Estates and interests

Debbie Rook

LL.B open learning

The doctrine of estates

• Refers to the PERIOD OF TIME during which the rights of the land will last

• e.g freehold = forever

More than one estate can exist in one piece of land at a

time

28 Hill Road:

I own the freehold estate.

You own the leasehold estate. FEE SIMPLE

ABSOLUTEIN

POSSESSION

5 yrs

Legal estates - s.1(1) LPA 1925

• FEE SIMPLE ABSOLUTE IN POSSESSION

• Perpetual grant

• Not conditional

• A right to immediate enjoyment

Legal estates - s.1(1) LPA 1925

• TERM OF YEARS ABSOLUTE

• A fixed term

• Can be less than a year

• Can be a future interest

Lace v. Chantler [1944]

• A landlord purported to grant a lease “for the duration of the war”.

• Held: this was an uncertain period of time and therefore NO leasehold estate was created.

5 legal interests – s.1(2) LPA

• (a) An easement for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute

• (c) A charge by way of legal mortgage• (b) A rentcharge – subject to certain

conditions• (d) “…and other similar charge”• (e) Rights of entry exercisable over a legal

term of years absolute

Equitable interests – s.1(3) LPA

• A process of elimination – 2 legal estates and 5 legal interests and everything else is equitable (s.1(3) LPA 1925).

Examples of equitable interests

Common examples• Interest of a beneficiary under a trust • Restrictive covenants in freehold

land• Equitable easements• Estate contracts

A trust of land

• A trust is the means by which property may be held by one person (a trustee) for the benefit of another (a beneficiary).

What is an estate contract?

• It is a contract to create or transfer a legal estate

• It must comply with s.2 Law of Property (Miscellaneous Provisions) Act 1989

• It is always an equitable interest

When do you need a deed?

• S.52 LPA 1925

• To CREATE or TRANSFER a LEGAL ESTATE or a LEGAL INTEREST in land

What is a deed? – s.1 LP(MP) Act 1989

• 1. Must be clear on face of document that it is a deed

• “This Deed of transfer …”

• 2. Must be validly executed:

• signed

• witnessed

• delivered

EXCEPTION

• S.54(2) LPA 1925

• A SHORT LEASE (not exceeding 3 years)

• in possession

• at the best rent

• without the payment of a fine (premium)

• Applies to creation but not assignment

15

Summary

• s.1(1) LPA – 2 legal estates

• s.1(2) LPA – 5 legal interests

• s.1(3) LPA – anything else is equitable

• s.52 LPA – need a deed for a legal estate/interest

• s.54(2) LPA – an exception to the need for a deed (the short lease)

WHEN IS A RIGHT LEGAL?

MUST BE LISTED

in s.1(1) or s.1(2)

LPA 1925

MUST USE THE CORRECT DOCUMENT

(A DEED)

+

WHAT RIGHTS CAN BE EQUITABLE?

THOSE NOT

IN S.1 LPA 25

THOSE THAT ARE IN s.1

BUT WHICH AREN’T

MADE BY DEED

INTERESTS in land

Ali owns the freehold of Greenacre

…

… over which she gives

- Neighbour Caron - a right of way over the garden - Neighbour Dillon - a

promise that Greenacre will never be used for business purposes

- North Bank plc which had lent money to Ali – a mortgage

- Bren a 5 year lease.

Multiple rights in land

Estates• Ali owns the

freehold

• Bren owns a leasehold

Interests• Caron has an

easement• Dillon has a

restrictive covenant• The Bank has a

mortgage

What happens if Ali sells Greenacre to Ed?

The big question = is Ed bound by the following:

• lease• easement• restrictive covenant• mortgage?

The issues this raises

• The need to protect estates/interests against new owners of the land

• The need to protect new owners against existing estates/interests

• The need to establish priority between competing interests e.g. two mortgages

The issue of priority

• The way in which the law determines which of several competing proprietary rights in the same land should have priority over the others

SUMMARY

1. There are 2 main types of rights in land: estates and interests

2. There can be a number of different rights in the same piece of land – more than one estate and more than one interest

3. The only rights that concern land lawyers are proprietary ones – ones that are CAPABLE of enforcement against a new owner

4. The Issue of Priority is of fundamental importance in land law – does a proprietary right bind a new owner of the land?

Two regimes

• Unregistered land

…. eventually to be replaced by

• Registered land

• Registered land means that the estate in the land has been registered at HM Land Registry.