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12 Land Law (rules and principles relating to ownership of land and its…
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
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
Remember - interest in land includes easements and covenants
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
)
Is an interest in land -> can potentially be protected through registration and can be binding on third parties
Registration offers legal protection and makes lease binding on third parties (cannot be done for licences)
Can potentially be assigned to new tenant
Lease could be transferred to someone else
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
Ie if landowner sells land, licensee may lose their right to occupy land
Cannot be assigned to others
Licence is agreement between landowner and licensee - not transferrable
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
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
2
Exclusive possession; and
Tenant must have the right to exclude everyone, including the LANDLORD, from the premises
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
If landlord provides regular services eg cleaning, unlikely to be exclusive possesion
Exclusive possession can still be made out if Court finds there are sham/bogus clauses
3
Appropriate formalities
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
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
Equitable rights
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)
Easement - can be legal or equitable
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
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
Servient tenement
Land that carries the burden of the easement
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
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
The right must be a type recognised as capable of being an easement
And described sufficiently to identify it
Covenants
Purely equitable interest in land
Promise to
do something or refrain from doing something
, concerned with and relating to the land
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
2 parties
Covenantor
Person entering into the covenant; usually the purchaser
Covenantee
Person having the benefit of the covenant (usually the seller of the freehold)
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
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
Beneficial tenants in common
Co-owners have distinct and separate shares in the estate
Shares reflect investment/contribution to purchase price
Tenant-in-common is entitled to specific share of property
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
Pre-market
Stage before property goes to market
Seller must choose estate agent and produce Energy Performance Certificate
Pre-contract
Searches and investigations on title will be completed
Financing discussed
Instructions taken from seller and purchaser
Exchanges of contracts
Contracts are exchanged. Process begins to be legally binding - neither can withdraw without penalties
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
Completion
Buyer's
solicitor
sends money to seller in exchange for transfer of title. Buyer can move in
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
Find out if property title is registered or unregistered
Unregistered
Obtain title deeds
Registered
Obtain copy from HM Land Registry
Pre-contract searches (stage 2) - Seller's Solicitor
Determine how buyer is financing transaction, check mortage, etc
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
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%
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
Remedies before completion
Innocent party has 3 key remedies if contract is breached before contract for sale has completed
Specific performance
Equitable remedy
Compels party to complete contract
Used when damages may be insufficient to compensate for breach
Damages
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
Rescission
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