooms. The owner is granting their guests a licence to stay, and they enter into a contract with the guests. Such a right is not a recognised proprietary right; the guests have a personal right against the owner to stay in the house.
Example: A personal right
If the owner stopped a guest from staying at the guesthouse, then the guest would only be able to seek damages for breach of contract and they would not be able to recover the right to stay at the guesthouse. If the owner sold the house to a third party, then the guests would not be able to enforce the contract against the third party. The guests would have to seek damages for breach of contract.
2.4 The study of land law
You will learn all about the nature of each of the recognised proprietary rights, the substantive characteristics that may need to be satisfied and the formalities to create/transfer during your study of land law. This will enable you to look at a series of facts and reach a justified conclusion about the status of a right that has been granted and what this means for the parties in question.
2.5 Summary
- Proprietary rights are enforceable ‘in rem’ and are capable of being enforced against third
parties. - Personal rights are only enforceable ‘in personam’ and against the person who granted the
right. - A proprietary right is a very powerful right in the land. A buyer of land will be very concerned
to know what proprietary rights affect a piece of land. - In order to be a proprietary in status, a right must:
- Be on the fixed list of rights which are capable of having proprietary status;
- Comply with any substantive requirements for the right in question; and
- Comply with the formalities to create the particular proprietary right.
- A proprietary right is capable of being enforced against a third party. Whether it will be
enforceable on the facts often depends upon whether it has been registered.
- Estates in law
3.1 Land ownership
All the physical land in this country is owned by the Crown. At the time of the Norman Conquest, the ownership of all land in England became vested in the Crown. When we say we own a piece of land, what we actually own is not the physical land itself, but a
right to possess the land. This is a very powerful proprietary right.
Estate
A proprietary right of possession is called an estate in land
Two recognised legal estates:
There are two recognised legal estates: the freehold and the leasehold. The type of estate will
determine the length of time the right of possession can be enjoyed.
3.2 The freehold estate
The highest possible estate in land is the fee simple absolute in possession (LPA 1925, s 1(1)(a)), which is more commonly referred to as the freehold estate. It is a right of possession which lasts until the owner for the time being dies without heirs, meaning without any blood relatives and without having disposed of it by will. It is very rare for someone to die without an heir.
Fee
The word fee denotes that it is capable of being inherited.
Simple
The word simple means that it can be inherited by any heir and includes distant relatives.
Absolute
The word absolute signifies that the estate is not liable to end prematurely, which means it is not
determinable or subject to a condition, such as you passing an exam.
In possession
Denotes that the fee simple owner has a current right to use and enjoyment of the property. Physical possession is not necessary here and includes receiving rent if the property is let to a tenant under a lease
Assessment focus point
You may see reference to other freehold estates (in addition to the ‘fee simple’) in other academic reading. These are no longer of practical relevance and you only need to be aware of the fee simple absolute in possession (referred to henceforth as the freehold) because it is the only freehold estate recognised at law.
Landowner
For all practical purposes, the holder of the freehold in a piece of land is equivalent to the owner of any other property. It is this person we refer to as the landowner.
Death of current owner
In practice, if the current owner dies without next of kin and without a will, the land is regarded as bona vacantia and the estate reverts to the Crown. This is an incredibly rare occurrence. The freehold therefore endures for a period which is uncertain, at least at the time of granting. Since it is a form of property, the owner of the freehold is free to sell it or give it away. Alternatively, the owner may grant a lesser estate for a shorter period of possession than their
own (a lease) to which their own estate will then be subject.
3.3 The leasehold estate
Where a freehold owner grants a lesser estate, which is of a certain duration, the estate granted is
a term of years absolute (LPA 1925, s 1(1)(b) LPA) which is more commonly known as the leasehold estate or simply a lease.
Sub-lease
The leaseholder (whom we call the tenant) may grant a lease of a lesser duration out of their own leasehold, while still retaining the original lease. This is now subject to the ‘sub-lease’.
Sub-lease
This process may continue with sub-leases for shorter and shorter periods of possession being
granted by the successive sub-lessees. The residue of the estate after the granting of a lease is known as the freehold reversion. If the
grantor holds a leasehold estate, the residue is known as the leasehold reversion. This means that when the lease ends, the right to physical possession of the land automatically reverts to the landlord.
3.4 Hierarchy of rights of possession
Any piece of land may be subject to a hierarchy of estates ie rights of possession. The same piece of land may simultaneously be subject to a freehold, a lease and a sub-lease etc
with the holder of each right owning not the land itself but rather the right to possession of the land subject to the lesser rights they have granted for their particular ‘slice of time’. Each of these estate holders could be described as the owner of the particular estate in question
and whilst we often refer to the owner of the freehold reversion as the owner of the land itself, the
term is quite unhelpful without a more detailed knowledge of the various estates that exist and
which take priority over our so-called ‘owner’ of the land
3.5 Commonhold
Commonhold is a type of freehold. Introduced by the Commonhold and Leasehold Reform Act
2002, commonhold is not a new estate in the land, but one created out of a freehold registered
estate. Commonhold was designed to meet the needs of owners of flats or apartments, and other
properties where the owners are interdependent on each other, for example, retirement homes. It
is an alternative to a long lease, which is a declining asset. Another advantage is that there is no
overall landlord.
However, there is a freehold owner, and that is a company called a commonhold association. The owner of each flat is a member of the association (ie if you buy a commonhold flat, you will be part of the association). The commonhold association is responsible for maintaining the communal areas of the building. It’s estimated that fewer than 50 blocks of flats across England and Wales are commonhold properties.
3.6 Summary
The freehold estate
-‘Fee simple absolute in possession’
-Equivalent to absolute ownership of land
-Lasts indefinitely
-LPA 1925, s 1(1)(a)
-A piece of land will only be subject to one of these estates
The leasehold estate
-‘Terms of years absolute’
-Lasts for a certain duration
-LPA 1925, s 1(1)(b)
-Granted out of the freehold estate. A piece of land may be subject to more than one of these estates
- Interests in land
All land is owned by the Crown. The freehold and leasehold estates are proprietary rights of
possession. Interests in land are proprietary rights of more limited use. As a proprietary right, an interest is a very powerful right in the land, which can be recovered (as an action ‘in rem’) and is capable of enforcement against third parties ie new owners of the land burdened by the interest.
Interest
A proprietary right of limited use is called an interest in land. An interest in the land does not give a right to possess the land in the way an estate does, rather it gives the interest holder the right to do something on the land or restrict what can be done on the land.
Incumbrances
Interests in land are also sometimes referred to as incumbrances on an estate.
4.1 What rights are ‘interests’?
Given the powerful nature of a proprietary right, they are seen as a burden on the land. For
example, if a piece of land is subject to a proprietary right of way (an easement) if may adversely affect the value and saleability of the land in question.
LPA 1925, s 1
Parliament has therefore limited the number of rights that are capable of being proprietary. The
number of interests is limited by LPA 1925, s 1. If a right has not been recognised by LPA 1925, s 1
as having proprietary status then it will only ever be personal in nature. An example of such a
right is a licence, which is not an interest in land but rather a personal right against the grantor.
4.2 Legal and equitable interests
LPA 1925, s 1 draws a distinction between legal and equitable interests. LPA 1925, s 1(2) lists
interests which are capable of existing at law ie are capable of being legal interests. LPA 1925, s
1(3) covers rights which have been recognised by the courts as having proprietary status. Such interests will only take effect in equity as equitable interests. This distinction becomes important in respect of remedies and enforcement (see below).
Legal Interest
- Mortgages
- Easements granted for a term equivalent to a freehold or leasehold estate (ie forever or for a
certain term) - Rights of entry
Equitable Interests
The equitable interests you will encounter are:
* Freehold covenants
* Estate contracts
* Interests in a trust of land
* Easements granted for an uncertain term
We will now consider each of these interests in turn
Mortgage
A mortgage is capable of being a legal interest: LPA 1925, s 1(2)(c).
A mortgage can be defined as a loan of cash, which is secured by rights granted over property. These rights include the right to possess and sell the land in the event of default in the mortgage repayments. It is the borrower that grants the mortgage, not the lender.
Easement
An easement is a proprietary right to use land which belongs to somebody else. The use is more limited than an exclusive right to occupy or use. An easement must be granted for a term equivalent to one of the legal estates (ie forever, like the freehold, or for a certain period, like a lease) to be a legal easement: LPA 1925, s 1(2)(a). If
the easement is granted for an uncertain duration, it is only capable of being an equitable
easement.
Example: Different easements
Rights of way, drainage, storage, and parking on neighbouring land
Right of entry
A right of entry is a legal interest in the land: LPA 1925, s 1(2)(e).
A right of entry is either:
* A right for a landlord to re-enter leased premises and end the leasehold estate in the event
of tenant default or some other specified event occurring; or
* A rentcharge owner’s right to hold the land if money owed in not paid.
Rentcharge
A rentcharge is very uncommon. It is a legal right to receive a periodic sum paid by the owner of the land. A right of entry in a lease is also known as a ‘forfeiture clause’. This is explored in chapter 10
Assessment focus point
Rights of entry are not considered other than in the context of forfeiture. The most important legal interests in land are mortgages and easements.
Restrictive covenant
A covenant is a promise relating to the land. Covenants between freehold owners generally arise when one person sells part of their land and wishes to ensure that the buyer does not do anything which could affect the amenity and
value of the seller’s retained land.
Restrictive covenants are negative in nature, they prevent a landowner from doing something
on their land.
A restrictive covenant
A restrictive covenant is not a recognised legal interest in the land. It falls under LPA 1925, s
1(3) as being an equitable interest and was recognised as having proprietary status by the courts in the 1840s.
Example: Different restrictive covenants
Promise not to sell alcohol from the land, promise not to build on the land, promise to only use the
land for residential purposes
Estate contract
The estate contract is a contractual right to a legal estate, whether freehold or leasehold. Equity will order specific performance of a contract to create or transfer a legal estate, because each piece of land is regarded as unique. This, together with the maxim that ‘equity sees that as done what ought to be done’, results in an equitable interest arising from the
contract.
Example: Different estate contracts
A contract to buy land, a contract to grant a lease, an option to purchase land, a right of preemption
Interest in a trust of land:
A trust exists where one person (the trustee) holds property for the
benefit of another (the beneficiary). When a trust exists, there is a split in the legal and
equitable title (ownership). A piece of land may be placed in trust. The beneficiary(s), has an equitable interest in the land. The trustees and beneficiaries can be the same or different people.
Example: Interest in a trust of land - express trust
A trust of land can be created expressly. A piece of land is transferred to A to hold in trust for B. A is the trustee, the legal owner of the land. B is the beneficiary and has an equitable interest in the land.
Example: Interest in a trust of land - implied trust
A trust of land can be created impliedly. A and B buy a house together, each contributing 50% of the purchase price. The land is transferred to A only. A is the legal owner of the land. Equity recognises B’s contribution and implies a trust. A and B are both beneficiaries. B has an equitable interest in the land.
4.3 The distinction between legal and equitable interests
The distinction between legal and equitable interests is important for two main reasons in modern
land law.
Remedies = Person who holds legal interest
First, remedies. A person who holds a legal interest, whose interest is infringed, will have a wide range of remedies available to them. At law, this will include damages, which the holder of the
right would get as of right (ie automatically). There would be no discretion to take into account the
merits of the case. In addition, a number of equitable remedies may be available to them, although this will be subject to satisfying the usual equitable principles.
Holding equitable interests
In contrast a person who holds an equitable interest, whose interest is infringed, is not entitled to
damages as of right. The remedies granted, which may include damages or other equitable
remedies, are entirely at the discretion of the court. The second reason the distinction is important is enforcement of the interest against third parties, which is considered in chapters five and six.
4.4 Summary
- A piece of land can be subject to a hierarchy of different estates and interests.
- An interest in land is a proprietary right to use, enjoy or restrict what can be done on a piece of land.
- Interests can be legal or equitable in nature.
- LPA 1925, s 1(2) lists the interests capable of being legal. These include easements granted for a
certain term or forever; mortgages; and rights of entry. - Restrictive covenants, estate contracts and interests in a trust of land have been given
proprietary status by the courts. These all take effect as equitable interests pursuant to LPA
1925, s 1(3). - The distinction between legal and equitable interests is important because of the remedies
available in the event of infringement of the right and also when considering enforcement of
the right against third parties.
5 Transfer of the freehold estate
5.1 Introduction
The nature of a freehold estate means it invariably will last forever. Freehold estates are very
rarely created. Rather, when an individual or business acquires a piece of land, the freehold is
being transferred. Transfer of an estate is a legal process. This section considers the different ways a freehold estate can be transferred to a new owner, with
a focus being on the formalities required to transfer by way of sale, which is the most common
way a freehold estate is transferred.
Title
You may see references to ‘transfer of title’ in the context of the transfer of any property.
Title simply means ‘ownership’. Transfer of a freehold estate can be achieved in a number of ways:
5.1.1 Formalities
Formalities are what the owner of a freehold estate has to do to transfer their land to a new
owner. If, for example, a freehold owner decides to sell (or indeed gift) their land then how does the buyer become the owner? This is the process of conveyancing in practice
Degree of formality
Given the value and importance of land in society, the degree of formality required to transfer
land is much higher than other forms of property. For example, you could agree to transfer your
title (your ownership) of a picture to your friend by simply handing it over. This would be enough
for most types of personal property, but not for land.
5.2 Sale of a freehold
The usual method of transfer of the freehold estate is by a sale.
Sale consists of a three-stage process, though the first stage, exchange of contracts, is voluntary
and not legally necessary to transfer the estate. This stage is common in practice. The second and third stages are necessary to transfer a freehold estate. Without them, the sale will not comply with the legal formalities required to transfer the land effectively.
5.2.1 Pre-exchange of contracts
When an offer has been accepted, and both seller and buyer have agreed in principle to the sale
and purchase, the buyer will normally make various enquiries before committing to a purchase by the formal exchange of contracts. This will involve carrying out searches of the public registers
and confirming that the seller actually owns the land. The buyer will also want to find out about any proprietary rights which benefit or burden the land. Common examples include whether the land has the benefit/burden of a right of way or is subject to a leasehold estate. These are practical steps that the buyer’s and seller’s solicitors carry out before the contract is entered into.
5.2.2 Exchange of contracts
Once the buyer is happy to commit to the purchase, the seller and buyer enter into a binding contract in which they agree the price and other terms. The buyer does not collect the keys at this point, it is just the point at which the parties become legally committed to buy/sell the land. The buyer usually pays a deposit to the seller at this stage. Until the contract is entered into, both parties can pull out of the deal without incurring any
legal liability.
Requirement of certain formalities
Contracts for the sale of land require certain formalities in addition to the general rules of contract law.
All land contracts (where the subject matter of the contract is land) must comply with LP(MP)A
1989, s 2:
* The contract must be in writing.
* It must contain all the expressly agreed terms.
* It must be signed by both parties.
5.2.3 Completion of the deed
The second stage in the sale of land is ‘completion’. This occurs by way of a deed. A deed is a written legal document. This deed is known as a conveyance in unregistered land or a transfer in registered land. A legal estate must be transferred or created by deed: LPA 1925, s 52(1). Completion usually takes place some weeks after exchange of contracts, but it can take place at the same time, which is called ‘simultaneous exchange and completion’ in practice.
Requirements of a valid deed
The requirements of a valid deed are set out in LP(MP)A 1989, s 1:
* A deed must be clear on the face of the document that it is intended to be a deed.
* The deed must be validly executed.
* The deed must be delivered.
This first requirement is satisfied by labelling the document as a deed.
Valid execution
Valid execution means that where the grantor (ie the seller) is an individual, then the deed must be signed by the seller in the presence of a witness. The witness needs to sign the deed to confirm that they have witnessed the signing of the deed by the individual entering into that deed. This is described as ‘attesting’ the signature in the statute
If the seller is a registered company, it can execute the deed in one of several ways:
Two directors signing in the presence of a witness;
* One director and the company secretary signing in the presence of a witness; or
* Affixing the common seal of the company.
Assessment focus point
Note there is no legal requirement for a buyer to sign the deed. However, in practice both parties do tend to execute the deed.
Delivery
Requires an acknowledgement that a person entering into a deed intends to be formally bound by its provisions. In practice, delivery takes place by dating the document, which the parties’ solicitors will do
Standard form of transfer deed
In practice, a standard form of transfer deed is used, called a TR1, which is a form prescribed by
the Land Registry. Practically speaking it is at the point of completion when the buyer pays the
balance of the purchase money to the seller and the seller moves out of the property and hands the keys to the buyer
Legal title passes
If the land being transferred is unregistered land, which is much rarer nowadays, legal title
passes at this point. The sale does then trigger a legal requirement to register the land for the first
time at the Land Registry (LRA 2002, ss 4 and 6).
5.2.4 Registration
The final stage of transfer of a freehold estate is registration where you ‘tell’ the Land Registry that the buyer is the new owner of the land. The buyer does this by sending the completed deed to the Land Registry
Transfer of legal title
If the land being transferred is registered land, legal title does not transfer until registration has
taken place (LRA 2002, s 27(1)). This means the buyer is not recognised as the legal owner of the estate until registration has taken place.
Unregistered land
If the land being transferred is unregistered land, the legal title is transferred upon completion of
the deed. The new owner must then register the land with the Land Registry for the first time (first
registration) within two months of completion, otherwise the legal title will revert back to the seller
(LRA 2002, ss 4 and 6).
Land Registry
The Land Registry is a national non-ministerial department which keeps a
register recording who owns each piece of land in England and Wales.
5.3 Summary
- Conveyancing is the term used to describe the legal process of transferring title to a freehold
or leasehold estate. To most people, this is the sale/purchase of a house or flat. - In order to transfer legal ownership of an estate, a deed must be used. The deed must then be registered at the Land Registry.
- It is common for parties to enter into a contract before the deed. At the point of exchange of
contracts, the deal becomes legally binding. - The contract is voluntary, it is not necessary to effect a legal transfer. If the parties do enter into a contract, it must comply with LP(MP)A 1989, s 2. It is must be in writing, contain all the
agreed terms and be signed by both parties. - The deed must comply with LP(MP)A 1989, s 1. It must be intended as a deed, validly executed
and delivered. - If the land is registered, the buyer is not recognised as acquiring legal title until registration has
taken place. - If the land is unregistered, legal title passes at the point of completion, but a requirement to
register the land for the first time is triggered.
- Land contracts
6.1 Introduction
In the majority of land purchases/sales, the parties will enter into a contract to buy/sell the land.
This is the first step in the process of conveyancing. Once exchange of contracts occurs, the parties become contractually committed to buy/sell the land. A contract to buy/sell land is not the only type of land contract. In this part of the chapter you will be introduced to the different types of land contract that are commonly encountered and explore the proprietary status of a land contract and the remedies available for breach.
6.2 Formalities
Contracts where the subject matter is land. All three of the following requirements must be satisfied to have a valid land contract. This is as
per the (LP(MP)A), s 2:
* The contract must be in writing.
* It must contain all the expressly agreed terms.
* It must be signed by both parties.
This is in addition to the normal contract law requirements and relates to all contracts where the
subject matter of the contract is land.
Note. It is possible that contracts may be signed by electronic signature pursuant to the Electronic
Communications Act 2000 if the parties agree a procedure for that, but it is not the current practice.
6.3 LP(MP)A 1989, s 2
6.3.1 The contract must be in writing
There is no scope for an oral land contract.
6.3.2 The contract must contain all the expressly agreed terms
LP(MP)A 1989, s 2(2) provides that the contractual terms may be incorporated into the contractual document either by being set out in the document or by referring to some other document (‘by reference’), which is very common in practice. For both commercial and residential
sale transactions there are Law Society standard conditions of sale, which are incorporated by
reference into the majority of contracts for the sale of land.
6.3.3 The contract must be signed by both parties
The terms may either be contained in one document, which is signed by both parties, or if the contracts are to be exchanged, in two documents provided they are identical (LP(MP)A 1989, s 2(1)). The standard conveyancing practice is to exchange contracts. Two copies of the contract are drawn up. One copy is signed by the seller and the other by the buyer. To create a binding contract the parties then exchange their copies.
6.4 Can a land contract be varied?
What is the position where a contract has been correctly created, but there follows a variation to that contract? Will such a variation have to comply with LP(MP)A 1989, s 2?
Key case: McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38
Facts: The parties tried to orally agree a variation to the agreed completion date in the sale contract.
Held: This variation was held to be void. Whenever a material term in a land contract is varied that
variation must also comply with LP(MP)A 1989 s.2. The court did not specifically define what is meant by a ‘material’ term. It seems, however, that where a term, such as a completion date, is essential to the nature of the contract then it will be
considered ‘material’.
6.5 Proprietary effect of the contract
The effect of a binding land contract is to pass an equitable interest in the land to the buyer, called an estate contract.
Key case: Walsh v Lonsdale (1882) 21 Ch D 9
A land contract was given proprietary status in this case based on the equitable maxim that
‘equity regards as done that which ought to be done’. In this case, the landlord and tenant entered into a contract for a seven-year lease. The tenant took possession of the property, but the parties failed to execute a deed to actually create the
legal lease. The court recognised an equitable lease because of the existence of the contract and
the availability of the remedy of specific performance. This case therefore makes clear that a contract to create or transfer a legal property right will create a proprietary right in equity if the remedy of specific performance is available ie the
claimant must have ‘clean hands’. A claimant would not have ‘clean hands’ if, for example, it was
in breach of any of the contract terms itself.
6.6 Application
A land contract will be used in a variety of situations. The following are the most usual estate contracts you will encounter which create a contractual right to a legal estate.
6.6.1 Contract to buy land
As part of the process of buying/selling land (conveyancing), the buyer and seller may choose to
enter into a sale contract to record the terms of the agreement and to commit themselves legally
to the purchase/sale.
6.6.2 Contract for lease
Prior to the grant of a lease, the landlord and tenant may choose to enter into a contract to commit themselves to enter into the lease in the future. This is common in practice where the premises are not ready for immediate occupation, but the parties want the certainty that a lease
will be entered into. In practice this is called an ‘agreement for lease’ or ‘contract for lease’.
6.6.3 Option agreement
An option agreement is a type of estate contract that gives another party a right, during the option period, to serve notice that they wish to buy the land. If notice is served during the option period, the seller must sell the land to the buyer. However, the buyer is not obliged to exercise the option and buy the land.
6.6.4 Right of pre-emption
A right of pre-emption is a type of estate contract that gives another party a right of first refusal in the event the land owner decides to sell their land. This means that the land owner cannot sell the land without first offering it to the party holding the right. There is no obligation to sell, and there is no ability for the party who has the benefit of the right to require the land be sold to them.
6.6.5 Failed legal estate/interests can be recognised as an estate contract
A land contract may be created deliberately (as in the above examples) or it may be that the
parties try to create a legal interest/estate but fail. For example, the document trying to create
the legal interest/estate may not be a valid deed. In this situation, the courts will recognise an equitable interest in the land (examples below) providing:
* There is a document that complies with LP(MP)A 1989, s 2; and
* The remedy of specific performance is available.
Example: Land contracts
A contract to transfer a legal estate (ie a sale contract/option agreement/right of pre-emption) will
create an estate contract.
A contract to create a legal lease will create an equitable lease.
A contract to create a legal mortgage will create an equitable mortgage.
A contract to create a legal easement will create an equitable easement.
6.6.6 Enforceability of an estate contract
As an estate contract is a proprietary right in land it is capable of binding and being specifically enforceable against third parties (ie subsequent owners of the freehold estate). In order to be binding on third parties purchasers, an estate contract must be protected against third parties. The method of doing this varies depending upon whether it has been created over registered or unregistered land.
6.6.6 Enforceability of an estate contract
Note. If the interest holder fails to protect the estate contract and the third party is a donee (someone who is gifted or inherits the land) they will be bound by a properly created estate contract, regardless of registration. This rule applies if the burdened land is registered or
unregistered, though the legal authority is different.
6.7 Remedies for breach of a land contract
Where there is a valid land contract, either party will be entitled to a remedy should the other party breach any of the terms of the contract.
6.7.1 Damages
This is a common law remedy and therefore available as of right rather than at the court’s discretion. The usual measure of damages is the loss which the claimant has suffered as a result of the breach eg legal and surveyor’s fees, including the loss of the bargain. The following equitable remedies are also available in the event of breach.
6.7.2 Specific performance
This is a court order compelling the defaulting party to carry out positive contractual obligations, including transferring the land to the buyer.
6.7.3 Injunction
A prohibitory injunction is a court order restraining somebody from doing something, including
breaching a contract by selling the land to someone else
6.7.4 Equitable remedies are discretionary
Both specific performance and injunctions are equitable remedies. This means they are not available ‘as a right’ (unlike common law damages) and are entirely at the discretion of the court. This means there is no automatic right a claimant will get the remedy they seek.
Equitable principles
Equitable principles will also apply, which means the court will have regard to the behaviour of both parties in determining whether to make an order or grant an injunction. If the buyer delays in requesting the remedy or itself has not behaved honourably then the court may well refuse to make an order of specific performance or grant an injunction.
Key case: Coatsworth v Johnson [1886-90] All EER Rep 547
A landlord and tenant entered into a contract for a lease of a farm. The tenant moved in, but the lease was not completed by deed. The court would not recognise an equitable lease because the tenant had breached a term of the contract and so the remedy of specific performance was not available as the tenant was not coming to court ‘with clean hands’.
Assessment focus point
Remember that in addition to complying with LP(MP)A 1989, s 2 a land contract must be capable of specific performance (ie the claimant must have clean hands) in order for it to be recognised as an equitable interest in the land ie an estate contract/an equitable lease.
6.8 Summary
A valid land contract that is capable of specific performance is also known as an estate
contract. The estate contract is a contractual right to a legal estate, whether freehold or
leasehold, and is an equitable interest in the land.
* A contract for land must comply with LP(MP)A, s 2. That is, it must be in writing, signed by
both parties and contain all the agreed terms.
* Commonly encountered land contracts are: a contract for the sale of land, a contract to grant
a lease, a right of pre-emption, and an option agreement.
* Equity will order specific performance of a contract to create or transfer a legal estate,
because each piece of land is regarded as unique. This, together with the maxim that ‘equity
sees that as done what ought to be done’, results in an equitable interest arising from the
contract, known as an ‘estate contract.’
* An estate contract, as a proprietary right, is capable of binding third parties. A donee third
party (who is gifted or inherits the land) will be bound by an estate contract. A purchaser will
only be bound if the estate contract has been properly protected.
- Introduction to land registration
There are two separate systems for proving ownership of a piece of land: registered and unregistered land.
7.1 Registered vs unregistered land
Registered Land
If a piece of land is registered, it means the land has been registered at the Land Registry, a state institution in charge of administering the register. The register is a complete record of all matters
relating to a piece of land (ie who owns it and the rights that benefit and burden it).
Unregistered Land
In unregistered land, the title information (ie who owns the property) is contained in various old
paper title deeds. As the seller may have lots of old title deeds of varying degrees of usefulness relating to the property, a buyer of unregistered land would have to search through these to ascertain the relevant detail about the property.
7.1.1 Disadvantages of the unregistered land system
There are a number of disadvantages of the unregistered land system for both buyers and sellers of land:
* It is very difficult to discover third party interests, where documentation is held by the rightholder themselves, rather than any centrally administered authority.
* There is no state guarantee of accuracy or compensation for error (this does exist in the registered system) and there a much higher risk or fraud.
* Examining title deeds is necessary and reading very ancient documents might be very difficult or the deeds might be missing as a result of fire/loss. There might also not be a plan of the property, so it is difficult to know for certain the extent of the property.
* As there are more documents to read and interpret the conveyancing process may be slower and incur more expensive legal fees for a purchaser. The process is also very repetitive each time the land is sold again.
7.2 History of land registration
The LRA 2002 governs the present system of registration. The system was introduced in England and Wales by the Land Registration Act 1925 (now repealed), which envisaged that land would gradually be registered, region by region. From 1926 onwards central government designated various areas as being areas of compulsory registration, so eventually all of England and Wales would be registered. It was not until 1990 that all of England and Wales became designated as an area subject to compulsory registration.
7.2 History of land registration
Even now, you do not have to register an unregistered title – you only have to do this if there is a transaction or event (disposition) which triggers compulsory registration. These transactions include sale, mortgage, gift, assent (if you’ve inherited land).
The Land Registry estimates that approximately 15% of land in England and Wales is not registered.
7.3 The rationale for land registration
The aim behind the LRA 2002 was that: […] the register should be a complete and accurate reflection of the state of the title of the land
at any given time, so that it is possible to investigate title to land online, with the absolute
minimum of additional inquiries and inspections. (Paragraph 10, Explanatory Notes to the LRA 2002)
The system of registered land was therefore designed to simplify and cut down on the costs of
conveyancing, while allowing for a complete record of all matters relating to a piece of land.
7.3.1 Advantages of the registered land system
There are a number of advantages of the registered land system for both buyers and sellers of
land:
* Each registered title has a title plan which evidences the full extent of the property and usually also provides information as to who is responsible for the property’s boundaries.
* Once a title is registered a copy of the registered title can be downloaded from the Land
Registry’s website easily and quickly. This reduces the risk of fraud too.
* Once a person is registered as the title owner that ownership is guaranteed by the State. Therefore, buyers are certain that the title to the land has been investigated and approved before registration. If it is incorrect then an innocent party who has suffered loss can make a
claim for compensation against the Land Registry.
* Once the title is registered all information is held centrally and can be viewed online. This speeds the conveyancing process up as a seller’s solicitor can deduce title and draft a contract for sale very quickly rather than have to wait for the original deeds and documents to be sent from the client (or the client’s lender).
7.4 Compulsory land registration
Each time that unregistered land is sold for the first time since 1 December 1990 it must be
registered. This is known as first registration. Note. It has only been compulsory to register changes of ownership following death or gifts of
land since 1 April 1998.
LRA 2002
Under LRA 2002, s 4 (first registration) and LRA 2002, s 27 (transactions involving already
registered land) there are a number of circumstances which trigger compulsory registration: ‘triggering events’. These triggering events apply to both unregistered and registered land. If the land is unregistered
the event triggers a requirement to register the land for the first time. If the land is already registered, the event triggers a requirement to update the register. The LRA 2002, s 3 allows for voluntary registration of unregistered land, for example if the owner wants to obtain the advantages of the land registration system. The Land Registry offer reduced registration fees in these circumstances
7.4.1 Circumstances which trigger compulsory registration: ‘triggering events’
- Transfer of the freehold estate by sale, gift, or court order.
- Grant of a lease for a term of more than seven years.
- Assignment (transfer) of a lease of unregistered land with more than seven years to run.
7.4.1 Circumstances which trigger compulsory registration: ‘triggering events’
- An assent, vesting assent or vesting deed which is a disposition of the freehold or a leasehold with more than seven years to run (this refers mainly to transfers on death).
- The grant of a lease to take effect in possession more than three months after the date of the grant (ie future leases).
- A first legal mortgage of the freehold or of a leasehold with more than seven years to run.
Assessment focus point
The triggering events you are most likely to encounter are in bold above. Remember these apply to both unregistered land (triggering a first registration requirement) and registered land (triggering a requirement to update the register).
7.5 Summary
- There are two systems to prove land ownership in England and Wales – registered and unregistered land.
- If a piece of land is registered, it means the details of who owns the land and the rights that benefit/burden it are recorded at a centrally administered authority – the Land Registry.
- If a piece of land remains unregistered, it means it is simply not registered and an owner of
unregistered land must prove they own the land by producing the historic title deeds for the property.
7.5 Summary
- A piece of land need only be registered for the first time when a ‘triggering event’ occurs.
- There are many advantages to a piece of land being registered. It simplifies and makes quicker
and cheaper the cost of conveyancing. - Once a piece of land is registered, the registered title must be kept up to date. If a triggering
event occurs, the details must be registered and the Land Registry notified.
8 Principles of registration
8.1 Purpose of land registration
The aim of land registration was that the buyer would always know precisely what it was buying, and the holder of the interest would always know that, by recording it on the register, the interest would be enforceable against a new owner. It was based on three principles:
* The mirror principle
* The curtain principle
* The insurance principle
We will now explore the principles behind registered land, considering what ‘land registration’ was
designed to achieve and whether it has been realised. The contents of a registered title is also introduced.
8.1.1 The mirror principle
Put simply the register should reflect all matters that the property has the benefit of and all the matters that the property is subject to. The register should be a clear and comprehensive account of the ownership and rights that benefit and burden a piece of land, and a purchaser should only
need to look at the register to understand who owns a property and what third party rights will bind the property.
Transparent simplicity
The transparent simplicity of the mirror principle for recording third party interests against an
estate has never been fully realised due to the existence of overriding interests. Overriding interests have attracted criticism since the system of land registration was first
established in 1925. They are, nevertheless, retained by the LRA 2002, although their number has
been vastly reduced.
Overriding interest
An overriding interest is an interest that does not appear on the register
but will still be binding on the owner of the legal estate and any buyer of it. Their full title under the LRA 2002 is ‘unregistered interests which override registered dispositions’.
8.1.2 The curtain principle
The register records the ownership of the legal estate in the property, the legal title. If a property is held on trust, the purchasers need not be concerned the beneficial or equitable
ownership of the land (‘what lies behind the curtain’), which is often far more complicated than the legal ownership. This information is kept off the title. This principle simplified land conveyancing, making the process of investigating ownership to a piece of land much simpler and quicker.
8.1.3 The insurance principle
The accuracy of the register is guaranteed by the state. This is one of the advantages of registered land over unregistered land. If there is an error with the register, it will be corrected and anyone who has suffered any loss will be compensated (LRA 2002, s 23).
You often see the compensation referred to as ‘state indemnity’.
8.2 Registered title
When a piece of land is registered for the first time, it is given a unique title number and the details of the landowner and rights that benefit/burden a piece of land are recorded. The title plan the Land Registry created for each property ensures that there is an accurate plan
of the property.
Official Copy
When a piece of land is registered for the first time, it is given a unique title number and the details of the landowner and rights that benefit/burden a piece of land are recorded. The title plan the Land Registry created for each property ensures that there is an accurate plan
of the property.
8.2.1 The property register
The property register contains:
* A description of the land (i.e. the address) by reference to the title plan
* The type of estate, freehold or leasehold
* Details of any rights (eg easements) that benefit the land
8.2.2 The proprietorship register
The proprietorship register contains:
* The name and address of the register proprietor (owner) of the land
* Details of any restrictions affecting the registered proprietor’s ability to deal (eg sale / lease /
mortgage) with the land
* The class of title
On first registration of a property the Land Registry decides which class of title should be
given to the property.
Class Title - Absolute
This is the best form of ownership and is really what you would want
to see on the official copies if you were buying a property. Most
properties are registered with this class of title. It means the land is
only bound by interests that are registered on the title or overriding
interests.
Qualified
An owner may be registered with qualified title if the Land Registry is
of the opinion that the title has some defect which it will then specify
on the register. It is very rare to see someone registered with qualified
title in practice.
Good Leasehold
This will be granted where the Land Registry is satisfied as to the title
of the leaseholder only and not the freeholder. This could be the case
where the freehold title is unregistered and where the applicant fails to submit evidence of the freehold title when applying to register their leasehold title.
Possessory
This may be given by the Land Registry where the applicant is in
possession of the property or is in receipt of rents and profits and
there is no other class of title that can be given. Where there are no
title deeds to prove ownership, or the deeds have been destroyed
possessory title would be given. It is usually given to those with a claim
under ‘adverse possession’ or ‘squatters rights’. Possessory title may mean that third party interests created before the date of first registration will bind the property even though these are not noted on the title.
Assessment focus point
You will consider classes of title in more detail if you go onto study property law and practice. At this stage, you need to understand what class of title is and that title absolute is the best and most common grade given.
8.2.3 The charges register
The charges register contains the details of interests the land is burdened by, including details of
any leases the land is subject to. For example, if the land is burdened by a restrictive covenant, an easement or a mortgage, these will detailed here
8.3 Keeping the register updated
LRA 2002, s 27 provides a list of transactions involving already registered land which must be
registered ie the Land Registry must be notified of the transaction so that the register can be updated accordingly. Failure to register means the transaction is not legally recognised (LRA 2002, s 27(1)). This
ensures the register is an accurate reflection of a piece of land at any one time and kept up to date.
Example: Keeping the register updated
The effect of LRA 2002, s 27 is that the buyer of a freehold estate is not recognised as the new legal owner until registration has taken place; the tenant of a lease over seven years is not recognised as having a legal lease until the lease is registered; and a legal mortgage is not created until it has been registered at the Land Registry.
8.4 Summary
- Land Registration was introduced to simplify land conveyancing and create a system whereby
there was a complete record of ownership, extent of land and rights that benefit/burden it. - The system is based on three principles: the mirror principle, the curtain principle and the
insurance principle. - Each registered title, also called an official copy, is split into three registers: the property register, the proprietorship register and the charges register.
- On first registration, a piece of land is given a ‘class of title’. The best class of title is ‘title absolute’.
- In order to ensure the register is kept up to date, it is compulsory to register a number of events
with the land eg sale. Failure to register means the transaction is not legally recognised eg the buyer is not recognised as a new legal owner until it registers the sale.
9 What is land?
9.1 The significance of ‘what is land’
Land is defined in plain English as:
[…] the part of the earth’s surface that is not covered by water. The legal definition, however, it not quite as simple. The significance of whether something falls within the legal definition of ‘land’ is important for a number of reasons
9.1 The significance of ‘what is land’
- There is a much higher degree of formality required to transfer land compared to other forms of property.
- A deed must be used to transfer land.
- If a third party is digging under a piece of land or swinging a crane over the land, is this trespass? A landowner will want to know what action they can take (if any).
9.1 The significance of ‘what is land’
- A buyer of a piece of land will want to know what is included with what they’re buying. A buyer of land gets everything that falls within the legal definition of land (LPA 1925, s 62). If there is a shed in the back garden, is this part of the land? What about the carpets?
- If a mortgage lender initiates possession proceedings because a borrower stops making their
payments due under the terms of the mortgage loan, the lender will want to know exactly what they can take possession of and then sell. A lender will have a mortgage over ‘the land’
and therefore a right to sell everything that counts as being part of the land.
9.1.1 The statutory definition of land
The statutory definition of land is found in LPA 1925, s 205(1)(ix):
“Land” includes land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of buildings (whether the division is horizontal, vertical or made in any other way) and other corporeal hereditaments; also a manor, an advowson, and a rent and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or
derived from land.
9.1.1 The statutory definition of land
“Mines and minerals” include any strata or seam of minerals or
substances in or under any land, and powers of working and getting the same […]; and “manor” includes a lordship, and reputed manor or lordship; and “hereditament” means any real property which on an intestacy occurring before the commencement of this Act might
have devolved upon an heir. In summary the statutory definition of “land” includes the surface; buildings or parts of buildings on the land; other corporeal hereditaments; and other incorporeal hereditaments.
Corporeal hereditaments
Corporeal hereditaments are physical things attached to the land –
called ‘fixtures’ in practice.
Incorporeal hereditaments
Incorporeal hereditaments are the benefit of any proprietary rights that the land has but which have no physical substance. For example, if a piece of land has the benefit of an easement to park on the adjoining neighbour’s land, this proprietary right is part of the land, and the benefit of it therefore passes with the land when it is sold.
9.2 Airspace and ground below the earth
Cuius est solum eius est usque coelom et ad inferos maxim
This is an ancient Latin maxim. It means he who owns the land owns everything up to the heavens
above and the depths below.
Although rhetorically appealing, the maxim does not really represent the true state of the law where, as you will see, the depth and height of an estate owner’s land is limited to what they might, from a practical and policy perspective, reasonably require to make effective use of their
possession.
9.3 Airspace
An owner’s rights in the airspace above their land are restricted to such height as is necessary for
the ordinary use and enjoyment of the land and the structures upon it.
In other words something on your neighbour’s land that overhangs yours is likely to be a trespass
as they are, by definition, using space that you could utilise. Conversely, above that height, the owner has no greater rights than any other member of the public (Bernstein of Leigh (Baron) v
Skyviews and General Ltd [1978] QB 479).
The law makes a distinction between:
* The upper airspace
* The lower airspace - that portion of airspace which is necessary for the landowner’s ordinary use and enjoyment. There is no exact height from where the upper airspace begins. The lower airspace is to such
height as is necessary for the reasonable enjoyment of the particular piece of land.
9.3.1 The upper airspace
Key case: Bernstein of Leigh (Baron) v Skyviews and General Ltd [1978] QB 479
Facts: The defendant flew over the plaintiff’s country house for the purpose of taking an aerial
photograph. The plaintiff claimed damages for trespass.
Held: The defendant had not committed trespass. He was flying many hundreds of feet above the
ground and did not interfere with any use to which the plaintiff might put the land. Note. The Civil Aviation Act 1982, s 76(1) grants immunity from trespass or nuisance for any
innocent flight of aircraft.
9.3.2 The lower airspace
If a structure overhangs your property so that it is in the ‘lower airspace’, that is a trespass
irrespective of whether damage is caused to your property. This can be illustrated in the case of Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334 where an injunction was granted for the removal of an advertising sign
erected by the defendant which projected into the airspace above the plaintiff’s shop by a few inches.
9.3.2 The lower airspace
In Anchor Brewhouse Developments v Berkley House (Docklands) Developments [1987] EGLR 172
the jib of a crane trespassed in the airspace above the claimant’s property and an injunction was
granted. Note. An injunction is a discretionary remedy, and the court may sometimes award damages if it
considers damages are adequate in the circumstances.
9.4 The ground below
This issue of who owns the ground beneath the surface of the earth came before the court in the
case of Grigsby v Melville [1974] 1 WLR 80.
Court of Appeal
The Court of Appeal held that the cellar was owned by the claimant and based their reasoning partly on the fundamental principles that a conveyance of land ordinarily carries with it all that is beneath the surface.
Exceptions to the principle
There are some exceptions to the principle that a landowner owns everything beneath the surface
of its land:
* A landowner is not entitled to all minerals under his land. All mines of gold and silver belong to
the Crown.
* If a landowner finds ‘treasure’ (as defined under the Treasure Act 1996) then that also belongs
to the Crown.
* Any coal under land belongs to the Coal Authority by virtue of the Coal Act 1938.
* The Infrastructure Act 2015, s43 effectively states there is no trespass at depths below 300 metres and therefore there is no need for the consent of the freehold owner to deep-level drilling.
9.5 Summary
- The statutory definition of land includes: the surface of the physical land, buildings on the land, fixtures, and the benefit of any easements.
- Land must be transferred by a deed (LPA 1925, s 52).
- When land is sold everything classed as land will pass to the buyer (LPA 1925, s 62).
- If a lender exercises its right to possess and sell the land, it is entitled to sell everything classed
as land. - ‘Land’ includes:
- The space below the ground (up to approx. 300 m).
- The ‘lower airspace’ above the ground, which is to such height as necessary for the reasonable enjoyment of the particular piece of land. This will vary depending on the piece of land in question, there is no set height.
- Fixtures
Quidquid plantatur solo, solo cedit.
This ancient Latin maxim, upon which the modern law is based, means ‘whatever is attached to the land becomes part of the land’. This principle is encapsulated in modern land law in the LPA 1925’s definition of ‘land’, which includes ‘other corporeal hereditaments’ ie things attached/fixed to the land, what we ‘fixtures’ in practice.
10.1 The legal issue
Blocks of stone placed one on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if
deposited in a builder’s yard and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels
Holland v Hodgson (1872) LR 7 CP328: Blackburn J
When does a item of property (ie chattel, which is personal property) become fixed to the land so
it forms part of it?
How do we determine if an item is a fixture (and therefore part of the land) or a chattel, which is
not part of the land?
This issue is particularly relevant when land is being sold. A buyer and seller will need to know what is a fixture (and should remain as its part of the land) or a chattel, which a seller can take with it.
It is also very relevant when a lender takes possession of land if a borrower defaults on a mortgage payment. The lender will want to know what is a fixture and can therefore be sold with the mortgaged land.
10.2 The legal test
The legal test for determining if an object is a fixture or chattel has two parts
10.2.1 The degree of annexation test
This is the first part of the test and considers how the object is fixed/attached to the land/building.
The more firmly the object is fixed to the land or building, the more likely it is to be classified as a fixture. Even if it is fairly easy to remove, its character is still prima facie that of a fixture. If, on the other hand, the object rests on the land by its own weight, it is generally considered to
be a chattel.
10.2.2 The purpose of annexation test
The second part of the test considers why the object is attached to the land/building. It asks whether the annexation was for the more convenient use or enjoyment of the chattel as a chattel, or to enhance the land or building in some way.
This test takes priority over the degree if annexation test. The degree of annexation test raises a presumption, that the thing in question is or is not a fixture.
This presumption can then be rebutted by objectively looking at the purpose.
Exercise: Challenge yourself
Mr Justice Blackburn in the case of Holland v Hodgson (1872) offers a good explanation of the area of law and how the two tests interrelate. Consider reading this and the judgement of Scarman LJ in Berkley v Poulett [1977] 1 EGLR 86 which establishes principles in respect of the purpose of annexation test that have been followed in case law since.
Key case: Botham v TSB Bank plc [1996] 73 P & CR D1
Facts: The mortgagee took possession of Mr Botham’s flat and sold it, including the contents. Mr
Botham argued that many items were chattels, not fixtures, and so he should be given credit for them from the proceeds. Roch LJ looked at each item in turn and assessed which were fixtures and which were chattels.
Held: LJ Roch confirmed the two tests as being:
(a) The method and degree of annexation;
(b) The object and purpose of the annexation.
Key case: Botham v TSB Bank plc [1996] 73 P & CR D1
[…] if the item viewed objectively, is, intended to be permanent and to afford a lasting improvement to the building, the thing will have become a fixture. If the attachment is temporary and is no more than is necessary for the item to be used and enjoyed, then it will remain a chattel
Examples
- Ornamental items are often chattels eg pictures
- Carpets and curtains are likely to be chattels
- Light fittings attached by screws are likely to be chattels
- Kitchen appliances (eg a washing machine) are likely to be chattels if not integrated and can
be removed without causing damage - Kitchen units are fixtures
- Items installed by a builder are more likely to be fixtures
- Bathroom fittings (ie the toilet/baths) are fixtures
D’Eyncourt v Gregory (1866)
LR 3 Eq 382
A stone garden seat and
ornamental statues standing
on their own weight were held
to be fixtures because they
formed part of the architectural design of the house and its grounds. If chattels are incorporated
into the architectural design
of a building, they may
consequently be classified as
fixtures even though they are
not firmly affixed.
Leigh v Taylor [1902] AC 157
A tapestry was tacked securely to a wall. The purpose was merely to
display the tapestry in order to enjoy it. The tapestry was held to be a chattel. A chattel may be securely
affixed to the land but remain
a chattel if the purpose of
annexation is the better
enjoyment of the chattel as
such.
Elitestone Ltd v Morris [1977] 2
All ER 515
A wooden bungalow was not
attached to the land, but
rested on concrete pillars. It
was held to be a fixture because in order to remove it from the land it would have had to be demolished. If a chattel cannot be removed from the land without destruction/demolition, it will
be deemed to be intended to
form part of the land and
therefore a fixture.
10.3 How does this work in practice?
Under LPA 1925, s 62, a conveyance of land (ie a transfer) automatically includes all fixtures in the property, unless the items are specifically excluded from the sale in the contract under the LPA 1925, s 62(4). If the contract is silent and does not specifically exclude any items from the sale, the seller may not remove a fixture after they have contracted to sell the property to another. To avoid a dispute about whether an item is a fixture or chattel, it is common practice for the buyer and seller to agree which items are to pass on the sale by completing a Law Society
fixtures and contents form (Form TA10) which forms part of the contract.
10.4 Summary
- Items fixed to the land form part of the land. Such items are known as ‘fixtures’.
- To determine if an item is attached to the land, you must apply two tests:
(i) The degree of annexation test.
(ii) The purpose of annexation test. - The degree of annexation test produces a presumption, which can be rebutted by the more decisive purpose of annexation test.
- In applying the test, the item must be objectively considered depending on the particular circumstances.
- As a fixture is part of the land, ownership can only be transferred by a transfer of the land; in contrast a chattel can be transferred by physical delivery.
- Where the land is mortgaged, fixtures form part of the security and will be included in any sale by the lender following repossession
- Formality rules for the estates and interests in land
In this chapter, you have been introduced to the estates and interests that exist in land. You have
also learnt about the formality rules that govern the transfer of a freehold estate in land. In subsequent chapters, you will learn about the formality rules to create a leasehold estate and the formality rules to create the different interests in land.
The chart below summarises these rules. You may find it helpful to refer back to this chart as you progress through the land workbook and during any revision period.
