Land Law

Question 1

how much of the airspace above a property does the landowner own?

Answer 1

landowner’s rights only extend to a height needed for ordinary use and enjoyment

Question 2

what is the general rule with fixtures and chattels (if not contracted out of)

what is the two stage test for determining fixture or chattel?

Answer 2

fixtures pass with the land, chattels = personal property so do not pass with the land

degree of annexation - creates a presumption which can be affirmed or rebutted by the purpose of annexation

Question 3

fixture or chattel?

firmly affixed to the land for the purpose of better enjoyment

ornamental objects

free standing cooker / built in hob and cooker

kitchen units

items installed by a builder e.g. tiles

bathroom fittings (e.g. wash basin)

light fittings attached by screws

gas fire connected purely for to function as a fire

objects that improve the architectural design of the property

mobile home

pictures especially made for a specific room

dilapidated greenhouse which is likely to collapse if moved

Answer 3

chattel

chattels

free standing = chattel / built in = fixture

kitchen units = fixture

builder = fixtures

bathroom fittings = fixtures

light fittings attached by screws = chattels

gas fire to function as a fire = chattel

chattel

fixture = part of the design of the room

greenhouse = fixture - couldn’t be removed without its deconstruction

Question 4

what is the main difference between a freehold estate and a leasehold estate

Answer 4

freehold = estate can last forever
leasehold = estate lasts for a specific period but not forever

Question 5

what are the two types of leases?

what is the difference between them?

Answer 5

fixed term lease - certain amount of time

periodic lease - keep renewing until landlord or tenant terminate by giving notice

Question 6

what is a commonhold

Answer 6

form of freehold tenure

gives a buyer a freehold interest in their flat or house with communal areas being managed by a commonhold association run by commonhold owners

Question 7

what are the two ways in which an express trust can be created

Answer 7

(a) self- declaration – here the settlor retains the legal title to their property but declares that they hold the property as trustee for the benefit of another person (the beneficiary); or

(b) declaration plus transfer – the settlor declares a trust and transfers legal title to their property to the trustees who hold the property for the benefit of the beneficiaries.

Question 8

what are the two types of implied trust?

Answer 8

1. resulting trust = A person, who is not the legal owner, contributes directly to the purchase price of the property. The person acquires an interest proportionate to their contribution.
2. constructive trust = An interest in land is created when a person, who is not the legal owner of the property, makes a contribution to the property other than a direct financial contribution at the time of the purchase. This can include contributing to the mortgage payments or making substantial improvements to the property.

Question 9

would the following be classed as detrimental reliance on an agreement for the purposes of creating a constructive trust?

• Paying for improvements to the house out of their own money
• Paying all of the household bills to allow the legal owner to pay the mortgage
• Working unpaid in the legal owner’s business.

what will not be seen as detrimental reliance?

Answer 9

yes

The detriment must be linked to the agreement and not related to any other motive, such as love and affection.

Question 9

Any attempt to convey a legal estate to a minor operates ____________

Answer 9

as a declaration of trust that the land is held in trust for the minor

Question 9

max number of trustees?

what happens where this is exceeded?

Answer 9

4

the first four named adults = trustees

Question 10

explain the powers / constraints of trustees

Answer 10

they have all the powers of an absolute owner

duty to consult the beneficiaries - only to beneficiaries of full age and who have an interest in possession (entitled to an immediate interest in the land)

trustees must comply with the wishes of the beneficiary (in case this is disputed - act in accordance with the majority in according to the value of their combined interests)

Question 10

how can co-owners of land go about selling their land?

what happens when the co-owners are in dispute with one another?

Answer 10

all trustees must sign a deed

s14 TLATA order to determine how a trustee should be functioning and the extent of different parties rights in land

s15 TLATA = factors the court should consider:
(a) the intentions of the person or persons (if any) who created the trust;
(b) the purposes for which the property subject to the trust is held;
(c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home; and
(d) the interests of any secured creditor of any beneficiary - usually given the most weight, other than where children are involved

and the wishes of any beneficiaries of age

the above is a non-exhaustive list

Question 11

what is the test for the creation of a constructive trust as set out by Lord Bridge in Lloyds Bank v Rosset

Answer 11

constructive trust = implied trust

1) agreement (at the time of purchase or subsequent to it) + detrimental reliance (or altering your position based on the agreement)

2) conduct + direct financial contribution

Question 11

beneficial co-owners of land can have their equitable interests either as joint tenants or tenants in common, how is this determined?

Answer 11

legal estate = joint tenants

equitable interests = JTs or TICs

equity follows the law = creates presumption of JTs

all four unities should be present if JTs = possession (JTs and TICs have this) (TICs don’t have) the same interests and title and given at the same time

if all four unities = JT presumption persists but can be rebutted if:

express declaration the trust is meant to be TICs

there are words of severence (severence transfers JTs to TICs)

finally does equity intend for it to be JTs or does it fall under an exception - businesses usually TICs / where the contributions of one owner far exceeds that of the other)

Question 12

if there is no declaration of trust under s1 TLATA, how else might there be a trust?

Answer 12

implied trust

Question 13

how may the equitable interests in a joint tenancy be severed?

what is the impact of this?

Answer 13

formally - by express declaration

OR

informally through acts of severence:

i) alienation - unilateral act disposing of the equitable interest e.g. via sale, gift, lease or mortgage
ii) mutual agreement (act together either expressly or impliedly where the land is dealt with in such a way that would sever)
iii) course of dealing - the parties act in a way that shows they regard their interests as separate (so TICs)

bankruptcy - form of involuntary alienation
homicide
money management after acquisition

the equitable interest severed becomes a TIC. the remaining equitable interests remain JTs

Question 14

what is the different between an easement and a profit a prendre

Answer 14

easement - landowner can make use of a part of land for the benefit of their land

profit a prendre - right to go onto someones land and remove something that exists there naturally

Question 15

how is co-owned land sold?

Answer 15

all trustees must sign a deed

if it is disputed:

S14 TLATA order - trustees function and extent of each persons rights

S15 - factors to consider :

the intention of the person that created the trust (if someone did create the trust)
the purpose of the property to which the trust is held
minors
bankruptcy

Question 16

for an easement to be legal it must be granted for ___________ or __________ but not ________

Answer 16

forever or a set number of years

never an uncertain duration

Question 17

what did Re Ellenborough Park say?

Answer 17

set out the characteristics required for an easement

1. There must be a dominant and a servient tenement.
2. The easement must accommodate the dominant tenement.
3. The dominant and servient tenements must not be both owned and occupied by the same person.
4. The easement must be capable of forming the subject matter of the grant.

Question 18

do the dominant and servient land need to be next to each other?

Answer 18

do not need to join each other, but they
should be close enough to establish a connection between the two

Question 19

what is meant in the second stage of the Re Ellenborough Park test - the easement must accommodate the dominant tenement?

Answer 19

it must benefit the dominant land (not the dominant landowner)

e.g. does it improve the marketability of the land

if a right benefits a business, it will benefit the land if the business is connected to the use of the land

Question 20

will erecting a sign benefit the dominant land (stage 2 of the Re Ellenborough Park rules)?

Answer 20

in Moody v Steggles the sign was on the servient land and directed customers to the business

Question 21

in which circumstances would a quasi-easement become an easement?

Answer 21

if the land is partitioned - you cannot have an easement over your own land

Question 22

what happens if a dominant and servient land come back into common ownership?

Answer 22

any rights granted over the land in the form of easements are extinguished - doversity of ownership of the land is required

Question 23

what is meant by “The easement must be capable of forming the subject matter of the grant”

Answer 23

there must be a capable grantor - must be over 18 own the legal estate + grantee - you cannot grant rights to a village because the group is too vague and fluctuating

(a) An easement must be capable of reasonably exact definition.

(b) An easement must not involve any expenditure by the servient owner.

(c) An easement must not be so extensive as to amount to a claim to joint possession of the servient tenement.

(d) The law is very cautious when it comes to a claim for a new type of negative easement.

Question 24

are you able to grant an easement for the right to light?

Answer 24

there is no general right to light

the person claiming the right to light would need to show an infringement of the following :

basically the level of light coming through windows would not be sufficient for the comfortable use of the building bearing in mind the building’s bearing and locality

Question 25

can you grant an easement for a scenic view?

Answer 25

no

Question 26

can you grant an easement for recreational purposes?

Answer 26

the right to use a communal garden = easement in Re Ellenborough

right use leisure and sporting facilities = easement (Diamond matter)

Question 27

is a servient tenement obliged to maintain and repair to enable the dominant tenement to enjoy the easement

Answer 27

obligation is usually with the DT for repair and maintenance but:
-the ST should provide reasonable access to enable the DT to repair/maintain
- the ST will need to contribute to any costs of maintenance - Halsall v Brizell [1957]

except - boundary fences - Crow v Wood recognised a right to require the owner of adjoining land to keep the boundary fence in repair

Question 28

what does the court say in relation to a right to supply hot water being an easement?

Answer 28

not capable of being an easement as it forces the ST to spend money

Question 29

in which of the following would the courts be unlikely to grant an easement:

1) parking / storage where there is no limit on how many vehicles are parked/stored on the land and there is no limit on for how long

2) a Claimant who owned part of a shopping centre claiming there was an easement for customers to park in the shopping centre’s car park

Answer 29

1) because there was no limit on the amount of cars and for how long = amounted to joint ownership of the land = no easement

2) an easement would be granted provided the car park was sufficiently large

Question 30

what is the courts attitude towards exclusive possession being too intense to amount to an easement?

Answer 30

two approaches:

1) reasonable use

Batchelor v Marlow - Marlow had a right to park six cars on commercial land between 8:30am - 6pm Mon - Fri which covered the whole of the servient land

CoA decided the right was too intense to form an easement - the ST had no reasonable use of the land (he could not park in the spaces in the times he would likely need to, nor could he use the land for anything else - the parking covered the land)

2) possession and control test - remember only Privy Council

arguably a more lenient test (more likely to grant an easement applying this test)

it was argued that the test shouldn’t be reasonable use, but should instead be whether the servient land owner retains ‘possession and control’ of the land

Lord Scott noted that where rights to park were granted, the servient owner still retained the ability to build above or under the parking area.

Question 31

what is the courts attitude towards the creation of new easements?

Answer 31

new positive easements can be created and are usually done so by analogy to existing easements

the court are reluctant to recognised new negative easements

Question 32

will the court recognise an entitlement to an easement of television reception?

Answer 32

no - it would place an immense burden on the owner of the servient land if they wished to build and develop the land

Question 33

list the different ways in which an easement can be created

Answer 33

1. express grant/reservation
2. implied by necessity
3. implied by conduct
4. Wheeldon v Burrows
5. s62 LPA 1925
6. prescription

Question 34

what is required for the courts to create an easement under Wheeldon v Burrows?

what is the effect of finding all requirements under Wheeldon v Burrows?

Answer 34

only applies to grants not reservations

1) the existence of a quasi easement prior to sale

2) continuous and apparent

3) The right must be necessary to the reasonable enjoyment of the land sold (this is a lower bar than implying an easement via necessity - so if there is an alternative means of access but it is dangerous, the court will deem the easement necessary)

4) the right must be in use at the time of sale

turns quasi-easement into full easement

Question 35

how does s 62 LPA 1925 impact the creation of an easement? what is its role?

Answer 35

acts as a word saving provision

means that the buyer of a property is passed all the easements, rights and advantages that accompany the property, even if such provisions are not contained in the conveyance

case law has expanded the remit of section 62 so that it can now be used to create new easements

for example - Wright v MacAdam

Mr MacAdam (‘M’) let a flat to Mrs Wright (‘W’) for one week. She continued in occupation and subsequently M gave her permission to store her coal in his coal shed.

M then granted a new tenancy to W. No reference was made to the coal shed. M then demanded W should pay a weekly amount for the use of the coal shed. W refused.

The court found that when the lease was renewed, there was implied into the renewed lease an easement to store coal in the coal shed. All that was required was the existence of the right at the time the lease was renewed; s 62 automatically implied an easement of storage. The effect was to convert or uplift the permission/ licence given by M into a full legal easement.

Question 36

what are the conditions for section 62 LPA to operate?

Answer 36

1) There must be a conveyance as defined in s 205(1)(ii) LPA 1925. This requires an
‘instrument’, ie a written document that has the effect of creating or transferring a legal
estate. (not a contract for sale)

2) there to be diversity of ownership (except with easements to light and where the right has been continuous and apparent)

3) There must be an existing privilege at the date of the conveyance. Section 62 is not
concerned with future rights.

4) The right must be capable of being an easement or profit. If the right lacks the four essential characteristics of an easement in Re Ellenborough Park, s 62 will not cure the defect. However, the claimant does not need to demonstrate that the right is necessary for the reasonable use of the land.

Question 37

list the ways in which an easement can arise through prescription

Answer 37

1. common law
2. doctrine of Lost Modern Grant
3. Prescription Act 1832

Question 38

what is required for an easement to be created via prescription?

Answer 38

the dominant owner can show the use of the right for at least 20 years

it will be necessary to show that the right has been exercised by or on behalf of a fee simple owner against a fee simple owner

1) continuously and
2) as of right (without force, secrecy or permission)

Question 39

will a right which has been exercised for over 35 years 6-10 times, be classed a continuous use for the purposes of creating an easement through prescription

Answer 39

yes - the court considered this was reasonably regular use

Question 40

prescription will ________ under the Prescription Act 1832 if the user can prove uninterrupted enjoyment of the right for a 20 year period

no use for ___________ or ______ = interruption

Answer 40

succeed

one year or more

Question 41

are covenants legal or equitable interests in land?

Answer 41

equitable - They are not listed in s 1(2) LPA
1925

Question 42

what formalities are required to create a covenant?

Answer 42

because they are equitable = writing and signed (s 53(1)
LPA 1925) so can be created via a contract

common for covenants to be created by deed because they tend to be created when land is sold and are part of the transfer

Question 43

who are the parties to a covenant?

Answer 43

The original covenantor and the original covenantee are parties to a contract

Question 44

The burden of a restrictive covenant may pass in equity under the doctrine in Tulk v Moxhay, provided 5 requirements are satisfied.

What are the requirements?

Answer 44

(a) the covenant must be negative (restrictive) in substance;

(b) the covenant must, at the time of the creation of the covenant, have been made to benefit dominant land retained by the covenantee;

(c) the covenant must touch and concern the dominant land;
- 3 part test

(d) the covenant must be made with the intent to burden the servient land; and
- can be express or implied via s 79(1) LPA 1925

(e) the owner of the servient land must have notice of the covenant for it to bind them
- how notice is given depends on whether the land is registered / unregistered

Question 45

in order for there to be a valid restrictive covenant, 5 things must be present (according to the doctrine in Tulk v Moxhay).

The third = ‘the covenant must touch and concern the dominant land’

what is meant by this

Answer 45

(i) a ‘touching and concerning’ covenant must benefit only the dominant owner for the time being, so that, if separated from their land, it ceases to be advantageous to them;

(ii) the covenant must affect the nature, quality, mode of user or value of the land of the dominant owner; and

(iii) the covenant must not be expressed to be personal (ie must not have been given only to one specific dominant owner).

Question 46

The burden of the covenants cannot run at _____________________ however they may run in _______ if the requirements in [case] are met.

Answer 46

the burden of the covenants cannot run at common law however they may run in equity if the requirements in tulk v moxhay are met.

Question 47

Positive covenants cannot run with the land, either at common law or in equity, and are therefore not enforceable against a successor in title to the covenantor.

There are three devices which developed at common law which enable positive covenants can be enforced
against successors in title of the servient/ burdened land (either directly or indirectly):

Answer 47

• Create a lease
• both restrictive and positive covenants are binding on a successor in title to a tenant
• but less attractive than the purchase of freehold land because has to be a fixed duration rather than lasting forever like the freehold estate
• Indemnity covenant (indirect method of enforcement)
• The doctrine of mutual benefit and burden – Halsall v Brizzell
• a person who wishes to take advantage of a service/ facility which benefits their land must also comply with any corresponding obligation e.g. the costs of maintaining the facility
• two pre-conditions

Question 48

what are the two conditions are required under the doctrine of Halsall v Brizell in order for the positive covenant to be enforceable?

Answer 48

(i) There must be a clear correlation between the benefit and the linked burden; and

(ii) The covenantor’s successors in title must have the opportunity to elect whether to take the benefit (and accept the related burden) or to renounce it (and escape the related burden).

Question 49

how is the doctrine of Halsall v Brizell different from the other methods of enforcement of positive covenants (e.g. lease + indemnity covenant)?

Answer 49

the doctrine is not actually a direct method of enforcement

instead it enables the owner of the benefited land to prevent the exercise of the rights if the costs of maintenance have not been paid

Question 50

what do annexation and assignment relate to? how are they different from one another?

Answer 50

• relate to covenants running with the land in common law
• annexation = the benefit of the covenant is attached to the land of the covenantee and the benefit passes automatically to any successor in title of the
  covenantee
• assignment = an express transfer of the benefit of the covenant to a successor in title to the covenantee in writing

Question 51

which rules must be complied with in order for a covenant to be enforceable through annexation at common law ?

Answer 51

(a) The covenant must touch and concern the land

(b) There must have been an intention that the benefit should run with the estate owned by the covenantee
- This will either be by express words or implied by s 78 LPA 1925.

(c) The covenantee must have a legal estate in the benefited land
- no covenant can run where the original covenantee had an equitable interest

(d) The buyer of the benefited land must also take a legal title in the benefited land
- the legal lease does not need to be identical
- the benefit could pass to a tenant of a legal lease

Question 52

how does the benefit of a covenant pass with the land through assignment at common law ?

Answer 52

1. must take place at the same time as the transfer of the land
2. must be in writing and signed by the assignor (ie the original covenantee)
3. written notice of the assignment must be given to the person with the burden of the covenant

Question 53

what is a legal lease

what is in the list of legal interests

Question 54

list the three ways in which the benefit of a covenant runs with land in equity…

Answer 54

• Annexation
• Assignment
• Building schemes

Question 55

what are the three methods of annexation in equity?

Answer 55

1. express annexation
   - clear words and clear that the dominant land is to benefit (‘For the benefit and protection…’)
   - the whole of the dominant land benefits no matter how extensive
   - look out for ‘each and every part’
2. implied annexation
   - where such annexation was obviously intended and it would be unjust to ignore that intention
   - statutory annexation should be considered in priority to this
3. statutory annexation
   - the covenant must have been created post 1925
   - the covenant must touch and concern the land
   HOWEVER - the application of this has been limited by:
   i) the parties ability exclude the effect of s 78 LPA 1925 from the transfer creating the covenant
   (ii) the need for the land to be benefited from the covenant to be identifiable from a description, plan or other reference in the transfer, aided, if necessary, by external evidence to identify the land

Question 56

it is possible for the benefit of a covenant to pass to a successor in equity by express assignment.

what is required for this?

Answer 56

same conditions as assignment in common law:
1. must take place at the same time as the transfer of the land
2. must be in writing and signed by the assignor (ie the original covenantee)
3. written notice of the assignment must be given to the person with the burden of the covenant

Question 57

how does the benefit of a covenant run with the land in equity through building scheme?

Answer 57

• rare
• imposes reciprocal obligations between the buyers of the different plots of the scheme, including positive covenants

Question 58

A covenant is enforceable (positive or restrictive) as between the original contracting parties.
When both the dominant and servient land has changed hands, how the benefit and burden
have passed needs to match for the dominant land owner to take action.

Whether the method matches depends on whether the covenant is positive or restrictive. look at restrictive covenants….

Question 59

A covenant is enforceable (positive or restrictive) as between the original contracting parties.
When both the dominant and servient land has changed hands, how the benefit and burden
have passed needs to match for the dominant land owner to take action.

Whether the method matches depends on whether the covenant is positive or restrictive. look at positive covenants….

Question 60

what are the remedies for a breach of a restrictive covenant?

Answer 60

• injunction
• damages in lieu of injunction

Question 61

what are the remedies for a breach of a positive covenant?

Answer 61

• damages
• possibly specific performance

Question 62

When a mortgage is created the borrower continues to hold the __________________________ subject to the mortgage. A mortgage is therefore a _________________ right over land.

Answer 62

when a mortgage is created the borrow continues to hold the legal estate in the land subject to the mortgage.

a mortgage is therefore a third party right over land.

Question 63

what formalities are required to create a mortgage?

Answer 63

• a deed to create a legal mortgage = deed (s 52 (1) LPA)
• s 1 LPMPA 1989 requirements of valid deed
• if requirements of valid deed are not met = equity may intervene under the principle in Walsh v Lonsdale
• to create equitable mortgage must comply with s 53(1) LPA 1925 (in writing and signed)

Question 64

list the remedies that are available for a lender in relation to a legal mortgage?

Answer 64

• possession
• the power of sale
• debt action
• appointing a receiver
• foreclosure

Question 65

a lender has a right to possession under a legal mortgage. explain how this right can be exercised…

Answer 65

• lender has right to posession even if the borrower doesnt default
• right to possess or where the property is let, directing tenants to pay the lender (not the borrower)
• possession usually used with another remedy
• the lender cannot use or threaten violence to anyone present on the property to obtain possession (s 6 Criminal Law Act)
• if the lender can obtain possession without breach of s6 = doesnt need to apply to the court

Question 66

what must a lender do when wanting to begin possession proceedings against a residential borrower

Answer 66

• if residential = must comply with pre-action protocol (the protocol is weighted in favour of enabling the borrower to continue making payments and live in the property)
• under s 36 AJA, a borrower can ask the court to use its discretion to:
  i) adjourn proceedings
  ii) suspend or postpone execution

court will only use its discretion where:
a) lender has started possession proceedings
b) it is a dwelling house
c) the borrower is likely within a reasonable period (the whole of the mortgage period can be reasonable) to pay any sums due under the mortgage (ie arrears)

• the court will not exercise discretion unless the borrower can show a detailed financial plan showing how they will repay the mortgage instalments when they fall due and the outstanding arears

Question 67

what must a lender do to enforce their right of possession where the property subject to the mortgage is producing income?

Answer 67

• the lender can use the income from the property to pay the debt owed
  e.g. where uses right of possession to make the tenants pay the lender instead of the borrower
• however, the lender must:
  (a) account to the borrower for any sum beyond that which is due to them; and
  (b) manage the property with due diligence, accounting to the borrower for any income that should have been received had the property been managed correctly

note - this strict duty to account is why lenders prefer to appoint a receiver in relation to income-producing property

Question 68

what is required for a lender to exercise their power of sale?

Answer 68

the power of sale must:
1. exist
- the power of sale is either expressly in the deed or implied into every legal mortgage (unless expressly excluded)

2. have arisen
   - legal date for redemption must’ve passed (usually 1 month into the mortgage term but will be in contract) or an instalment must be due
3. be exercisable
   - either expressly state in the mortgage deed or
   - lender will rely on one of the elements in section 103 LPA:
   (i) the lender has given the borrower notice to repay the loan amount (whole sum) and the borrower has not paid the sum for three months after such notice; or
   (ii) interest is in arrears for two months after becoming due; or
   (iii) the borrower has breached a term of the mortgage (other than the covenant to pay the mortgage money or the interest thereon) e.g. insure the property or keep it in good repair

Question 69

a lender is exercising their right to sell under a mortgage. what duties does the lender have to the borrower in exercising this right?

Answer 69

• can sell privately or at auction

DUTIES:

(a) act in good faith and not cheat borrowers (eg the property must be properly advertised and the lender cannot sell hastily at a knock down price); and

(b) take reasonable care to obtain the true market value of the property at the date of sale.

NOTE - Lenders are not under any obligation to delay the sale in order to maximise the price of the property

if lender doesnt obtain true value = must account to the borrower for the difference

Question 70

what is ‘equity of redemption’ ?

Answer 70

usually appears in the context of a lender exercising their right to sell + the duties they owe to the borrower under exercising this right

the right (in equity) for the borrower to recover the assets (e.g. the value of the property) subject to the mortgage upon repayment of the debt

Question 71

when a lender exercises its right to sell, they must distribute the proceeds of sale in accordance with s 105 LPA in a particular order.

what is the order?

Answer 71

(a) the costs of redeeming any prior mortgages (ie mortgages with priority over the selling lender’s mortgage);
(b) the lender’s expenses of sale;
(c) the lender’s own mortgage; and
(d) the balance (if any) to the person(s) entitled to the equity of redemption

Question 72

a lender can take a debt action against the borrower. what things must it consider when doing this?

Answer 72

• legal date for redemption must’ve passed
• The Limitation Act 1980 limits the lender’s ability to recover the debt to:
• six years for the recovery of interest; and
• twelve years for the recovery of capital.
• Where a lender has exercised the power of sale and the proceeds of sale are insufficient to pay the debt (negative equity), the lender can pursue the borrower for the shortfall as a debt action.

Question 73

usually the lender will only appoint a receiver in which circumstances?

Answer 73

where the property is producing income e.g. let to tenants

NOTE IF A SCENARIO RAISES INCOME THINK OF THIS

Question 74

under what circumstances does the power to appoint a receiver arise?

Answer 74

under the same circumstances as the power of sale:
must exist
must’ve arisen
must be exercisable

Question 75

can a receiver be appointed orally or in writing

Answer 75

must be in writing

Question 76

The receiver has the power to demand and receive income from the property but such income must be used for certain causes. what are they?

Answer 76

• outgoings on the property;
• interest on any prior mortgages;
• insurance premiums, repair costs and their own costs;
• interest on the current mortgage;
• capital on the current mortgage; and
• the balance to the borrower.

Question 77

who is the receiver an agent of?

Answer 77

the borrower

this means the borrower has no recourse against a lender for the acts/omissions of the receiver

this is what makes appointing a receiver more attractive than taking possession (remember when exercising the right to possess there is a strict duty to account, whereas if you appoint a receiver, the borrower couldnt come after you for any errors)

Question 78

what duties does a receiver have to a lender AND a borrower?

Answer 78

(a) to ensure that their personal interests do not conflict with their role as a receiver.
e.g. a receiver cannot purchase the mortgaged property in a personal capacity;

(b) to act in good faith in the course of their appointment;

(c) to act with reasonable competence. What this means depends on the nature of the particular property.
e.g. where a receiver takes over the running of a pig farm, they should negotiate the usual trade discounts on pig feed

(d) to take reasonable care to obtain the true market value of the property at the date of sale (if the receiver has the power of sale); and

(e) the receiver may (but is not obliged to) take steps to increase the value of the property (ie obtaining planning permission or letting the property).

Question 79

if the interests of a lender and a borrower conflict, who ‘s interests is the appointed receiver allowed to prioritise?

Answer 79

lenders

Question 80

Foreclosure is available by an application to the __________________ once the ______________________________ has passed.

Answer 80

High Court

legal date for redemption has passed

Question 81

the foreclosure procedure is in two stages. what are they? what happens in each?

Answer 81

(i) Foreclosure Nisi: directing the preparation of accounts of what is owed followed by a
period of (usually) six months in which to pay; and

(ii) Foreclosure Absolute: which has the effect of vesting title to the property in the lender and extinguishing the equity of redemption held by the borrower.

Question 82

why would a lender not use foreclosure where there is negative equity in a property?

Answer 82

because even if the property is worth less than the sum owed, the borrower is released from liability

Question 83

how is a borrower protected from the ‘draconian’ effect of foreclosure?

Answer 83

(a) the discretion of the court to re- open foreclosure proceedings, in exceptional circumstances, even after the foreclosure absolute order; or

(b) where the property is a dwelling house, the borrower may seek to adjourn the foreclosure
proceedings by means of an application under the AJA 1970; or

(c) an application to court for a judicial sale. This will preserve the equity of redemption in favour of the borrower.

Question 84

which remedies available to a lender end the mortgage

Answer 84

end the mortgage:
- exercising the power of sale
- foreclosure

wouldn’t end the mortgage:
- taking possession
- pursuing only debt action
- appointing a receiver

Question 85

curtains and carpets - fixtures or chattels?

Answer 85

fixtures

Question 86

how can a buyer create an indefeasible easement?

Answer 86

• necessary to document e.g. by deed from the landowner to the buyer
• only the landowner’s signature is needed but the signature must be witnessed by a third party
• the buyer must register the deed at the LR

Question 87

how will a solicitor know if a property is subject to a mortgage?

Answer 87

• 2 entries on the charges register (one giving the date and purpose of the charge and one stating the identity of the lender)
• the lender may also wish to register a restriction on the proprietorship register preventing the borrower from making a disposition without the consent of the lender

Question 88

does a home right create an interest in land?

Answer 88

no - statutory right under the Family Law Act but may bind a buyer if…
- In registered land if it is protected by a notice in the Charges register by the date when the transfer of the property to the buyer is registered
- In unregistered land a home right must be protected as a Class F land charge in order to be binding on a buyer

Question 89

severance describes the method in which joint tenancy in equity can be converted into tenancy in common.

severance can only be effected by
1. formal severance by written notice
2. informal severance

explain how formal severance by written notice takes place

Answer 89

formal severance by written notice:
- doesn’t need to be signed

i) the notice must use appropriate wording
- the notice must express a desire to end the joint tenancy immediately
- expressing a future desire or intent is insufficient

ii) the notice must be received by all other joint tenants or be deemed to have been received (either by handing it to the deemed recipient or posted)
- if posted, reliance can be posted on the deeming provisions of s 196 LPA 1925
- if the notice is sent by registered or recorded letter, it is deemed sufficiently served if the letter is not returned undelivered
- any notice is sufficiently served if it is left at the last known place of abode or business in the UK of the person to be served

Question 90

Five years ago, the owner of registered freehold land created a first mortgage by deed over the land. Three years later, the owner granted a lease of the land for a term of six years, by deed. Last year, the owner created a second mortgage by deed over the land, which was then registered at the Land Registry. Two months later, the first mortgage was registered at the Land Registry. The legal date for redemption has passed in respect of both mortgages. The owner is four months in arrears of interest on the second mortgage.

How would you describe the exercise of the power of sale and the priority between the three interests?

Answer 90

The second mortgagee can exercise the power of sale and will be able to sell the land free from the first mortgage, but subject to the lease.

Question 91

If a freehold owner grants a leasehold estate, the freeholder will still retain the _________________ .

Answer 91

reversion

Question 92

is a lease capable of being legal?

Answer 92

capable of being a legal estate in land – s 1(1)(b) LPA 1925 – a term of years absolute in possession

Question 93

what formalities are required for a lease for more than 3 years?

Answer 93

• s 52 LPA provides a deed is required
• requirements for a valid deed = s 1 LPMPA

Question 94

what formalities are required for a lease of three years or less?

Answer 94

parol lease:
- type of short term lease
- no formalities are required
- can be created orally

in order to be legal they must comply with the criteria set out in 54(2) LPA 1925:
(a) The lease must be for three years or less. This would include periodic leases where the period of the lease is for three years or less. For example, a monthly periodic lease.
(b) The lease must take effect in possession. This means that the tenant must have the immediate right to possess and enjoy the land.
(c) The tenant must pay the best rent which can be reasonably obtained. This means market rent.
(d) The landlord must not charge a fine or premium. This is a one- off capital sum. For example, granting the lease for £5,000. This premium could be paid instead of rent, or in addition to it.

leases for three years or less can also be created by deed

Question 95

Where the correct formalities for the creation of a legal lease have not been followed, equity may intervene to recognise an equitable lease.

In which two circumstances would this occur?

Answer 95

1. where there is a contract to create or transfer a legal estate; or
2. where there is an attempt to use a deed but the deed is not valid

FOR BOTH
- there must be:
* a contract;
* complying with s 2 LPMPA 1989; and
* clean hands (SP is an equitable remedy so claimant must come with clean hands)

However, a contract to transfer an existing legal estate (freehold or a lease) will create an equitable right known as an ‘estate contract’

Question 96

what are the three essential characteristics of a lease?

Answer 96

1. The estate must be for a duration permitted for a leasehold estate.
   - must be fixed an ascertainable period
   - any attempt to create a lease for life will create a lease for a term of 90 years which ends on the death of the tenant (or as otherwise provided for in the agreement)
2. The grant must give exclusive possession
   - Exclusive possession is the ability for the tenant to exercise control over the land:
   (i) the tenant may exclude all (including the landlord) from the land; and
   (ii) exclusive possession extends beyond mere exclusive occupation. The latter is the characteristic of a licence. A tenant does not need to be in occupation to enjoy exclusive possession.
   - the landowner retaining a key does not negate exclusive possession
   - the occupier must have general control of the property
3. The grant must have the correct formalities

• the court will look at the substance of any agreement, not just its form
• when the above three have been met, a lease has been created (even if it is labelled a licence)
• if one or more of the above are missing = licence

Question 97

what are they key differences between a lease and a licence?

Answer 97

Question 98

what are service occupancies?

Answer 98

• type of licence
• where employer allows an employee to live in the employer’s accommodation for the better performance of their duties
• terminates when the employment comes to an end

Question 99

is payment of rent an essential characteristic of a lease?

Answer 99

• not an essential characteristic of a lease
• but supports the view that the parties intended a formal relationship of landlord and tenant

Question 100

A lease is essentially a contract which creates an estate in land. The contractual terms contained in a lease are known as covenants.

List some key lease covenants for the tenant and the landlord…

Answer 100

Tenant’s covenants:
* rent
* contribution to insurance
* repair
* alterations
* alienation.

Landlord’s covenants:
* quiet enjoyment
* insurance.

Question 101

In the absence of an express obligation, certain covenants will be implied on the part of the landlord to include.

What are they?

Answer 101

1) quiet enjoyment
- the tenant’s lawful possession of the land will not be substantially interfered with by acts of the landlord
- a residential tenant is further protected by the Protection from Eviction Act (PEA) 1977 which
prevents a landlord from unlawfully depriving the tenant of their occupation

2) obligations in respect of fitness of the property
- dwelling- house, s 11 of the Landlord and Tenant Act 1985 obliges the landlord to:
(a) keep in repair the structure and exterior of the dwelling- house;
(b) keep in repair and proper working order the installations for the supply of water, gas, electricity and sanitation; and
(c) keep in repair and proper working order the installations for space heating and water heating.

However, the landlord is only liable if there is disrepair and only once such disrepair has been notified to them.

Question 102

what is the difference between assignment and a sublease?

Answer 102

ASSIGNMENT:
- tenant passes all of their interest under the lease to a new tenant and steps out of the picture
- no new lease is created > the existing lease simply changes hands

SUBLEASE:
- lesser estate is carved out of the superior estate
- new lease is created
- this must be for a shorter duration than the head lease

Question 103

list the different types of alienation covenant…

Answer 103

(a) The open contract position – if the lease does not contain a covenant against alienation the tenant has complete freedom to deal with the lease as they wish.

(b) Absolute prohibition – there is a covenant by the tenant not to deal with the lease. This could relate to assignment or any other form of alienation.

(c) Qualified covenant – the covenant by the tenant is not to assign (or otherwise deal with) the lease without the landlord’s consent.

(d) Fully qualified covenant – the tenant covenants not to assign (or otherwise deal with) the lease without the landlord’s consent – such consent, not to be unreasonably withheld.

Question 104

what effect does legislation have on alienation covenants?

Answer 104

Section 19 of the Landlord and Tenant Act (LTA) 1927:
- translates any qualified covenant into a fully qualified
covenant so that the landlord cannot unreasonably withhold consent.
- note this does not alter an absolute prohibition

Landlord and Tenant Act (LTA) 1988:
- imposes obligations on the landlord (in relation to a
qualified covenant) where the landlord has received a written application:
* to give consent (unless it is reasonable not to do so);
* to give written notice of their decision including any conditions; and
* where consent is withheld, written reasons for refusal.
- the landlord cannot unreasonably delay giving consent

Section 19(1A) of the LTA 1927:
- enables the original landlord and original tenant of a non- residential lease (granted post 1 January 1996) to agree in advance (at the point of drafting the lease) on the:
* circumstances in which the landlord may withhold its consent to an assignment; and
* conditions subject to which any consent to assign will be subject.
- not subject to the same reasonableness test as 1988 LTA

Question 105

alienation covenants address the ways in which the tenant can dispose of the lease. there are four ways a tenant can dispose of the lease, what are they?

Answer 105

• assignment;
• sub- lease;
• mortgage/ charge;
• parting with possession/ occupation.

Question 106

The LT(C)A 1995 includes some provisions which apply retrospectively to old leases:

1. liability of the original tenant
   and
2. liability of the assignee

explain liability of the original tenant

Answer 106

for old leases (created before 1 Jan 1996)

1. liability of the original tenant
   - privity of contract between the original landlord and the original tenant
   - within the lease the parties may have covenanted on behalf of themselves and their successors in title
   - however, even if this is not expressed within the lease, the continuing obligations will be implied under s 79 LPA 1925.

If the original tenant (T1) assigns the lease to T2:
* T1 remains subject to the burden of the covenants in the lease;
* but ceases to be entitled to the benefit of covenants in the lease.
T1’s contractual liability lasts for the duration of the lease.

Question 107

There are two sets of rules governing how covenants in leases are enforced. Which set of rules applies depends on when the lease was created (not assigned).

what is an old lease. what is a new lease for these purposes?

Answer 107

• leases created before 1 January 1996 (‘Old leases’); and
• leases created after 1 January 1996 (‘New leases’).

Question 108

The LT(C)A 1995 includes some provisions which apply retrospectively to old leases:

1. liability of the original tenant
   and
2. liability of the assignee

explain liability of the assignee

Answer 108

for old leases (created before 1 Jan 1996)

2. liability of the assignee
   - When the original tenant (T1) assigns the lease to an assignee (T2) there is a relationship of privity of estate between the landlord and T2
   - T2 is liable for breaches of all real covenants (can be positive or negative)
   - the test for a real covenant:

(i) a ‘touching and concerning’ covenant must benefit only the dominant owner for the time being, so that, if separated from their land, it ceases to be advantageous to them;
(ii) the covenant must affect the nature, quality, mode of user or value of the land of the dominant owner; and
(iii) the covenant must not be expressed to be personal (ie must not have been given only to one specific dominant owner).

• An assignee is only liable under privity of estate for the duration that the lease is vested in them (ie whilst they are the tenant in occupation and paying rent).

If T2 defaults the landlord has a choice; they can pursue:
* T1 via privity of contract;
* T2 via privity of estate; or
* both of them.

If the original tenant is sued as a result of a breach which they did not commit they can either take action:
i) at common law against the tenant currently in possession
ii) on the indemnity covenant (most deeds of assignment contain an express indemnity covenant
iii) In the absence of an express indemnity covenant, this will be implied into any assignment for value by the LPA (unregistered land) or the LRA (unregistered land)

• on the sale or assignment of the reversion the benefits and burdens of the landlord’s covenants which
  touch and concern the land are transmitted to the new landlord
• this enables the new landlord to pursue either the original tenant (via privity of contract) or the current tenant (via privity of estate)
• again, the new landlord only has the benefit and burden of the covenants whilst the reversion is
  vested in them

Question 109

the LT(C)A 1995 also applies to all new leases (granted after 1 Jan 1996.

explain the position of the tenant under LT(C)A 1995

Answer 109

• the tenant (meaning the original tenant and any subsequent assignee) is bound by the covenants of the lease only whilst the lease is vested in them
• upon assignment all covenants pass to the assignee unless they are expressed to be personal
• in contrast, to old leases, the covenants do not need to touch and concern the land
• the assigning tenant is automatically released from any liability under the lease
• (unlike with old leases) if the assignee breaches a covenant, the landlord can only go after the assignee (ie the current tenant)

Question 110

the LT(C)A 1995 also applies to all new leases (granted after 1 Jan 1996.

explain the position of the landlord under LT(C)A 1995

Answer 110

• upon sale of the reversion, the new landlord takes the burden of the landlord covenants and acquires the benefit of the tenant covenants, provided that the covenants were not expressed to be personal
• the covenants do not need to touch and concern the land
• the outgoing landlord has to follow the criteria in ss 6 and 8 LT(C)A 1995 in order to obtain a release from the landlord covenants
• if a release is not obtained, the outgoing landlord
  remains liable on the landlord covenants (so the tenant would have the choice of pursuing the former landlord, the new landlord or both)
• to avoid this, the landlord can state in their lease that their liability ends once they have disposed of the reversion

Question 111

What is an Authorised Guarantee Agreement (AGA)?

Answer 111

• an agreement between the landlord and the outgoing tenant under which the outgoing (or former) tenant guarantees that the assignee (incoming tenant) will perform the lease covenants
• if the assignee (incoming tenant) does not perform the lease covenants, the landlord can take action against the former (outgoing) tenant who has given an AGA
• the obligation under an AGA is a primary obligation = means that the landlord may pursue the former tenant without taking any action against the assignee
• only one former tenant can be liable under an AGA at any one time so if the assignee assigns the lease, the AGA ceases to be of effect
• the landlord can, however, require the former tenant to enter a new lease if the assignee is declared bankrupt and the lease is disclaimed by the trustee in bankruptcy

Question 112

When can a landlord require an AGA?

Answer 112

A landlord can only seek an AGA where:

• the lease contains a covenant against alienation without the landlord’s consent (ie the tenant cannot sell the lease without first asking the landlord’s permission); and
• it is either reasonable to do so or, in the case of a commercial lease, it is a condition of the landlord giving its consent (under s 19(1A) LTA 1927).

Question 113

A former tenant who suffers loss due to liability under an AGA as a consequence of the default of the assignee may recover from the assignee on which two grounds?

Answer 113

1. at common law common law against the tenant in possession at the time of the breach (ie the current
   tenant)
2. more commonly, on the basis of an express indemnity given by the immediate assignee

• unlike old leases, indemnity covenants are not implied on every assignment

Question 114

do sections 17, 18 and 19 of the Landlord and Tenant (Covenants) Act 1995 apply to old or new leases?

Answer 114

• applies to both old and new
• the aim of this retrospective effect is to improve the position of a former tenant who remains liable either due to:
• privity of contract in an old lease; or
• the terms of an AGA if a new lease.

Question 115

Section 17 of the Landlord and Tenant (Covenants) Act 1995 relates to the recovery of a fixed charge from a former tenant i.e. rent.

Before the landlord can pursue a former tenant for the payment of rent, they must do which three things?

Answer 115

• serve a default notice;
• on the former tenant;
• within six calendar months of the fixed charge falling due.
• if the landlord fails to serve the default notice, they cannot recover the fixed charge from the former tenant
• if the former tenant pays the sum demanded in full, the former tenant can request an overriding lease from the landlord
• the former tenant/guarantor then becomes the immediate landlord to the defaulting tenant

Question 116

what does Section 18 of the Landlord and Tenant (Covenants) Act 1995 relate to?

Answer 116

applies where an assignee agrees to a variation of the terms of the lease which was not contemplated in the original lease

Question 117

what does Section 19 of the Landlord and Tenant (Covenants) Act 1995 relate to?

Answer 117

• if a former tenant pays the sum demanded in accordance with a s 17 default notice in full, s 19 allows the former tenant to request an overriding lease from the landlord.
• An overriding lease is:
• the same duration as the original lease but less three days;
• on the same terms as the original lease; and
• granted by the landlord to the former tenant.

The former tenant becomes the landlord to the defaulting assignee, but is obliged to pay rent
to the landlord and comply with the tenant covenants in the same way as the original lease.

Question 118

list the landlord’s remedies for non- payment of rent

Answer 118

• debt action
• commercial rent arrears recovery
• forfeiture.

Question 119

explain how a landlord can take debt-action for non-payment of rent.

Answer 119

• a lease is likely to contain an express covenant by the tenant to pay rent
• in the absence of an express covenant i.e. parol lease the obligation is implied
• the landlord may sue the tenant for debt
• this is not a damages claim
• doesnt end the lease
• landlord may pursue the current tenant, a former tenant (via privity of contract or an AGA) or both
• in relation to a former tenant, the landlord will need to serve a default notice under s 17 LT(C)A 1995
• cannot bring a claim after the expiration of six years from the date on which the arrears became due
• pursuing an action in debt acknowledges the existence of the lease and has the potential to
  waive the right for the landlord to forfeit

Question 120

explain how a landlord uses commercial rent arrears recovery to recover non-payment of rent.

Answer 120

• only available against the tenant in possession
• consists of the landlord entering the premises in order to seize the tenant’s goods and sell them
• the arrears of rent are paid off from the proceeds of sale
• a court order is not required but there is a procedure to follow:
• applies to leases of com prop only
• can only be used to recover ‘normal’ rent (ie not service charge or insurance premiums even if the lease states these other payments are reserved at rent)
• the rent due must exceed a minimum of seven days’ rent
• the landlord must give the tenant a minimum of seven days’ notice of their intention to take control of the tenant’s goods
• such notice must be given by an authorised enforcement agent (formerly a bailiff)
• the tenant’s goods are ‘bound’ (ie controlled by
  the landlord) at the date of the notice
• the tenant may challenge the landlord’s warning
  notice in court
• only an enforcement agent may take control of the tenant’s goods
• not allowed to remove certain goods, which include items or equipment up to the value of £1350 which are necessary for the tenant’s business, such as computers or telephones
• the landlord can only take items belonging to the tenant, so any items which are leased or bought on hire purchase cannot be taken
• sale of goods must be at a public auction (the tenant is given at least seven clear days’ notice of the sale)

note CRAR does not bring the lease to an end. Exercising CRAR acknowledges the existence of the
lease and may therefore waive the landlord’s right to forfeit

Question 121

explain how a landlord uses forfeiture to recover non-payment of rent

Answer 121

Forfeiture for non- payment of rent:
* is also known as the right to re- enter – see s 1(2)(e) LPA 1925;
* can only be exercised against the tenant in possession (not a former tenant);
* is the right for a landlord to retake physical possession of the premises thereby prematurely terminating the lease.

• the right to forfeiture must be expressly reserved in the lease
• the landlord may have waived their right to forfeiture
• there is a method to follow

Question 122

a landlord may try to use forfeiture to recover non-payment of rent. explain how a landlord may have waived their right to forfeiture.

Answer 122

• the landlord may lose the right to forfeit in respect of that breach if by their conduct they are deemed to have waived it
• waiver may be:
  i) express
  ii) implied - if the landlord does some unequivocal
  act showing recognition of the continued existence of the lease and in full knowledge of the facts giving them the right to forfeit
  e.g. exercising CRAR, demanding future rent or suing for or accepting rent after the breach

not impliedly waived where the landlord’s conduct shows they no longer regard the lease as subsisting; e.g. where the landlord has commenced possession proceedings.

Question 123

where a landlord uses forfeiture to recover non-payment of rent, they must follow a method of forfeiture. what is the method?

Answer 123

• make a formal demand for the rent due by presenting themselves at the premises on the due date for payment between sunrise and sunset unless the lease expressly exempts the landlord from this requirement

The landlord may forfeit either by:
* peacefully re- entering the premises; or
* by suing for and obtaining a possession order in the courts.
Section 6 Criminal Law Act 1977 makes it a criminal offence to repossess any premises (residential or business) using force.

• Where the premises are let wholly or partly as a dwelling and the occupier continues to reside at the premises, the landlord must obtain a court order before re- entering

Question 124

where a landlord uses forfeiture to recover non-payment of rent, what relief does a tenant have?

Answer 124

• tenant may apply to the court for relief from forfeiture
• if relief granted = tenant may retake the premises on the terms of the original lease as though there had been no forfeiture

The tenant may seek relief as follows:
(i) if the landlord sues for possession and the tenant pays all the arrears of rent and costs before the trial, the court must generally grant relief;
(ii) the tenant can also apply to the court for relief within six months of the landlord’s re- entry pursuant to a court order. In this case, however, relief is at the discretion of the court; and
(iii) if the landlord forfeits a non- residential lease by re- entry without court proceedings, the six- month time limit does not apply and the court can exercise its inherent equitable jurisdiction to grant relief in such a case.

Question 125

which remedies does a landlord have in relation to a breach of a covenant other than the covenant to pay rent? list them…

Answer 125

1. Damages
2. Specific performance
   - discretionary remedy
   - doesnt bring lease to the end
3. Forfeiture
4. Self- help remedy

Question 126

explain how forfeiture operates as a remedy for a landlord where there has been a breach of covenant other than the covenant to pay rent…

Answer 126

• must be expressly reserved in the lease (not always labelled as a forfeiture clause sometimes called provisios or re-entry)
• if the landlord waives the breach = loses right to forfeit for that breach
• can forfeit by peaceable re- entry or a court order for possession
• if the are wholly or partly let as a dwelling house and the tenant is in occupation then a court order is required
• brings the lease to an end
• is exercised against the tenant in possession

Before the landlord can forfeit, they must generally serve a notice on the tenant under s 146 LPA 1925:
(a) specifying the breach;
(b) requiring it to be remedied within a reasonable time, if capable of remedy; and
(c) requiring compensation if desired.

• if the tenant remedies the breach within the time specified, there can be no forfeiture.
• if the tenant does not remedy the breach within a reasonable time after receiving the notice (assuming the breach is capable of remedy), the landlord may forfeit.
• breach of a covenant against alienation (ie not to assign or underlet) = a once and for all breach and is not capable of remedy
• therefore, the landlord does not have to include a
  reasonable time within which to remedy the breach within their s 146 notice

Question 126

explain how damages operate as a remedy for a landlord where there has been a breach of covenant other than the covenant to pay rent…

Answer 126

• doesnt bring lease to an end
• ordinary contractual as to the measure of damages will apply
• can be claimed against former tenant, current tenant (ie via privity of contract in an old lease or via an AGA in a new lease) or both
• a default notice under s 17 LT(C)A 1995 is not required to be served on a former tenant, as damages are not included within the definition of a fixed charge
• a claim for damages for disrepair = limited to the amount by which the reversionary interest has diminished in value as a consequence of the disrepair
• where the lease has three or more years unexpired, the landlord must first serve on the tenant a s 146 LPA
  1925 notice
• the notice must include a statement to the effect that the tenant is entitled to serve a counter notice claiming the benefit of the Leasehold Property (Repairs) Act 1938
• the tenant has 28 days within which to serve a counter notice and if served, the landlord cannot take further action without leave of the court.

Question 127

does a tenant / sub-tenant have any relief against forfeiture for breaching a covenant other than the covenant to pay rent?

Answer 127

• tenant can apply for relief:
  i) as part of the landlord’s possession proceedings, or
  ii) in response to the landlord peaceably re- entering the premises
• the court may grant relief on such terms as it thinks fit - he who seeks equity must do so with clean hands.
• the effect of relief is that the lease continues as before as if forfeiture had not happened
• if the head lease is forfeited = any sublease ceases to exist
• subtenant can apply for relief against forfeiture of the head lease ( even where tenant hasn’t be able to obtain relief)
• this would involve the court vesting the head lease in the sub- lessee and on such terms as to rent, costs and damages as the court thinks fit.

Question 128

how can a self-help clause be used by a landlord to remedy a tenant’s breach of their covenant to
repair?

Answer 128

• Jervis v Harris clause
• The lease must contain a provision that
  allows the landlord to:
• enter and inspect the property;
• give the tenant notice that repair is required and a time period for the tenant to undertake the repairs;
• if the tenant does not complete the work the landlord can enter the property and do the work; and
• the landlord can recover the cost of the work as a debt due from the tenant thus: avoiding the provisions of s 18 LTA 1927 and the Leasehold Property (Repairs) Act 1938.

Question 129

what remedies are available to a tenant for any breach by the landlord of a landlord’s covenant?

Answer 129

1. specific performance/ injunction
2. damages
3. self- help
   - the landlord’s failure to perform an obligation does not entitle the tenant to withhold the rent.
   - however, in relation to a repair obligation, the tenant may notify the landlord that the repair is needed and that the tenant will carry out the repair if the landlord fails to do so
   - if the tenant then carries out the repairs, they may withhold rent until the ascertained cost of repair has
   been repaid (this is common law set off)

• alternative of equitable set off
• where tenant withholds payment of rent, and landlord sues the tenant, equity may allow the tenant to have their unliquidated claim set off against the liability for rent
• only occurs where the connection between the two claims is sufficiently direct so that it would be manifestly unjust not to allow set off
• the tenant’s claim must, therefore, be one that arises directly from the relationship of landlord and tenant created by the lease
• most leases will exclude both kinds of set off

Question 130

list the ways in which leases can be determined (brought to an end)

Answer 130

1. effluxion of time;
2. notice to quit;
3. break clause;
4. surrender;
5. disclaimer;
6. frustration;
7. repudiatory breach;
8. merger; and
9. forfeiture.

Question 131

explain how a lease is determined (brought to an end) via the method of notice to quit

Answer 131

• a periodic tenancy will continue on indefinitely from one period until the next, until either party gives the other notice to quit
• one full notice period is required
• yearly tenancy requires not less than a half year’s
  notice
• if the premises are wholly or partly let as a dwelling house and the tenant is in occupation = not less than 4 weeks’ notice must be given

Question 132

how would a break clause end a lease?

Answer 132

• the landlord and tenant can agree to include a break clause in the lease
• this may be exercised by the landlord, tenant or both
• can be a fixed date or on a rolling basis
• one party gives notice to the other of their desire to activate the break clause

Question 133

how does surrender determine (end) a lease?

Answer 133

• requires the landlord and tenant to mutually agree for the tenant’s estate to be yielded up to the landlord
• the lease is then merged into the reversionary estate and extinguished
• an express surrender must be contained in a deed
• does not terminate the
  interest of any sub- tenant (even if the rights of the sub- tenant were unknown to the landlord)

Question 134

how does disclaimer determine (end) a lease?

Answer 134

• arises upon the bankruptcy/ liquidation of the tenant
• trustee in bankruptcy or liquidator can disclaim contracts which given rise to a liability to pay money or perform any onerous act
• releases the tenant from all further liability
• doesnt end a subtenancy
• sub- tenant may seek an order to vest the disclaimed property in themselves

Question 135

how does a merger determine (end) a lease?

Answer 135

• the tenant purchases the freehold reversion and holds both interests at the same time.
• provided there is no contrary intention, the lease merges into the reversionary title and is extinguished

Question 136

When a buyer investigates title, they are trying to discover if the land is subject to any third party rights that may bind them.

In unregistered land this will depend on two things, what are they?

Answer 136

1. is in the interest legal or equitable
2. how is the interest protected

• legal estates/interest binds the world (so any buyer regardless of whether they knew about their existence)
• only exception = puisne mortgages which must be registered with the LR
• equitable interests are protected by a land charge or by the doctrine of notice

Question 137

how do you register a land charge?

Answer 137

• classes of land charge:
  C(iv) an estate contract
  D(ii) a restrictive covenant
  D(iii) an equitable easement
  F a home right
  C(i) puisne mortgage
• land charge is registered against the estate owner’s name (not the parcel of land)
• causes problems where:
  i) you are a third party right holder with no access to the deeds
  ii) the estate owner has used different versions of their name
• the onus to register is on the person holding the equitable interest

Question 138

what is the effect of properly registering a land charge?

what is the effect of failing to properly register a land charge?

Answer 138

PROPERLY REGISTERING:
- is deemed to constitute actual notice of the interest as from the date of registration
- any buyer will be bound

FAILING TO PROPERLY REGISTER:
- a Land Charge is void against a buyer for money or money’s worth of a legal estate unless the Land Charge is registered before completion of the purchase
- knowledge of the charge is irrelevant here > only registration will bind

Question 139

how should the buyer of unregistered land use the Land Charges Register?

Answer 139

• good practice = search against all the names of estate owners revealed in the epitome of title, including any revealed who pre- date the root of title
• this is because any Land Charge registered will bind the buyer
• search certificate from the Land Charges Register is
  conclusive in favour of the buyer (provided the buyer has searched the register as above)
• even if best practice is followed, it is still possible the buyer will be bound by a Land Charge not revealed by the epitome of title > the buyer may be entitled to statutory compensation if they suffer loss

Question 140

what is the doctrine of notice?

how does it work?

Answer 140

• looking at unreg land and ways in which an equitable interest will bind a subsequent buyer
• it applies to:
  (a) equitable interests pre- dating 1925; and
  (b) beneficial interests under a trust (express or implied) whenever created.
• equitable interests post- dating 1925 are protected by Land Charges
• beneficial interests under a trust cannot be protected by registration of a Land Charge > the doctrine of notice is their only means of protection
• a buyer is bound by equitable interests unless they are ‘Equity’s Darling’:
  i) a bona fide
  ii) purchaser for value
• consideration must be given
• someone who has been gifted land is not a purchaser for value
  iii) of a legal estate or interest without notice of the equitable interest
• Does the buyer have notice of the third party’s equitable interest? If so, the buyer will be bound
• onus on buyer to show no notice
• different types of notice (see attached)

Question 141

what is overreaching?

Answer 141

• unreg land
• only for beneficial interests under a trust
• mechanism by which a buyer can take property free of the interests of any person with a beneficial interest under a trust
• on completion the buyer must pay the purchase money (capital monies) to a minimum of two trustees
• interests of any person holding a beneficial interest under the trust then lift from the property and shift to the proceeds of sale (the purchase money)
• so once overreaching has taken place, any beneficiary under a trust no longer has an interest in the property
• buyer takes the property free from those interests

Question 142

A landlord may have required a guarantor if it had reservations about the proposed tenant’s ability to maintain rental payments without financial difficulties.

explain how the guarantee would work and what it would cover

Answer 142

• guarantee must be in writing
• will oblige the guarantor to pay the rent and
  any other sums due under the lease if the tenant does not pay and to remedy, or indemnify the landlord against loss caused by, any breaches of covenant committed by the tenant
• more complex where the landlord wants to sue the guarantor of a former tenant
• the liability of a guarantor under an old lease is likely to extend through the duration of the lease, regardless of an assignment by the guaranteed tenant
• new lease = guarantor is automatically released from liability on an assignment of the lease by the guaranteed tenant
• any attempt by the landlord to require the guarantor directly to guarantee the incoming tenant is likely to be void
• the landlord may require the guarantor of the outgoing tenant to guarantee the outgoing tenant’s obligations under the AGA, thereby indirectly guaranteeing the incoming tenant until a further assignment takes place
• where the landlord intends to pursue a former tenant or the guarantor of a former tenant, whether under a new or an old lease, the landlord must comply with s 17 of the LT(C)A 1995

Question 143

explain the position of lease v licence regarding flat sharing agreements

Answer 143

AG Securities v Vaughan / Antoniades v Villiers
- in both each occupier had signed a single agreement described as a licence

• AG Securities v Vaughan = licence
• the agreements entered into by the occupiers were independent and did not confer a right of exclusive occupation on any one party
• the agreements had different dates and different rents

CONTRASTED WITH Antoniades v Villiers = lease:
- the agreements were interdependent and had to
be read together as a single agreement
- the agreements were in identical terms and signed
on the same day
- the court focused on the realities of the situation and found a clear intention that the occupiers (a couple) were to share a bedsit with one double bed
- the intention was for the couple to acquire joint and exclusive occupation of the flat
- the other terms aimed at making the lease look like a licence were a sham

Question 144

explain how rent deposits work to protect the landlord in granting a leasehold

Answer 144

• landlord can require the tenant to deposit a cash sum as security for payment of the rent and performance of the tenant’s covenants contained in the lease
• details contained in the rent deposit deed (e.g. circumstances under which the landlord can withdraw from the deposit and when it is repayable to tenant)
• provided there is no breach of the terms of the
  rent deposit deed by the landlord, the landlord can draw upon the money as soon as the tenant is in breach of a relevant covenant in the lease, without taking court action for debt or exercising any other remedy in respect of the breach
• the deed would normally require the tenant to top
  the deposit up in such circumstances
• rent deposit is usually returned to the tenant at the end of the term of the lease or on the earlier lawful assignment

Question 145

how can a landlord can possession of a property through forfeiture?

Answer 145

• through ‘peaceable re- entry’ (ie without force) or, if that is not possible, by obtaining a court order

Question 146

explain the court’s involvement in forfeiture

Answer 146

• if a tenant cannot gain possession of the property through peaceable re-entry > landlord can apply for a court order
• the tenant can also apply to the court for relief from forfeiture, whereupon the court has discretion to allow the lease to continue
• this would be subject to a condition that the tenant paid all arrears and costs

NOTE - a landlord can waive its right to forfeit by carrying out any act demonstrating an intention to continue the relationship of landlord and tenant so must be careful not to demand or accept rent after the breach has arisen

Question 147

where there is a breach of the tenant’s covenant to repair, there will be several remedies available to them:

1. specific performance
2. damages
3. self-help
4. forfeiture

explain in what circumstances SP may be awarded

Answer 147

• equitable remedy
• forces the tenant to comply with a positive covenant
• only granted where other remedies are not appropriate
  e.g. where there are no forfeiture or self-help clauses in the lease, or where damages are not an adequate remedy

Question 148

how does Section 18 of the Landlord and Tenant Act 1927 effect the amount of damages a landlord may receive where a tenant has breached their covenant to repair?

Answer 148

• it limits the amount of damages to the amount by which the landlord’s reversion (usually the freehold building) has diminished in value as a result of the disrepair
• the diminution in the capital value of the building
  attributable to the disrepair may be less than the cost of the repairs, so this course of action may not be attractive to the landlord

Question 149

how is the procedure used in forfeiture for non- payment of rent different from the procedure used in for breach of other covenants?

Answer 149

breach of covenants other than to pay rent:
- s146 LPA
the landlord must serve a s 146 notice on the tenant which will:
* specify the breach
* require the breach to be remedied within a reasonable time if it is capable of remedy
* require the tenant to pay compensation for the breach
- if tenant does not comply with the notice = landlord can forfeit either by peaceable re- entry or by court order
- the tenant can apply for relief from forfeiture

ADDED COMPLICATION in cases of disrepair where the lease was originally for seven years or more and has at least three years left unexpired
- here the Leasehold Property (Repairs) Act 1938 applies and requires the s 146 notice to include notification of the tenant’s right to serve a counter notice within 28 days
- if the tenant serves a counter notice, then the
landlord can only proceed to forfeit with the leave of the court

Question 150

which events trigger first registration?

Answer 150

1. transfer of a qualifying estate (freehold or leasehold) by sale, gift, court order or assent
2. legal lease created (granted) for more than seven years
   - this does not trigger the registration of the freehold reversion
   - legal leases for 7yrs or less are protected as overriding interests
3. first legal mortgage of a qualifying estate (with more than 7yrs left to run)

Question 151

what are the time limits for first registration?

Answer 151

• must apply within 2 months of the triggering event
• LR may extend the time limits where there is good reason
• effect of not registering in time:
  (a) transfer = the legal estate reverts to the transferor. An equitable interest is held until registration has been completed;
  (b) legal lease = the transaction fails to grant a legal lease. An equitable interest is held until registration has been completed; and
  (c) creation of a mortgage = the transaction fails to create a legal mortgage. An equitable mortgage exists until registration has been completed.

Question 152

once a freehold/leasehold estate have been registered, certain transactions (‘registrable dispositions’) only have legal effect if they too have been registered.

what are they?

Answer 152

1. transfer of registered estate
2. grant of a legal lease for more than 7 years
3. grant of a legal charge (ie mortgage)
4. expressly granted legal easement or profit

Question 153

what is the order of priority for mortgages?

Answer 153

• the order in which they are entered onto the register not when they were created

Question 154

explain how restrictions work

Answer 154

• protect interests under a trust of land (express or implied).
• appear in the proprietorship register to inform potential buyers that the registered proprietor has limited rights to deal with the legal estate in the land.
• buyers must implement overreaching to acquire the property free from the trust interest.
• a restriction can prevent the registration of a disposition that does not comply with its terms.
• can be entered on the register without the consent of the registered proprietor

Question 155

explain how notices work

Answer 155

• protect other types of interests, not related to trusts of land.
• charges register.
• can be entered without the registered proprietor’s consent.
• the registered proprietor can challenge a notice and claim damages for any loss caused by it

Question 156

what are overriding interests?

which interests override?

Answer 156

• interests that do not appear on the register but bind the owner of the legal estate and any buyer of it

1. A legal lease granted for 7 years or less (including parol leases)
2. Legal easements (such as rights of way) or profits that arise by implication or prescription after October 2003
   To be overriding, one of the following conditions must be met:
   - The purchaser has actual knowledge of the right.
   - The existence of the right would be apparent upon a careful inspection.
   - The right has been exercised in the year before transfer.
3. A proprietary interest (like an equitable lease or beneficial interest) held by someone in actual occupation of the property can override the registered title, but actual occupation must be present.

Question 157

what does actual occupation mean for the purposes of overriding interests?

Answer 157

• involves physical presence or continuous use of the property
• it doesn’t necessarily require the person’s personal presence but can include occupation by a representative (e.g., caretaker)
• a person can remain in actual occupation even if temporarily absent, as long as there is visible evidence of occupation (e.g., furniture) and an intention to return

Question 158

when can overriding interests be lost?

Answer 158

if the occupier fails to disclose their interest when asked or if the occupation is not obvious upon a reasonable inspection

Question 159

a seller tells a buyer the registered property for sale has the benefit of an easement, where should the buyer look confirm the easement has been properly registered?

Answer 159

the property register - shows what benefits the property

Question 160

A solicitor is acting for a purchaser of a registered freehold property. The seller tells the buyer that the property is burdened by an easement granted by deed in 2006.

What will the buyer’s solicitor look for when examining the official copy of the title to the property to confirm that the easement is properly registered?

Answer 160

the charges register

Question 161

if parties own a property as tenants in common, where would the parties beneficial interest be shown?

Answer 161

a restriction on the proprietorship register