ESTATES AND INTERESTS IN LAND Flashcards
CAN LAND BE ‘OWNED’ IN ENGLAND
AND WALES?
An important point to understand about the concept of ‘land’ in English law is that land itself cannot be registered and owned. The Crown owns all land in England and Wales. Individual landowners hold ‘estates’ in their land derived
ultimately from the Crown.
FREEHOLD AND LEASEHOLD ESTATES
Under the Law of Property Act 1925, there are only two legal estates in land in the UK: a freehold estate (sometimes referred to as a ‘fee simple absolute in possession’) and a leasehold estate (also known as a ‘term of years absolute’)
freehold estate
It is an estate which is of indefnite duration.
leasehold estate
A leasehold estate, on the other hand, has a fixed maximum duration. This means that there is an ascer-tainable date on which the lease will come to an end. Common durations are six months, one year, 99 years, and 999 years.
COMMONHOLD
- Commonhold is a relatively new form of land ownership. It’s used (though rarely) with regard to fLats and commercial leases on business parks.
- Commonhold makes it easier to ensure that commonhold owners comply with obligations under positive covenants (such as a covenant to pay fees for shared services).
- A covenant is a promise to do or not to do something which relates to land. The rights and duties of the unit holders will be contained in a ‘Commonhold Community Statement’, and these rights and duties will beneft and bind successive unit holders.
- The commonhold is like a leasehold scheme in which a management company covenants to com-ply with maintenance obligations and provide services.
- The land will be registered as commonhold land and the owner of each individual unit (unit holder) will be a member of the ‘Commonhold Association’ and will be registered as
the** freehold owner of that unit**. - The Association will be a company limited by guarantee. The members of the company will be the unit holders, and the company will be registered as the freehold owner of the common parts.
creation of commonhold
Creation of a commonhold requires three conditions to be
fulflled:
*The freehold estate must be registered as a ‘freehold estate in commonhold land’;
*The land must be specifed in the Memorandum of a Commonhold Association as land in relation to which the Association is to exercise functions; and
*There must be a Commonhold Community Statement which makes provision for the rights and duties of the Association and of the unit holders.
estates in land
LEGAL INTERESTS AND EQUITABLE INTERESTS
Whilst there are only two legal estates in land, there are a number of other possible rights and interests in land. **These rights do not confer ownership of land but are instead rights over land **belonging to another. They may be either legal interests or equitable interests.
definition of legal interests
The interests that can exist at law are set out by statute.
Legal interests must generally be** created by deed**.
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types of legal interests
a.Mortgages
b.Easements
c.Rentcharges
d.Profts à Prendre
e.Rights of Entry
Mortgages
A mortgage is **a loan secured **against a property which entitles the lender to certain rights, including the right to sell the property if there is a default on the loan obligation secured by the mortgage.
Easements
An easement is a right which exists over a piece of land which benefts a diferent piece of land. The land over which the right is enjoyed is the ‘servient tenement’ and the land beneftting is the** ‘dominant tenement’**. An example of an easement is a right of way over someone’s land or a right to
use pipes crossing the land of another.
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Rentcharges
- A rentcharge is an interest in land requiring the landowner to make a periodic payment in respect of land to the rent-charge owner (who typically was a former owner of the land).
- A rentcharge cannot arise from a lease or tenancy and is not the same as a lease or tenancy.
- A rentcharge gives the rentcharge owner a right of entry, which means in the event of a default on the rentcharge, the rentcharge owner may enter the premises (that is, take possession of it).
EXAMPLE
A developer sells plots on a freehold estate but retains ownership and responsibility for common amenity areas on the development. To fund the maintenance on the common areas, the developer may reserve a rentcharge from each plot purchaser.
Profts à Prendre
- A proft à prendre is an interest in land enabling someone to take something from land of another (for example, timber or fish).
- There are two types of proft à prendre: in gross and appur-tenant.
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Proft à Prendre in Gross
1.Unlike an easement, a proft can exist independently of land and this is known as a proft à prendre in gross. This means that the proft can be exercised** for the personal benefIt** of the owner and can be bought and sold independently, and it is not attached to the ownership of any particular piece of land.
- The owner of the profIt might not own any land at all. For example, a person who does not own land might have a proft à prendre in gross to go onto another person’s land to collect peat.
- A proft à prendre in gross may be **substantively registered **at HMLR with its own title.
Proft à Prendre Appurtenant
A proft à prendre appurtenant is a proft in which the right
(for example, to take timber or fsh) is attached to a partic-ular piece of land in the same way as an easement. Such aproft cannot be registered at HMLR with its own title.
Right to Entry
Rights of entry enable the holder to go onto the land in certain circumstances. They are often included in leases and annexed rentcharges.
Definition of Equitable Interests
When there is an attempt to create a legal interest but deed formalities are not met, an equitable interest may still arise.
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Types of Equitable Interests
a.Equitable Mortgages
b.Restrictive Covenants
c.Positive Covenants
d.Estate Contracts
Equitable Mortgages
A legal mortgage must be created by deed. If parties fail to use a valid deed, the mortgage may still take efect in equity. To be a valid equitable mortgage, a contract for land is need-ed. A contract for land must be in writing, be signed by both parties, and contain all the agreed terms. If the failed deed satisfes these requirements, it can constitute a contract for
land.
Restrictive Covenants
Under contract law, a contract generally binds only the parties to it and can be enforced only by those same parties. This is the doctrine of ‘privity of contract’. In a land law con-text, it is important to know whether an obligation attached to land (a covenant) can be enforced only between the original contracting parties, or by subsequent owners of the parcels of land. If a covenant is negative in nature, it may be possible for the covenant to be enforced against a later owner of the burdened land.
Positive Covenants
Covenants can also be positive in nature, for example, it is common to fInd an obligation on a landowner to fence aboundary and to maintain it thereafter, or an obligation to contribute to the costs of repair of a shared road. However, such covenants might not be enforceable against successors intitle.
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Estate Contracts
- When a person enters into an agreement (that is, a contract) to buy land, the person is deemed to have an equitable inter-est in that land from the date of the contract.
- Note that a person having an option to purchase land or a right of pre-emption is also deemed to have such an equitable interest. Estate contracts require a valid contract for land to be created
Exam Tip
Note that a number of legal and equitable interests can exist in land at the same time. These are called** ‘con-current interests’.** The solicitor acting for a buyer of the property must make himself aware of all these interests and be able to distinguish between those which will affect his client and those which will not.
FORMALITIES FOR CREATION OF LEGAL AND EQUITABLE INTERESTS
- Valid deed
- valid contract
- other formalities
valid deed
A deed is required to create and transfer most legal interests and estates in land (subject to the exceptions of short legal leases and implied legal easements discussed later). To cre-ate a valid deed, the document must:
*Be in writing;
*State on its face that it is a deed;
*Be signed by the grantor in the presence of a witness who attests their signature (that is, signs to indicate they have witnessed the grantor’s signature); and
*Be delivered (meaning, showing an intention to be bound by the deed, usually by dating or sealing the document).
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Valid Contract
Contracts for land are used to create the following equitable interests:
*Failed legal interests (for example, if the formalities of a deed were not met);
*Estate contracts (including contracts for the sale of land, options to purchase, and rights of pre-emption);
*Equitable mortgages; and
*Equitable leases
Requirements for a valid contract
To be valid, a contract for the sale of land or an interest in land must meet the general requirements for a contract (an agreement—that is, an ofer by one party and acceptance by another, consideration, intention to create legal relations, and parties with legal capacity—that is, parties over the age of 18 and of sound mind). In addition, the contract must:
*Be in writing
*Include all the terms to which the parties have agreed; and
*Be signed either by all the contracting parties or by someone who has their written authority.
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Other Formalities
- Some equitable interests can be created without entering an estate contract. For example, covenants and equitable easements require only a writing signed by the grantor.
- And expressly created benefcial interests under a trust require
only evidence in writing signed by someone else to declare the trust. - Finally, benefcial interests under an implied trust have no formal requirements at all.
Proprietary Estoppel
Sometimes, it would beunconscionable to permit a party to gain or lose an advantage and proprietary rights, owing to a lack of formalities. Thus, in rare circumstances, if it would be unconscionable for the holder of title to refuse the claimant’s entitlement, proprietary estoppel can intervene to grant the claimant an appropriate remedy.
Conditions for Proprietary Estoppel
There must be an assurance that the claimant would have an** interest in land. An assurance relating to benefts other than an interest in land, for example, a promise of money, will not be suffcient. Assurances can be active or passive.
*The claimant must show reasonable reliance on the assurance, meaning they must have changed their be-haviour because of the assurance.
*The claimant must have acted to their detriment, which could take many forms, such as spending money on the land, working on the land, or refusing other employment.
*It must be unconscionable** to permit a party to gain or lose proprietary rights, having regard to all the circum-stances.
