PROPRIETARY RIGHTS AND CONTRACTS Legal or equitable interests?
There are two types of interests in land, legal or equitable.
PROPRIETARY RIGHTS:
s.1(2) LPA 1925 List of legal interests:
Proprietary rights = rights concerning the ownership of land. • Easements
• Mortgages
Proprietary rights may:
1. Vary – they may be extensive or quite narrow. – eg. possession s.1(3) List of equitable interests:
of the land to the exclusion of others is an extensive rights, while • Estate contracts
the right to fish on property is more narrow. • Restrictive covenants
2. Concern what you can or cannot do over the land that you • Beneficial interests behind a trust
physically possess. – eg. possession might not mean that ability
to carry on a business on the land. What is included in land?
3. Be numerous over one land – so possible to have more than 1.
Rights relation to a land will extend to:
Proprietary rights are distinctive: 1. The surface of the land
As land is unique and generally an expensive purchase, so the rights 2. The lower airspace above the land
surrounding it are distinctive. Proprietary rights are enforceable against 3. The ground below the surface area
the person who granted it, and also against those who come over to the 4. Buildings/Parts of buildings found on land
land. 5. Wild plants growing on land (not including commercially grown
plants which will belong on the person who planted them)
There may be lots of proprietary rights over one piece of land. However, 6. Wild animals killed on the land (not including living animals that
Land law tries to ensure that any given land is not overburdened by a don’t belong to anyone)
multitude of rights being exercised over it. There may be rights over a 7. The soil over which water flows (up to the middle of the river if
land that are not given proprietary status, these rights remain personal flowing between two plots)
only. 8. Incorporeal hereditaments = intangible rights that benefit the
land
9. Fixtures on the land
Proprietary rights Personal rights The lower airspace above the land:
• Rights in rem = Enforceable • Rights in personam = Enforceable
against the land itself only against the person who Only part of the airspace will be deemed as part of the land which is
• If the holder of the right is granted it and not against the land.
denied that rights, they will be • The only option for breach of a
necessary for the ordinary enjoyment of land.
able to seek action to recover personal right is sue for breach of
the land. contract Anchor Brewhouse Developments v Berkley House (Docklands
• Enforceable against third • Not enforceable against third Developments) Ltd Invasion of the lower airspace amounts to trespass.
parties parties
Civil Aviation Act 1982 Aircraft may pass over land at a reasonable
height without it being deemed as trespass.
OWNERSHIP OF LAND:
Bernstein of Leigh (Baron) v Skyviews & General Ltd Interference with
All land in England and Wales is technically owned by the Crown. At the upper airspace will not amount to trespass.
most, individuals could have an estate in land.
The ground below the surface area:
Estate in land = proprietary rights in land to physically possess, use,
enjoy and deal with the land to the exclusion of others. This includes mines and minerals
s.1 Law of Property Act 1925 All estates and interests in land are Coal Industry Act 1994 Coal is automatically owned by the Coal
capable of being proprietary rights, and you will find the list below. If Authority.
a right is not on the list, it cannot be proprietary, it can only be personal
– meaning that the right is not attached to the land. Fixtures on the land:
Personal rights to do bind third parties and the only remedy for breach Where a chattel has become attached to the land/building on it, it may
will be damages paid by the grantor, not the subsequent owner. become a part of the land by becoming a fixture.
Holland v Hodgson This will depend on:
Estates in land: 1. Degree of annexation to the land/building – the greater the
annexation, the more likely it is a fixture. If no annexation, then
1. Freehold: *Outright ownership* it is a chattel only.
Freehold = “fee simple absolute in possession” – it will last for AND
2. Purpose of annexation
an unlimited time.
All land must have a freehold owner. If the owner cannot be Melluish v BMI The label the parties give to the object is not conclusive
of its status.
traced, the ownership is held by the Crown.
s.1(1)(a) Law of Property Act 1925 Freehold is one of the estates Degree of annexation:
in land.
Chelsea Yacht Houseboat can be removed without damage despite
2. Leasehold: *Renting* attachments to land so this means it is a chattel. A permanent home
Leasehold = “term of year absolute”, meaning an estate granted is not necessarily a fixture.
out of freehold. The owner of a freehold could choose to rent Elitestone Ltd v Morris If it is not possible to move shack without
someone a leasehold estate of all or part of the land. – it will last destroying it, despite no attachment to land, it is a fixture. If a
for a fixed period of time – eg. 4 weeks, 4 years, any period. sculpture can be removed without damage or diminishing its
s.1(1)(b) LPA 1925 Leasehold is one of the estates in land. inherent beauty, it is deemed to be a chattel.
Both estates in land sit below the Crown’s ownership. Purpose of annexation:
Interests in land: Hamp v Bygrave This is the dominant test of the two.
Interest in land = a powerful right which one person has over another’s Botham v TSB Bank If the object is intended to be permanent and
land. These rights do not confer a right to possession. provide lasting improvement to building, it is deemed to be a fixture.
If temporary and not necessary, it will be a chattel. – eg. bath, sink,
1. Easements – Such as a right of way lavatory = fixtures; dishwasher, cooker, curtains = chattels.
2. Mortgages – Loans for a house
3. Restrictive covenants – Eg. cannot operate a business Leigh v Taylor Only fixed for personal enjoyment. – eg. tapestry or
4. Estate contracts an artwork is a chattel.
5. Beneficial interest behind a trust
Land law – All chapters – Revision notes | Page 1 of 28
, Holland v Hodgson Dry-stone wall, per Blackburn J, is a fixture “Equity regards done which ought to be done.” – The buyer has an
despite no attachment due to purpose. equitable interest in the land which can be enforced.
D’Eyncourt Tapestries, stone statues, garden seats, vases, integral to This equitable interest is capable of binding third parties.
design of land are fixtures.
Remedies for breach:
Holland v Hodgson Purpose of annexation is judged objectively. • Damages for breach of contract – available as a right
• But also equitable remedies as the buyer has possibly lost the
house of their dreams:
Other factors: • Coatworth v Johnson Specific performance for the sale
to go ahead
Botham v TSB Bank List of other factors the court will take into • Injunction to stop the seller to sell the house to
account: *Extra marks* someone else
* If the object is part of the overall design of the building
* The moveability of the object – if moved regularly, probably Coatworth v Johnson Equitable remedies are not available as a right,
a chattel but these are granted at the court’s discretion. If the buyer has also
* Damage caused to the land/building when moved – if great breached the contract or is in the wrong for any other reason, the
damage, likely a fixture equitable remedy may not be granted. “You must come with clean hand
* Installation of the object – if installed by a builder, likely a for equity to grant relief.”
fixture, if installed by an independent contractor, likely a
chattel.
Acquiring a leasehold:
FORMALITIES FOR LAND CONTRACTS: Process:
Land contracts require additional requirements to normal contracts STAGE 1 – Contract: s.2 LP(MP)A
studied in contract law as property is the highest value asset you can
contract on and therefore, additional safeguards are required. STAGE 2 – Deed:
Exception: no need for a deed if the lease is for 3 years or less
Normal contract rules apply – these will not be assessed;
• Offer STAGE 3 – Registration of Title:
• Acceptance Exception: no need to register title if the lease is for 7 years or less
• Consideration
• Intention to create legal relations Effect of a binding contract:
• Absence of Misrepresentation
The same as above, a contract will create an equitable estate if the
s.2 Law of Property (Miscellaneous Provisions) Act 1989 Formalities formalities have been complied with.
for contracts created by an interest or estate in land (contract on/after
27/09/1989): CONTRACT FORMALITIES:
• Must be in writing
• Must contain all the terms of the agreement Types of estate contracts:
AND ¾ Deliberately created contracts:
• Both parties must sign the contract – but contracts may be • Contract to grant a lease – Walsh v Londsdale
exchanged – here the parties sign their own copies and • Contract to sell freehold land
exchange it with one another. In this case, the contract • Option to purchase
becomes binding when exchanged. • Right of pre-emption (= an exclusive right to buy a land
within a period of time, such as 6 months/a year)
The contract may also refer to another document which will then be
incorporated into the contract by reference. – eg. on sale, repair works ¾ Inadvertently created contracts/Failed legal estates and
may be a required to be carried out by the seller and in this case, the interest:
contract may refer to the seller report. • Equitable easements
• Equitable mortgages
s.2 Formalities are required when acquiring a freehold estate. • Equitable leases
Acquiring a freehold: These contracts (1. and 2.) must all comply with the s.2 LP(MP)A
formalities.
Process:
No need to comply with s.2 LP(MP)A:
STAGE 1 – Contract: 1. Contract to grant a lease with a term not more than 3 years –
The buyer and seller will enter into a contract for sale. This will set out s.54(2) LPA 1925
the contract price, the agreed completion date, and the key term. 2. Auctions
3. The creation of rights in property under resulting, implied or
Prior to entering into the transaction, the buyer will carry out: constructive trusts – s.53(2) LPA 1925
• searches of the land
• will have instructed a surveyor to carry out structural reports, Cases on s.2 LP(MP)A 1989:
• see whether the owner actually has the right to sell it,
• burden on the land, Firstpost Homes v Johnson If only the plan was signed and the contract
• interests which the land had the benefit of was not, then contract does not comply with s.2.
CA held: the letter was the actual contract in this case and signature on
When satisfied with the condition of the property and everything else, the plan only did not suffice. There was no s.2 compliant contract
then will go ahead with the contract. Once exchanged, the deal because the lack of signature on the letter.
becomes binding and both parties are legally obliged to go ahead with
the sale. This is done by dating the contract. Tootal Clothing v Guinea Properties When the formalities are used to
get out of obligations and the contract relating to land also contains
STAGE 2 – Deed: another term, the court may uphold that term even if it did not comply
The seller transfers the property to the buyer. with s.2.
Facts: Tootal Clothing had been granted a lease for 25 years. The tenant
STAGE 3 – Registration of Title: was to carry out fitting works to the property. On satisfactory
The buyer will be registered with the Land Registry as the new owner. completion of these works the owner of the land was to pay the tenant
£30,000. The landlord failed to pay.
Effect of a binding contract: Held: the court view this as an attempt by the landlord to get out of the
contract after the completion has taken place.
Seller = has absolute ownership of freehold.
Wright v Robert Leonard Developments The remedy of rectification
Seller and buyer enter into a s.2 compliant contract may be available if:
1. A term, previously available to the parties that was intended to
be included in the contract is omitted by mistake AND
2. It would be unjust not to amend the contract.
Seller still has the legal title, but at this point,
Buyer now has an equitable interest, an “estate contract”. Oun v Ahmad The remedy of rectification may be rejected if the
omitted term was expressly excluded (not by mistake).
Land law – All chapters – Revision notes | Page 2 of 28
, • Grant of a lease for more than 7 years
North Eastern Properties v Coleman A contract contains all the terms
if it contains all the terms relating to the property. Effect of non-registration: s.7 LRA 2002
Facts: a contract for the sale of 11 flats was entered into. In the actual • If non-registration of registered land – legal title not acquired.
contract, only 8% of the discount was reflected and it was agreed that Buyer has equitable title which can be enforced
the buyer would then submit a separate invoice to get the other 2%. • If non-registration of unregistered land – legal title passes with
CA Held: the buyer argued that because the 2% discount was omitted deed but reverts to the seller after 2 months. Buyer has
from the contract this meant that the contract was not s.2 compliant as equitable title which can be enforced
it did not contain all the terms. Court rejected this argument. The
contract was still compliant with the formalities as they did contain all A land may remain unregistered if no triggering events occurred since
the terms relating to the property as only the 8% discount was relating the LRA came into force.
to the property and the other 2% was relating to the wider transaction.
McCausland v Duncan Lawrie A variation to the contract must also
CREATION AND TRANSFER OF A LEGAL LEASE:
comply with s.2 in order for it to be valid. Creation:
Facts: two solicitors agreed on a completion date that fell on a Sunday. s.52 LPA 1925 Must be created by a deed, except if the lease is for 3
After noticing this they agreed orally that they would make sure to years or less.
complete the transaction the preceding Friday. However this did not s.1 LP(MP)A 1989 Sets out the requirements of a deed – the deed must
happen and one of the solicitors issued a notice to complete. The comply with the requirements.
question was whether this agreement to change the completion date
was enforceable. Transfer (assignment):
ACQUIRING A FREEHOLD – STAGE 2 (DEED): Must be transferred by a deed, even if it was not created by a deed. –
eg. maybe because the lease was for 3 years or less.
s.52(1) LPA 1925 A legal estate must be transferred or created by a
deed. When having a long-term lease but the leaseholder does not need the
land, they may want to find someone else to take on the lease. In this
Deed = the document that transfers the legal estate to the buyer. case, the lease will be transferred (assigned).
s.1 LP(MP)A 1989 Deed formalities: Exception to deed requirement:
• Must be clear on the face of the document that it is intended to s.54(2) LPA 1925 Need not register leasehold if:
be a deed 1. It is for a term of 3 years or less AND
• Validly executed by the Seller/transferor: 2. Fixed term/express periodic/implied periodic
¾ signed in the presence of a witness (over 18 and not a
member of the family) and s.54(2) LPA 1925 Document need not even be in writing if:
¾ delivered/dated. 1. In possession
2. Best rent (= market rent)
The back of an envelope could amount to a deed if it complies with 3. With no fine or premium paid
these requirements.
s.54(2) LPA 1925 Creation of a short lease can be oral or implied and
s.2 LP(MP)A 1989 Effects of an invalid deed: the law will recognise it.
• Treats the failed deed as a contract – a promise to convey the Crago v Julian (1992) But you cannot assign an existing lease orally. Any
estate assignment must be done by deed.
• This entitled the buyer to insist on the transfer of the freehold.
• The contract must still comply with s.2 LP(MP)A formalities REGISTRATION OF A LEGAL LEASE:
Example: Legal lease for more than 7 years:
The parties have already agreed to sell the house and a date for s.27 LRA 2002 Substantive registration requirement: The lease must
completion is agreed. A deposit will then be paid by the buyer to the be registered and will be entered into the Charges register of the
seller and at this point, the buyer now has an equitable interest in the freehold title.
house (estate contract).
Effects of non-registration: it will not be a valid lease, simply an
On the date of completion, the buyer solicitor will send the purchase equitable lease until registered.
money to their client. Once received the seller solicitors will call the
buyer solicitor and at this moment both parties will date the deed they Legal lease for 7 years or less:
hold that will then be signed by their client in the presence of a witness. Sched 3 para 1 LRA 2002 No registration needed, but leaseholder does
At this stage, the house will have been transferred to the buyer. have an overriding interest so their interest is binding on third parties
and their interest will override the rights of a purchaser. – As no
ACQUIRING A FREEHOLD – STAGE 3 (REGISTRATION): registration is needed, this lease will not appear on the title, but a buyer
will still be bound.
Today most land is registered at Land Registry which will show proof
of ownership. However, before this system came into existence
ownership of land was proved by showing title deeds to the buyer. This
CREATION AND TRANSFER OF LEGAL INTERESTS:
task has proved to be administratively difficult as the title deeds often s.1(2) LPA 1925 Lists the interests that are capable of being legal:
dated back hundreds of years and contained the transfer documents • s.1(2)(a) Easements for a duration equivalent to a legal estate
for each transaction (chain of ownership of land). – forever or for a set period of time.
You are free to check any address on the system for £6. Eg. an easement for life is not a legal interest as it is not forever
and not for a set period of time. This can only be an equitable
This system was introduced in 1925 by the LPA 1925. Although this new easement.
system was introduced about 100 years ago still to this day around 20%
of all land in England and Wales remains unregistered. Easement = the right to use or restrict the use of another’s land
without taking anything from it. – eg. a right of way, right of
Land Registration Act 2002 Made registration compulsory on all sales drainage, right of car park, right of light, right of storage.
of land and other transactions.
• s.1(2)(c) Charges by way of legal mortgage or rights granted
What happens after a transaction: over property as a security for a loan.
• If land is sold, the buyer must register themselves as the new
owner of the land with Land Registry. Mortgage = when a loan is taken out from a third party and as
• At this stage the seller’s name will be replaced by the buyer’s security for the loan the third party is granted right over the
name at the Proprietorship Register. property to make sure that if the loan payments are missed the
third party can enforce their rights over the land instead.
Registration is compulsory for:
• s.4 LRA 2002 First registration of unregistered land on a • s.1(2)(e) Rights of entry (forfeiture).
triggering event (=eg. sale of land).
• s.27 LRA 2002 On the disposition of land already registered. Rights of entry = rights of a landlord to enter the property to
recover physical possession of it if the tenant is in breach of a
Events which trigger registration under s.4 and 27 LRA 2002: key term. This allows the landlord to recover the property and
• Sale of land end the lease.
• Gifting of land
• Assent of land on inheritance Formalities for the creation of legal interests:
• Grant of a mortgage
Land law – All chapters – Revision notes | Page 3 of 28
