Conveying Estates and Interests in Land

Question 1

Conveying estates and interests in land

Answer 1

• Writing requirement: deed of grant must be made in writing in order to transfer property
• LPA s52(1): “all conveyances of land or of any interest therein are void … unless made by deed”
  
  • Formalising of a legal title to land
  • Inter vivos
• Grant: legal title

Question 2

Completion of a transfer

Answer 2

• S27(1) Land Registration Act
  
  • “A disposition of a registrable estate or charge does not operate at law until the relevant registration requirements are met.” The interest is only protected by equity
  • Disposition: the creation or transfer of an interest in land.
    
    • A transfer is not complete until the transferee is registered as the proprietor of that estate or interest. You cannot have priority against third parties until this is done
• S27(2) LRA: lists the kinds of dispositions required to be completed by registration
  
  • Numerous clausus of estates and interests in land that can exist at law
• A deed is effective to create / transfer a legal interest between the parties to the deed (grantor and grantee)
  
  • The interest has no effect at law as regards a third party until it is registered

Question 3

Completion as between parties

Answer 3

• The creation or transfer of an interest in land must be in writing [s53(1a) LPA]
  
  • The person who owns the interest and wants to create or transfer it must sign the conveyance
• A trust of land must be evidenced in writing [s53(1b) LPA]
  
  • You can create it orally, but if it needs to be proved in a dispute, it will only be upheld if there is writing to evidence the creation of the trust of land
• A disposition of an equitable interest or trust must be in writing [s53(1c) LPA]

Question 4

Completion as regards third parties

Answer 4

• On death, in order to exercise the power to dispose of real estate by will, there are writing requirements [s3 Wills Act 1837]
  
  • Requirements for a valid will in s9
• A legal title passes by deed
  
  • S1(3) LP(MP)A: a document which makes clear that it is intended to be a deed that is signed and delivered as a deed (it must say deed)

Question 5

Exceptions to completion

Answer 5

• S52(2d): exempts leases not required by law to be made in writing
• S53(2): interests which arise under a resulting or constructive trust do not need to fulfil the writing requirement, they arise on equitable principles by operation of law
  
  • They are not truly a grant from the person who owns the property
  • There is no need for writing because it is a resulting trust
• S54(2): exempt leases are those taking effect in possession for a term not exceeding three years … at the best rent which can be reasonably obtained without taking a fine (premium – capital payment on the outset)
  
  • Three years or fewer
  • These leases are always legal, they can never be equitable because equitable leases arise by accident because somebody did not use a deed to make a legal lease (probably used a contract which equity enforces)
  • Short leases are exempt from formalities, and thus they are always legal
  • They can be created orally

Question 6

Periodic tenancies

Answer 6

• They require no formalities and can be inferred by the interval at which rent is paid
• They may go on indefinitely, but their assignment is treated differently
• They arise weekly, monthly, quarterly and yearly (frequencies of payment)
• Can roll over indefinitely, but they are still short leases
• When we talk about possession, we mean that the right to possession arises at the time of the grant
• Are often inferred by frequency of rent payment
• Can be made “by parol” (orally as opposed to verbally; written or spoken)

Question 7

City Permanent BS v Miller

FACTS

Answer 7

• M agreed to lease flat to C for 3 years and thereafter for a weekly tenancy. M did not yet own the premises. C paid £228 for three years. M then took a transfer of the premises and executed a charge in favour of CPBS, which was registered. C then took possession. M defaulted on mortgage and CPBS sought possession. C claimed that she had priority as a lessee in possession.

Question 8

City Permanent BS v Miller

HELD

Answer 8

• C had no lease, as it had not been made by deed. Because the grant did not comply with s52 LPA, C had nothing but bare possessory title only (C did not have a lease because it was three years + a single week and thus could not come under the exception; also, the three years was paid for by a fine) from after the mortgages had arisen, and CPBS had a stronger and earlier right

Question 9

Long v Tower Hamlets

FACTS

Answer 9

• TH offered in writing a quarterly tenancy to L of shops and flats above to commence 6 months hence. L never paid any rent. 12 years later, L claimed adverse possession (AP) of freehold. TH argued start date of AP began only when they gave notice to quit tenancy (which they hadn’t done yet). L argued he had no tenancy because not created by deed; did not fall within exemption because a “reversionary (it was supposed to take effect in the future)” lease is one not taking effect in possession.

Question 10

Lond v Tower Hamlets

HELD

Answer 10

• A reversionary lease must be made by lease because it is not taking effect immediately
• Leases for 3 years or fewer, taking effect in possession, for regular rent are exempt from any writing whatsoever

Question 11

Assingment of a short lease

Crago v Julian

Answer 11

• s52(2d) only applies to creation and not to assignment of existing lease
  
  • Any contract between an assignor and an assignee can only create an equitable interest between them and not between the lessor and the assignee

Question 12

Unpaid vendor’s lien

Answer 12

• Vendor’s security for the purchase price
  
  • A property right which sits on the property
• Discharged only if, and to the extent that, the purchase price is paid
• Survives completion in equity
• Until they pay, the purchaser never received unencumbered title, and so they are not free to grant interests with priority
• The lien entitles the lendor retain possession until the payment is made
  *

Question 13

What is a lien?

Answer 13

• A lien is not a mortgage because there is no accountability to the debtor for excess on sale
• But, like a mortgage, it gives the right to apply for an order for sale under s90 LPA
  
  • The unpaid vendors lien is an equitable charge created by operation of law but having the force of one created consensually by writing to secure the payment of the purchase price [Menelaou]
• It is a property right in land and takes priority

Question 14

Barclays Bank v Estates & Commercial Ltd

Answer 14

• The lien arises automatically as a consequences of the contract

Question 15

Formal acquisition of a legal estate

Answer 15

Contract

Creation or transfer

Registration

Question 16

Formal acquisition of a legal title

Contract

Answer 16

• The vendor and purchaser enter a contract for sale of the legal estate (whether freehold or leasehold). The purchaser usually pays a deposit
  
  • Legal title may be transferred without there being a contract

Question 17

Formal acquisition of legal title

Creation or transfer

Answer 17

• the contract is executed by the vendor transferring title
  
  • Can also be known as ‘completion’ and is the stage at which the outstanding balance of the purchase price is paid* and *the purchaser takes possession of the land

Question 18

Formal acquisition of legal title

Registration

Answer 18

• After completion, the purchaser applies to be registered as proprietor of the estate
  
  • Legal title does not vest in the purchaser until registration.
  • Registration may take place some weeks of even months after completion or transfer
  • Not required in the case of short leases

Question 19

When does the purchaser acquire equitable rights in the land?

Answer 19

• As soon as there is a specifically enforceable contract, the purchaser acquires equitable rights in the land
  
  • A specifically enforceable contract for sale of land is itself a property right, known as an estate contract
  • A vendor-purchaser constructive trust arises on the entry of a specifically enforceable contract and continues until registration. Under the trust, throughout that time, the vendor holds the legal estate on trust for the purchaser

Question 20

Nature of the formal acquisition of land

Answer 20

• The formal acquisition of legal title is heavily regulated
  
  • Each stage of transaction has its own statutory requirements
  • This highlights the uniqueness and importance of land
  • Formality requirements make property rights visible by providing a record of them. They also serve a cautionary role in giving people cause to reflect before entering into complex transactions. Finally, there is an evidentiary function in the protection against fraud

Question 21

Contracts for sale of land

Answer 21

• The requirements for the sale or disposition of an interest in land are provide by s2 Law of Property (Miscellaneous Provisions) Act 1989. For a contract for sale of land to be valid, it must
  
  • Be in writing
  • Incorporate all the terms
    
    • In a single document signed by both parties, or
    • In each of two documents signed by one of the parties and exchanged
• No contract will exist unless and until the formality requirements are fulfilled

Question 22

Contracts to which s2 of the LP(MP)A applies

Answer 22

• All contracts for the creation or transfer of an interest in land
• This section does not apply to contracts which have land as their subject matter but do not have a disposing purpose, even if K has the effect of disposing land
• The option to purchase land consists of two stages
  
  • The option is granted
  • The option is exercised by the grantee – this does not involve entry into a new contract and no question of compliance with s2 arises

Question 23

Contracts by correspondence

Answer 23

• Under s40, it is possible for a contract of sale to come into existence through correspondence between parties
  
  • The correspondence provides the written evidence of the contract required by s40 MPA
• Contracts by correspondence are not possible under s2 [Commission for the New Towns v Cooper]
  
  • However, correspondence may produce a contract where it results in the creation of a single document signed by both parties
• In Green v Ireland, the court accepted in principle that a string of emails which contained the typed signatures of both parties could create a contract under s2

Question 24

The concept of exchange

Answer 24

• A valid contract may be created under s2 where separate documents are signed by each of the parties to the transaction and are then exchanged
• The concept of an exchange is characterised by the parties’ mutual intentions as regards the documents and formal delivery [Commission for the New Towns v Cooper]
• Exchange can take place by telephone [Domb v Isoz]
  
  • There is possible lack of evidence that the exchange took place in the event of a dispute
• Exchange can take place by post
  
  • Where post is used, exchange is sequential and does not take place until the second document to be dispatched has been received or posted [Eccles v Bryant and Pollock]
• Exchange takes place as soon as the solicitors agree during the conversation that it has done so
  
  • The contract exists from this point, even if paper documents are later physically exchanged

Question 25

The definition of ‘signed’

Answer 25

• Signature is not confined to a “**wet ink” signature on a piece of paper [Firstpost Homes v Johnson]
• In relation to s2, a types name at the end of an email is a ‘signature’ [Green v Ireland]
  
  • However, the name of a sender of an email which is automatically inserted into the header is not a signature as it had not been inserted to give the document authenticity [J Pereira Fernandes SA v Mehta]

Question 26

Effect of non-compliance with s2 LP(MP)A

Answer 26

• The effect of non-compliance with s2LP(MP)A is that there is no contract
• There is a limited period within which the validity of a contract can be raised
  
  • Once land has been transferred, the court will not permit the validity of the transfer to be challenged for non-compliance of the contract with s2
• Non-compliance with s2 will prevent the enforcement of any aspects of the parties’ agreement that remain executory

Question 27

Collateral contracts

Effect of non-compliance with s2 LPMPA

Answer 27

• One of the requirements of s2 is that the contract for sale of land contains all of the terms agreed by the parties
  
  • If a term is omitted, there is no contract, even where there is a written and signed document
• S2 does not prevent parties from entering a composite transaction, consisting of a contract for sale of land and other, separate or collateral, agreements
• Whether a term is part of a contract for sale of land is a question of fact [Keay v Morris Homes]

Question 28

Rectification

Effect of non-compliance with s2 LPMPA

Answer 28

• The possibility of rectification is referred to in s2(4) LP(MP)A, which confers the court discretion to determine the time at which the contract comes into being
  
  • This enables the court to take into account the possible effect of rectification on third parties who enter a transaction between the date of the of the original contract (void at the time for non-compliance with s2) and the court’s decision to rectify the agreement
• Rectification may be awarded where there is a prior agreement or common intention to contract on specified terms*, and *convincing proof that the written agreement does not reflect those terms [Josceleyne v Nissen]
• Rectification may also be available in cases of unilateral mistake, but only where the party not mistaken has acted unconscionable [George Wimpey v VI Construction]
• Rectification will he refused where a term is deliberately omitted from the agreement, even where both parties mistakenly consider the document to be a valid contract in the absence of the agreed term [Oun v Ahmad]

Question 29

Contracts creating rights between parties

Answer 29

• The contract creates a legally binding obligation between the parties
• The contract is executed by the vendor and creates or transfers the property right

Question 30

Necessary formality requirements for creation or transfer of rights

Answer 30

• The formality requirements necessary are provided in s52 and s54 LPA
  
  • S52: save in exceptional cases, the creation or transfer of a legal right requires the execution of a deed. The effect of non-compliance is that the legal title does not pass
  • S54(2); there are no formality requirements to create a legal lease of three years or less, where the lease is granted at market rent, without a premium and takes effect in possession

Question 31

Registration

Voluntary and compulsory registration

Answer 31

• Possible under s3 LRA
• The scope of registration of title is outlines in s2 LRA
  
  • Compulsory registration under the Act extends to freehold title and leases of more than 7 years’ duration [LRA s2(1a)].
  • Leases of this duration cannot be registered, although leases more than 3 years’ duration can be recorded on the title of the estate out of which the lease was granted as a means of preserving their priority on a transfer of the landlord’s estate

Question 32

Compulsory first registration

Answer 32

• Unregistered land is subject to compulsory first registration of title
• First registration will take place on the occurrence of one of a number triggering events (s4 LRA)
  
  • Transfer by sale
  • Gift of a freehold or of a lease with more than 7 years’ remaining duration
  • Grant of a new lease of more than 7 years’ duration
• Where compulsory first registration is triggered, failing to register within the statutory timescale (s6 LRA) is that the transfer becomes void as regards the transfer of legal title (s7 LRA)
• In the absence of an event triggering compulsory first registration, an unregistered freehold title and an unregistered lease (with more than 7 years’ remaining duration) can be registered voluntarily (s3 LRA)

Question 33

The register

Answer 33

• Where a title is registered, it is entered on the register with a unique title number
• On first registration, a freehold estate is registered with absolute, qualified, or possessory title
  
  • Absolute title vests the estate in the proprietor subject principally to burdens on the register and overriding interests (s11(3-5) LRA)
  • Qualified title may be awarded where there is a possible defect in the applicants title
  • Possessory title may be awarded where there is insufficient documentary proof in the applicants title
• Leases may also be registered with absolute, qualified and possessory titles, which have an analogous effect to those grades of freehold title, with additional provisions in s12(4) LRA that they are subject to covenants, obligations and liabilities in the lease

Question 34

Disposition of registered titles

Answer 34

• Once a title has been brought onto the register through voluntary or compulsory first registration, subsequent dealings must be completed by registration
• Certain dispositions of registered estates do not operate at law until registration (s27 LRA)

Question 35

E-conveyancing

Answer 35

• Enables transfers or dispositions of land to become electronic transactions, which would thus close the registration gap (where legal title is held on trust for the purchaser through the vendor-purchaser constructive trust because legal title does not reach the purchaser until registration)
• Aims to prevent equitable intervention because instead of a disposition having no effect at law until registration (s27(1) LRA), in the scheme of e-conveyancing a disposition only has effect on registration

Question 36

Concerns with e-conveyancing

Answer 36

• There are concerns that e-conveyancing will exacerbate the risk of conveyancing fraud
• There are unresolved legal issues surrounding the possibility of parties to the transaction delegating their authority to sign a conveyancer
  
  • There is a concern whether a transaction signed by a single conveyancer on behalf of joint owners will trigger the overreaching mechanisms

Question 37

Requirements of a deed

Answer 37

LP(MP)A

• S1(2a): valid if clear on the face of the document that it is intended as a deed by the person making it
  
  • It must say “deed”
• S1(3a)(i): must be signed by the executor of the deed in the presence of a witness who attests the signature
  
  • Shah v Shah: Deed involving a primes to pay £1.5m. When sued on deed, D argued that not valid because the witness had signed after the executor. The CA applied estoppel – as it was peculiarly in the knowledge of the signatory that no witness was present, but the deed presented to C as if it had been properly attested
    
    • You cannot claim something is invalid if you are responsible for the invalidity
    • Pill LJ: “failure to comply with the additional formality of attestation should not permit a person to escape the consequences of an apparently valid deed he had signed, representing that he had done so in the presence of an attesting witness, merely by claiming that in fact such witness was not present at the time of signature”
    • The party executing the deed will be estopped from seeking to invalidate it on the basis that attestation did not in fact take place
• A deed takes effect when it is “delivered as a deed [s1(3b)]”

Question 38

Failed deed

Answer 38

• A failed deed may operate as a contract
• Parker v Taswell: “yet there is nothing in the Act to prevent [the seal] being used as an agreement, though void as a lease because not under seal”
  
  • If the document does not say deed on it, and thus fails to comply with s1 LPMPA, but has all the terms and conditions and is signed by both parties, it is a contract (s2 LPMPA). If this is true, equity (using the principle from Walsh v Lonsdale) will perform that contract in equity and gives an equitable lease

Question 39

Express trust in land

Answer 39

• An express trust is one created by the actual intention of the settlor
  
  • It must be “manifested and proved by some writing signed by some person who is able to declare such a trust or by his will [s53(1b) LPA]”

Question 40

The vendor-purchaser constructive trust

Answer 40

• Where a purchaser enters a contract for the sale of land, the vendor will hold the land on a constructive trust for the purchaser before legal title has passed
  
  • This arises even if the vendor wishes to carry out the agreement; it does not depend on the vendor seeking to renege and so does not depend on unconscionability
• The CT is grounded on the equitable maxim that “equity treats as done that which ought to be done”
• Contracts for the sale of land are specifically enforceable in equity, so equity treats it as having been performed immediately and the vendor holds the property on trust by the operation of law
• The trust’s purpose is an equitable mechanism to protect purchaser interests
• In the absence of exceptional circumstances is that a court will use specific contract to ensure that A completes the promised transfer of A’s legal estate in the land to B
• The existence of a contract binding A to make a transfer of a property right in land to B is another means by which B can acquire an equitable property right in land
  
  • The contract imposes a duty on A which relates to a specific property right of A
• This trust shares the same basic qualities as other means of acquiring equitable interests

Question 41

The doctrine of anticipation

Answer 41

• The vendor-purchaser constructive trust depends on the doctrine of anticipation [Walsh v Lonsdale]
• Where A is under a duty to grant B a recognised property right, equity can ‘anticipate’ that grant by regarding B as already having that right
• This doctrine can give rise to a trust: in Walsh v Lonsdale it gave rise to an equitable lease

Question 42

Limits on the doctrine of anticipation

Answer 42

• Applies only where A’s duty is to give B a recognised property right in specific land
• The doctrine only applies where A is under a duty to B