Chapter 4 - Formalities required - Creation & transfer of estates and interests

Question 1

How to prove the ownership of land when the land is sold?

unregistered

Answer 1

a deed or set of deeds establishing ownership can be produced

Question 2

How to prove the ownership of land when the land is sold?

registered,

Answer 2

details showing that the land is registered at the Land Registry in the form of an official copy of the land register can be given

Question 3

Statement: Land which is currently unregistered will eventually be registered. The register is a state guarantee of land ownership.

Answer 3

Land which is currently unregistered will eventually be registered. The register is a state guarantee of land ownership.

Question 4

Three-stage process involved in conveyancing

Answer 4

an agreement, which is ‘subject to contract’

exchange of contracts &

transfer of the legal estate on completion.

Question 5

Sale subject to contract

Answer 5

In the law of England and Wales, a verbal agreement for the sale of land has no legal effect.
o It is no more than a declaration of intent to enter into a binding agreement

•Pre-exchange costs such as survey costs & solicitor’s fees must still be paid by the party who has incurred them

Question 6

Formalities of creation & transfer of legal etsates

Answer 6

Law of Property (Miscellaneous Provisions) Act 1989 s 2

Law of Property Act 1925 s 52

Law of Property (Miscellaneous Provisions) Act 1989 s 1

Land registration Act 2002

Question 7

Formalities- exchange of contracts

Answer 7

A legally binding contract is not entered into until buyer and seller, usually through their solicitors, exchange contracts.

Contracts in relation to the creation or transfer of an interest in land are governed by s 2 LP(MP)A 1989.

The effect of a failure to incorporate all agreed terms can make the contract a nullity, that is, it will be void.

Question 8

Elements of s 2 of the LP(MP)A 1989

Answer 8

In writing

Incorporating all the terms as agreed

Signed

Question 9

Points to note about s 2 LP(MP)A 1989

Answer 9

The terms may be incorporated into a document either by being set out in the document or by reference to some other document.

Contracts for items such as curtains & other fittings do not have to comply with s 2 although, for the avoidance of doubt, these items will usually be part of the main contract.

Most importantly, contracts which relate to the sale of land do not actually transfer the ownership of the land itself.

Question 10

Keay & Another v Morris Homes (West Midlands) Ltd (2012)

Answer 10

A contract varying a pre-existing contract omitted a crucial term. The variation contract failed to include an alleged promise by the seller to carry out defined building works.

The failure to include this term in the variation contract meant that the variation contract was a nullity and could not be enforced as it did not comply with s 2 LP(MP)A 1989, that is, it did not contain all relevant terms.

Question 11

An equitable interest after exchange of contracts

Answer 11

The buyer has the right to enforce the sale of the land

If the seller refuses to go ahead with completion, the buyer can sue for damages for breach of contract

•He may be entitled to a court order of specific performance requiring the seller to perform the contract.

Question 12

Legal title after exchange of contracts

Answer 12

Legal title vests in (i.e., remains with) the seller

The buyer has an estate contract.

•This is a contract to create a legal estate at some future date & gives the buyer an equitable interest in the property.

Question 13

Buyer’s rights between exchange & completion

Answer 13

Buyer’s rights on exchange

Where the seller refuses to sell, the buyer can-Obtain damages
Obtain an order of specific performance from the court

Buyer holds an equitable interest in the form of an estate contract

Such an equitable interest requires protection

The seller can also obtain damages or obtain an order of specific performance if the buyer refuses to complete

Question 14

Completion

Answer 14

Completion of the transfer/ conveyance occurs after exchange, although the length of time between exchange & completion can vary considerably.
o For ordinary house purchases, it is usually no longer than 28 days, although it is possible for exchange & completion to be on the same day

Completion must be by deed by virtue of s 52 LPA 1925 otherwise void
o A deed is a formal document required when transferring legal title (ownership) to land.

•Exceptions
o Lease for three years or less- LPA 1925 s 54(2)
o Equitable interests- LPA 1925 s 53(1)

Question 15

Requirements for a valid deed

Answer 15

P(MP)A 1989 s 1
In writing
Clear on its face that it is intended to be a deed
Validly executed (Signed, Witnessed, Delivered)

Question 16

Valid execution of a deed

Answer 16

The deed to be osigned by the individual in the presence of a witness who attests (i.e., signs to confirm that they have witnessed the signature.
Alternatively, the deed may be signed at the direction & in the presence of the individual if attested by two witnesses who are present &
odelivered by the individual, or by someone authorised by them, to the other party.
Delivery by an individual means that the person executing it acted in such a way as to show an intention to be bound by it. By s 1(5), if a solicitor or licensed conveyancer or their agent or employee delivers the deed in the course of the transaction, they are presumed to act on behalf of the client.

Question 17

Registered land

Answer 17

Where registered land is sold (i.e., registered land is transferred from seller to buyer), the buyer does not become the legal owner on the day of completion. •They become the legal owner only when the transfer has been registered at the Land Registry, until then the buyer has an equitable interest. •The seller retains the legal estate & holds the land on trust for the buyer until registration. Registration gap •A gap between moving into a property on the day of completion & becoming the legal owner. •With the advent of online conveyancing, the registration gap should be eliminated, as completion & registration ought to occur instantaneously. •The rules relating to registered land are governed by the LRA 2002.

Question 18

Unregistered land

Answer 18

Where land is unregistered, a sale will trigger a process of compulsory first registration at the Land Registry. On the day of completion of the sale of unregistered land, the legal estate is transferred. There is no registration gap with unregistered land; however, first registration must occur within two months of the completion date.

Question 19

Effect of legal estate in unregistered land

Answer 19

Sale subject to contract (no legal effect)Exchange of contracts (creation of an estate contract)Conveyance (transfer of legal title)Compulsory first registration (property becomes registered land)

Question 20

Effect of legal estate in registered

Answer 20

Sale subjecat to contract (no legal effect)Exchange of contracts (creation of an estate contract)Completion (land held on trust by seller for buyer)Registration of new proprietor (transfer of legal title)