Nature of Land Flashcards
The prospective buyer of a large freehold property has discovered that a number of third parties are claiming rights in the property. He has asked his solicitor to explain the formalities required to create these rights.
What third party rights must be created by deed?
A-An express trust interest.
B-An option to purchase the property.
C-An easement by prescription.
D-A lease for a term of five years.
E-A restrictive covenant.
Option D is the correct answer. A lease must be created by deed (s52 LPA 1925) unless it falls with the parol lease (A ‘parol lease’ is a short term (less than three years, usually) lease at full market rent which may be oral or written (but not by deed).) – this lease does not and so it requires a deed.
Option A is wrong because express trusts are created in writing (s53 LPA 1925).
Option B is wrong because an option to purchase does not need to be created by deed. It is sufficient that the agreement is in writing, contains all the agreed terms and is signed by (or on behalf of) both parties (s2 LP(MP)A 1989).
Option C is wrong because the very nature of a prescriptive easement is that it is not created by way of an express agreement between the parties. Therefore there are no formalities which need to be satisfied. There are, however, a number of conditions which must be met for a prescriptive easement to exist.
Option E is wrong because a covenant is an equitable interest. Whilst covenants are often created on sale of a part, with the covenants incorporated into the transfer deed, it is not essential that it be created by deed for it to take effect. The minimum formalities required are for covenants to be created in signed writing (s53(1)(a) LPA 1925).
A man owns the freehold of a large residential house. He has granted in favour of his neighbour a right of way on foot only along the footpath by the side of the house as a shortcut to the main public highway. This right was created expressly by deed. The deed provided that the right of way can be exercised only for so long as the neighbour owns their neighbouring property.
What third party right does the neighbour have over the man’s land?
A-A profit
B-A rent charge.
C-The benefit of a positive covenant.
D-A legal easement.
E-An equitable easement.
Option E is correct. An easement is a right for one landowner to make use of another person’s land for the benefit of their own land. The neighbouring landowner has been given a right of way over the company’s land. Although it has been created by deed, for an expressly created easement to be legal, the duration of the easement must either be unlimited in time (i.e. last forever) or for a fixed and certain duration (s1(2)(a) LPA 1925). The neighbouring landowner’s easement has been granted for an uncertain duration so it can only be equitable. An expressly created equitable easement which does not satisfy the duration requirements of s1(2)(a) LPA 1925 need only be created by signed writing to be validly created. The deed will satisfy this requirement.
Option A is wrong because a profit is a right to go on to someone else’s land and take from that land something that exists naturally. The neighbouring landowner only has a right to cross the company’s land.
Option B is wrong because a rentcharge is a right to receive a periodic payment charged on the land and there is no reference to this on the facts.
Option C is wrong because a positive covenant is one which requires the person entering into the covenant to go to some effort or expenditure to perform the obligation. This is not the case here.
Option D is wrong. As noted above, although easements are listed in s1(2) LPA 1925 and are capable of being legal, this easement does not satisfy the requirement for the duration to be either unlimited in time or for a fixed and certain duration. It therefore cannot be legal.
Quick Q:
A businessman owns of a number of freehold properties and is also the tenant under various leases of other properties. The businessman is considering various possible dealings with his property portfolio.
Which one of the following transactions does not require a deed to be valid at law?
The grant of a lease without a premium for a term of two years at market rent with immediate possession.
Parol lease exception:
The lease in this question falls within the parol lease exception: the term is for two years with immediate possession, the rent is a market rent (i.e. the best reasonably obtainable) and there was no premium (i.e. fine) paid.
Answer:Option D is correct. Although the general rule is that the creation or transfer of a legal estate or interest must be by deed (s52(1) LPA 1925), there are exceptions to that rule. One of those exceptions, known as the parol lease exception, comes from s54(2) LPA 1925 where the grant of a lease for a term not exceeding three years, taking effect in possession and at the best rent reasonably obtainable without a fine will create a legal lease. The lease in this question falls within the parol lease exception: the term is for two years with immediate possession, the rent is a market rent (i.e. the best reasonably obtainable) and there was no premium (i.e. fine) paid.
Option A is wrong because a legal lease for a fixed term of five years would not fall within the parol lease exception and would therefore need to be created by deed.
Options B and C are wrong because the sale of an existing legal lease and the sale of a freehold are both transactions involving the transfer of a legal estate and so the general rule from s52(1) LPA applies to them.
Option E is wrong because the creation of a charge by way of legal mortgage is the creation of a legal interest in land and therefore the general rule from s52(1) applies.
The buyer of a house has contacted you. He moved into the house last week and has discovered that the seller has removed the freestanding range cooker in the kitchen. The contract for the sale of the house did not mention the cooker.
Was the seller entitled to remove the cooker?
A-Yes, because the cooker is likely to be a chattel due to the slight degree of annexation
B-Yes, because a seller is entitled to remove any items it wants to on completion of the sale of the land
C-No, because the removal of a cooker would breach an implied covenant that there should be cooking facilities in a house
D-No, because a cooker will be a fixture as cookers are always intended to be a permanent addition to the land
E-No, because all items within a property are part of the land and must not be removed
As the contract did not deal with the cooker, whether it forms part of the sale depends on whether it is a chattel or a fixture. There are 2 tests to establish this – the degree of annexation and the purpose of annexation (the latter being the most important test). If an item is securely attached this raises the rebuttable presumption that it is a fixture whereas freestanding items are chattels. This presumption can be rebutted by contrary evidence as to whether the item was intended as a permanent addition to the land.
The cooker is described as “freestanding” as so would appear to be a chattel as it would have a low degree of annexation (and so A is correct) unless it could be argued that it is intended to be a permanent addition to the land. This is unlikely (and D refers to “always” and so is wrong). The case of Botham sets the precedent that white goods are likely to be chattels. B and E are wrong as previously explained, items can be fixtures or chattels and so may or may not be removed accordingly. C is wrong as there is no such implied covenant.
A man has agreed that a woman can take possession of a home for five years. The woman paid a premium of £10,000 at the start and pays a quarterly sum of £2,000. The agreement is in a written document that contains all the agreed terms and is signed by both the man and the woman. The signatures of the man and woman have not been witnessed.
What interest has been created by the document?
A-This is a valid legal lease as it was created using the correct formalities.
B-This is a valid legal lease as the woman will have a periodic quarterly tenancy.
C-This can only be a licence between the parties as the correct formalities have not been followed to create a lease.
D-This is an equitable lease, as though it has failed the formalities required to be legal, equity will enforce such a contract.
E-This is an equitable lease as the agreement to enter into the lease here will be enforceable under equity.
Option D is correct. As the lease complies with s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, equity will enforce the contract created under the doctrine in Walsh v Lonsdale.
Option A is wrong as the correct formalities for a deed set out in s.1 LP(MP)A 1989 have not been complied with. A deed is ordinarily required to create a legal estate in land, ie the document must make clear on its face that it is a deed, and it must be signed, witnessed and delivered.
Option B is wrong as this cannot be a legal periodic tenancy as the tenant has paid a premium (a fine) so cannot rely on s54(2) of the Law of Property Act 1925.
Option C is wrong as equity can intervene as per option D above.
Option E is wrong as we are told on the facts that the lease was entered into and it is a failure of formality which makes the lease equitable.
Key points in this Q:
A solicitor has been instructed by a man who is in the process of buying a registered freehold property. The solicitor has discovered that there are a number of third parties who are claiming rights to the property and the man would like an explanation of the formalities required to create these rights.
What third party rights do not require to be created by deed?
A-A legal lease for a term of two years taking effect in possession at a market rent with a premium having been paid.
B-A legal lease for a term of five years.
C-A charge by way of legal mortgage.
D-A legal easement created by prescription.
E-An express legal easement for a period of seven years.
Option D is correct. The general rule is that legal estates and legal interests must be created by deed. Easements are capable of being legal as long as they are equivalent to one of the two legal estates. The facts would imply this is the case. The very nature of a prescriptive easement is that it is not created by way of an express agreement between the parties. Therefore there are no formalities (i.e. a deed) which need to be satisfied. There are, however, a number of conditions which must be met for a prescriptive easement to exist.
Option A is wrong. A legal lease for a term of two years taking effect in possession at a market rent without a premium being paid falls under the parol lease exception and parol leases do not have to be created by deed to take effect as legal leases. However, here a premium has been paid and so it does not fall within the parol lease exemption and a deed will be required.
Option B is wrong as a legal lease for five years does not fall within the parol lease exemption and so a deed is required.
Option C is wrong as all legal mortgages require a deed.
Option E is wrong as an express legal easement for either a fixed period or the equivalent of a freehold estate (forever) must be created by deed (s52(1) LPA 1925).
Last year, the owner of a piece of land sold part of that land to a buyer. In the transfer deed, the owner granted the buyer a right of way over the owner’s retained land for the rest of the buyer’s life.
What interest does the buyer hold in the owner’s retained land?
A-An equitable easement.
N-A legal lease.
C-A legal restrictive covenant.
D-A legal easement.
E-An equitable lease.
REMEMBER DIFFERENCE BETWEEN LEASE AND EASEMENT (EXCLUSIVE POSESSION)
Option A is the correct answer. An easement allows a landowner to make use of another piece of land for the benefit of his own land. The buyer’s right of way over the owner’s retained land meets that description. The right possesses the essential characteristics of an easement as laid out in Re Ellenborough Park. An easement is capable of being a legal interest but must comply with the criteria in s1(2)(a) LPA 1925. This means that the easement must be granted for a period equivalent to a fee simple absolute in possession (i.e. freehold which can last forever) or a term of years absolute (i.e a lease which must be granted for a fixed duration). The easement granted on these facts does not correspond with either of those periods and therefore cannot be legal. It can only be equitable. It is irrelevant that it has been created by a deed.
Option B is wrong. Although leases created by deed for a term exceeding three years can be legal, a lease requires exclusive possession to be granted for a fixed duration. Neither of those are present on the facts.
Option C is wrong. A restrictive covenant is a promise by one landowner not to do something on or with their land which is given to another landowner. No such promise has been given on the facts here.
Option D is wrong. As indicated above with the explanation for Option A, this easement cannot be legal as it was not created for an appropriate duration.
Option E is wrong for the same reason as Option C. The buyer does not have exclusive possession of the owner’s land for a fixed period of time so there is no lease.
A client has entered into a contract to sell a piece of land comprising a house and garden. There is a large and very heavy stone statue which stands on a plinth and the plinth is concreted into the terrace in the centre of the garden. The contract is silent as to whether the client will be removing the statue on completion.
There is now a dispute between the client and the buyer. The buyer is claiming that the statue is part of the land and should not be removed on completion.
Which of the following statements best describes how the buyer may successfully argue their claim?
A-Given that the statue is large and heavy and will be difficult to move, it may be argued that it is a fixture and should not be removed on completion.
B-Statues are always classed as fixtures and, therefore, this statue should not be removed on completion.
C-The plinth is a fixture and it may be argued that, as the statue is standing on the plinth, the statue is also a fixture and should not be removed on completion.
D-The statue may rest on its own weight but if its purpose is to permanently enhance the garden, it may be argued that it is a fixture and should not be removed on completion.
E-The statue is a chattel because it is resting on its own weight. All chattels are part of the land and should not be removed on completion.
Option D is the correct answer. Fixtures are included in the definition of land whereas chattels are personal property. Accordingly, if the buyer successfully argues that the statue is a fixture, the buyer can insist that it is not removed on completion. Chattels, as personal property, can be removed on completion.
The statue is resting on its own weight and this gives rise to a rebuttable presumption that it is a chattel. However, if the purpose of placing the statue on the plinth was to permanently enhance the land, this may rebut the presumption and the statue may be regarded as a fixture.
Option A is wrong as the size and weight of the statue and the difficulty in moving it are irrelevant as to its classification. If there were a high degree of attachment to the land, this would only raise a presumption that the statue was a fixture. The application of the purpose of annexation test would be conclusive as to its ultimate classification.
Option B is wrong as not all statues are fixtures (see e.g. Berkley v Poulett).
Option C is wrong as the classification of the plinth is irrelevant as to the classification of what is sitting on it.
Option E is wrong for two reasons: first, it does not consider the purpose of the placing of the statue and secondly, because it states that chattels are part of the land.
Quick Q:
A freehold owner entered an agreement (not in the form of a deed) to grant a five-year lease with a tenant. The parties have never formalised the arrangement.
Which of the following answers best describes the circumstances in which equity would intervene to recognise the arrangement?
The agreement must be in writing, signed, contain all the expressly agreed terms and the tenant must have clean hands.
Option C is correct. Equity may intervene to recognise the agreement if there is a contract complying with s2 of the Law of Property (Miscellaneous Provisions) Act 1989 (which requires the written contract to incorporate all the expressly agreed terms and be signed by or on behalf of all parties) and the tenant has clean hands (Walsh v Lonsdale).
Option A is not the best answer as it omits the need for the contract to comply with s2 LPMPA, in particular the need for the contract to incorporate all the expressly agreed terms.
Option B is wrong. A lease is capable of being legal.
Option D is not the best answer. A five-year lease requires a deed in order to be legal (s.52 LPA 1925 and s1 LPMPA 1989), but this is not relevant to whether equity will recognise the arrangement.
Option E is wrong as it is the tenant who needs to demonstrate clean hands.
A man has agreed that a woman can take possession of a home for five years. The woman paid a premium of £10,000 at the start and pays a quarterly sum of £2,000. The agreement is in a written document that contains all the agreed terms and is signed by both the man and the woman. The signatures of the man and woman have not been witnessed.
What interest has been created by the document?
A-This is a valid legal lease as it was created using the correct formalities.
B-This is a valid legal lease as the woman will have a periodic quarterly tenancy.
C-This can only be a licence between the parties as the correct formalities have not been followed to create a lease.
D-This is an equitable lease, as though it has failed the formalities required to be legal, equity will enforce such a contract.
E-This is an equitable lease as the agreement to enter into the lease here will be enforceable under equity.
Option D is correct. As the lease complies with s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, equity will enforce the contract created under the doctrine in Walsh v Lonsdale.
Option A is wrong as the correct formalities for a deed set out in s.1 LP(MP)A 1989 have not been complied with. A deed is ordinarily required to create a legal estate in land, ie the document must make clear on its face that it is a deed, and it must be signed, witnessed and delivered.
Option B is wrong as this cannot be a legal periodic tenancy as the tenant has paid a premium (a fine) so cannot rely on s54(2) of the Law of Property Act 1925.
Option C is wrong as equity can intervene as per option D above.
Option E is wrong as we are told on the facts that the lease was entered into and it is a failure of formality which makes the lease equitable.
