Estates in land and the Land Registration system

Question 1

History of land ownership

Answer 1

• Land law as we know it evolved from the Norman Conquest in 1066, which introduced the rule that all land in England and Wales belongs to the Crown as sovereign.
• It is technically incorrect to say we ‘own’ a piece of land. What we own is a right in the land.

Question 2

Key legislation relating to land

Answer 2

Law of Property Act 1925 (LPA) - radically overhauled land law.

Land Registration Act 2002 (LRA) - governs the system of land registration, a national record of land ownership in England and Wales.

Question 3

Actions in rem vs actions in personam

Answer 3

• All of land in England and Wales is owned by the Crown.
• In ordinary language, we refer to the person who owns the strongest right, the freehold estate, as the owner of the land.
• Historically, the court allowed a claimant dispossessed of his land to recover it and have it returned. The claimant did not have to settle for damages as a remedy.
• This type of action is known as a real action, or an ‘action in rem.’
• Action in rem was available to someone who technically was not the true owner of the land (the Crown owns the land); it was available to the freeholder
• As the result of this, the subject of some real actions i.e. land then became classed as ‘real property’
• Other forms of property were classed as personal property. If the owner of personal property e..g a watch is deprived of it, they can still bring an action in rem to recover it
• An action in rem for personal property is only available to the true owner. A non-owner has an action in personam only; usually compensation in damages.

Question 4

Personal property

Answer 4

• Also known as chattels.
• A leasehold estate is classified as personal property. Historically, a dispossessed tenant could only obtain damages and was not entitled to return of the land over which he had a lease. This is no longer the case; in modern land law, the leasehold state is treated in the same way as real property and can be recovered by an action in rem.
• Chattels can be further divided into choses in possession (tangible items) and choses in action (intangible items)

Question 5

Types of right in land

Answer 5

• Rights to possession
• Rights to use the land
• Rights to restrict what can be done on the land
• Rights to buy the land

Question 6

Importance of the distinction between proprietary rights and personal rights

Answer 6

1) The remedy available - all real property and leases are proprietary rights in the land, meaning they can be recovered by an action in rem. If a right of way exists as a proprietary right, the holder of it can recover it if they are deprived of it. A personal right in land can only be recovered by an action in personam. If a right of way is simply a personal right, the holder can only recover damages.
2) A proprietary right is capable of binding third parties - e.g. new owners of the land burdened by the right, generally new freeholders. A personal right can only bind the original parties.

Question 7

How to determine if something is a personal or proprietary right

Answer 7

• There is a fixed list of rights capable of being proprietary, but they are not written definitively anywhere, rather in a number of statutes and case law judgments.
• Just because a particular use of land has been recognised as having proprietary status on the list, does not mean the actual right under consideration will definitely have proprietary status; it depends on the circumstances.
• Certain recognised proprietary rights have substantive characteristics that must be met. These characteristics differ depending upon the right in question.
• Systems have developed by which proprietary rights in land must be made apparent in registration if they are to bind a purchaser of subsequent rights in the land.

Question 8

Proprietary rights discussed on the course

Answer 8

• Freehold and leasehold estates (proprietary rights of possession)
• Trusts of land
• Estate contracts
• Restrictive covenants
• Mortgages
• Easements

Question 9

What are the two estates in land?

Answer 9

• Freehold estate

- Leasehold estate

Question 10

Characteristics of the freehold estate

Answer 10

• Fee simple absolute in possession
• Equivalent to absolute ownership of the land
• Lasts indefinitely
• LPA 1925, s 1(1)(a)
• A piece of land will be subject to only one freehold estate.

Question 11

Characteristics of the leasehold estate

Answer 11

• ‘Term of years absolute’
• More commonly known as a lease; if you own one of these estates you are a tenant
• Lasts for a certain duration
• LPA 1925, s 1(1)(b)
• Granted out of the freehold estate, and a piece of land can be subject to more than one of these estates

Question 12

Three stage process of a sale of a freehold

Answer 12

(1) Exchange of contracts
(2) Completion of the deed
(3) Registration

Question 13

Sale of freehold - (1) Exchange of contracts

Answer 13

• Voluntary
• Must comply with the requirements in LP(MP)A 1989, s 2
• When the contracts are exchanged, the parties become contractually committed to proceed with the sale.
• This stage is not necessary to legally transfer land.
• This is the stage at which the buyer pays a deposit.

Question 14

Sale of freehold - (2) completion of the deed

Answer 14

• The deed is compulsory in order to transfer the ownership (LPA 1925, s 52(1))
• The deed must comply with LP(MP)A 1989, s 1
• This stage is when the legal title of unregistered land passes to the buyer
• This stage is when the buyer pays the purchase money and collects the keys

Question 15

Sale of freehold - (3) registration

Answer 15

• The deed must then be registered at the Land Registry for the buyer to be recognised as the new legal owner of the land (LRA 2002, s 27(2)(a) and s 27(1))
• This is when legal ownership of the land passes to the buyer

Question 16

What is a lease?

Answer 16

• Created when one person with an estate in land (the landlord/lessor) grants the temporary right to another person (the tenant/lessee) to use and enjoy that land exclusively.
• May be granted for weeks/months/years
• Can be residential or commercial
• A recognised proprietary right in the land (LPA 1925, s 1(1)(b)), known as a ‘term of years absolute’ and defined in LPA 1925, s 205(1)(xxvii)

Question 17

What is a licence?

Answer 17

• Simply confers a personal right to be on someone’s land

- A licence justifies what would otherwise be a trespass.

Question 18

Key differences between a lease and a licence

Answer 18

• Lease is a proprietary right in land; licence is a personal permission to be on someone’s land.
• Lease is capable of being enforced against third parties; licence can only be enforced against the grantor
• A tenant can sue a third party for nuisance or trespass; a licensee is not entitled to sue a third party for nuisance or trespass
• Lease can also confer security of tenure; a licence can have no security of tenure
• Lease enforceable in rem; licence enforceable in personam
• Tenants under leases receive various statutory protections; there is no statutory protection for licensees.

Question 19

Key case for determining lease v. licence

Answer 19

Street v Mountford
- In determining whether an agreement creates a lease or licence, a court in future would look at the substance, rather than the label.

Question 20

Requirements for a lease to exist

Answer 20

1) Certainty of term
2) Exclusive possession
- Payment of rent not essential (LPA 1925, s 205(1)(xxvii), Ashburn Anstalt v Arnold)

Question 21

Leases - Certainty of term

Answer 21

• The tenancy must be granted for a certain duration.
• If a certainty of term is not present, no lease will be found.
• Lace v Chandler - a lease ‘for the duration of the war’ failed for lack of certainty.

Question 22

Leases - Exclusive possession

Answer 22

The right to exclude all others from the property, including the landlord.

Question 23

Leases - Formalities

Answer 23

• The rules that must be followed to formalise the arrangement.
• Given the proprietary status of a lease, there is a high degree of formality that the parties must adhere to in order to create the legal estate.

Question 24

Two ways that certainty of term can be shown

Answer 24

1) A fixed term

2) A periodic term

Question 25

What is a fixed term?

Answer 25

• A fixed term exists where the maximum duration of the arrangement is known from the outset.
• Once a fixed term lease is created, neither party can unilaterally bring the lease to an end earlier unless there is a break clause present in the lease.

Question 26

What is a periodic term?

Answer 26

• Technically a lease for one period.
• In practice, this is generally weekly/monthly/quarterly/yearly, which goes on extending itself automatically until either landlord or tenant give notice to quit (to terminate the tenancy).

Question 27

Two ways a periodic term can be created

Answer 27

(1) Express periodic tenancy - where there is a written agreement documenting the agreement
(2) Implied periodic tenancy - where there is nothing set out in writing, but the certain term arises by looking objectively at all the relevant circumstances including payment and acceptance of rent on a periodic basis.

Question 28

Implied periodic tenancy - case

Answer 28

Prudential Assurance Co Ltd v London Residuary Body

• A piece of land was sold to Greater London Council. It was leased back to the seller on a lease which was to continue until the land was required by the council for road widening purposes. On the abolition of the GLC, the freehold passed to LRB. The LRB had no authority to create roads but served six months notice bringing the lease to an end.
• HoL held that the arrangement was for an uncertain period at the outset and was therefore not a lease. However, the court did say that the land was held under a yearly periodic tenancy that had arisen by virtue of the tenant’s possession and payment of rent by reference to a year.
• The ‘term’ of the periodic tenancy depends upon the period by reference to which the rent is calculated, not the intervals at which it is payable.

Question 29

When will an occupier have exclusive possession?

Answer 29

• A question of fact in each case.
• The substance of the agreement has to be examined along with the facts.
• The court will look at the reality of the situation; if a clause appears to defeat exclusive possession but has been inserted into the lease only to make what would otherwise be a lease appear to be a licence, it will be thrown out as a sham clause.

Question 30

Scenarios that may indicate that an occupier does not have exclusive possession

Answer 30

(1) The landlord retains a key
(2) The landlord provides services
(3) There is a sharing clause

Question 31

Exclusive possession v. exclusive occupation

Answer 31

Exclusive possession is not to be confused with exclusive occupation. Multiple occupiers are capable of having exclusive possession together if they can show certain conditions exist.

Question 32

Exclusive possession - retention of a key

Answer 32

• The purpose for which the key is retained is what matters.
• If they key is used only in an emergency or by arrangement, then exclusive possession may still exist.
• The courts will look at whether any right of access the landlord has is restricted/unrestricted.
• If access is restricted e.g. just ‘to carry out repairs’ this seen more as acknowledgement of exclusive possession, rather than something that will defeat it (Street v Mountford)
• ‘There is no magic in the retention of a key’ (Aslan v Murphy)

Question 33

Exclusive possession - landlord provides services

Answer 33

• If a landlord provides attendance or services, there is a licence, not a tenancy (Marchant v Charters)
• Services include cleaning, changing linen etc
• The occupier is simply a lodger provided services are actually carried out.

Question 34

Exclusive possession - sharing clauses

Answer 34

• If a landlord reserves the right to share the property with the occupiers or reserves the right to introduce others to share, that may mean that there is no exclusive possession.
• All the circumstances must be looked at to see whether this is a genuine clause or simply a sham to defeat exclusive possession

Question 35

Exclusive possession - sharing clauses - cases

Answer 35

A G Securities v Vaughan - Occupants lived in a flat with 4 bedrooms and shared accommodation. At first they did not know each other, and they all signed separate agreements setting out the terms of the occupancy, containing different monthly payments and beginning at different times. The landowner reserved the right to introduce others. This arrangement was a sensible and realistic one, and so the occupiers did not have exclusive possession.

Antoniades v Villiers - The accommodation was a small attic flat with one bedroom. The occupants were a couple who signed separate agreements, which were identical. The agreements reserved a right for the landowner to introduce others to share. They also contained acknowledgements that the occupants did not have exclusive possession. HoL : ‘these clauses cannot be considered as seriously intended to have any practical operation or serve any purpose apart from…seeking to avoid the ordinary legal consequences’ so there was held to be exclusive possession.

Question 36

Sharing clauses - factors the court should consider

Answer 36

1) The size and nature of the accommodation
2) The relationship between the occupiers
3) The wording of the clause (e.g. how widely it is drafted; the wider it is drafted, the more likely it is a sham)
4) Whether the clause has ever been exercised (if it has not, this may indicate it is a sham)

Question 37

Importance of the lease v. licence debate for business tenancies

Answer 37

In the context of business arrangements, the result affects security of tenure as business tenants, but not licensees, are protected by the Landlord and Tenant Act 1954, entitling them to remain in the premises at the end of the lease term and request a new lease.

Question 38

Courts attitude to lease v licence in a business context

Answer 38

• Court tends to construe the document as a whole to see whether the landlord retains control over the property
• Courts are more prepared to accept the reality of the label ‘licence’ than they are in a residential context as there tends to be more equality in bargaining power, with commercial leases often negotiated and parties legally represented.

Question 39

Business lease v licence: Control

Answer 39

Esso Petroleum v Fumegrange Ltd - Esso could inspect Fumegrange’s business documents and books, inspect the premises to ensure compliance with operating standards, alter the layout and decor of the station, and make alterations and additions. The degree of control exercised by Esso over the premises and the way in which it was conducted was inconsistent with Fumegrange having exclusive right to possession of the service stations. The degree of physical control over the premises and conduct of business at the premises was held to be very significant.

Question 40

Business lease v licence: Right to relocate

Answer 40

Dresden Estates v Collinson - Dresden reserved the right to require Collinson to move into other premises owned by Dresden on giving notice. Held: ‘You cannot have a tenancy granting exclusive possession of particular premises, subject to a provision that the landlord can require the tenant to move to somewhere else.’

Question 41

Main situations where something that would otherwise be a lease is merely a licence

Answer 41

(1) Where there is no intention to create legal relations

(2) Where there is a service occupancy

Question 42

Lease v licence - no intention to cause legal relations

Answer 42

Facchini v Bryson -
Where there is a family arrangement, an act of friendship or generosity, it can be presumed that there is a lack of such intention, although this is not always the case.

Question 43

Lease v licence - service occupancy

Answer 43

Facchini v Bryson - likely to be no ICLR where there is an employer/employee relationship between the landowner and the occupier. Where the occupier is required to live in the premises for the better performance of his duties as an employee, there is no tenancy, even though a rent may be paid.

Norris v Checksfield - A lorry driver claimed a lease of the premises he was occupying as part of his job. No lease as it was a service occupancy; he required the premises for the better performance of his job (he could do late night/emergency deliveries on short notice)

Royal Philanthropic v Country - A teacher who was occupying a house near the school where he taught claimed he had a lease. He had a lease (there was no service occupancy) because the occupation did not enable him to perform his duties better as a teacher and was simply a perk of the job.

Question 44

Formalities required for a lease

Answer 44

• Depends on the length of term of the lease
• General rule: to create a legal lease, a deed must be used (LPA 1925, s 52)
• The requirements of a valid deed are set out in LP(MP)A 1989, s 1
• If the term of lease is over 7 years, the lease must also be registered in accordance with the LRA 2002, s 27(2)(b)(i)
• This is a compulsory registration requirement. If it is not done, a legal leasehold estate will not have been created (LRA 2002, s 27(1))

Question 45

Formalities required for a lease - exceptions

Answer 45

• Certain short leases have no formal requirements, yet they still exist as legal leases. They need not even be in writing (LPA 1925, s 54(2))
• s 54(2) states that a lease with a term of 3 years or less need not be created by deed provided the following three conditions are met:
  (1) The lease takes effect in possession (i.e. the tenant takes the lease immediately)
  (2) The lease is granted at ‘best rent’ (interpreted as meaning ‘market rent’)
  (3) The lease is not subject to a fine or premium (there is no upfront payment for the grant of the lease)

Question 46

Types of arrangement which fall within the formalities exceptions for leases

Answer 46

(a) Short fixed term leases (maximum 3 years or less)
(b) Express periodic tenancies (where there is a tenancy agreement)
(c) Implied periodic tenancies (where an occupier is in possession and paying rent at regular intervals)
- Periodic tenancies, whether express or implied, will only fall within s 54(2) if each individual period of the tenancy is for 3 years or less.
- These short leases, whether created by deed or less formally under s 54(2), do not need to be registered to exist as legal leases, as they are under 7 years.

Question 47

Do you have to register an unregistered title?

Answer 47

No - you only have to do this if there is a transaction or event which triggers compulsory registration e.g. sale, mortgage, gift or assent (inheritance of land)

Question 48

Rationale behind the Land Registry system

Answer 48

Designed to simplify and cut down costs of conveyancing, while allowing for a complete record of matters relating to land.

Question 49

How does land registration work?

Answer 49

• When a piece of land is registered for the first time, it is given a unique title number and the details of the land owner and rights that benefit or burden the land are recorded.
• The title plan (accurate plan of the property) is created by the Land Registry
• State indemnity scheme pays compensation to anyone who suffers as a result of a mistake made by the Land Registry
• Land Registry documents are known as the Official Copy

Question 50

How is unregistered land recorded?

Answer 50

• The title information is not contained in the Land Registry Official Copy but in various old paper title deeds
• A buyer of unregistered land would have to search through these to ascertain the relevant details

Question 51

Disadvantages of unregistered land

Answer 51

• Examining title deeds is essential and old documents might be difficult to read or the deeds might be missing due to fire/loss
• It is difficult to discover third party interests, where documentation is held by the right holders themselves rather than a centrally administered authority
• There might not be a plan of the property
• No state guarantee of accuracy/compensation for error
• Conveyancing process may be slower and incur more expensive legal fees.

Question 52

Advantages of registered land

Answer 52

• Simpler; no need to investigate multiple deeds
• Once a person is registered as the title owner, that ownership is guaranteed by the State
• A copy of the registered title can be downloaded easily and quickly, and reduces the risk of fraud
• Each registered title has a title plan which evidences the full extent of the property and its boundaries

Question 53

Compulsory land registration

Answer 53

• Each time unregistered land is sold for the first time since 1 December 1990, it must be registered
• This is known as the first registration
• It has only been compulsory to register changes of ownership following death/gifts of land since 1 April 1998
• LRA 2002 s 3 allows for voluntary registration of unregistered land and the Land Registry offer reduced registration fees for this
• LRA 2002 s 4 (first registration) and LRA 2002 s 7 (transactions involving already registered land) give a number of circumstances which trigger compulsory registration

Question 54

Compulsory land registration for unregistered land - triggering events

Answer 54

Under s 4 LRA 2002:

• Transfer of the freehold estate by sale, gift or court order
• Grant of a lease for a term of more than 7 years
• Assignment (transfer) of a lease of unregistered land with more than 7 years left to run
• An assent, vesting assent or vesting deed which is a disposition of the freehold or leasehold with more than 7 years left to run (mainly refers to transfers on death)
• The grant of a lease to take effect in possession more than 3 months after the date of the grant (future leases)
• A first legal mortgage of the freehold/leasehold with more than 7 years left to run.

Question 55

Land registration - the mirror principle

Answer 55

The principle that the register should reflect all matters that the property has the benefit of and all the burdens that the property is subject to.

Question 56

Issue for the mirror principle

Answer 56

• There are interests called ‘overriding interests’ that are capable of binding the property even though they are not registered on the title.
• The existence of ‘overriding interests’ being inconsistent with the idea of transparency has attracted criticism since the system of land registration was first established.
• They are retained by the LRA 2002, though their number has been vastly reduced. They are described in the Act as ‘unregistered interests which override registered dispositions’

Question 57

Example of an overriding interest

Answer 57

A legal lease that is granted for a term of 7 years or less; such leases do not need to be registered but will be binding on a new owner.

Question 58

Land registration - the curtain principle

Answer 58

• Register records the ownership of the legal estate in property, the legal title
• A property may be held on trust. The trustees are the legal owners, they hold the legal title. The beneficiaries’ interest in the land are not recorded on the register.
• These equitable ownership matters being kept off the register is called being kept ‘behind the curtain.’
• Reflects the ideal that the register should be the sole source of info for purchasers, and purchasers need only be concerned with legal ownership. This simplifies land conveyancing.

Question 59

Land registration - the insurance principle

Answer 59

• Accuracy of the register is guaranteed by the state
• If there is an error, the register will be corrected and anyone who has suffered a loss will be compensated (LRA 2002, s 3)

Question 60

What information does the Property Register contain?

Answer 60

• Freehold/leasehold (the nature of the legal estate)
• Address with reference to title plan
• Proprietary rights that benefit the land (e.g. property benefits from a right of way over another property)

Question 61

What information does the Proprietorship Register contain?

Answer 61

• Details of the owner of the legal estate
• The class of title e.g. title absolute, possessory title
• Any personal covenants given by the current owner to the former owner (most common being an indemnity covenant)
• Any restrictions on the owners ability to deal with the land e.g. a mortgage restriction preventing a sale without lender’s consent, or notification that the land is held on trust

Question 62

What information does the Charges Register contain?

Answer 62

• Mortgage(s)
• Burdens on the land e.g. restrictive covenants, positive covenants and easements over the land
• Notices
• Leases granted out of the title
• Basically any proprietary rights that burden the land

Question 63

Classes of title

Answer 63

• On first registration of a property, the Land Registry decides which class of title should be given to the property
• The class of title will be shown in the Proprietorship Register
• Both freehold and leasehold estates can be registered with either: an absolute title, a possessory title, or a qualified title.
• Leasehold estates may also be registered with good leasehold title.

Question 64

Absolute title

Answer 64

The best form of ownership. Most properties are registered with this class of title. The land is only bound by interests that are registered on the title or overriding interests.

Question 65

Qualified title

Answer 65

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. Very rare in practice.

Question 66

Possessory title

Answer 66

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, e.g. where there are no title deeds to prove ownership or the deeds have been destroyed. It is usually given to those with a claim under Adverse Possession or Squatters Rights. It may mean that third party interests created before the date of registration will bind the property even though they are not noted on the title.

Question 67

Good Leasehold Title

Answer 67

Granted where the Land Registry is satisfied as to the title of the leaseholder only and not the freeholder. Could be the case where the freehold is unregistered and the applicant fails to submit evidence of the freehold title when applying to register leasehold title.

Question 68

Transactions involving already registered land which must be registered i.e. the Land Registry must be notified of the transaction so the register can be updated

Answer 68

LRA 2002 s 7:

• Transfer of the freehold estate by sale, gift, or court order
• Grant of a lease for a term of more than 7 years
• Assignment (transfer) of a lease of unregistered land with more than 7 years left to run
• An assent, vesting assent or vesting deed which is a disposition of the freehold or a leasehold with more than 7 years left to run
• The grant of a lease to take effect in possession more than 3 months after the date of the grant (future leases)
• A first legal mortgage of the freehold or of a leasehold with more than 7 years to run

Question 69

What is the result of failure to register a transaction?

Answer 69

The transaction is not legally recognised (LRA 2002, s 27(1))