LAND LAW
· Property
· Real/Personal rights
· Real/Personal property
· Land (definition)
· Corporeal Hereditaments
· Incorporeal Hereditaments
· Law/Equity
· Trusts
· Tenures/Estates
· Types of legal estates (broken down)
· 1925 legislation key points
v Property DEF: the condition of owning or being owned. In Law property is a RELATIONSHIP not a possession.
Distinction between real and personal rights.
Ø Real rights:(in rem) refer to a relationship between a person a and a thing. This applies to everybody.
Ø Personal rights: refers to relationship between certain persons such as in the sale of a house.
Distinction between real and personal property.
Ø Real property: land and all interest in land. This only refers to non-movable objects such as a house. This also includes abstract objects such as a tenancy agreement.
Ø Personal property: this refers to all movable objects and rights under a contract. This is also referred to as chattel.
Definition (legal): land of any tenure, an mines and minerals, whether or not held apart from the surface, buildings or parts of buildings (whether the division is horizontal, vertical or made in any other way) and other corporal hereditaments: also a manor, and an easement, right privelege, or benefit in, over, or derived from land.
Includes the land itself (soil, stones etc and everything that is fixed to it such as a garden wall or any machinery bolted to a factory floor.
These are rights classified as ‘real property’. For example it includes a right of way.
The common law protects LEGAL rights and interests. Equity protects equitable rights and interests. For example if person A who owned a house told his girlfriend that it was half hers but didn’t legally give her half and let her spend money on it and then sold it, she would have an equitable claim to a share of the sale but no legal right. In this way legal and equitable rights can run alongside each other. A judge can place emphasis on either which increases the role of JUDICIAL INTERPRETATION in the rule of law. Equitable interests can also fill in the gaps left by common law.
TRUSTS
Arises when property is held upon trust from another. For example if person A is to inherit a property upon turning eighteen from person B, this is ‘upon trust’. Until person A turns 18 they have no legal interest in the property but do have an equitable interest. The owner (person B) does have a legal interest. Person A is termed the ‘beneficiary’ and person B is the ‘trustee’
Tenure refers to the terms on which land is held. This doctrine is now for practical purposes obselete. The basis for modern land ownership is the system of estates. An estate descibes the duration for which the land is to be held.
There are two types of legal estates. There were more before the 1925 legislation (discussed later). Since the 1996 Trust of Land and Appointment of Trustees Act all legal estates being created must be done so by the proper legal methods stipulating all clauses. These can be created by trusts or formal writing.
Ø Fee simple absolute in possession (freehold): Can have any estate (duration) as long as there are still persons entitled to take the property under a will or under intestacy. Intestacy is when no legal will has been made but equitable interest is found upon appeal.
Ø Terms of years absolute (leasehold): This refers to when the estate is a fixed term. For example a piece of land or an office apartment may be let to private individuals or a firm for a period of 2 years.
¨ Determinable fee simple: Estate automatically comes to an end only when a specified event which may never occur happens, e.g “to person A until they qualifies as a barrister”. Before the 1996 Trust of Land and Appointees of Trustees Act this was an equitable interest. It is now a trust.
¨ Conditional fee simple: Estate which has a condition attatched to it which may cut it short. For example “to person A on condition that he does not qualify as a barrister” or “on condition that he does not marry person B”
¨ Fee simple upon condition precedent: Estate in which fee simple does not arise until a contingent is met. For example “to Rosie if she passes her degree”
Concerns FUTURE interests. Remainder refers to the passing of the estate to person B from person A. Reversion refers to the clause that at the end of the grant, the estate is passed back to the original grantor.
FEE TAIL ESTATES (ENTAILS)
Since the 1996 Trusts of Law Act there have been no new fee tail estates. The estate describes an estate which is to be passed upon through the hereditary line only. Since the 1925 legislation the only estates of this nature have been equitable.
LIFE ESTATES
An estate which is granted for life.
The only interests or charges in or over land which are capable of subsisting or being conveyed or created at law are-:
1) An easement: Right to use property which is not your own or to take something from it. For example this includes the public’s right to walk on pathways or to take wood from a forest.
2) A rentcharge: Rent paid on land other than under a lease or mortgage. This is very rare now.
3) Charge by way of legal mortgage: Contract of debt repayments with the property as security in case of persistent non-payment of dues.
4) Other charges created by instrument: Very rare again. Usually refers to sub-section charges by statute.
5) Rights of entry: This clause enables the landlord to recover the property should the tenant breach the duties of the lease i.e. rent payments.
LAND LAW 2
· ENFORCEABILITY OF 3RD PARTY INTERESTS-UNREGISTERED LAND
· Legal/Equitable interests in the sale of land
· Overreachable interests
· Interests registrable as land charges
· Effects of registration
· Effects of non-registration
· TYPES OF LAND CHARGES (A-F-A,B and E unimportant)
· Land Charges class C
· Land Charges class D
· Land Charges class F
· Legal/Equitable interests in the sale of land
· Doctrine of notice
· Interests still governed by doctrine of notice
· Types of notice
ENFORCEABILITY OF THIRD PARTY INTERESTS IN THE SALE OF LAND
Legal/Equitable interests in the sale of land
q Legal interests in unregistered land survive dealings with land and bind purchasers irrespective of notice.
q Equitable interests in unregistered land are overreachable; registrable as land charges or governed by the doctrine of notice.
The doctrine of overreachable interests ensures that the purchaser of land takes that land free from certain equitable interests, which effected it before the purchase. Equitable interests are converted from interests in the land to interests in the proceeds of the sale. In effect those with equitable interests have their interests bought off them in the sale. They have to accept a reasonable price according to the law. Section 2 LPA 1925 explains this.
Interests registrable as land charges
The Land Charges Act 1972 replaced the Land Charges Act 1925.
ü Land charges are charges attached to land such as legal mortgages or covenants (agreement to undertake something).
ü Land charges must be registered against the name of the ‘estate owner’ whose estate is intended to be affected. For the purpose of registration the correct name of the estate owner must be the name which appears on the conveyance or legal mortgage.
ü Registration of land charges is deemed to constitute ‘actual notice’ (LPA 1925 s198(1)).
All legal and equitable interests have to be registered. However many equitable interests are not registered because the public are often naïve of the law.
§ When a freeholder registers land, the effect of registration is then extended to the leaseholder. The freeholder (trustee) is the person who owns the legal interest in land while the leaseholder (the beneficiary) is the person who leases the interest in land normally through a land charge.
§ When a question arises as to whether a person had knowledge of a registered land charge at the time of entering a contract to buy the land, the question shall be determined by reference to their actual knowledge. In this case registration does NOT constitute actual knowledge as it does in LPA 1925 s198. This is according to the Law of Property Act 1969 s25.
¨ Land charges of classes A,B,C(I),C(ii) and F, if unregistered are void against a purchaser of any interest in land (legal or equitable).
¨ Land charges of classes C(iv),D(I),D(ii) and D(iii), if unregistered, are void only against a purchaser for money or money’s worth of a legal estate in the land.
¨ A purchaser is defined in LPA 1925 s17(1) as ‘any person (including a mortgagee or lessee) who for valuable consideration, takes any interest in land’. Valuable consideration’ means they have to pay for the land.
Interests registrable as land charges (listed as A-F)
Most important are classes C and D.
Class C land charges (Land Charges Act, LCA s2(4)
i. The puisne mortgage: A puisne mortgage is a legal mortgage which is not protected by a deposit of the documents relating to the legal estate affected.
ii. The limited owner’s charge
iii. The general equitable charge
‘a general equitable charge is any equitable charge which-:
a) Is not secured by a deposit of documents relating to the legal estate affected; and
b) Does not arise or affect an interest arising under a trust of land or a settlement; and
c) Is not a charge given by way of indemnity (statement of liability to pay compensation for any loss) against rents equitably apportioned or charged exclusively on land in exoneration (to say that someone who has been blamed should not have been) of other land and against the breach or non-observance of covenants and conditions; and
d) Is not included in any other class of land charge
iv. The estate contract. The estate contract is defined in the LCA s2(4) as “a contract by which an estate owner or by a person entitled at the date of the contract to have a legal estate conveyed to him to convey or create a legal estate, including a contract confirming either expressly or by statutory implication a valid option (explained below) to purchase, a right of pre-emption (explained below) or any other like right”
An option gives a right to demand at any time that the owner conveys the agreed estate or interest to the owner provided that the latter has satisfied any conditions which were attached to the option.
Class D Charges (LCA 1925, s2(5)
Only D(ii) and D(iii) are of interest.
ii. Comprises the ‘restrictive covenant’ (agreement not to do something). This covenant or agreement restricts the use of land (e.g. an agreement between two owners of land not to use their residential properties for business purposes). This land charge must have been made after the LCA came into force on 1/1/1926 and must not be between lessors and a lessee.
iii. Comprises of equitable easements’. These are easements, rights or privileges over land which is merely an equitable interest.
Class F Charges (LCA s2(7))
Matrimonial home rights under Part IV of the Family Law Act 1996 are registrable in the context of unregistered land as Class F Land Charges. Family Law Act 1996 s30 gives spouses who are not legal owners of the matrimonial home ‘rights of occupation’ in the home. This applies only to properties which ARE OR WERE intended to be a matrimonial home for the legal owner and their spouse.
Legal/Equitable rights in the sale of land
The principal difference lies in their effect on third parties. Legal rights are good against all of the world. Equitable rights are good against all persons except the bona fide purchaser of a legal estate for value without notice who can rightfully claim to be a purchaser (terms explained in doctrine of notice).
If A agrees to sell land to B with a covenant to do so (written agreement or contract) but then refuses to the following happens. The legal remedy of breach of contract is in Tort-damages can be claimed. The equitable remedy is that the contract has to be adhered to (the courts can force the sale to go through).
Doctrine of notice
Where the doctrine of notice still applies, the purchaser to avoid being bound by equitable interests must show that they are-:
Ø ‘Bona fide’: In good faith.
Ø A purchaser: that they received the property otherwise that by the operation of law. That is, it is to be bought through the proper application of the law (not black market etc.).
Ø Of a legal estate: The type of estate (duration of tenancy SEE LAND LAW 1) must be a legal one (Fee simple absolute in possession or Terms of years absolute in possession.
Ø ‘for value’: purchaser is ‘purchaser in good faith for valuable consideration’. Value includes money, money’s worth and marriage consideration. It does not include ‘nominal consideration in money’ (LPA 1925 s205 (xxi).
Ø ‘without notice’: the purchaser must not know of any equitable interest. Formal registration of equitable notice may sometimes constitute actual notice to the purchaser. The LPA 1925 s199(1) states “purchaser is deemed to have notice of those matters which ‘would have come to his knowledge if such inquires and inspections had been made as ought reasonably to have been made by him”.
Main categories are-:
i. Interests excluded from operation of overreaching and from registration of Land charges under the LCA 1925. E.g. restrictive covenants entered into BEFORE 1926 and equitable easements created or arising before 1926 (when the LCA came into force).
ii. Interests excluded by the interpretation of the courts from operation of overreaching and from registration system.
iii. Equitable interests which are overreachable, but which have not been overreached because the purchaser failed to pay two trustees.
¨ Actual notice: real knowledge that a person has of something. Land registration constitutes actual notice under s198 of the LPA 1925.
¨ Constructive notice: Notice which the law makes available to those seeking it. For example all interests in the last 15 years have to be checked.
¨ Imputed notice: Hard to prove. Notice which is suggested in any way.
LAND LAW 3
· OVERVIEW OF COURSE SO FAR (UNCLEAR POINTS-WHOLE OF LAND LAW 3).
· Registration of Land charges-problems
· LAND CHARGES ACT
· Enforceability of interests in unregistered land
· Most important classes of Land Charge (5 – with DEFS)
· Effects of registration and non-registration of land charges
· Registration
· Non-registration
· Section 199 of the 1925 LPA
· Estoppel
Interests registrable as land charges (LPA section 2-easement etc.-Land 1) are often not registered because the public don’t know of the need to register them. Therefore parties can lose out in certain circumstances. The Law is tough on this point to secure efficiency though at the expense of justice. Taking each case on it’s individual merits would very often be very expensive and would leave the law uncertain.
Enforceability of Interests in unregistered land
Legal interests in unregistered land will bind a purchaser with or without notice of their existence except for a puisne mortgage.
Equitable interests in unregistered land fall into 3 categories-:
¨ Those which are overreachable (converted into interests in the profit of a sale) as equitable interests cannot continue from one owner to another.
¨ Those which are registrable as land charges under the Land Charges act (LPA section 2).
¨ Those which continue to be governed by the equitable doctrine of notice.
ü C(I) Puisne Mortgage: (pron.puny)-legal mortgage which is not protected by the deposit of the documents relating to the legal estate affected.
ü C(iv) Estate Contracts: the contract agreeing the sale of land from one party to another including ‘options’ and ‘rights of pre-emption’ Options cover the right of the purchaser to demand the conveying of the land to them by the owner if the purchaser has met the terms of the contractual agreement (such as paid the price). Rights of pre-emption are merely rights of first refusal. If A decides to sell a property with B having rights of Pre-emption, B has the choice of whether to make the first bid. If they have a bid refused and the owner later sells to someone else at a price not above B’s , B has a right to purchase the property.
ü D(ii) Restrictive Covenants: An agreement not to do something. For example two owners of residential houses may make an agreement for neither of them to use their properties for business.
ü D(iii) Equitable easements: These are easements, rights or privileges over land of merely equitable interest (for example those created before 1926).
ü F) Matrimonial home rights: Rights of occupation in the matrimonial home for those spouses who are not the legal owners of the home.
REGISTRATION
Registration constitutes ‘actual notice’ to all persons for all purposes (s198 LPA 1925).
v Classes C(I) and F are void against the purchaser of any interest in land.
v Classes C(iv), D(ii) and D(iii) are void only against a purchaser for money or money’s worth of a legal estate in the land.
Section 199 of the 1925 LPA
A purchaser “shall not be prejudicially affected by notice” of an interest which is void against them because it has not been registered.
Estoppel
Estoppel is the rule that a person cannot reopen a matter once it as been decided by court. Estoppel by deed is the rule that a person cannot deny having done something which is recorded in a deed. Estoppel by conduct is the rule that no-one can deny things which they have done or failed to do which have had an affect on another persons actions if that person has acted in any way which relied upon the other’s behaviour. In land law this is evident in a persons equitable interests being made void if they did not register them as explained above.
LAND LAW 4
· Registration of title
· Unregistered land (title check)
· Registered land (title check)
· History of registration
· Principals of registration
· Mirror Principal
· Curtain Principal
· Insurance Principal
· The Register itself (what’s on it)
· Mechanics of registration
· Grades of title
· Kinds of interests in land
· Registrable interests
· Minor interests
· Overriding interests
· Conditions triggering first registration (since 1997 LRA)
· Subsequent registration
· Registrable interests and charges
· Types of entry on the register
Registration of title
There are two types of title existing in law varying in whether they have been registered or not.
¨ Title Deeds System (unregistered)
¨ Registrarion of title (registered)
Unregistered land (title check)
The purchaser has to check on the title for the last 15 years (statutory requirement – the register only contains 15 years worth). Purchaser has to enquire about any land charges and equitable interests. This is very expensive and very time consuming for the purchaser.
Registered land (title check)
This eliminates the examination of the title. The central register (of each area-can be borough, city or other area) is checked as opposed to the title deeds. The purchaser can find out any third party interests and can ensure that the seller is in a position to sell. However not all overriding interests are registered but they are all binding. Efficiency is held at the expense of justice. This title system is cheap, easy and accesable.
§ Pre 1926: Registration was not compulsory but was possible. It was however still very rare.
§ 1925 LRA: Registration still not compulsory but pressed forward.
§ 1967-95: Voluntary registration restricted
§ 1990 LRA: Registration compulsory for all new conveyances and transfers and all new lands created.
§ 1997 LRA: Registration also compulsory on all gifts of land.
Mirror Principal
Register should inform reader of everything (except overriding interests) and should be kept up to date.
Curtain Principals
Details of trusts are kept off the title. Any equitable interests are overreachable. That is they are converted into interests in the proceeds of the sale.
Insurance Principal
The accuracy of the register is guaranteed. Indemnity (compensation) for loss due to errors on the register possible. However overriding interests are not included in the indemnity.
The Register itself (what’s on it)
The register is in two copies and three parts. The owner’s copy is called the Land Certificate. The Land certificate is not proof of title as it is not necessarily up to date. The three parts are as follows.
q Property Register: Describes the type of the estate. Also refers to a plan or map showing where the property is. It also includes interests in land that are registered.
q Proprietorship register: Name and address of the owner and the grade of the title (see types of grades later).
q Charges register: Details of any third party interests affecting the land which are registered.
Until the 1988 LRA, the register could only be seen by the proprietor and those given permission by the proprietor. Since the act, anyone can see it who pay’s the charge.
Mechanics of registration
Ø Title to the land has to be proved
Ø Buyer has to apply for first registration
Ø Registry check title of land and complete registration
Ø Buyer has to apply for registration within 2 months of conveyance. Otherwise their legal interests in the land are passed back to the seller but only on trust for the buyer to reapply.
The register itself is proof of title. If a person is registered as a proprietor, they hold the legal estate.
Grades of title
There are four different grades of title (entered on the proprietorship register). They are as follows-:
¨ Absolute title: This is the MOST COMMON. With Freehold estates it is subject to only overriding and minor interests. The title is cured of any defects by the process of overreaching. It is the same with leasehold estates but also includes all covenants, obligations and liabilities. It also guarantees the lease itself was legitimately granted.
¨ Qualified title: Very rare. Property is held subject to any estates. For example with previously unregistered land, if the buyer did not look back 15 years and would have found interests if they had, the title is not a legal interest.
¨ Possessory title: Possible to acquire interests in land simply by being in occupation in them. Owners of this title can apply for it to be upgraded to absolute title. This title includes ‘squatters rights’.
¨ Good Leasehold title: Same as absolute title except that the title is not guaranteed even if the lease is. If it later comes to knowledge that the lease should not have been granted due to unknown interests in the property, the lease is removed.
Kinds of Interests in Land
There are three different interests in land. They are as follows-:
· Registrable interests
· Minor Interests
· Overriding interests
Registrable interests
Registrable in their own right. They must be capable of subsisting as legal estates (Fee simple absolute in possession or Term of Years absolute-of more than 21 years only to prevent cluttering register). Before 1986, it was leases of 40+ years that had to be registered though leases of 21-40 years could be registered voluntarily but at a cost to the individual.
Minor Interests
Defined in s. 3 LRA 1925. They are all interests in registered land other than registrable interests, registered charges and overriding interests.
ü They cannot be registered in their own right. They have to be registered on the Property register.
ü Nearly always equitable such as
- land charges in unregistered land
- equitable easements (D(iii))
- Restrictive covenants (D(ii))
- Estate contracts (C(iv))
ü Interests of beneficiaries under trusts of land or strict settlements, which are capable of being overreached on a sale of land.
ü Any other equitable interests or rights in or over land
ü Interests or rights acquired under dispositions by the registered proprietor which have not yet been registered.
Overriding interests
Interests which bind the purchaser regardless of notice. Often not registered so efficiency held at the expense of justice. These interests are not overreachable, they are overriding.
Conditions triggering first registration of land (since 1/1/98- from 1997 LRA
v A conveyance on sale of a fee simple
v The grant of a lease for a term exceeding 21 years
v The assignment of a lease with more than 21 years left to run
v Conveyances, grants or assignments by way of gift or pursuant to a court order
v Dispositions of a fee simple or lease with more than 21 years to run affected by assent, vesting assent or assent deed
v First legal mortgages protected by the deposit of documents of a fee simple or lease with more than 21 years to run.
Subsequent dealings with registered land
§ Registered land = Transfer
§ Unregistered land = Conveyance
§ Must be recorded in the register to transfer the title.
§ Transfer itself only passes over the equitable interests. The legal interests are only passed to the purchaser when the register has been amended.
Registrable interests and charges
¨ Legal easements created by express grant must be noted on the property register of the land benefiting from it, and on the charges register of the land burdened by it.
¨ Legal mortgages created by registered charge (special category of interest) are registered by an entry on the charges register of the title to which they relate. The proprietor of the charge i.e. mortgage lender, is then issued with a charge certificate and the land certificate is retained by the land registry.
Types of entry on the register
There are four types of entry on the register which are all listed below.
· Notice: Use for land interests which would be registrable as land charges in the context of unregistered land. Entered on charges register on the appropriate title. Land notice on unregistered land (i.e. Class Civ), Dii), Diii) and F). Consent of registered Proprietor must be present (to get land certificate) except for class F charges.
· Caution: Use to protect almost all forms of minor interest. Enter on the proprietorship register. Land certificate NOT required. Effect is that no dealings with the land should be registered without the consent of the ‘cautioner’ or without the ‘cautioner’ being given the opportunity to substantiate their claim.
· Restriction: RARE. Use to note on the register any limitations on the powers of the registered proprietor of the land to deal with the land. Entered on the proprietorship register of the relevant title. As with a notice, the land certificate must be produced.
· Inhibition: VERY RARE. An order of the court or registrar forbidding dealings with the land either until a certain event or indefinitely. It is used only in rare circumstances such as bankruptcy or emergency.
LAND LAW 5
· Failure to protect minor interests
· Case (FAILURE TO PROTECT MINOR INTERESTS)
· Peffer V Rigg
· Minor interests becoming overriding
· Actual Occupation
· Types of overriding interest
· Case (ACTUAL OCCUPATION)
· Chokhar V Chokhar
· City of London Building Society V Flegg
· Abbey National Building Society V Cann
· Williams & Glyns Bank Ltd. V Boland
· Ferris Hurst case
· Strand Securities V Caswell
· Paddington Building Society V Mendhelsohn
· Lloyds Bank PLC V Rossett
Failure to protect minor interests
Not enforceable against a purchaser of land for value unless protected by an entry on the register. This would normally be in the form of a notice or caution but can be a restriction or caution (all in Land Law 4).
Case (FAILURE TO PROTECT MINOR INTERESTS)
Peffer V Rigg
The plaintiff and the first defendant bought a house as an investment and home for the first defendants mother in law. The house was put into the first defendants name to be held on trust for himself and the plaintiff. The house was divided into two flats. The lower one was occupied by the mother in law and the upper one was rented out to cover the mortgage costs. The first defendants wife moved into the upper flat which concerned the plaintiff. The plaintiff drew up an express trust stating the original purposes of the original purchase which bound the fist defendant. The first defendant and his wife divorced. As part of the divorce settlement the first defendant transferred the fee simple of the property over to his wife for nominal consideration of £1 (which constituted money or money’s worth). It was intended that she took over the mortgage repayments for the upper flat. To do this she needed to re-let the upper flat. The plaintiff claimed that the re-letting of the upper flat and selling of the trust were in breach of the trust. He also contended that the second defendant (the ex-wife) held the house 50% on trust for him as a beneficiary as the first defendant had done. She denied knowledge of him and that she made reasonable enquires about existence of such a person. She also claimed that re-letting the flat was not in breach of the trust. The court held: The express trust was only valid against the first defendant because it had not been registered against all subsequent owners. The plaintiff lost their beneficial interest due to failure to register. The re-letting was also justified to repay the mortgage.
A minor interest can be overriding as well as minor. The owner of a beneficial interest under a trust who is actual occupation of a property has an overriding interest. That beneficial interest under a trust is a minor interest. A beneficial interest under a trust could be bought about by a financial contribution to the property in way of mortgage repayments or contribution to the purchase price. SEE LATER NOTES ON PASCOE v TURNER IN ESTOPPEL. Those interests can still be overreached by payment to two or more trustees. Those interests are then converted into interests in the proceeds of a future sale.
Actual Occupation
For actual occupation under s 70(1)(g) (as below) there must be a degree of permanence to residing in the property concerned. There must also be a degree of settled or established occupation.
Types of overriding interest
Five most important types include-:
ü A) Easements
ü F) Adverse possession rights
ü G) Rights of every person in actual occupation of the land, save where enquiry is made of such person and the rights are not disclosed.
ü H) Rights excepted from the effect of registration of less than absolute title.
ü K) Leases granted for a term NOT exceeding 21 years.
Case (ACTUAL OCCUPATION)
Chokhar V Chokhar
The defendant who owned the legal title to the matrimonial home sold it at a discount to a friend while his wife was in hospital giving birth to their child. He did so without her knowledge or consent. She had been contributing to the mortgage repayments which constitutes a beneficial interest under a trust. Although she was in hospital at the time she was still in actual occupation by virtue of her belongings being in the house, her stay in hospital being only a short one and her intention to move back into the house. Her interest was overriding on the purchaser.
City of London Building Society V Flegg
A couple bought a house for £34000 for themselves and the wife’s parents to reside in. The parents contributed £18000. The remainder was to be raised by the couple in a loan. The couple were registered as the proprietors AND as joint beneficial owners of the beneficial interests under a trust for sale (pre 1997). The couple obtained two further loans without the knowledge of their parents which they defaulted on. The building society made no enquires about the parents interest which was not registered but apparent by virtue of their belongings being in the house. The parents claimed their interests were beneficial under a trust (by virtue of contributing to the purchase price) and in actual occupation. They therefore claimed an overriding interest. Court held: The payment was made to the two trustees (the couple) which overreached the parents overriding interest. Their interests were therefore converted into proceeds of a future sale.
Abbey National Building Society V Cann
The first defendant acquired a loan off the plaintiff to buy a house for which he claimed he would be the only occupant. He actually intended to live there with his mother and her fiancé who had contributed to the purchase price. He took out further loans which his mother and her fiance did not know about. He defaulted on the loans and the building society sought repossession. The mother and her fiance claimed actual occupation and a beneficial interest under a trust by virtue of contribution to the purchase price. They had the beneficial interest but not actual occupation. This is because their occupation of the property had been fleeting before the property was transferred but after the payment was advanced. The loans were defaulted on before the completion (transfer of land) before the couple had had a chance to move in. Therefore they did not have actual occupation under s 70(1)(g)(above) because there was no degree of permanence. Actual occupation applies from the moment the interest is created (transfer of land).
Williams & Glyns Bank Ltd V Boland
Husband was the registered proprietor of a house to which the wife had contributed money towards in the way of mortgage repayments and contributions to the original purchase price. Therefore she had a minor interest of a beneficial interest under a trust. She was also in actual occupation so she had an overriding interest. The loan was defaulted upon and a repossession order was granted. Court held: As the bank failed to make reasonable enquires about the existence of the wife’s interests, her interest was overriding. It was not overreached because payment could only be paid to one trustee (the husband).
Ferris Hurst case
Occupation of part of premises only. Occupation of sub-under-lease with option to purchase. Minor interest-beneficial interest under a trust combined with actual occupation under s 70(1)(g). Court held the option to purchase was for the whole property. NB: The Law commission has recommended rights should be overriding for parts of the property only.
Strand Securities V Caswell
In 1949 the freeholders granted a 42 year lease to the first defendants wife. In 1952 she granted a 39 year sub-lease to her husband, the first defendant. This lease was never registered in any way (in it’s own right as a lease over 21 years or as a notice or caution.). Later in 1952, the wife transferred her lease to Critalls who were made aware of the sub-lease an accepted rent of the husband. In 1961 the freeholders granted a 99 year lease to the company T Ltd. T Ltd. Then sought possession off Critalls who in turn served notice on the husband. Later in 1961 the husband allowed his stepdaughter to live rent-free in the property to help her through some matrimonial problems. He left the property. In 1962 the superior lease was transferred to the plaintiffs who knew of the sub-lease. They tried to evict the stepdaughter. They claimed the sub-lease was void due to it’s not being registered. The husband (first defendant) claimed an overriding interest. He claimed a beneficial interest under a trust by virtue of his rent payments. He also claimed actual occupation. The courts held: He was not in actual occupation as there was no permanence due to his not living there for a substantial period of time. His stepdaughter was not in actual occupation on his behalf because he was not receiving any rent off her or making payments to her to look after the property on his behalf.
Paddington Building Society V Mendelsohn
A mother and son agreed to buy a flat. The mother paid roughly half the purchase price. The rest was raised by the son in way of legal mortgage from the plaintiffs. The house was put in the sons sole name. The society had no knowledge of the mother. The son and his girlfriend moved in in July. The mother moved in in August an the transfer and execution of mortgage was in October. The son then defaulted on the repayments. The society obtained a possession order. The mother claimed an overriding interest by virtue of actual occupation and a beneficial interest under a trust. The courts held: Without any express trust or agreement at the time of the purchase it must be imputed that the mothers interest must not take priority over the mortgagee. The claim for an overriding interest was struck out due to the imputed intentions at the time of the sale. An overriding interest cannot be claimed where the interest upon which it is founded does not itself have prioritee over the transferee.
Lloyds Bank PLC V Rossett
Rossett bought a derelict house. The wife had been supervising the builders during reconstruction. The husband took out a mortgage without telling the wife and defaulted on it. A repossession order was granted. The wife claimed she had interests in the property and was in actual occupation by virtue of her constant supervision and instructions to the builders on the site. The courts held: Actual occupation must have some kind of continuity and can vary in it according to the particular circumstances. The test is whether a prospective purchaser upon enquiry would be able to tell that someone is in occupation there. The wife had actual occupation of a derelict property (but notably wouldn’t have were it not derelict). This was upheld by the Court of appeal. The House of Lords decided she didn’t have a beneficial interest and so did not investigate actual occupation.
LAND LAW 6
· Proprietary Estoppel
· Assurance
· Reliance
· Case (RELIANCE)
· Re Basham
· Detriment
· Case (DETRIMENT)
· Dillwyn V Llewelyn
· Courts approach to Propietary Estoppel
· Case (EXPECTATION LOSS APPROACH)
· Pascoe V Tuner
· Difficulties with the doctrine
This doctrine prevents someone relying on their strict legal rights when it would be morally wrong to do so (unequitable). It must follow a test to be applied-:
Y A must give an assurance to B than B will acquire an interest in A’s land.
Y A must B to rely on that assurance
Y B must act in reliance upon that assurance to their detriment (normally financial).
Y A must negate on their assurance.
There must be an ASSURANCE, RELIANCE and a DETRIMENT.
q Grantor of the assurance must be entitled to make that assurance.
q Assurance can promise present or future entitlement to interests in the land.
q It must be precise and complete. It cannot be ambiguous or part of incomplete negotiations.
q Where the assurance relates to a tenancy, the assurance must be in concrete nature.
Reliance
The claimant must be induced by the reliance to act to their detriment. The defendant must be aware that the claimant may rely on their assurance. The reliance must justifiably lead to the change of position which must be detrimental.
Case (DETERMINING A RELIANCE)
Re Basham
The plaintiff had helped in her mother and stepfathers business from an early age. This was on the reliance that she would be entitled to the stepfathers property upon his death. Years later the plaintiff and her husband were going to move to a cottage. The stepfather convinced them not to as he could help them acquire another property. From that house the plaintiff and her husband looked after the stepfather who was on his deathbed. A few days before the stepfathers death he indicated he wanted to leave the property to the plaintiff and money to the plaintiff’s son. He died intestate. The court held: The doctrine of proprietary estoppel applies. The reliance was on a future interest and the assurance was imputed. Both were accepted. The reliance does not have to be on an assurance of a current interest. It can be a future one.
Detriment
Normally but not always expenditure of money (i.e. making improvements to the property).
Case (DETERMINING A DETRIMENT)
Dillwyn V Llewelyn
A father gave his son possession of a piece of land and signed a memorandum stating that the land was being given to his son as a gift. The attempted gift was invalid as formal requirements had not been met. The father consented and encouraged his son to build a house on the land at the sons expense. When the father died, the son found out he only had a life interest in the land (due to his fathers error). The courts held: There was proprietary estoppel. The son had relied upon an assurance to his detriment. The courts ordered a transfer of the fee simple of the estate to the son.
The courts have a great deal of scope and power to deal as they deem fit to individual cases. They have unlimited discretion. For example in Pascoe V Turner (below) the transfer of the fee simple was ordered. Other remedies include imposition of easements, monetary compensation, right to occupy and rent free tenancies.
There are however two major approaches-:
Ø Expectation Loss Approach: This approach compensates for the loss of the assurance which the plaintiff relied upon. The plaintiffs original expectation could be granted too them. For example if the assurance was a right of way, that right of way could be granted by the courts.
Ø Reliance Loss Approach: Plaintiff is compensated for the detriment occurred. For example a person who pays £1000 towards decorating might be awarded that amount in compensation (assuming they did so upon a reliance from the holder of the legal interests in the land that they would acquire the interests).
Case (EXPECTATION LOSS APPROACH)
Turner moved into Pascoe’s house originally as a housekeeper. Pascoe later gave Turner an oral agreement that the house was hers (at the time they were living as a couple). Turner stayed in the house and paid a few hundred pounds on decoration. He later dumped her for another woman and kicked her out. She had given up her home when she moved in with Pascoe. The assurance was the oral agreement that the house was Turner’s. The reliance was Turner’s believing it and leaving her property to go live there. The detriment was the few hundred pounds spent on decoration. The courts decided to transfer the fee simple of the property to her as that was her original expectation.
Difficulties with the doctrine
¨ It can be very hard to prove an assurance.
¨ Can the equitable benefit pass to a third party (i.e. if B would acquire A’s land but dies, is C (B’s spouse) entitled to it.
¨ Negates the principal of uniformity and consistency of legal interests in land.
LAND LAW 7
Topics Covered
· Concurrent interests V Successive interests
· Concurrent interests pre 1997
· Separation of legal and equitable rights pre 1997
· Trusts for Sale
· Doctrine of conversion
· Strict settlements
· Trusts of Land and Appointment of Trustees Act 1996
· Trusts of Land
· Rights and duties of trustees and beneficiaries post ’96
· Creation of Trusts
· Express Trusts
· Implied Trusts
· Resulting trusts
· Case (RESULTING TRUSTS)
· Springette V Defoe
· Eves V Eves
· Grant V Edwards
· Constructive Trusts
· Case (CONSTRUCTIVE TRUSTS)
· Bannister V Bannister
Concurrent Interests are when two or more people are simultaneously entitled to interests in the same parcel of land. Successive Interests are when interests in a parcel of land are passed from one person to another under a trust for sale, strict settlement or trust of land.
All concurrent interests other than landholding by trustees took place behind a trust for sale (express or implied). They could not take place behind a strict settlement because the very nature of strict settlements demand interests in land being passed from one party to another. They cannot exist at the same time.
All separation of legal and equitable interests in the same land were held in trusts for sale and strict settlements. The legal interests were owned by trustees and the beneficial interests were owned by beneficiaries. The trustees ownership was only for formal use to manage the property for the benefit of the beneficiaries.
Trusts which directed the trustees to sell the land. Trustees can manage the property but are not supposed to do so in order to gain any personal benefit from it. For example A may convey land to trustees B and C to sell for the proceeds to go to the beneficiary D. An example of how one could arise is by transfer of land to a minor (who cannot hold a legal interest).
Interests of the beneficiaries are interests in money, not the land. There interests are converted into proceeds of the sale. This doctrine was abolished in section 3 of the 1996 act (to follow).
Created under the Settled Land Act 1925. Cannot cover concurrent interests. Mechanism describing the arrangement which establishes a series of successive beneficial interests. For example from settler to B for life, remainder to C in fee simple. Here the settler is the person creating the strict settlement. B is the holder of the legal estate and C is the holder of the beneficial interest until B dies when they gain the legal title. Examples include entails and conditional fee simples.
Ø Creation of STRICT SETTLEMENTS prohibited
Ø Existing STRICT SETTLEMENTS continue
Ø Creation of ENTAILS prohibited
Ø Existing ENTAILS continue
Ø Creation of TRUSTS FOR SALE prohibited
Ø Existing TRUSTS FOR SALE converted into TRUSTS OF LAND
Ø Existing TRUSTS FOR SALE EXPRESSLY CREATED continue
Ø Abolishes doctrine of conversion
Ø Beneficiaries in land have interest in land, not in money
Any trust of property which consists of or includes land. Trusts include those which are express, implied, resulting or constructive, trusts for sale and bare trusts.
The act was partly designed to increase the powers of both the trustees and the beneficiaries. Under the act-:
v Doctrine of conversion abolished (beneficiaries have interests in the land itself)-(section 3).
v Trustees have power of an absolute owner (section 6).
v Trustees may delegate the powers of a tenant for life to the beneficiaries (section 9).
v Beneficiaries have a right to be consulted by the trustees on any function relating to the land (section 11). As so far it is possible in keeping within the intentions in the creation of the trust, the trustees must take effect to the beneficiaries wishes.
v Beneficiaries have a right to occupy (section 12).
v Trustees and beneficiaries may apply to the court for an order relating to the exercising of the trustees powers, the need to obtain consents or consult beneficiaries or to the nature and the extent of the beneficiaries interests. The courts may take actions such as imposing or rejecting a sale (section 14).
There are two main types of trusts which are created in different ways. They are EXPRESS TRUSTS and IMPLIED TRUSTS
Arise in two ways: a declaration of trust by the owner, or a transfer of the legal estate expressly subject to a trust of that estate. There is no need for special words but intention must be clear. The declaration of trust must be proved in writing (section 53(1)(b) LPA 1925). They must be definitive in nature and extent of any beneficial rights. Express trusts for sale continue after the 1996 act. Implied trusts do not.
Writing is not needed under section 53(2). There are two varieties of implied trusts. They are resulting trusts and constructive trusts.
Resulting Trusts
If a person contributes to the purchase price or pays any other money towards the property (i.e. mortgage repayments and refurbishment of the property) they have a resulting trust proportionate to their contribution. This is not the case when there is evidence that the contribution was not intended by the recipient and the grantor to create a trust.
Case (RESULTING TRUST)
Springette V Defoe
The wife owned the legal title to a property. The husband claimed a resulting trust by virtue of his decoration. The courts denied his claim as there was no apparent imputed agreement between him and his wife. The courts refused to base a resulting trust on what would be telepathy.
Eves V Eves
A cohabitating couple bought a house together. The title was registered in the mans name. The man said the title would be in his name because the woman was under twenty-one. The woman did however do a lot of work on the property to it’s benefit. The courts held she had a 25% share in a resulting trust.
Grant V Edwards
A man had the title of a house put in his sole name when bought. He claimed it should not go in the joint names of him and his girlfriend because she was going through a divorce at the time. The excuse that he gave to his partner was proof of a common intention. There was also a detrimental reliance so a resulting trust was created.
Constructive Trusts
Constructive trusts arise where A has so conducted himself that it would be inequitable for him to deny B a beneficial interest in the land. A must induce B to act to his detriment by an assurance that he was acquiring a beneficial interest in the land. There must be a bargain or common intention, detrimental reliance and unconscionable denial of rights. Very similar to Proprietary Estoppel.
Case (CONSTRUCTIVE TRUSTS)
Bannister V Bannister
A purchaser bought a cottage from his sister-in-law on the oral understanding that she would be entitled to live in it for the rest of her life rent-free. The purchaser negated and denied the right. The purchaser tried to obtain possession of the property. The courts held that the agreement, though not written (therefore not express) to create a constructive trust. That is because the purchaser had acted so unconscionably by denying the right. The common intention at time of purchase was for the plaintiff to live rent free in the property. The detrimental reliance was the consenting to sell the property.
LAND LAW 8
· Co-ownership
· Joint tenancy
· Rights of survivorship
· Four Unities
· Tenancy in Common
· Co-ownership at Law V Co-ownership at equity
· Severance
· Limits of Severence
· Methods of Severence
· Case (WRITTEN NOTICE OF SEVERANCE)
· Harris V Goddard
· Re Drapers Conveyance
· Gore and Snell V Carpenter
· Konch V Bullard
· Other methods of Severance
· Case (OTHER METHODS OF SEVERANCE)
· Williams V Hensman
· Case (COURSE OF DEALING)
· Bannister V Bannister
· Severance by Homicide
· Statutory mechanism of Co-ownership
· Co-lateral purpose rule
· Case (CO-LATERAL PUPOSE RULE)
· Jones V Challenger
· Williams V Williams
· Trustees in Bankrupty
· Case (BANKRUPTCY)
· Re Citro (a bankrupt)
· Abbey National V Moss
· Insolvency Act 1986
· Purchasers of co-owned land
· Purchasers of co-owned land with only one trustee
· Affects on purchasers of the 1996 act
This is when two ore more people are simultaneously entitled to ownership of the same piece of land. Each co-owner is simultaneously entitled to possession of the whole land. No co-owner can exclude another from any part of the land. No more than four people can hold a legal estate according to the 1925 LPA.
There are two types of co-ownership. They are Joint tenancies and Tenancies in common.
NB: Tenancy denotes types of estate (freehold or leasehold).
Each co-owner is entitled to the whole of a single interest in the land. There are no specific shares (there are in Tenancies in common). There are two major principals: the right of survivorship and the four unities.
On death of joint tenants, the interest in the land is deivided equally between the other tenants. For example if land is owned by A, B and C and C dies, the land is owned purely by A and B. There can be no will or intestacy
NB: Each one of the four unities has to be present for joint tenancies to exist. The four unities are possession, interest, title and time.
1) Possession: All co-owners must share the right to the same physical land.
2) Interest: All the co-owners must share the same interest (i.e. same estate).
3) Title: Each co-owner must have obtained the title by a single transfer or conveyance (that is each co-owner must have been conveyed or transferred the land in the same certificate on the register).
4) Time: Each co-owner must become entitled to the land at the same time.
Each co-owner has a specific share in the land. For example a piece of land may be 75% owned by A, 20% owned by B and 5% owned by C.
v NO right of survivorship: If B dies their interest is not passed to A and C. The deceased’s interest can be passed on in a will or intestacy.
¨ Legal co-ownership must be a joint tenancy.
¨ Equitable co-ownership may be a joint tenancy or tenancy in common. Normally a tenancy in common.
The process by which a joint tenancy may be converted into a tenancy in common. That is an equal interest be converted into a notional specific interest. The right of survivorship would also not apply in tenancies in common. For that reason severance may be desired by someone wanting to leave land in a will.
Y One cannot sever by a will.
Y Only EQUITABLE interests can be severed. Legal interests have to remain under a joint tenancy.
Written notice: Notice in writing to all co-owners of beneficial interest to sever. A notice in writing of a desire to sever a joint tenancy must ‘evince an intention to bring about the wanted result immediately. This is shown in Harris V Goddard.
Case (WRITTEN NOTICE TO SEVER)
Harris V Goddard
Husband and wife were joint tenants. The wife asked for a property transfer order under the Matrimonial Causes Act 1973 as part of a divorce settlement. Before the case was heard the husband died in a car crash. The husbands counsel claimed the tenancy had been severed by the petition for divorce. If severed the husband would gain a notional share which could be passed on in an intestacy. The courts held it hadn’t been severed because the divorce petition was not immediate. The wife therefore was entitled to the whole house due to her right of survivorship.
The issue was whether a summons (supported by an affidavit) issued by a wife under the Women’s Property Act 1882 seeking an order of the sale of the matrimonial home and distribution of the profits constituted a severance. The courts held that the summons combined with the affidavit was enough to amount to an intention to sever immediately. It amounted to a notice in writing under s36(2) of the 1925 LPA to sever the equitable joint tenancy.
Husband and wife had been in protracted negotiations in divorce proceedings. A draft separation agreement (not yet accepted) had a proviso of severance of two properties which they were joint beneficial tenants of. The bulk of the agreement was finalised whereby all that remained was to finalise some ancillary divisions. The husband died before the agreement was finalised and accepted. The husbands counsel claimed the properties had been severed by virtue of the draft agreement being only reliant on menial amendments. The courts held that it had not been severed because the divorce settlement would have had to be final to sever. The intention was for a possible future severance not an immediate one. The wife gained both properties through the right of survivorship.
A husband and wife were joint beneficial tenants. The wife began divorce proceedings. The wife was terminally ill so she posted the notice of severance to her estranged husband. After she posted it, but before it arrived, the husband was rushed to hospital. The wife realised that if he died she would gain the property under rights of survivorship. She changed her mind and ripped the notice up (after going back to the house). The husband died. The courts held that the process of delivering the letter was written notice. The wife lost the right of survivorship and the tenancy was severed.
Other methods are explained in Williams v Hensman below.
Case (OTHER METHODS OF SEVERANCE)
There are three ways of severing a joint tenancy. They were laid out in this case. The ways are-:
ü Severance of a joint tenant operating on his own share: A co-owner can sell or mortgage their share by forging the signature of the other co-owners if the transferee does not know of the fraud. Bankruptcy also severs a joint tenancy.
ü Severance by mutual agreement: Mutual agreement by all joint tenants that the property should be severed. This does not need to be in writing.
ü Course of dealing: The ‘course of dealing’ refers to the notion that if one or more joint tenants act in a way not consistent with a joint tenancy which the others all agree too, the property is severed. In Gore V Snelling – a “course of dealing is where over the years the parties have dealt with their interests in the property on the footing that they are interests in common and are not joint.”
Case (COURSE OF DEALING)
Burgess V Rownsley
The plaintiffs father and defendant had an equal contribution to a purchase of a house. That meant they had a resulting trust giving them a beneficial interest under a joint tenancy. There was evidence of an oral agreement between the parties that the defendant would sell her interest at a certain price to the plaintiff. The defendant negated on her oral promise. The courts held that the oral agreement was enough to sever because it held a common intention by each of the co-owners.
The Forfeiture Act 1972 states that “he who unlawfully kills someone cannot derive beneficial interests.” Therefore if a joint tenant kills another joint tenant they cannot benefit from the right of survivorship. The land is severed.
The Statutory Machinery of Co-ownership
Under the 1925 legislation all co-ownership is under a trust for sale. If there is no express trust where land (other than settled land under a strict settlement-concurrent interests only), is puroported to be granted to two or more persons as co-owners, a statutory trust will arise. Since 1997 this has been under a Trust of Land.
Colateral Purpose Rule
Section 30 of the LPA 1925 tells of how trusts for sale do not have to be sold. The purpose of the original purchase is taken into account. If the purpose was as a matrimonial home, the sale does not have to proceed. Beneficiaries can force Trustees to apply section 30 if they try to sell the property. NB: This problem does not exist after the 1996 act. Now under section 14 of the ’96 act.
Case (CO-LATERAL PURPOSE RULE)
Jones V Challenger
A couple already divorced were arguing over what would happen to the house. The court held that if the purpose of the purchase of the property still existed, neither party could order a sale. As the matrimonial home purpose didn’t exist as they were separated the courts forced the house to be sold.
Williams V Williams
Husband moved out of the matrimonial home leaving his wife and four children. Two years later (when the youngest child was twelve) the husband decided he wanted the house sold. The courts held that the purpose of the purchase (family home purpose) still existed as there were children in the house. Therefore the sale of the house was delayed until after the youngest child turned eighteen.
Trustees in Bankruptcy
The role of the trustee is to sell the land. The trustee has the power under section 14 of the ’96 act to apply to the courts to force a sale. In bankruptcy the co-lateral purpose rule is normally sidelined.
Case (BANKRUPTCY)
Re Citro (a bankrupt)
Bankruptcy of one partner meant that the doctrine of the co-lateral purpose rule was sidelined. There were persons under eighteen in actual occupation of the house but their interests were sidelined. The approach of the courts was that if the postponement of payment would be detrimental to the creditor, the co-lateral purpose rule does not apply. Here (as in most cases concerning mortgages) postponement would have been detrimental to the creditors. The Courts ordered that the property was sold.
Abbey National V Moss
A house was in the sole name of a mother. The daughter convinced her to transfer the property into their joint names. The daughter then forged her mothers signature to obtain a mortgage. The mortgage was defaulted upon and a repossession order was sought. The daughter went bankrupt. The courts held that the original purchase of the house was as a home for life for the mother. That purpose still existed. For that reason and the underhand actions of the daughter, the courts refused to order a sale.
Insolvency Act 1986 ss 335A-337
Gave limited protection for those affected by another persons bankruptcy. The courts must have regard to-:
Ø Interests of the creditors.
Ø Whether the property is a home.
Ø The bankrupts spouse’s conduct in contributing to the bankruptcy.
Ø The needs and resources of the spouse.
Ø Needs of the children in the property.
Ø Financial resources of the bankrupt (i.e. do they own other properties they could move to).
Ø All circumstances of the case other than the needs of the bankrupt.
If there are children in the property and it was bought as a family home, the sale will be delayed. After the passing of a year since the bankruptcy, the creditors interests outweigh all others. That gives the family time to make alternative living arrangements.
Purchasers of co-owned Land
q There is only one legal title however many owners.
q To overreach beneficial interests two or more trustees have to be paid. Conversion applies.
Purchasers of co-owned land with only one trustee
If a purchaser knows of the co-ownership, they can insist on another trustee being appointed. If the purchaser is unaware of the co-ownership-can the sole trustee effectively deal with the land? Under section 6 of the ’96 act they have powers of an absolute owner so they can. Are the interests of the beneficiaries binding on the purchaser? If the land is unregistered the doctrine of notice applies to enforceability of the beneficiaries interests. In registered land the beneficiaries interests should be binding as a notice or caution on the proprietorship register. If not on the register they may be overriding if combined with actual occupation under section 70(1)(g) LPA 1925.
Affects of the ’96 act on purchasers
¨ Section 10: Only the consent of two persons (trustees and/or beneficiaries) is needed for a sale.
¨ Section 16: (UNREGISTERED LAND ONLY). A purchaser of unregistered land is not affected by any failure of the trustees to consult the beneficiaries.
NB: A purchaser of registered land has to make enquires of people in actual occupation of the land and ensure that beneficiaries have given consent to the sale.
LAND LAW 9
· Creation of interests in land
· Adverse Possession
· Limitation Act 1980
· Why do we have Adverse Possession?
· Averse Possession Requirements
· Successive adverse possessors
· When does the limitation period start?
· Effect on unregistered freehold land
· Case (UNREGISTERED FREEHOLD LAND)
· Colchester BC V Smith
· Registered freehold
· Case (REGISTERED FREEHOLD)
· Buckinghamshire CC V Moran
· Unregistered Leasehold land
· Registered Leasehold land
· Case (REGISTERED LEASEHOLD LAND)
· Spectrum Investment Co V Holmes
· Central London Commercial Estates V Kato Kegaku
· Reform Proposals
Creation of interests in land
v Registration: Express formal writing
v Deed: Completion creates or conveys a LEGAL interest in land
v Signed written document: Creates or conveys an EQUITABLE interest in land
v Declaration of Trust: Normally proven in writing but can be implied. Must be common intention
v Contract for creation/conveyance: Before completion, the agreement if signed creates an EQUITABLE interest in the land. Contract must be conclusive, written and signed by both parties.
v Adverse possession: See below
Adverse Possession
The passing of a legal ownership of land from a legitimate owner to an adverse possessor (squatter) without any legitimate claim to the land. Legitimising situations which began as unlawful.
Limitation Act 1980
In general, the act limited the right to bring an action against a party to within a certain limit of time. For example one cannot claim in Tort 40 years after an injury. In Land Law, this was put at 12 years (section 15(1) Limitation Act 1980). Therefore, if an adverse possessor is in possession for 12 years, the original owner loses their right to recover. There are certain requirements though (below).
Why do we have adverse possession?
Y Protection of defendants from stale claims
Y To encourage plaintiffs not to sleep on there rights (registration helps the original owner).
Y To allow the best use of the land. An adverse possessor may treat it and use it better.
Y To facilitate the investigation of title to unregistered land. Limitation makes it safe to rely on proof of title going back only 15 years because any possible claims to ownership will be time-barred.
Adverse Possession requirements
¨ Factual Possession: Adverse Possession must be without consent or permission of the owner (otherwise a license or lease is created). Must also be exclusive possession. Must also be discoverable by the original owner
¨ Intention to Possess (animus possidendi): Must be an intention to possess at the time being. There need not be an intention to own, or an intention to possess in the future. Must be an intention to exclude those who have no title.
Successive adverse possessors
One squatter can take the time of another. For example if the owner is dispossessed by a squatter who is in possession for 8 years before being dispossessed by another squatter; the second squatter must only be in possession for a further 4 years. However, if there is a break in adverse possession, the limitation period is re-started.
When does the Limitation Period start?
q The period starts against a tenant immediately
q The period starts against a freeholder from the end of the last existing tenancy.
EXAMPLE: If A holds a freehold and grants B a 50 year lease, but B is dispossessed 20 years into the lease by C. C will acquire B’s lease 32 years into B’s lease on the original terms. A would only be dispossessed 62 years after granting B the lease. The limitation period against A starts at the end of the 50 year lease.
Effect in unregistered freehold land
At the end of the 12 years, the paper owner’s title is extinguished. The adverse possessor holds the land and can apply to be registered. The land is however still subject to any third party interests. BUT: If the adverse possessor enters an agreement after the 12 years, being aware of his rights, with the previous paper owner, the extinguished title can be revived.
Case (UNREGISTERED FREEHOLD LAND)
Colchester Borough Council V Smith
The Adverse possessor, Mr Tilson had held land for over 12 years and had not applied to be registered. AFTER the 12 years he entered into an agreement with the council (whilst aware of his rights) that the land was the councils but he had a license). As Mr Tilson entered the agreement freely after legal advice AND the negotiations started BEFORE the 12 years had expired, the Council retained the title.
Registered freehold land
After the 12 years, the paper owners title is NOT extinguished. The paper owner holds the land on trust for the adverse possessor (section 75 Limitation Act-section 75 trust-see reform proposals). The adverse possessor may apply to be registered though, at which point the former owners title IS extinguished. The adverse possessors interest (trust) is an overriding interest (s70(1)(f) LRA 1925).
Case (REGISTERED FREEHOLD LAND)
Buckinghamshire CC V Moran
The plaintiffs owned a piece of land that they had an intention to build a road diversion in the future. The defendant adversely possessed the land to the plaintiffs knowledge for 18 years. At that time the plaintiff tried to recover the land but were unable to because the limitation period had expired. The Plaintiffs intention to build a road diversion in the future was not enough to prevent the action. The courts held that factual possession and an intention to possess must both be present.
Unregistered leasehold land
Time begins to run against the tenant immediately but not against the freeholder until the term of the lease expires. The leaseholder can surrender the lease even if they were dispossessed over 12 years ago. Time then begins to run against the freeholder who can of course exclude the adverse possessor and invite the dispossessed former leaseholder back into another lease. NB: Different in registered leasehold land.
Registered leasehold land
Lease cannot be surrendered if the limitation period has expired.
Case (REGISTERED LEASEHOLD)
Spectrum Investment Co. V Holmes
In 1902 a freehold owner granted a 99 year lease to D. In 1956, D was dispossessed by H and in 1968 H was registered as the leaseholder (qualified title always given). In 1975 D purported to surrender her lease to the freeholder. The freeholder tried to delete H’s title and re-instate D as the leaseholder. The courts held the lease could not be surrendered because it had been extinguished. The freeholder was bound to accept H as the leaseholder.
Central London Commercial Estates V Kato Kegaku
The plaintiffs had granted a long lease to Axa and Equity. Both the freehold and leasehold were registered. Axa were dispossessed by the defendants. The defendants hadn’t been registered against the leasehold when Axa tried to surrender it’s lease. The freeholders held the property on trust for the defendants until they were registered. Held: Axa could not surrender their lease because the land could not be split (freehold being registered, leasehold not being registered). The defendants trust was an overriding interest (s71(1)(f)) and therefore could not be defeated.
Reform (PROPOSALS)
Land registration for the twenty-first century: Law Com 254 contains substantive and procedural proposals.
SUBSTANTIVE PROPOSALS
An adverse possessor should only succeed in an application to be registered as proprietor if-:
ü The dispossessed proprietor failed to object to the registration, or was estopped from doing so; or
ü The adverse possessor had an independent right to the land, or had entered into adverse possession under a mistaken belief as to his/her rights.
PROCEDURAL PROPOSALS
Abolish the section 75 trust (registered freehold land) and protect the adverse posessors rights merely as overriding interests.