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Summary Proprietary rights and non-proprietary rights
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A notes summary of property law proprietary rights and non-proprietary rights
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Proprietary Rights and Non-Proprietary Rights:A fundamental question about property law which must be tackled is what it is about a ‘property’
right that makes it different from other kinds of legal rights, such as a contractual right. At its most
basic, and subject to issues such as effective protection (which we will consider later), the most
important distinctions are that a property right is generally enforceable against everyone. By
contrast, a contractual right is only enforceable against a limited class of other people. An example
of this is that a personal right relating to the house next door to you (such as using a short cut across
their garden) may be enforceable against your neighbour, but will not normally be enforceable
against the purchaser of that neighbour’s house. A property (or ‘proprietary’) right generally will. It
flows from this that whether a right is a property right, rather merely a personal right may have very
significant consequences. It should also be clear that there is often a close relationship between
property rights and the law of obligations.
In the spectrum of rights and interests in property the division between proprietary rights (which can
bind third parties) and non-proprietary rights (which do not) is not always very clear. The leading
case on this issue (National Provincial Bank Ltd v Ainsworth [1965] AC 1175) provides a ‘definition’
which is not particularly helpful, requiring a ‘property’ right to be definable, identifiably by third
parties, capable in its nature of assumption by third parties and have some degree of permanence or
stability. The problem with this test is that it describes the qualities of a proprietary right at least as
much as it sets a standard for them, so that there is a large degree of circularity.
Numerus Clausus:
In relation to land, at least, it is probably better to identify those types of rights which are clearly
proprietary and those which are not, rather than attempt to formulate clear principles for identifying
these. Accordingly, we will deal with the proprietary nature of rights in relation to the different
issues which we encounter. As a general rule, the courts have sought to restrict the number of
proprietary rights because of their potential ‘universality’ of effect. The limited number of
proprietary rights recognised by a legal system is described as the ‘numerus clausus’ – this is Latin
for ‘closed list’.
Lease/License:
The area where this distinction between proprietary/non-proprietary rights is most unclear is the
distinction between a lease and a ‘mere’ licence to occupy land. For the time being you should note
that the main requirement for a lease (or tenancy) is that the occupier has a right of ‘exclusive
possession’ conferred upon him or her free from the control of and able to exclude the ‘landlord’,
save in relation to limited residual rights to view the property, etc. The occupier and landlord will
also be bound by contractual undertakings contained in the lease, known as ‘covenants’. The crucial
factor in determining whether or not the relationship between the parties is a lease or a licence is
the intention of the parties, rather than the words used to describe the relationship.
Types of Leases:
The main types of leases in terms of duration are (a) Fixed Term and (b) Periodic. Fixed term leases
will be for a specific period, such as 99 years. Periodic leases (known as ‘periodic tenancies’)
, characterised by recurring periods, such as weekly, monthly or yearly. You will see from your reading
that a further form of lease (with very little security for the tenant) is a Tenancy at Will.
A further distinction that can be made is where a number of leases may exist for different periods of
time for the same property (you may recall the fragmented ownership of a pub from the
introductory property plenary). Such ‘chains’ of leasehold relationships use terminology such as
‘head’ and ‘sub’ or ‘under’ lease (lessor, lessee, tenant, etc). The person granting a lease is known to
hold the ‘reversion’ (which can be the leasehold reversion or the freehold reversion), as ownership
‘reverts’ to that person when the lease expires or ends for another reason. Transfers of leasehold
interests (or freehold reversions) are generally known as ‘assignments’.
Requirements for a Lease:
The main test for a lease is 'exclusive possession' as defined by case-law in this area.
A further requirement for a ‘lease’ is certainty of duration. Look at s. 205(1)(xxvii) of the Law of
Property Act 1925 and ask yourself how the types of lease outlined above fit into the requirements
for certainty of duration included in this definition (the wording is difficult, so don’t worry if this isn’t
clear, but do try to make sense of it).
Creation and Termination of a Lease:
Fixed term leases must be created expressly and the formalities may need to be followed – this will
be discussed in greater detail when we consider registration later in the course, but see the
information below about formalities as well. Periodic tenancies can be expressly created, but may
also be created by implication where a tenant goes into actual occupation with the landlord’s
consent and pays rent set by reference to a period of a week, month, etc.
Naturally, fixed term leases generally end at the expiry of the term fixed, though a tenant who stays
in possession and pays rent periodically may continue to ‘hold over’ as a periodic tenant. Periodic
tenancies require notice to be given (‘Notice to Quit’), and many fixed term leases have ‘break
clauses’, or other provisions whereby notice of termination can be given a party at set points, or
subject to certain conditions, within the fixed term period. There is a significant amount of legislative
regulation of the termination of leases in many contexts (particularly private residential tenancies),
as well as other aspects of the landlord and tenant relationship. Where a lease has terminated, the
landlord can take legal steps to remove a tenant still occupying the property.
A tenant can also end a lease by express or implied surrender, which is effectively giving up the
property to the landlord. Express would involve a deed, and implied would usually consist of the
physical vacation of the property.
Note that it is not just land which can be ‘leased’; many other types of property (including motor
vehicles and aircraft) are commonly leased.
Formalities:
Certain formalities must be satisfied for the explicit creation (and transfer) of rights in certain
property. The distinction between ‘legal’ and ‘equitable’ interests has been based upon the
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