LECTURE 1 exchange it with one another. In this case, the contract
becomes binding when exchanged.
CONTRACTS
The contract may also refer to another document which will then be
INTRODUCTION: incorporated into the contract by reference. – eg. on sale, repair works
may be a required to be carried out by the seller and in this case, the
s.1 Law of Property Act 1925 All estates and interests in land are contract may refer to the seller report.
capable of being proprietary rights, and you will find the list below. If
a right is not on the list, it cannot be proprietary, it can only be personal s.2 Formalities are required when acquiring a freehold estate.
– meaning that the right is not attached to the land.
Acquiring a freehold:
If I sell my house to Adam, then Adam will be bound by proprietary
rights in the land benefiting Lucy, even if Adam is only a third party and Process:
he never agreed to these arrangements.
STAGE 1 – Contract:
Personal rights to do bind third parties and the only remedy for breach The buyer and seller will enter into a contract for sale. This will set out
will be damages paid by the grantor, not the subsequent owner. the contract price, the agreed completion date, and the key term.
Prior to entering into the transaction, the buyer will carry out:
Estates in land: • searches of the land
• will have instructed a surveyor to carry out structural reports,
1. Freehold: *Outright ownership* • see whether the owner actually has the right to sell it,
• burden on the land,
Freehold = “fee simple absolute in possession”, meaning that it • interests which the land had the benefit of
can be inherited by anyone with immediate right to possession
and it will not expire. – it will last for an unlimited time. When satisfied with the condition of the property and everything else,
then will go ahead with the contract. Once exchanged, the deal
All land must have a freehold owner. If the owner cannot be becomes binding and both parties are legally obliged to go ahead with
traced, the ownership is held by the Crown. the sale. This is done by dating the contract.
s.1(1)(a) Law of Property Act 1925 Freehold is one of the STAGE 2 – Deed:
estates in land. The seller transfers the property to the buyer.
2. Leasehold: *Renting* STAGE 3 – Registration of Title:
The buyer will be registered with the Land Registry as the new owner.
Leasehold = “term of year absolute”, meaning an estate
granted out of freehold. The owner of a freehold could choose Effect of a binding contract:
to rent someone a leasehold estate of all or part of the land. –
it will last for a fixed period of time – eg. 4 weeks, 4 years, any Seller = has absolute ownership of freehold.
period.
Seller and buyer enter into a s.2 compliant contract
s.1(1)(b) LPA 1925 Leasehold is one of the estates in land.
Both estates in land sit below the Crown’s ownership.
Seller still has the legal title, but at this point,
Interests in land: Buyer now has an equitable interest, an “estate contract”.
Interest in land = a powerful right which one person has over another’s “Equity regards done which ought to be done.” – The buyer has an
land. These rights do not confer a right to possession. equitable interest in the land which can be enforced.
1. Easements – Such as a right of way This equitable interest is capable of binding third parties.
2. Mortgages – Loans for a house
3. Restrictive covenants – Eg. cannot operate a business Remedies for breach:
4. Estate contracts • Damages for breach of contract – available as a right
5. Beneficial interest behind a trust • But also equitable remedies as the buyer has possibly lost the
house of their dreams:
Legal or equitable interests? • Coatworth v Johnson Specific performance for the sale
to go ahead
There are two types of interests in land, legal or equitable. • Injunction to stop the seller to sell the house to
someone else
s.1(2) LPA 1925 List of legal interests:
• Easements Coatworth v Johnson Equitable remedies are not available as a right,
• Mortgages but these are granted at the court’s discretion. If the buyer has also
breached the contract or is in the wrong for any other reason, the
s.1(3) List of equitable interests: equitable remedy may not be granted. “You must come with clean hand
• Estate contracts for equity to grant relief.”
• Restrictive covenants
• Beneficial interests behind a trust 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):
• Must be in writing
• Must contain all the terms of the agreement
AND
• Both parties must sign the contract – but contracts may be
exchanged – here the parties sign their own copies and
CONTRACT FORMALITIES:
Land law – Lecture notes | Page 1 of 32
, Held: the question for the court was whether a variation to the contract
Types of estate contracts: relating to land need to comply with s.2. It has been decided that any
¾ Deliberately created contracts: variations to the origin of contract must also comply with Section 2 as
• Contract to grant a lease – Walsh v Londsdale deciding otherwise would undermine having s.2 in place because
• Contract to sell freehold land solicitors would then just make variations to the original contract
• Option to purchase without actually complying with s.2
• Right of pre-emption (= an exclusive right to buy a land
within a period of time, such as 6 months/a year. It is
also a right of first refusal, if the seller was still happy to
sell the land, the buyer with the right of pre-emption
had to be offered the land before other buyers)
¾ Inadvertently created contracts/Failed legal estates and
interest:
• Equitable easements
• Equitable mortgages
• Equitable leases
These contracts (1. and 2.) must all comply with the s.2 LP(MP)A
formalities.
No need to comply with s.2 LP(MP)A:
1. Contract to grant a lease with a term not more than 3 years –
s.54(2) LPA 1925
2. Auctions
3. The creation of rights in property under resulting, implied or
constructive trusts – s.53(2) LPA 1925
Cases on s.2 LP(MP)A 1989:
Firstpost Homes v Johnson If only the plan was signed and the contract
was not, then contract does not comply with s.2.
Facts: the parties have reached an oral agreement. The seller has then
typed out a letter stating that he agrees to sell the buyer the land
showed on the enclosed plan in consideration for the sum of £1,000.
The seller signed and dated the letter and signed the plan. The buyer
however just signed the plan and not the letter. The seller then
subsequently died and the buyer filed a case requesting specific
performance.
CA held: the letter was the actual contract and signature on the plan
only did not suffice. There was no s.2 compliant contract because the
lack of signature on the letter.
Tootal Clothing v Guinea Properties When the formalities are used to
get out of obligations and the contract relating to land also contains
another term, the court may uphold that term even if it did not comply
with s.2.
Facts: Tootal Clothing had been granted a lease for 25 years. The tenant
was to carry out fitting works to the property. On satisfactory
completion of these works the owner of the land was to pay the tenant
£30,000. The landlord failed to pay the money once the work has been
completed and he claimed that the contract did not comply with s.2.
Held: the court view this as an attempt by the landlord to get out of the
contract after the completion has taken place. The contract to do these
works was a separate agreement which was distinct from the contract
to create a lease and did not need to comply with s.2
Wright v Robert Leonard Developments The remedy of rectification
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.
Oun v Ahmad The remedy of rectification may be rejected if the
omitted term was expressly excluded (not by mistake).
North Eastern Properties v Coleman A contract contains all the terms
if it contains all the terms relating to the property.
Facts: a contract for the sale of 11 flats was entered into. The final sale
price included a 10% discount per flat from the average price of these
types of flats on the market. In the actual contract only 8% of the
discount was reflected and it was agreed that the buyer would then
submit a separate invoice to get the other 2%. Seller entered into
litigation for specific performance against the buyer.
CA Held: the buyer argued that because the 2% discount was omitted
from the contract this meant that the contract was not s.2 compliant as
it did not contain all the terms that were agreed in relation to the sale.
Court rejected this argument and upheld their argument of the seller
ordering specific performance. The reasoning behind the judgement
was that the contract was still compliant with the formalities as they did
contain all the terms relating to the property as only the 8% discount
was relating to the property and the other 2% was relating to the wider
transaction.
McCausland v Duncan Lawrie A variation to the contract must also
comply with s.2 in order for it to be valid.
Facts: two solicitors agreed on a completion date that fell on a Sunday.
After noticing this they agreed aurally that they would make sure to
complete the transaction the preceding Friday. However this did not
happen and one of the solicitors issued a notice to complete. The
question was whether this agreement to change the completion date
was enforceable.
Land law – Lecture notes | Page 2 of 32
, LECTURE 2 Creation:
CREATION AND TRANSFER s.52 LPA 1925 Must be created by a deed, except if the lease is for 3
years or less.
ACQUIRING A FREEHOLD – STAGE 2 (DEED): s.1 LP(MP)A 1989 Sets out the requirements of a deed – the deed must
comply with the requirements.
s.52(1) LPA 1925 A legal estate must be transferred or created by a
deed. Transfer (assignment):
Must be transferred by a deed, even if it was not created by a deed. –
Deed = the document that transfers the legal estate to the buyer. eg. maybe because the lease was for 3 years or less.
s.1 LP(MP)A 1989 Deed formalities: When having a long-term lease but the leaseholder does not need the
• Must be clear on the face of the document that it is intended to land, they may want to find someone else to take on the lease. In this
be a deed case, the lease will be transferred (assigned).
• Validly executed by the Seller/transferor:
¾ signed in the presence of a witness (over 18 and not a Exception to deed requirement:
member of the family) and s.54(2) LPA 1925 Need not register leasehold if:
¾ delivered/dated. 1. It is for a term of 3 years or less AND
2. Fixed term/express periodic/implied periodic
The back of an envelope could amount to a deed if it complies with
these requirements. s.54(2) LPA 1925 Document need not even be in writing if:
1. In possession
s.2 LP(MP)A 1989 Effects of an invalid deed: 2. Best rent (= market rent)
• Treats the failed deed as a contract – a promise to convey the 3. With no fine or premium paid
estate
• This entitled the buyer to insist on the transfer of the freehold. s.54(2) LPA 1925 Creation of a short lease can be oral or implied and
• The contract must still comply with s.2 LP(MP)A formalities the law will recognise it.
Crago v Julian (1992) But you cannot assign an existing lease orally. Any
Example: assignment must be done by deed.
The parties have already agreed to sell the house and a date for
completion is agreed. A deposit will then be paid by the buyer to the
seller and at this point, the buyer now has an equitable interest in the
REGISTRATION OF A LEGAL LEASE:
house (estate contract). Legal lease for more than 7 years:
s.27 LRA 2002 Substantive registration requirement: The lease must
On the date of completion, the buyer solicitor will send the purchase be registered and will be entered into the Charges register of the
money to their client. Once received the seller solicitors will call the freehold title.
buyer solicitor and at this moment both parties will date the deed they
hold that will then be signed by their client in the presence of a witness. Effects of non-registration: it will not be a valid lease, simply an
At this stage, the house will have been transferred to the buyer. equitable lease until registered.
ACQUIRING A FREEHOLD – STAGE 3 (REGISTRATION): Legal lease for 7 years or less:
Sched 3 para 1 LRA 2002 No registration needed, but leaseholder does
Today most land is registered at Land Registry which will show proof have an overriding interest so their interest is binding on third parties
of ownership. However, before this system came into existence and their interest will override the rights of a purchaser. – As no
ownership of land was proved by showing title deeds to the buyer. This registration is needed, this lease will not appear on the title, but a buyer
task has proved to be administratively difficult as the title deeds often will still be bound.
dated back hundreds of years and contained the transfer documents
for each transaction (chain of ownership of land). CREATION AND TRANSFER OF LEGAL INTERESTS:
You are free to check any address on the system for £6. s.1(2) LPA 1925 Lists the interests that are capable of being legal:
• s.1(2)(a) Easements for a duration equivalent to a legal estate
This system was introduced in 1925 by the LPA 1925. Although this new – forever or for a set period of time.
system was introduced about 100 years ago still to this day around 20%
of all land in England and Wales remains unregistered. 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
Land Registration Act 2002 Made registration compulsory on all sales easement.
of land and other transactions.
Easement = the right to use or restrict the use of another’s land
What happens after a transaction: without taking anything from it. – eg. a right of way, right of
• If land is sold, the buyer must register themselves as the new drainage, right of car park, right of light, right of storage.
owner of the land with Land Registry.
• At this stage the seller’s name will be replaced by the buyer’s • s.1(2)(c) Charges by way of legal mortgage or rights granted
name at the Proprietorship Register. over property as a security for a loan.
Registration is compulsory for: Mortgage = when a loan is taken out from a third party and as
• s.4 LRA 2002 First registration of unregistered land on a security for the loan the third party is granted right over the
triggering event (=eg. sale of land). property to make sure that if the loan payments are missed the
• s.27 LRA 2002 On the disposition of land already registered. third party can enforce their rights over the land instead.
Events which trigger registration under s.4 and 27 LRA 2002: • s.1(2)(e) Rights of entry (forfeiture).
• Sale of land
• Gifting of land Rights of entry = rights of a landlord to enter the property to
• Assent of land on inheritance recover physical possession of it if the tenant is in breach of a
• Grant of a mortgage key term. This allows the landlord to recover the property and
• Grant of a lease for more than 7 years end the lease.
Effect of non-registration: s.7 LRA 2002 Formalities for the creation of legal interests:
• If non-registration of registered land – legal title not acquired.
Buyer has equitable title which can be enforced Creation:
• If non-registration of unregistered land – legal title passes with s.52 LPA 1925 Must be created by a deed, except for implied
deed but reverts to the seller after 2 months. Buyer has easements.
equitable title which can be enforced s.1 LP(MP)A 1989 Sets out the requirements of a deed – the deed must
comply with the requirements.
A land may remain unregistered if no triggering events occurred since
the LRA came into force.
Substantive registration:
• If the servient land is registered, the legal interests must also be
CREATION AND TRANSFER OF A LEGAL LEASE: registered to be valid. – s.27(2)(d) and (f)-(e) LRA 2002
Land law – Lecture notes | Page 3 of 32
, • If the servient land is unregistered, legal charge triggers first
registration which becomes compulsory – s.4(1)(g) LRA 2002 Improperly created/failed legal estates or interests:
¾ Equitable easements
CREATION AND TRANSFER OF EQUITABLE INTERESTS: ¾
¾
Equitable mortgages
Equitable leases
Creation of equitable interests:
Equitable interest can arise:
• If inherently equitable:
¾ Not on the list in s.1(1) or s.1(2) LPA
¾ It was recognised as a proprietary right pre-LPA 1925
¾ s.1(3) LPA All other estates and interests will be held to
be equitable interests.
¾ s.53(2) LPA Must be created in writing and signed by
the grantor to be valid.
• If failed legal interests:
¾ They are on the list in s.1(1) or s.1(2) LPA
¾ Legal formalities have not been complied with (not by
deed or not registered) so were improperly created
¾ But they do comply with s.2 LP(MP)A 1989
• If grantor has an equitable estate:
¾ Grantor’s estate is not legal
¾ If someone doesn’t have a legal estate, they cannot
grant a legal interest out of their estate.
Equitable interests are still proprietary rights and can bind third parties.
Formalities:
• s.53 LPA Must be in writing and signed by the grantor except:
¾ Beneficial interests behind an implied trust
¾ Equitable interests arising by way of an estoppel
• If the interest is an estate contract, it must also comply with
s.2 LP(MP)A
¾ Estate contract that is deliberately created OR
¾ Failed legal lease, mortgage or easement
Main types of equitable interests:
Restrictive covenants:
Restrictive covenant = a land owner separates a part of its land and
sells it off to a buyer who will then promise not to do certain things on
the land likely in return for payment over lower than market price. –
eg. not to play bagpipes on the land, not to sell alcohol on the land.
Beneficial interest behind a trust:
A trust exists whereby one party holds legal title to property for the
benefit of another. As the beneficiary only owns the benefit of the
property which is an equitable right, they can only enforce the right in
equity.
Trusts can be express or implied.
Example – express trust:
If Adam decides to declare himself a trustee over property that he owns
and he declares himself to hold this property for the benefit of his son
Bill he will have expressly declared a trust.
Example – implied trust:
If Bridget and Tommy buy a house together. The legal title off the house
is in the name of Tommy but Bridget has also contributed to the
purchase price of the property even though her name is not on the title
deed. Equity will recognise Bridget's contribution and she will also hold
unequitable title to the house together with Tommy as it would be
unfair for only Tommy to own 100% of the house when Bridget has put
money towards the purchase price. This happens on the basis of a
resulting trust. Bridget can enforce or even sell her equitable interest
to a third party even if the trust was implied.
Estate contracts:
Estate contracts are a type of equitable interest. Equity recognises that
the moment a contract is entered into, the buyer has a legal right to
property but also an equitable right called an estate contract. While the
legal right to the property is only valid if the contract complied with the
formality requirements, an estate contract will be valid in any event.
One of the remedies of an equitable interest is specific performance
which is enforceable against third parties.
Types of estate contract:
Deliberately created estate contracts:
¾ Contract to sell freehold land
¾ Contract to grant a lease – Walsh v Londsdale
¾ Option to purchase
¾ Right of pre-emption
Land law – Lecture notes | Page 4 of 32
