Chapter 9 Land Law Flashcards
9.3 Land
The Interpretation Act 1978 where land is defined as including buildings and other structures, land covered with water and any estate, interest or right in and over land. The following items are regarded as land for tax purposes:
• The physical soil of earth
• The natural produce of the soil which grows without human labor
• The airspace above the earth to a height that is necessary for reasonable enjoyment of the land and buildings on it.
• Buildings and other structures on the ground with the fixtures attached to them
• Ground covered with water
• Estates, interest and intangible rights in or over the land
Fixtures are considered land, in determining whether a chattel becomes a fixture, two tests are applied:
• The degree of annexation – chattel has to be fastened to the building in a substantial way and the removal would cause damage to the building
• The purpose of annexation – chattel improves the building permanently
9.4 Estates and interests in land - freehold, leasehold and interest in land
Persons strictly do not own land; they own a period of time in relation to the land. The periods are called estates. In law there are two estates, a freehold and a leasehold.
Freehold (fee simple)– is a period of time without end. You have a bundle of rights that constitute ownership including the right of alienation and the right of enjoyment. The only freehold estate recognized in common law is the fee simple absolute in possession, meaning there are no conditions attached to the estate. Where the estate is in remainder or in reversion – so that it can be enjoyed until a future point in time, then the estate exists only in Equity.
Leasehold (term of years absolute) – this is a defined duration; the ownership rights can be limited in certain aspects. A leaseholder can be created by the owner of a freehold estate, they are said to have granted a lease. The freeholder gives up the right of occupation of the land during the period of the lease. The freehold estate they own during the lese is said to be reversionary on the lease, meaning the right of occupation of the land will revert back to the freeholder at the end of the lease. Many leaseholds are terms in possession, meaning the leaseholder has the present right to enjoy the land. Some are reversionary leases where the lease takes effect within 21 years from the date they are granted.
Interests in land – a person who owns an interest in land owns rights over someone else’s land. Interests restrict the estate owner in their occupation and use of the land in respect of which the estate exists. An interest in land attaches to the land itself. Interests in land may exist at law or in Equity, this distinction is not usually relevant for tax purposes.
9.4 Estates and interests in land - easements, profit a prendre, covenants, mortgage and estate contract
Easements – this is a right of one person to use the land of another in a certain way. Necessarily there are at least two persons and two pieces of land – the dominant tenant and the servient tenant. Dominant tenant enjoys the benefit of easement and the servient carries the burden of it. For example, one-person (dominant) may have to go over someone’s (servient) land to reach their garage. In Scots law an easement is known as a servitude.
Profit a prendre – this is the right of one person to enter and take a property off another person’s land. For example, the right to fish from a river on someone else’s land.
Covenants – this is an agreement by which one person promises the other they will do or not do something in relation to their land. This is called an obligation in Scots’ law. A covenant can dictate how the estate holder may or may not use their land.
Mortgage – is the transfer of an interest in land in order to secure the repayment of a loan. If someone purchases the freehold of business premises but borrows part of the purchase from a bank, the bank will usually demand that the loan is secured on the premises. The bank can force the sale of the premises if the individual does not pay back the loan and the premises are encumbered by the mortgage. Once the loan is paid off the banks interest comes to an end and the premises are unencumbered. When the borrower is a business the lender must register the mortgage against the company on company’s house.
Otherwise, if the borrower becomes insolvent without registration the mortgage would not be enforceable.
Estate contract – where an estate owner enters into a contract in respect of their land with another person, that other person may acquire an interest in the land of the estate owner. The interest so acquired is known as an interest under an estate contract. If someone is selling their estate to another individual, they acquire rights under the contract over the estate.
9.5 Leasehold estates – further aspects
Creation of a lease – a leasehold estate is validly created if these conditions are met:
• The lease gives the lessee the right to exclusive possession. This is the right to exclude all others from the premises that are subject to the lease. If this isn’t met, a licence has been created instead
• Certainty of duration – the duration must be certain
• The premises must be accurately defined.
It is not essential that the grant requires the payment of any rent. A lease can be created for a one-off capital payment (premium), premium and rent, rent alone or for no payment at all. If rent is provided for, a certain amount must be defined.
Terms of a lease – the terms also constitute a contract between the landlord and the lessee. The lessee has an estate in the land but owes duties to the landlord with the terms. The terms (leasehold covenants) may contain terms agreed between both parties, the following terms are normally implied into the agreement:
• Quiet enjoyment – landlord does not interfere with the tenant’s enjoyment of the property
• Repair and fitness for habitation – implied obligations of the landlord
Implied obligations of tenant:
• To pay the rent
• To pay rates and taxes
• Allow the landlord to visit the premises if they are liable to repair
• To return the premises to the landlord at the end of the lease in a state of repair
9.5 Leasehold estates – further aspects (2)
Bringing a leasehold estate to an end –
A leasehold estate may come to an end in a number of ways:
• Expiry at the end of the period of lease. Can be via a break clause which can bring the lease to an end at a certain point. Various statutes give businesses security of tenure which gives them the right to stay in occupation and take a new lease of the premises after their original lease ended
• By either party giving notice to quit
• By merger – where lessee acquires the landlord’s reversion on the lease or where a third party acquires both
• By surrender
• By forfeiture
Special types of lease:
Tenancy at will – is created where a tenant occupies premises at the will of the landlord who may determine the tenancy whenever they wish.
Tenancy at sufferance – created where after the expiry of the term of their lease, the tenant remains in occupation of the premises. The tenant remains liable for rent and the landlord may claim possession of the premises at any time.
Licences – a licence is a permission given by the occupier of land to do something which would otherwise be unlawful in relation to the land of another person. It prevents what would otherwise be a tort (trespass). Licences normally create no interest in the land in respect of which they created and are granted under a contract for payment.
9.6 Co-ownership of estates and interests in land
There are two types of co-ownership joint tenancy and tenancy in common. Co-ownership in land takes effect as a trust technically and is governed by the trusts of land and appointment of trustees’ act 1996. At law there only exists joint tenancy.
9.7 Proof of land ownership
There are two ways to prove ownership, reference to the land register and reference to the title deeds. Registration of title is compulsory in some areas. Land must be registered when it is transferred by sale or gift, where a lease is granted for more than 7 years or where there is a first legal mortgage of the land. Failure to register has consequences with the ownership of land. Once land is registered all transfers must be recorded in the land register. Ownership of unregistered land is evidenced by reference to the title deeds.
9.8 The sale of land
The rules of contract law govern the sale of the land. The parties enter into a contract of sale when the deposit is paid. The parties then become bound to the contract. The making of the contract is usually followed by its competition. This takes place by the buyer paying the balance of the purchase price and the vendor conveying the ownership of the property to the buyer.
