12 Land Law (rules and principles relating to ownership of land and its transfer) and Property Practice (practice aspects of transfer of land)

What is land?

Law of Property Act 1925

Surface, buildings, trees, plants, minerals, underground, air above land, fixtures, some rights over the land

Fixtures: Chattels or goods that have been fixed to land or a building so as to become part of it

Technically, extends to the heavens and centre of the earth - but limitations exist

In practice rights are limited - 'only what is necessary for ordinary use and enjoyment of the land

Crown entitled to keep any gold, silver, or other minerals found on land

Registered and unregistered land

'Good root of title' shows land ownership via documents. Landowner must shown an unbroken chain of ownership for min 15 yrs.

1925 HM Land Registry introduced

All land transfers must be registered here

Serves as proof in itself

Land register is online, available for everyone to see

Compulsory land registration is recent - thus some land remains unregistered

The nature of land

All landowners technically hold an estate in the land which is ultimately owned by the Crown

Can be leasehold

Can be freehold

Freehold Land

Closest thing in English Law to complete ownership

Person with freehold estate is called 'landowner', despite all land technically belonging to the Crown

Ownership has no expiry date - right to occupy land indefinitely

Leasehold land and licences

Lease: estate in land that gives holder right to occupy land for fixed period (owned by someone else but rented to tenant)

Licence: a personal right to occupy/use a land

Personal right

Can only be enforced against the person that granted the license; cannot be enforced against third parties

Cannot be assigned to others

Is an interest in land -> can potentially be protected through registration and can be binding on third parties

Can potentially be assigned to new tenant

Lease could be transferred to someone else

Licence is agreement between landowner and licensee - not transferrable

Ie if landowner sells land, licensee may lose their right to occupy land

Registration offers legal protection and makes lease binding on third parties (cannot be done for licences)

Lease vs licence: conditions

Substance, not form determines whether an agreement is a lease or

Landlord may seek to avoid granting a lease

So tenant doesn't have statutory protection

So tenant cannot enforce rights against third parties

Might therefore call their agreement a licence agreement

But the name of an agreement, even express terms within it, do not determine whether there is a lease or licence

Court looks at behaviour of parties to determine nature of agreement - as set out

Three essential characteristics of a lease

If these are not met, it can only be a licence

Parties must intend to create legal relations

1 Certainty of term

2 Exclusive possession; and

3 Appropriate formalities

Means: must know lease length at outset; agreement must be for fixed period

Eg 1 day, 100 years, renewing each month until notice given

But not 'for the duration of the war' or 'until you get married' - not clear at outset how long will be

Tenant must have the right to exclude everyone, including the LANDLORD, from the premises

If landlord provides regular services eg cleaning, unlikely to be exclusive possesion

Some landlords have sought to prevent leases by including clauses that allow them to introduce others to stay at property

But remember, court looks at substance, not form in determining whether these were genuine clauses, or whether they are sham/bogus clauses

Exclusive possession can still be made out if Court finds there are sham/bogus clauses

Depend on length of lease

Short leases can be created orally

Depends on whether parties want legal or equitable lease

Formalities must be complied with - eg deed, land contract, or oral agreement

Registration requirements, lease is properly formed and enforceable, etc

Interests in land

There are rights and interests in land which fall short of right to occupy

These are split into

Legal interests - enforceable as of right

Equitable rights

Eg Easements

Mortgages (lender has rights in case of loan default)

Rights of entry (contained in leases)

Rent charges

Profits/rights to take something from land, eg fish/wood

Can create a right in the absence of a formal document

Concerned with fairness>formality

If a right has not been formalised in a document, equity can sometimes step in to enforce the right

But equitable interests are not enforceable as of right - they are discretionary

Eg covenants

Eg equitable mortgages (mortgages that have not gone through usual formal processes of a legal mortgage)

Easements

Can be legal or equitable

Right which exists over a piece of land which benefits another piece of land

Essential characteristics

Dominant tenement

Land that enjoys benefit of the easement

Servient tenement

Land that carries the burden of the easement

Eg if one piece of land needed access to run internet cables through another piece of land, the land/home needing the broadband would be the land benefitting from the easement and thus the dominant tenement

Other requirements necessary for easement

Dominant and servient tenement must be in separate ownership

Easement must benefit the land and not be a personal right

The right must be a type recognised as capable of being an easement

And described sufficiently to identify it

Eg G owns land with a river running through. Rachel is given the right to swim in the river whenever she wants. This does not create an easement as it is a personal right, since there is no estate to which the benefit can attach

Covenants

Purely equitable interest in land

Promise to do something or refrain from doing something, concerned with and relating to the land

2 parties

Covenantor

Covenantee

Person entering into the covenant; usually the purchaser

Person having the benefit of the covenant (usually the seller of the freehold)

Restrictive

Prevents covenantor from doing something eg building a high rise on land

Positive

Oblige covenantor to perform certain functions or incur expense

Eg contribute to costs of maintaining a private shared road, help maintain a boundary fence

SUBSTANCE, NOT FORM, MATTERS IN DECIDING WHETHER COVENANT IS RESTRICTIVE OR POSITIVE

Easements and covenants - registration

Legal easements must be registered

Interests in land can appear on land register of title

Equitable easements and covenants can be registered as a notice in order to be protected, but do not have to be

If they are protected by a notice, they will be binding on subsequent buyers

If not protected by a notice, they will not be binding against purchasers for valuable consideration

If the property title is unregistered with HM Land Registry:

Interest can be registered as a land charge

If a land charge is entered, it will be binding on a purchaser

If no land charge is entered, the interest will not be binding on a purchase for valuable consideration

Easement - can be legal or equitable

Remember - interest in land includes easements and covenants

Co-ownership of land

Important feature of land law

Property can be bought together by:

Married couples

Families

Co-habiting couples

Business partners

Can be either:

Joint Tenants

Beneficial tenants in common

Under beneficial joint tenancy, if one co-owner dies, their interest in the property passes onto the remaining joint tenants automatically

Follows doctrine of survivorship

Overpowers requests of will

Do not have distinct shares in co-owned land

Together, they own 100% of the beneficial interest -> surviving joint tenant automatically acquires deceased's interest

Co-owners have distinct and separate shares in the estate

Tenant-in-common is entitled to specific share of property

Shares reflect investment/contribution to purchase price

Can be passed on in a will

Appropriate when:

Purchasers want to avoid doctrine of survivorship and instead pass property along via will

Joint owners have contributed in unequal portions -> wish to retain their unequal shares

Purchasers have entered into a commercial transaction where joint tenancy would be inappropriate - eg business partners buying business property

Property Practice

Conveyancing

'The steps a solicitor takes on behalf of their client which results in the transfer of the legal title to land from the current owner to new owner'

Stages of conveyancing

  1. Pre-market

Stage before property goes to market

Seller must choose estate agent and produce Energy Performance Certificate

  1. Pre-contract

Searches and investigations on title will be completed

Financing discussed

Instructions taken from seller and purchaser

  1. Exchanges of contracts

Contracts are exchanged. Process begins to be legally binding - neither can withdraw without penalties

  1. Pre-completion

Buyer solicitor sends draft transfer form to seller's solicitor for approval.

Practical information is exchanged - eg bank details, paying off existing mortgage, etc

  1. Completion

Buyer's solicitor sends money to seller in exchange for transfer of title. Buyer can move in

  1. Post-completion

Buyer's solicitor submits Stamp Duty Land Tax form (if applicable), seller's solicitor redeems any outstanding mortgages, etc

Pre-contract searches (stage 2) - Buyer's Solicitor

Solicitor/conveyancer needs to conduct pre-contract searches

Check if property has covenant/easement, gather information

Check planning permissions/rights of way issues with Local Authority

Environmental searches, sewage/water searches, etc

Remember - process isn't yet legally binding, and can be abandoned without penalties. Essential to be thorough

Pre-contract searches (stage 2) - Seller's Solicitor

Determine how buyer is financing transaction, check mortage, etc

Find out if property title is registered or unregistered

Unregistered

Registered

Obtain title deeds

Obtain copy from HM Land Registry

Remedies (deals with delays to completion/if completion is not done)

Circumstances dictate remedies available and advice client should receive

Delayed completion

Time is of the essence

If TIOT; meaning the date in the contract is firm and cannot be moved

Buyer can rescind contract

Time is not usually of the essence until a notice to complete is served

This is the first remedy; only after can TBOT normally

Appropriate special conditions in contract can make TOTE earlier but this is rare

Entitlement to interest for delay

Per Standard Conditions of Sale, money received after 2pm is treated as next working day; seller is then entitled to interest at contract rate on outstanding balance

Increases day by day

Only if buyer's fault

Notice to complete

Document innocent party may serve requiring defaulting party to complete

Can be served at any time after completion date

Must be served by a party that is ready, willing, and able to complete

Typically, however, solicitor serves notice

Solicitor shouldn't assume client wants Notice to Complete instantly; check why the delay occurred. In completion seems imminent and is just slightly delayed, it may not be necessary to serve a notice

Gives 10 working days to complete (excluding day of notice serving)

If buyer paid reduced deposit only, upon receive Notice to Complete, they must pay any balance necessary to bring deposit up to full 10%

Remedies before completion

Innocent party has 3 key remedies if contract is breached before contract for sale has completed

Specific performance

Damages

Rescission

Equitable remedy

Compels party to complete contract

Used when damages may be insufficient to compensate for breach

Based on losses from breach that are reasonably foreseeable

As with other contract breaches, court attempts to place innocent party into position they would've been in had the contract been performed

Available when fraud or false statement was made

That other party relied upon and induced the other party to enter the contract

Court tries to put parties back into a situation where the contracts never existed

Remedies after completion

Typically the buyer, rather than seller, who would pursue remedies at this stage

Damages are the only remedy here, but they are rare

Eg buyer may discover after completion that seller gave incorrect info on pre-contract enquires, despite being guaranteed otherwise