Tenures and Estates

Tenure

 Legal regime under which people own land

 Crown is owner & private ‘owners’ are its tenants

 Substance has disappeared over time

 Replaced by a monetary system

Estates

 Person owns an estate in land

 Right to possess a space on the earth for a period of time

Freehold
(only fee simple absolute exists in law)
Fee Simple
 Now equivalent to ownership
 Can be given away by will if owner has
no heirs
 In intestate deaths assets distributed
by Administration of Estates Act
1925
 If no heirs: Estate goes to crown
Fee Tail
 Can go to any descendants through
Male/ female line
 Last only as long as lineal descendance
of person granted the land
Leasehold
Essential characteristics Street v Mountford
 Certainty of term Lace v Chantler
 Exclusive Possession
 Rent (but not essential) Ashburn
Anstalt v Arnold
Fixed Term Tenancy
 Lease granted for a fixed term at
outset
 Can only be ended by break clauses or
breach of covenant
Periodic Tenancy
 Lease granted initially for a fixed
period
 BUT this period will automatically
recur until lease is terminated
 Typically notice = period of lease
 But Yearly Periodic Tenancy = 6
months notice
 PT over dwelling house notice must be
minimum of 4 weeks.
 May be implied when you take
possession and pay rent by reference
to a period

Life Estate Tenancy at Will

 If grantor grants a Life Estate it ends  Agreement can be terminated by
on death of grantee either party at any time
 Since 1925 they’re equitable interests
held under trusts
 Possessor = Life Tenant

Disguising creation of a lease as a licence

 In past landlords have tried to declare occupants of their land as licensees not tenants
 Allows landlord to avoid statutory benefits afforded to tenants
 E.g. security of tenure: Allows tenant to remain in occupation even
after expiration of lease
  Typically these centre on Exclusive possession: the ability to exclude all others from
the property, including the landlord.
 Without it there can be no lease
 It’s a licence: personal permission that creates no proprietary interest over that land

Court: ascertains whether agreements where landlord attempts to prevent EP arising are valid

 They must look at substance of the agreement.

 Not the terms

CASES

Street v Mountford [1985]

 Ms Mountford entered into an agreement described as a licence

 Mr Street granted her the right to occupy 2 furnished rooms
 Subject to clause that ‘licence may be terminated by 14 days written notice.

 Mr. Street admitted to granting Exclusive Possession

 HoL: Agreement created a tenancy
 In absence of special circumstances if an occupant has exclusive possession for
fixed/periodic term in return for paying rent a tenancy is created.

AG Securities v Vaughan

 Several agreements for a joint occupation of a furnished flat

 Issue: whether the occupiers enjoyed EXCLUSIVE POSSESSION
 Each agreement provided that each individual occupier was to share with up to 3 people
nominated by landlord. Clause was exercised
 Stated that only a licence was granted
 But it was clear that the whole point of it being drafted like this was to avoid the
Rent Acts

 They were licences no exclusive occupation. They arrived willing to share with
unknown people

Aslan v Murphy

 Licence agreement over a tiny room

 Licensor retained keys
 Agreement excluded exclusive possession
 Required occupant to vacate the premises for 90 mins each day
 Court: It was a lease
 There is no magic in retaining the keys and the room was too tiny for anything but
exclusive possession
 Look to nature of accommodation


Bruton v London and Quadrant Housing Trust

 Licencee of a block of flats purported to give homeless person a licence over one of the
plants
 HoL: Homeless person had a lease since he enjoyed exclusive possession for a term at a
rent
 Lace v Chantler [1944]
 Whether a ‘lease of the duration of the war’ was valid as a legal lease.
 Court: It was a licence as it was a lease of indeterminate maximum duration and was not
capable of being a lease.

Prudential v London Residuary Body [1991]

 Lease- dating from 1930- concerned a strip of land and provided for an annual rent of
£30
 Clause 6 – ‘Tenancy should continue until land was required by council to widen road
 Road still not widened 60 years later and freehold is vested in LRB
 Present landlords bought property from LRB, have no road widening powers
 Agreement purported to grant a term of uncertain duration which if valid entitles new
tenant to stay there forever at rent of £30

 Court: Lease contract was uncertain as there was no determined end date
 Invalid as lease
 By virtue of possession and payment of yearly rent tenant became yearly tenant
 As he paid rent on a periodic basis it was a periodic tenancy.

Manchester Airport Plc v Dutton [2000]

 Wood owned by National Trust

 Man Airport wanted to cut down trees for new runway
 Appellants set up camp there without permission or licence
 Later, NT gives Man Airport licence to carry out work
 Man Airport wanted order to recover possession of land

 Court: Refuses to give injunction for ejectment

 Licence doesn’t give Man Airport exclusive possession or absolute title
 Can’t rely on prior possession
 Man Air have only right to occupation, not possession
 Can’t eject trespassers. Only landlord can

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Future Interests
 Equitable Interests & Co- ownership

Property rights can be legal/equitable

Equity

 Supreme Court Act 1981: Where there is a conflict between common law rules and
rules of equity, the rules of equity prevail.

Equitable interests

Queen v London Borough of Tower Hamlets

 Applicant obtained a 10 year shorthold tenancy of a house
 No deed executed under seal so tenancy wasn’t a legal estate in the property
 But her contract exceeds 3 years so she has an equitable interest in the property
 She applies for a renovation grant but council refuses saying she doesn’t have an ‘owner
interest’
 Court: Though not a legal estate judge held that LPA 1925 defines ‘term of years
absolute’ applies to equitable interests so it is a good interest

Trusts
 Introduced by TLATA 1996
 Relationship in which trustees are owners of the assets
 Are required to use them according to the terms of the trust
 For benefit of Beneficiaries
 Trust may have many of both
 You can create a trust without beneficiaries for charitable purposes
 Trustees have a fiduciary duty to avoid situations in which other duties would conflict
with their trustee duties
 Trustees are usually legal owners of assets
 Beneficiaries are usually equitable owners of assets

Co-ownership

 All co owned property will be held by way of a trust

 May be expressly created or may be imposed to do justice

 2 main forms. Joint tenancy and Tenancy in common. Property held by way of trust

 Joint tenancy: Requires all 4 unities and upon which right of survivorship exists.
 Right of survivorship: If one tenant dies their interest disappears and the surviving joint
tenants continue as owners of the whole
 4 unities: All interest of joint tenants are alike AG Securities v Vaughan

Unities of: UNITY OF INTEREST: the joint owners have the same interest (doesn’t have to be
the same size just the same nature) in the property
UNITY OF TITLE: they must receive their title under the same document
UNITY OF TIME: they must receive their share at the same time
UNITY OF POSSESSION: they must all be allowed possession of the whole, and not to exclude
each other

 No shares but tenants collectively own the whole

  Can hold legal title: By a max of 4 people: If there are more the holders of the legal
title will be the first 4 named on the conveyance with the capacity to be a
 Can hold equitable title: By an unlimited number of people
 Joint tenancy in equity can be severed to create a tenancy in common
 Is seen as a single entity

 Tenancy in Common: Requires only the unity of possession and doesn’t operate right of
survivorship
 Shares of the whole don’t have to be equal
 If a tenant in common dies their interest continues to exist and will be divided as part of
their estate.
 Can hold equitable title: By an unlimited number of people
 Can’t hold legal title
 Can be ended by dividing up possessions or by selling asset and dividing up proceeds

Bodies Corporate (Joint tenancy) Act 1899

 A corporate body can hold real or personal property in joint tenancy in the same manner
as if it were an individual

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SEVERANCE

HOW?

 Written notice
 Or acts such as mutual agreement and conduct
 Must happen during lifetime of severing tenant

Harris v Goddard [1983]

 Plaintiffs are executor and children of Mr Harris’ first marriage

 Defendants are trustees of a fund in existence after sale of a property
 Held by Mr and Mrs Harris as joint tenants in equity
 Trust claims half as beneficiaries are his executors
 Mrs. Harris claims right of survivorship –WHOLE HOUSE
 Her employers provided the money for the house as a loan, protected by a policy on his
life
 The marriage broke down and she sent a letter petitioning for divorce
 Court- he died before petition could be heard. Therefore is the letter notice of her
desire to sever joint tenancy
 No – written notice must convey an irrevocable and unequivocal intention to sever
immediately- her prayer for a petition was too general
 Intention must be to sever immediately. Her letter was for court cases in the future

Re 88 Berkley Road [1971]

 Joint tenant’s written notice was served when sent by registered post to the co-owned
home
 EVEN though signed by severing joint tenant and never read by intended recipient

Murphy v Gooch [2007]

 Had a child
 Purchased a home- 25% interest in 99 year lease
 Since relationship broke down Mr. Gooch has been sole occupier
 Woman asked Gooch to buy her interest but he refused
 They were tenants in common with equal shares, wanted an order for sale
  He had been paying interest rent and premiums
 Was his credit for paying these offset by an obligation owed to Murphy as he was
sole occupier
 COURT:
 Doctrine of ‘equitable accounting’ a matter of personal obligations. Co-owners given
credits for expenditure incurred on a jointly owned property.
 Murphy entitled to offset credits for occupation rent. Gooch has option to buy her
interest or sell property with each getting equal shares

Palmer v Palmer

 Insolvency doesn’t sever JT

 Man dies insolvent
 Administrators wanted to sever JT to use half of value
 Wife appealed
 Court: Estate of deceased doesn’t include unsevered JTs

Security Interest I

Pledges, liens and charges

Security interests

 Property rights that exist for the limited purpose of making it more likely that some
obligation will be performed
 Most common: DEBT
 Secured creditor: Holds security for payment of debt
 Unsecured creditor: Does not
 If debtor becomes bankrupt unsecured creditor can only claim against debtor’s estate
along with all other unsecured creditors
 Secured creditor can realize the security without sharing it with other creditors.

Debenture: A document creating/acknowledging a debt

3 Main groups of security interest

1. Possession
Pawn/ Pledge: Debtor can’t use them until debt is repaid and only tangible assets can be
pledged

2. Title (transfer) security

Wider variety of assets can be used
Debtor can retain use and possession of secured asset while debt is being repaid
Creditor has title to the assets so realization of security is easier
Can have problems if debtor has bad title

3. Encumbrance
Equitable charges and liens are a form of encumbrance
Wide range of assets
Debtor can deal with assets in ordinary course of business as long as he doesn’t default

Created
 Directly by intention
  Or arise by operation of law

Pledge: Created by intention. Debtor delivers possession of goods/documents to creditor

Common law lien: Arises by operation of law. Debtor delivers goods/ documents to the
creditors for some other purpose (eg repair) and creditor can retain possession until bill for
services is settled. Right to retain physical possession

Unpaid sellers lien: Seller can retain possession of goods sold until the purchase price is paid

Equitable lien: Only arises by law in certain circumstances. With no unifying principle.

Tappenden v Artus (1964)

 Artus hired van from Tappenden

 Van broke down and Artus took it to second defendants (garage) to repair it
 Tappenden demanded return of van from garage
 They refused to deliver until he paid for repairs.
 Court: Garage Is entitled to use common law lien and assert it against bailor as bailor
gave bailee authority to give lawful possession to the garage for repairs.

 A company can raise money by issuing a debenture that creates an equitable interest
over some/all of its assets
 Charges can be fixed or floating depending on whether company is free to deal with the
charged assets in the ordinary course of its business
 Distinction between fixed and floating charges matters because assets subject to a
floating charge can be used to pay ‘preferential debts’ if company becomes insolvent

Agnew v Commissioner of Inland Revenue

 Book debt is sum of money due to a business in the ordinary course of its business
 Is a charge over the uncollected book debts of a company, leaving them free to
collect them and use the proceeds, is a fixed charge or floating charge???
 Charge over book debts was a floating charge
 As company retained power to extinguish the assets which were the subject of the
floating charge and replace them with assets the subject of the floating charge
 Compliance with the terms of the a fixed charge would paralyse the business

 Floating Charge: Security interest over a fund of changing assets of a company/LLP

 It floats until converted (crystallized) into a fixed charge.
 It then attaches to specific assets
 Crystallization can be triggered by many events
 In debentures the cessation of a company’s right to deal with the assets in the ordinary
course of its business leads to automatic crystallization
 In typical loan agreements defaulting is a trigger
 Can only be granted by companies
 Take effect in equity only

Romalpa Clauses

 When raw materials are supplied to a manufacturer on credit the supplier may use a
retention of title clause to secure manufacturer’s debt to the supplier.
 Ownership of the goods does not pass until the payment is made in accordance with the
terms of the contract
  Retention of title clause should become ineffective where manufactured goods are
concerned

Clough Mill Ltd v Martin [1984]

 Concerned Romalpa clause

 Plaintiff is yarn spinner
 Under 4 contracts it contracted to supply yarn to a company
 Plaintiff knew that yarn would be used to manufacture fabric
 Contracts included ‘romalpa clauses’
 Material should remain with seller until full payment is received/ buyer has
sold it to customers
 If payment is overdue seller can enter buyer’s premises to recover material
 Payment will be immediately due if buyer enters insolvency
 If material is used as material for other goods before payment the property of
whole good should remain with seller until payment has been made/ it has
been sold. Seller’s rights will extend to those other goods. Claiming
ownership of something the seller never had
 Martin was appointed receiver of buyer under debenture
 Buyer still owed plaintiff part of purchase price
 Seller wrote expressing intention to repossess yarn
 D’s solicitors replied saying that seller’s romalpa clause was invalid
 Plaintiff brought proceedings claiming damages from defendant for conversion of the
yarn
 Held: purpose of the clause is to provide seller with security for any unpaid and overdue
purchase price


Peachdart [1984]

 Suppliers supplied leather to a handbag manufacturer

 Romalpa clause- supplier retains title over leather and goods manufactured with it
 Buyer became insolvent and had
1.Some original leather
2.Some manufactured handbags
3.Some leather cut to handbag size
 Held: Suppliers retain title to original leather
 Not to: 2) Handbags as an attempt to get it would be a charge and void for non
registration
 Not 3 as Cut leather as once manufacturing process begins it is a manufactured good

Handy Lennoz

 Electric mototrs supplied for use in a generating plant

 Defendants became insolvent
 Supplier wanted to recover the motors
 Argued that it could be done as it can be unscrewed from generated
 Courts held in their favour
 Security Interests II- Mortgages

Are conveyances of the fee simple (plus a promise by the mortgagee to reconvey the title if
the dept was repaid within a fixed time)

Mortgagee takes ownership of the estate but leaves mortgagor in possession

It was thought unfair that a mortgagor might lose land worth more than the debt due to
defaulting

Mortgagee had to order a sale of land and only keep the value of the debt

Term “equality of redemption” refers to totality of mortgagors equitable beneficial

ownership of the land too

Has economic value- Market value of land minus debt