Land Part 1 Flashcards
Who does all land in England and Wales belong to?
The Crown
What do you technically own when you own land?
Rights to the land – e.g., right to possess
What are the 2 types of land rights?
- Proprietary
- Personal
Why is distinguishing between the 2 types of rights important?
Changes possible remedies and enforcements against third parties
What does action in rem mean?
Use or possession of the land can be recovered… don’t have to settle for damages
What type of right can be enforced against 3rd parties?
Proprietary
What remedy is there for personal rights?
Damages
Who do personal rights bind?
Only original parties
Personal or proprietary: freehold estate
Proprietary
Personal or proprietary: Leasehold estate
Proprietary
Personal or proprietary: easement
Proprietary
Personal or proprietary: mortgage
Proprietary
Personal or proprietary: restrictive covenant
Proprietary
Personal or proprietary: estate contract
Proprietary
Personal or proprietary: beneficial interest in a trust of land
Proprietary
If a particular use of land is recognised as proprietary status, does that mean that the actual right under consideration will have proprietary status?
No… e.g., easement or license
What are the 4 steps to determine whether a right is proprietary or personal?
- Is it on the fixed list?
- Does it satisfy any substantive characteristics for the particular proprietary right?
- Has it been created/acquired in accordance with the formalities for that particular right?
- Protection: if proprietary, is it enforceable against a 3rd party?
Is a proprietary right automatically enforceable against a 3rd party?
No
What is a proprietary right of possession called?
An estate in the land
What is a fee simple absolute in possession?
A freehold estate
How long does a freehold estate last?
Until the owner dies without heirs
What does the word ‘fee’ denote (e.g., fee simple absolute)?
Right is capable of being inherited
What does the word ‘simple’ denote (e.g., fee simple absolute)?
Right can be inherited by any heir, including distant relatives
What does the word ‘absolute’ denote (e.g., fee simple absolute)?
Estate is not liable to end prematurely (unconditional)
What does the word ‘in possession’ denote (e.g., fee simple absolute)?
Owner has the current right to use and enjoyment of the property… physical possession is not necessary
What is the leaseholder also known as?
Tenant
What is freehold reversion?
The residue of the estate after the granting of a lease
What is a leasehold reversion?
Landlord retains a reversionary interest, when the time expires the leasehold reverts back to them
What is an interest in the land also known as?
Incumbrance
Is an interest in the land personal or proprietary?
Proprietary
What are the 3 legal interests?
- Mortgages
- Easements
- Rights of entry
What are the equitable interests?
- Freehold covenants
- Estate contracts
- Interests in a trust of land
- Easements granted for an uncertain term
What is a right of entry also known as?
A forfeiture clause
What does it mean that a trust splits the title to land?
Trustee is legal owner
Beneficiary is equitable owner
Can a contribution to purchase price result in an implied trust in land?
Yes
What is the main difference between the remedies available for legal vs equitable interests?
For legal interests, many remedies are available as of right, regardless of merit (e.g., damages)
For equitable interests, remedies are the 100% discretion of the court
What interest does an equitable beneficial owner technically have?
An interest under a trust of land
What is the general nature of the process of conveyancing?
Ensuring legal formalities are followed when transferring land
What are the 3 stages for the sale of a freehold?
- Exchange of contracts
- Completion of the deed
- Registration
Which stage in freehold transfer is not strictly necessary?
Exchange of contracts
At what point are the parties legally committed to buy/sell land?
On exchange of contracts
What are the 3 requirements of a valid land contract?
- Contract must be in writing
- Must contain all the expressly agreed terms
- Must be signed by both parties
What is a deed known as in unregistered land?
A conveyance
What is a deed known as in a transfer of registered land?
A transfer
Does a legal estate have to be transferred/created by deed?
Yes
What are the 3 requirements of a valid deed?
- Intended to be a deed
- Validly executed
- Be delivered
What is a TR1?
A standard form of transfer deed that is commonly used
How can you show intention to be a deed to fulfill requirement #1?
Write deed on it
What is required for valid execution of a deed where the grantor (seller) is an individual?
- Deed must be signed in the presence of a witness
Does a buyer have to sign the deed for it to be valid?
No
What does deed delivery technically require?
Acknowledgement that a person entering into a deed intends to be formally bound
What does delivery look like in practice?
Dating the document (the solicitors usually do it)
When does title to unregistered land pass?
On completion of the deed
What does selling unregistered land trigger?
Requirement to register
When does legal title pass to registered land?
On registration
What is the deadline for registering land for the first time after a sale of unregistered land?
2 months
What happens if you miss the deadline for first registration?
Legal title reverts back to seller
Can you have an oral land contract?
No
On contract exchange, is it appropriate for the seller to sign one copy, the buyer the other, then exchange?
Yes
Can a land contract be varied?
Kinda, you have to repeat the entire process for it to be valid
What does a binding land contract create?
An equitable interest in the land for the buyer
What is the difference between an option agreement and a right of pre-emption?
Option agreement = other party has a right during a certain period to serve notice that they wish to buy… seller must sell the land to the buyer
Right of pre-emption: another party gets a right of first refusal if owner decides to sell their land
What arises from a failed deed?
A land contract/equitable interest
What type of right is an estate contract?
Proprietary
What do you have to do in order for an estate contract to be binding on 3rd party purchasers?
Protect the interest (e.g., registration)
What 3 remedies are available where there is a valid land contract?
- Damages (common law, usually as of right)
- Specific performance (equitable)
- Injunction
What does it mean that a land contract must be capable of specific performance in order for it to be recognised as an equitable interest?
The claimant must come to equity with clean hands
If a tenant breached a term of a contract, is specific performance available as a remedy?
No, because they don’t have clean hands
What are the 6 triggering events (for registration)?
- Transfer of freehold estate by sale, gift, court order
- Grant of a lease for a term of more than 7 years
- Assignment of lease of unregistered lease with more than 7 years to run?
- An assent, vesting assent or vetting deed which is a disposition of the freehold or leasehold with more than 7 years to run
- The grant of a lease to take effect in possession more than 3 months after the date of the grant
- A first legal mortgage
What is the mirror principle?
The land registry should reflect all matters that the property has benefit and burden for
Is the mirror principle fully realised?
No, because of overriding interests
Define overriding interest.
An interest that does not appear on the register but will still be binding on the owner of the legal estate and any buyer of it
What is the curtain principle?
What lies behind the curtain = beneficial and equitable ownership not available on the registry
What is the insurance principle?
Accuracy of the register is guaranteed by the state
On what ‘register’ is the class of title listed?
Proprietorship
What is absolute class title?
- Best one
- Land is only bound by interests that are registered on the title or overriding interests
What is a qualified class title?
Title has some defect which is specified on the registry
What is a good leasehold?
Where the land registry is only satisfied with the title of the leaseholder
What is a possessory class title?
May be given by the LR where the applicant is in possession of the property or receipt of rents/profits and no other title can be given
- Usually squatters rights or adverse possession
Does a tenant of a 7+ year lease have a legal lease if it wasn’t registered?
No
Which register shows covenants?
Charges
Which register describes the piece of land?
Property
What does the definition of land include?
- Mines and minerals
- Buildings/parts of them
- Corporeal hereditaments
- Incorporeal hereditaments
- Powers of working
- Manor (lordship)
How much airspace is included in land?
Such height as is necessary for the ordinary use and enjoyment of the land and the structures on it
What is lower airspace?
Where the land registry is only satisfied with the title of the leaseholder
What is upper airspace?
Anything above what is required for ordinary/reasonable use or enjoyment
How much ground below is included in a piece of land?
Everything beneath the surface
Who owns coal under land?
Coal authority – not the land owner
Who owns gold and silver found under the land?
The Crown
Who owns ‘treasure’ found in the ground of land?
Crown
How deep a depth no longer counts as trespass to land?
Below 300 metres
What are the legal tests for determining if an object is a fixture or a chattel?
- Degree of annexation
- Purpose of annexation
What does the degree of annexation test mean?
The more firmly affixed something is, the more likely it is to be a fixture
What is the purpose of annexation test?
Why the object is attached…
- Was it for the more convenient use or enjoyment of a chattel or to enhance the land or building?
Which of the legal tests to determine if something is a fixture takes priority?
Purpose of annexation
Why have 2 tests to determine if something is a chattel if one takes priority?
The degree of annexation raises a presumption, that can be rebutted by the purpose of annexation
What things are likely to be chattels?
- Pictures
- Carpets/curtains
- Light fittings attached by screws
- Non-integrated kitchen appliances
What items are likely fixtures?
- Kitchen units
- Items installed by a builder
- Bathroom fittings (e.g., toilet)
When would a stone garden seat and ornamental statues standing on their own weight be considered fixtures?
If they are incorporated into the architectural design of the building
What is commonly used to avoid disputes about chattels/fixtures upon the sale of the land?
Law Society Fixtures and Contents Form
What is the mortgagor?
The borrower
Who is the mortgagee?
The lender
What type of right is a mortgage?
Proprietary
Can a mortgage be a legal interest?
Yes
What are the formalities for a legal interest over registered land?
Deed + registration
What happens if a mortgage is not properly registered?
It will not take legal effect, there could still be an equitable interest
What 2 considerations indicate a legal mortgage has been formed?
- If the mortgage is being granted over a legal estate by the legal owner
- If the mortgage was granted by deed and properly registered
What 2 considerations indicate an equitable mortgage?
- If the mortgagor (borrower) only holds an equitable interest
- The mortgage is a defective legal mortgage
Where a mortgagor (borrower) holds an equitable interest, what formalities are required to create an equitable mortgage?
- In writing
- Signed by the grantor
What minimum formalities are required to result in a defective legal mortgage?
- In writing
- Contains all agreed terms
- Signed by both mortgagor and mortgagee
When is a mortgage considered to be fully discharged?
- When all reference to it has been removed from the Charges Register
What is the legal date of redemption for a mortgage?
The day when the borrower had to repay the loan in full
It was the only date the loan could be repaid
If FULL payment was not made, the property was forfeited to the lender
What is the equity of redemption?
Equity intervened to protect against harsh legal date for redemption
Mortgage is security for a loan not an opportunity to gain more
Recognises borrower as the true owner
What types of clauses does equity of redemption protect against?
- Post-poning/preventing redemption
- Collateral advantages
- Unconscionable terms
What is the financial value of equity of redemption?
Market value - outstanding debt
What is the equitable rule regarding the right to redeem?
There can be no cog or fetter on it
How would equity treat a clause which postponed the right to redeem until right before the lease expired?
They would not uphold it because the borrower could not get back what he had mortgaged on redemption
How would equity treat a clause that postponed the legal date of redemption for a freehold hotel for 40 years in exchange for a low interest rate?
It would be upheld because:
- freehold doesn’t lose value, borrower can get it back
- deal provided additional consideration
- it was commercial
Would equity uphold a ‘lock-in’ for non-commercial/residential property?
Probably, as long as there is a clear advantage in exchange for the lock in and there was an informed decision
Would an option for the mortgagee (lender) to purchase be upheld?
No, probably not, it prevents the right to redeem
Would an option granted at the same time as the mortgage be likely to be upheld?
No
Would an option granted to the mortgagee in a subsequent transaction be upheld?
Maybe, if upheld to be independent of the mortgage
If the mortgage and option are granted on the same day, but are in fact completely separate, would they be upheld?
Yes, if the ‘substance of the transaction’ was that they were separate
What consideration are mortgage lenders entitled to receive?
Capital and interest
In what 3 cases will a collateral advantage be struck out?
- If unconscionable
- If it is a penalty
- If it is repugnant to the equitable right to redeem
What is a solus tie?
When a lender makes it a condition of the loan that the mortgagor buys supplies from it
When are solus ties generally upheld?
If the end within the mortgage term
Is an unfair or unreasonable term likely to be held as unconscionable?
No, must be worse
What factors make it more likely that the term will be held as unconscionable?
- Imbalance of bargaining power
- Borrower being in a vulnerable position
- Lender exploiting a vulnerable borrower
- Wiping out any chance of surplus sale proceeds for the borrower
- Morally reprehensible
Would a penalty interest rate imposed in the event of borrower default that exceeds the lenders losses be upheld?
No
What factors make it more likely that a term will be held as unconscionable?
- Imbalance of bargaining power
- Borrower being in a vulnerable position
- Lender exploiting a vulnerable borrower
- Wiping out any chance of surplus sale proceeds for the borrower
- Morally reprehensible
Would a penalty interest rate imposed in the event of borrower default that exceeds the lender’s losses be upheld?
No
Is a lender entitled to charge higher interest rates when itself is in financial difficulties?
Yes
What happens to the mortgage if a term is declared unconscionable/void?
The term is struck out, but the remainder of the agreement remains in force.
What is undue influence in a mortgage context?
When a mortgage is for the benefit of one spouse’s business and not the other.
What happens if undue influence is successfully proven in a mortgage?
Mortgage will be unenforceable.
How does the bank ensure there is no undue influence?
- Lender must write to the party who the mortgage is not in their benefit explaining that they’ll require a letter from an independent solicitor confirming that the transaction has been fully explained to him/her.
- The ‘disadvantaged party’ has to nominate a solicitor.
- Lender sends all the info to that solicitor.
- Lender does not lend until they receive a letter.
What does the independent solicitor have to do in an undue influence mortgage scenario?
Must meet the party face to face and alone.
Must explain they are there to stop them from claiming undue influence later, emphasise risk and choice, keep detailed attendance note, confirm everything in writing, and send certificate to the bank.
What types of relationship can undue mortgage influence apply in?
Basically any relationship at all where it is not commercial and there are 2 owners.
Which relationships have an irrebuttable presumption of undue influence?
- Trustee/beneficiary
- Solicitor/client
- Doctor and patient
- Parent and child
Where is there a rebuttable presumption of undue influence in a mortgage?
Spouses
In addition to trust/confidence, what else must be shown for a claim for undue influence to succeed?
A transaction which requires explanation (e.g., why did X sign this?).
What determines the order of priority for legal mortgages?
Whichever was registered first, regardless of the order of creation.
What determines the order of priority between equitable mortgages?
The order of creation.
Will an equitable mortgage with a notice entered on the charges register rank ahead of subsequent legal mortgages?
Yes
Will an equitable mortgage with a notice entered on the charges register rank ahead of existing equitable mortgages?
No, order of creation still applies.
Can mortgage lenders agree to alter the mortgage priority rules?
Yes
What do mortgage lenders need to get to vary the order of priority?
A deed of priority AKA intercreditor deed.
Does a lender agreement to vary the order of mortgage priority need to be registered?
Yes
What 5 courses of action can a lender of a mortgage use on default?
- Debt action
- Possession
- Sale
- Receiver
- Foreclosure
When is a debt action likely to be used?
When the property has negative equity and doesn’t fully discharge the mortgage.
What is the limitation period for the recovery of mortgage debt for capital?
12 years from the deed date.
What is the limitation period for the recovery of mortgage debt for INTEREST?
6 years after deed.
For which 2 reasons would the lender want to take possession?
- To offer the property for sale with vacant possession
- To manage the property and derive an income from it to be applied towards the outstanding debt.
Is a mortgage lender expected to explore alternative arrangements prior to repossession?
Yes
What are the 3 procedural steps for the power of sale to be able to be used?
- Power of sale must have arisen in accordance with statutory rules
- Must be exercisable in accordance with statutory rules
- Lender must fulfil its dutieson sale which largely arise from case law.
What does a mortgage receiver do?
Try and generate income from the property.
Who is the receiver an agent for?
The borrower.
Why would a lender want a receiver and not just manage the property themselves?
Because they won’t be liable for negligence.
What is the main duty of a mortgage receiver?
Paying off the mortgage debt.
What is foreclosure?
Taking the whole property, even if the value is much larger than the remaining debt.
What is the court likely to do upon application for disclosure?
Order sale in lieu.
What can the borrower do after foreclosure if they have the means to pay?
Re-open the case.
What are foreclosure advantages from the perspective of the borrower?
Foreclosure extinguishes all other mortgages secured on the property and extinguishes contractual debt, so they cannot be personally pursued for surplus.
Is repossession a right or a remedy?
A right.
When can repossession be exercised?
As soon as the ink becomes dry.
What are the borrower’s safeguards against the right to possess?
- Criminal law act
- Pre-action protocol
- Common law jurisdiction to postpone
- Statutory jurisdiction to postpone.
How does the criminal law act protect against the right to possess?
It is a criminal offence to use or threaten violence to gain entry to a property.
How does the pre-action protocol protect against the right to possess?
Gives a set of steps lenders should file – possession should be a last resort.
How does the statutory jurisdiction to postpone protect against the right to possess?
Where the mortgage consists of a dwelling-house, the court can postpone the date for delivery if it appears to them that the mortgagor is likely able to pay in a reasonable time.
Does the statutory jurisdiction to postpone protect against the power of sale?
No
What is the starting point for a reasonable period under the statutory jurisdiction to postpone?
The remainder of the mortgage term.
What should a borrower requesting postponement of possession present?
A detailed financial plan showing how the loan and arrears will be paid off before the term expires.
Would a possession postponement be likely to be granted if there was evidence from an estate agent that there was a genuine offer to buy the property from the mortgagor?
Yes
Would instructing a solicitor to begin the home-selling process be sufficient to have a possession postponement granted?
No
Can postponement of possession be used if the lender used self-help?
No, an application for possession is required.
Does power of sale have to be express?
No, it can also be implied by statute.
Can statutory implied power of sale be modified by the mortgage contract?
Yes
When does the implied power of sale arise?
When the money becomes due.
When does the statutory right to sell arise for an interest-only mortgage?
At the legal redemption date.
If it is a capital+interest mortgage, when does the power of sale arise?
As soon as one portion of capital is due.
What happens if a lender sells after the power of sale has arisen but before it is exercisable?
- Sale to innocent purchaser will be valid
- Lender will be liable in damages to the borrower.
When does an express power of sale arise?
Whatever is written in the contract.
What are the three criteria that must be satisfied for the power of sale to become exercisable?
- Notice requiring payment has been served and the borrower defaulted
- Interest is unpaid and arrears for at least 2 months
- There has been some breach of another mortgage provision such as a covenant to keep the property insured.
For power of sale to be exercisable, does it have to be 2 full months interest, or just any small amount of interest unpaid for 2 months?
Any tiny portion of interest unpaid for 2 months.
What types of covenant breaches are likely to result in the power of sale being exercisable?
Anything that could affect the value of the property.
Who does the lender owe duties to when exercising the power of sale?
The borrower.
What happens to surplus proceeds after power of sale was exercised?
They go to the next entitled person.
Does a lender exercising power of sale owe a duty to obtain true market value or proper price?
Yes.
Is perfection as to price required? E.G., the highest price?
No.
Does a lender have unfettered discretion as to when to sell?
Yes.
What 3 things do lenders have to get expert advice on before selling?
- Method of sale
- Marketing strategy
- Reserve price.
