PROPERTY LAW NOTES

DATES- 18.7.2012, 19.7.2012 and 23.7.2012

What is PROPERTY?

It is NEVER a thing itself. It is always a right over a thing. It is a special set of rights (Recent development) It’s definition is NOT GIVEN anywhere

“Property” = “Property Rights” = “Proprietary” = “Proprietary Rights”

William Swadling- Property is:

1. A RIGHT OVER A THING, tangible or intangible, which is scarce, and

2A. Which affords USE AND ENJOYMENT of the thing, and/or

(Possession is a subset of use and enjoyment which is a much larger set)

2B. Which affords a SECURITY INTEREST in respect of financial transaction.

Suppose A borrows Rs. 1 Lakh from B and refuses to pay back . B can sue A breach of contract and specific relief. He will have a personal claim against A in contract. Personal claim binds persons themselves and the person’s estate.

What if A goes bankrupt?

Debt secured with an immovable property is usually secured against the property.

B can always go against the property to get his debts no matter who owns it. Even if A has sold the property to to C . B’s debt is secured against the property. C is unaware of the mortgage and claims he has paid so why should his property be bound.

Property binds third party or whole world without without consent or knowledge if a property right has come into existence via legal requirements being satisfied.

Mortgage will have priority and C will have a claim against A for selling him an already incumbered property.

3. Which is EXIGIBLE against the third parties or the whole world, without their notice, knowledge or consent. This is necessary and sufficient. It is the most important point.

There is a controversy as legal proprietary rights are exigible against the third paries without notice but equitable interests are exigible against the third parties only with notice.

Q. Whether there are equitable property rights in India?

Ans. Mulla says it does not exist in India. There is no difference between the two, just one kind of property rights. Mulla’s stand is erroneous. In practical world, it does not make much of a difference so an alternative to this controversy is not required.

Exigible = binds or actionable against.

4. Alienability is also there and according to Swadling it is the hallmark of property instead of exigibility but according to sir exigiblility is the real hallmark. Alienability is neither necessary nor sufficient.

Neccessity requires that something cannot be property if it is not alienable.

S.10, TPA- Restriction cannot be put on the transfer of a property. The condition would be void if it limits the transfer absolutely.

Except in the case of a lease where it is for the benefit of the lessor. In lease there is transfer of the enjoyment rights to another person. Therefore, alienation is not necessary. Non transferable lease is as much property right as any other.

A (Landlord lessor) C

(Tenant Lessee) B

Leasehold interest (right to use and enjoyment)

Now, whatever remains after the lease is the reversion. This gives two rights:

Right to receive rent. Right to alienate paramount title.

Both leasehold and reversion are independent property rights and usually can be sold any number of times.

Q. C tries to grab some land. A is not present. Can B prevent C? Can B alienate the leasehold interest?

Ans. A has right of reversion i.e. right to get rent. B has leasehold interest only. So B can never alienate the reversion because he does not have it. He can only transfer the leasehold interest.

Also B can prevent C from encroaching over the land. If he only had licence he would not have been able to do so.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

If B had easementary right and not a lease. He could stop C from interfering with this right if it is a ful fledged one.

NEMO DAT QUOD NON HABET- You cannot transfer what you do not have.

Like in the above situation if C wants to buy paramount title from A, he can only transfer- Paramaount title- B’s interest (leasehold interest) = Reversion

Therefore, S.10 itself provides an exception to alienablility.

S.6 (i)- A tenant in a non transferable rent contract cannot transfer his right.

A leasehold can be transferred/alienated by:

Assignment of the leasehold (i.e. sale) Creation of a sub-lease (can either be of whole property or only a portion of it)

So, S.6 (i), S.10 exception & S.108 (j) provisio permit non transferable leases. Therefore, it is not a necessary condition for an obligation to be a property right.

Is it a sufficient condition?

It means that if a thing can be transferred it is a property.

Assignment of contract- Contract is between 2 parties (privity). To get out of it, you can either breach it or find someone else who still has use for it. You can transfer a benefit of a contract and not the burden. Licence can be transferred. It is, however, a contract. So, any right, that can be transferred, does ot become a property right per se. Therefore, it is not a sufficient condition as well.

Alienability of a property is a general rule. You do not need permission for it in the contract. Sometimes, restriction on it may be provided in the contract, which is an exception. In only 1 case can there be a bar on transferability i.e. a transfer on leasehold. In no other case can a total prohibition, restrain or bar be created over transferability of a property (S.10 TPA)

DATE-24.7.2012

Amendment to the definition of property- Right over a thing ‘which is durable’.

Exigibility enhances durability but is not the source of it.

Durability means that a property right cannot be changed or taken away very easily, which is why it is preferred over a contractual right for the use and enjoyment.

The law provides for free breach of contract just at the cost of paying the damages. For more beneficial deal, rational profit maximiser will readily breach contracts. Thus, they are not as durable.

It is not very easy to revoke a lease, easement, mortgage or any other property right.

Durability does not flow from all the other parts of the definition. However, it is a necessary condition though it is not sufficient.

DEGREE OF DURABILITY BETWEEN MOVABLE AND IMMOVABLE PROPERTY

If it is immovable property that you have been deprived of there is a presumption in law that you will be given the same thing back because it cannot be adequately relieved by compensation in money. If it is movable property you may be given the thing back only if it is special, otherwise monetary relief may be granted. (S.10 SRA)

Thus, durability is little weak in case of movable property but is very strong in case of an immovable property.

LAW

PUBLIC LAW PRIVATE LAW

IT IS ALL ABOUT OBLIGATIONS

IT INCLUDES CONTRACT, TORT, PROPERTY (special because of exigibility), EQUITY ,ETC

Contractual obligations only bind parties to the contract. No boundation without consent. Similarly, ‘bind’ in property law is all about exigibility.

In tort, duty of care and obligation binds the whole world and is actionable only on the act or omission of the tortfeasor i.e. a breach of duty causing damage.

Property- 2 sorts of obligations:

1. No one shall interfere with the property (duty of non interference). Even a non transferable lease imposes this duty on the whole world. This is similar to tort.

2. Consequences of transfer of property bind the whole world.

The right to sue cannot be transferred. In property, 3rd parties are equally bound by the transfer, with or without their knowledge.

Each property holder is entitled to a reasonable amount of light, air, water. Non interference by noise, pollution, etc. (a tort- nuisance can also be brought in for noise) but no tort for proprietary rights of air, light, water.

Property law permits you to enforce rights beyond your own proprietary rights. E.g. Paying your neighbour for not growing a tree so that you can enjoy light. This is called easementary rights. It goes beyond and extends to someone else’s land.

TRANSFER

What is transfer of property?

‘Transfer’ of property is a process by which the person who originally holds the property parts with it , or, is parted from it, and another person comes to hold it.

All the persons were bound by the original right holder are bound by the other person who comes to hold it.

Ways of transferring:

By operation of law By volition or will of a person when he is alive By will or volition of a person after his death.

‘Parts with it’- implies the will of the person

‘Parted from it’- Does not imply will.

DATES- 25.7.2012, 26.7.2012 and 31.7.2012

Conveyance:

1. Transfer of property by will or act of parties; and2. Which needs the requirements of law prescribed for that type of conveyance.

Generally every sale and every conveyance is to be registered.

Mortgage: Registration + Attestation.

So there must be a concluded contract and this must be registered.

S.25 ICA- Contracts can be without consideration but it must be in writing and and registered.

If there is a proper consideration then not a problem but in case of gifts, you have to prove it’s a concluded contract.

CARDINAL TRICHOTOMY OF PROPERTY LAW

1. Consideration2. Title/property right3. Control/possession of the thing.

1st Case- Our day to day transactions. E.g. Buying a toffee. Here all the three things happen simultaneously.

2nd Case- FLIPKART- 1. Advance payment- debit/credit. 2. Title remains with flipkart and so the risk.

Cash on delivery- its just like a toffee transaction except that its happening in vendee’s place.

3rd Case- Buying a property: Suppose a growing company based in Bangalore wants to expand business and buy a private location in Nariman point. Seller may tell that the lease of the particular place ends on 1st Jan, 2007. So, company may become the tenant then ownward. So, this company wants a 5 year lease but then the control will pass only on 1st Jan 2007. But the company wants some sort of guarantee so it takes a risk and pays up some consideration. But the seller does not generally pass the title to prospective buyer because he is still looking for better bargains. So, this risk has to be taken by the buyer.

Now when a buyer pays in advance, all he has in hand is a slip of receiving. Law creates a legal property right immediately called legal buyer’s charge which binds the property and continues to do so until the advance is paid back or the property is handed over.

NUMEROUS CLAUSES PRINCIPLE

Courts are extremely reluctant to create new causes of action. Property rights are definite in number. There is a close list.

NC principle basically says that the property rights which exist and are recognised by law is fixed list. (only legislation can add to the list)

Parties by contract cannot keep creating new property rights. Since, 3rd parties are bound without consent and knowledge, it minimises the risk of being bound by rights you are unaware.

You should be able to know what rights bind a piece of land. Thus there are limited property rights recognised in a complete, closed list.

This list is found in statute and case laws. In India, almost all of them are statutorily recognised.

Chief Property Right

1. Freehold Estate2. Lease3. Easement4. Mortgage interests5. Charges

Equitable Property Rights

1. Beneficial interest to the freehold in a trust2. Equitable leases3. Equitable Easement4. Equitable Mortgages5. Equitable Charges6. Restrictive Covenant

Equitable property rights are dependent upon notice so they are less exigible than legal property rights.

FREEHOLD ESTATES

Theory in India and England is that all land, ultimately, is owned by the state or crown. When you cannot find the owner of a land, it goes to the state. For interim periods, it may be owned by private individuals.

In old times, wars were fought for land as it was the only source of economic activity. King, nominally, held all land. He handed out portions to nobles he wanted to please.

At time of independence, most of the land was owned by the British. All derived their title for some grant of the sovereign. State tried to transfer title of these intermediaries (zamidars, etc)

to people who were actually on the land. It was resisted very strongly as a FR and amendment had to be made. But because of so many cases, land reform lost fervour. Instead of giving absolute title, they were given a long or permanent tenency interest in the land on which they stayed or were farming upon. While zamidars still had absolute title in rural areas.

In urban areas, transfer of property took place simply. Trying to ascertain who has freehold estate is more a matter of history than law.

In modern day can you create a freehold estate?

It is either inherited or bought.

State, by acquisition, wipes out all prior rights and can create it.

Paramount title or ownership- The complete and hence the largest set of rights over land.

Not land but set of rights- You cannot carve out subleases on the land itself. You carve out rights over the land.

Any piece of land may be incumbered by all these rights which are subsets of paramount title or be a clean piece of paramount title. How do you claim the land back?

1. State acquisition, wiping every other right off, and granting compensation. Whether or not every right holder gets compensation, state gets clean paramount title by law. [Doctrine Of Eminent Domain] It gets back land free from all incumberances.

2. If a private person wants clear paramount title, he has to find every right holder and buy him off. This is useless. You are only to see that the right you are getting serves your purpose and is not incumbered, instead of wanting the paramount title.

DATES- 01.08.2012, 06.08.2012 and 07.08.2012

HILL v. TUPPER

The Basingstoke Canal Company owned the canal and some land on the banks of the canal. They leased the land on the banks of the canal to Hill for thepurposes of a boatyard. The lease included a clause granting Hill the exclusive rightto put pleasure boats on the canal. Tupper nevertheless started placing his pleasure boats on the canal. Hill sued Tupper, claiming that his ‘pleasure boat monopoly’ was an easement. If the court had accepted that claim, it would have meant that the pleasure boat monopoly was a property right which could be protected by suing anybody who interfered with it.

It was held that the pleasure boat monopoly was not an easement. The monopoly did not‘accommodate’ the land leased to Hill. Rather it was for the benefit of Hill’s business. Therefore, Hill’s only remedy was to sue the canal company for breach of contract. His right was merely a personal right wan was not enforceable against the third parties.

Q. What are the normal incidents of lease? Why did Hill not include the right in the lease itself?

Ans. It is because the lease was for the land and not for the use of canal so a separate right had to be included. Not every use of land can be included in benefit arising out of land because of Numerous Clauses.

A- Head Lease- T- Assignment (sale of lease) - B

1 P2 P3 C4 P5 C

1. Silence on terms 1-5 in head lease. Only contains terms as to rent and duration.

Will the term of head lease bind the assignee?

Whenever any of the terms of head lease are proprietary, they will bind B without his knowledge.

B will be bound by 1, 2, and 4 and not by 3 and 5.

2. Assignment deed says: “I, B agrees to terms 1-5 in head lease”.

B is bound by the lease terms. Only change is that T, and T alone can now sue B for breach of 3 and 5. A can only still sue for breach of 1, 2 and 4. In earlier situation even T could not sue B for breach of contract.

In Hill v. Tupper, was it a ferry right? NO. Hill claimed it was an independent right, like right to fish, was it? NO.

Easementary right?- The lease and the right to use canal were not related i.e., the use and enjoyment of dominant tenement must be connected to the use and enjoyment of canal for it to be an easementary right.

E.g. If Hill started a yacht club on the land, it would be related to the use of the canal- i.e., the canal is necessary for running the club. Therefore, there is a strong claim of property right as its an easement.

MOODEY v. STEGGLES

Moody’s bar was in the inner street such that in order to enter into it you have to go through the yard. Since bar was not visible, he had to purchase the right to put sign board on the wall from relationship, where the land is but a convenient incident to that relationship. It was claimed as an easement.

The question was what is the land/business being used for?

Ans. A benefit arising out of land must have a special relation with the land in order to be a property right. Also, it must have a normal connection with the ordinary use of land.

Necessary Conditions (Lord Evershed- Re Ellenborough Park Case)

1. The use or exercise of the right concerned- (a) must have a normal connection with the ordinary use of land and (b) must subserve or accommodate the land i.e. is not merely convenient incident to the exercise of the right concerned.

Land use can be intrinsic (that which exists for its own sake) or just incidental (that is some other purpose tobe solved and it exists for that) to it.Land use must be inherent to the concerned- property right.

So the enquiry is whether the relationship between grantor and grantee is through the land; Subserving the land- is the land use intrinsic to the exercise of right- or is there any independent relationship, where the land is but a convenient incident to that relationships.

2. It must be possible to identify the intention of the parties to create/transfer a property right.

3. The right claimed must fall in Numerous Clauses of recognised property rights.

LEASE (S.105)

A lease is usually the transfer of exclusive possession, i.e., 100% control of a place of land.

S.105 also gives other sorts of control.

A- Rubber plantation owner

B- Lease holder- to extract rubber from trees, add fertilizers, take care of trees.

This is not possible in England where exclusive possession + exclusive control is required.

In India- added advantage- can use land more efficiently.

Also some sort of exclusive control over some other aspect of land, but falling short of exclusive possession may also amount to a lease in India.

Lease is a transfer of right ot enjoy immovable property.

If C wants he can deny B the water.

In England: B will have a right to draw a certain amount of water (Easementary right).

Or: There are 3 leases- 1 for the field, 1 for rubber trees and1 for water as co-leases.

In India: B will have exclusive control over the entire property except for rubber trees.

C leased the whole piece of land except for the control over rubber trees. He does not have exclusive possession of the whole land but has some degree of control over some part of the land. He can get an easement or license.

If A keeps rest of the land and only part with the control of rubber trees then he can grant easementary right over water body or runs a pipeline through the land on which the trees are growing.

For an easement there must be a dominat tenement.

M gives B a lease for exclusive right for parking of cars.

Since, there is no way from office block to food joint, workers have to drive all the way through. So they asked M for an easementary right to walk across the parking lot. Can they get such right?

B has a kind of exclusive control but falling short of exclusive possession. If B had exclusive possession, he could have prevented anyone from using the parking lot.

Whether B had a lease or licence?- Depends on the intention of the parties.

Also the intention of the party cannot convert something which is not a property right into a property right.

EASEMENTS

1. There must be two tenements/parcels of land (DH and SH) in proximity to each other. Its not necessary that they should be adjoining each other.

Proximity depends on circumstances and resonableness.

2. The right claimed to be an easement must be for the beneficial enjoyment of the DH and must burden the SH.

1. There should be a normal connection with the ordinary use of land: DH is a holiday home so there should be a good view. Its an intrinsic part of having a holiday home near a lake. Therefore, there is a normal connection.

2. Numerous Clauses is satisfied- Statute allows for SS through a ‘defined apperture’. Vacant land does not have this right but buildings do.

3. Intention of the parties: It would be quite expensive to buy a property right. It will almost be like buying the property itself.

If it’s a property right nothing can be constructed on adjoining land which obstruct the view.

Only if necessary condition 1 is satisfied & numerous clauses, then it’s a bargain on 2nd condition- How much A is willing to pay and how much is B willing to part with.

LEASE

A lease is the transfer of exclusive control over

I. The entire parcel of land i.e. exclusive possession i.e. 100% control over parcel of land.

II. Some aspect of the parcel of land concerned.

Restricting the use of which land can be put is an intrinsic proprietary feature of leases. It is part of the numerous clauses.

Ferry- way to cross a water body just short of a bridge (includes the entire appratus). It’s a recognised property right usually conferred by state. Immovable.

England- Lease of ferry- reguirements- exclusive possession of boh sides of land and the canal.

If Hill and Tupper had all these things, such a lease could be granted.

Very rare to see exclusive control of water by a private individual. So, even in England, it is difficult for such a lease to exist.

In India it can easily be done by granting Type II lease- only requires control over some aspect of the . Provides for more efficient land use and also enables greater property rights.

For defeating Necessary Condition 1- just prove that use arising out of land is not ordinay but incidental to it. Create some other relationship between grantor and grantee which is primary and land use becomes by the way/incidental/contingent. So the lease fails as necessary condition 1 is not satisfied.

E.g. 1- Land use- extracting rubber- changed it to sourcing rubber (can be sourced from any land)- just sourcing and supplying rubber- therefore, not a lease, land use is by the way.

E.g. 2- Parking cars- changed to providing parking services for a certain no. of cars. Not limited to particular plot of land.

Ferry example- transportation services- ferry can be one of the ways- so becomes incidental.

The reason why this fuss is created is because of Rent Control Act which made all the leases perpetual leases and froze the rent. Landlords get nothing out of such property.

DATE 09.08.2012

A property right is more expensive as it is more durable.

Depends on the parties- how much would one be willing to pay and willing to part with the property.

Tf easements are agreed to orally, there is no need for registration. If the law permits oral arguments, its existence is not in question, but how to prove it.

What is the content of rights that automatically stnd transferred upon a parcel of land? What rights need to be say required as easements?

An easementary right is always something more than you are entitled to. What are you normally entitled to depends on the neighbourhood.

Legislature has decided that you are not normally entitled to sunlight from a lower angle but only from a higher angle.

Numerous Clauses, i.e. closed rist of the CLASSES OF PROPERTY RIGHTS THAT ARE RECOGNISED. You cannot create new classes.

Within each class of PR you have another NC= Closed list of the defined incidents OF THE DEFINED INCIDENTS OR CHARACTERSTIC OF EACH CLASS OF PR.

Profits and leases: The test is the use of land as intrinsic to the transaction or relationship between grantor and grantee.

Two kinds of profits:

1. Extractive profits.2. Non-extractive profits.

MORTGAGES

Security interest which is a property right.

It is never main reason for the transaction. Till now the property was not central to the transaction.

Main purpose of a transaction involving a mortgage is financial. The mortgage itself is ALWAYS SECONDARY, i.e., is an UNDERLYING TRANSACTION.

People can run away, immovable property cannot, so it provides security to the lender.

Types of pure mortgages (S. 58)

1. Simple2. By Conditional Sale3. Usufructuary

If it has more than the specified particulars of any of the pure mortgages, it will become an anamolous mortgage.

Mortgage defined under S. 58- Transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced.

E.g. A needs to raise 50 lakhs. He could sell the land, lease it or grant an easement. But he wants the money as well as retain the use of land. So he mortgages it.

Mortgagee’s interest= Contingent interest, conditional interest and ‘mortgage money is repaid’.

What the lender gets in return is the property right. It is not a pure conveyance. What A retains is the redemption of interest. He is still in possession but the nature of his PR changes. The moment money is repaid, mortgagee’s interest, which is a conditional one, ends.

Morgagee does not get the freehold, he only gets the right to sell the freehold in case of non repayment of debt.

Right of redemption is the right of mortgagor to get back his pledged interest.

Contingency depends on the chance of repayment. (the condition attached)

Mortgagor’s interest which has been pledged + a condition = Mortgagee’s interest

Right of Reversion i.e. right to get it back is left with the lessor.