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Adam Baker Law 2270 and 3270

Land Law 2017-2018

GENERAL PRINCIPLES AND CONCEPTS

Reading

Textbook

Dixon, ‘Modern Land Law’ (2016), pp. 1–26

Smith, ‘Property Law’ (2017), chs. 1, 2, 4, 5 and 6

McFarlane, Hopkins and Nield, ‘Land Law: Text, Cases and Materials’ (2015)
chs. 1, 2 and 5 and 6
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1. THE CONCEPT OF ‘PROPERTY’

1.1 Meaning of ‘property’

The term ‘property’ can be used in three different senses:

a. to describe physical things. Land could be such a thing (e.g. ‘that field is my
property’), as could ‘chattels’ (choses in possession), these being any tangible
property which is not land, such as books and chairs.

b. to describe rights in those physical things. This is a more technical sense

of the term ‘property’. To be an ‘owner’ of a land, for example, is to have
certain rights in it. If the owner was to sell the land, what they are strictly
selling is those rights. Likewise if they made a gift of it, what they are passing
is those rights.

When the term ‘property’ is used in this sense, the right-holder is said to
have a ‘proprietary right’: see Section 3. ‘Land Law’ is essentially the
study of proprietary rights existing over the physical entity of land.

c. to describe choses in action. These are intangible assets such as

contractual rights, shares in companies, patents, copyrights and debts.

1.2 Real property and personal property

The terms ‘real property’ and ‘realty’ describe both land (as a physical entity) and
proprietary rights in it, with the exception of leasehold estates. The expressions
‘personal property’ and ‘personalty’, by contrast, describe property that is not real
property.

The terms ‘land law’ and ‘real property law’ are largely synonymous. ‘Land law’ is
however broader in one respect. This is because it also includes leasehold estates.
Given that leasehold estates are a very important type of proprietary right in land,
‘land law’ is the term used to describe this module.

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2. THE TANGIBLE SENSE OF ‘LAND’

2.1 Introduction

In this section we are concerned with ‘land’ in the sense of a physical asset. Broadly
speaking, ‘land’ in this regard extends to the following:

i. the ground below the surface to a reasonable depth (Section 2.2);

ii. the surface, including constructions that are ‘part and parcel of the land’ and
fixtures (Section 2.3); and

iii. a certain portion of the airspace above the surface (Section 2.4).

2.2 The ground below the surface

It is well-established that ‘land’ extends down below the surface, so that an owner
may bring an action in respect of any subterranean trespass.

Edwards v Lee’s Administrator (1936) 96 S.W. 2d. 1028

In Bocardo SA v Star Energy UK Onshore Ltd [2011] 1 A.C. 380, it was held that an
owner’s entitlement extends down to the point at which physical features (such as
pressure and temperature) render the concept of ownership absurd. In that case the
boring of three pipelines between 800 and 2,800 feet below the ground was capable
of being a trespass to land.

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There are nevertheless certain exceptions to the principle of subterranean

ownership. For example, the ownership of all unworked coal is vested by statute in
the Coal Authority (Coal Industry Act 1994, ss 1(1) and 7(3)); and all rights in
petroleum (inclusive of mineral oil and natural gas) existing in its natural condition in
strata are vested in the crown (Petroleum Act 1998, ss 1(a) and 2(1)).

2.3 The surface, including vegetation, constructions and fixtures

Ownership of the surface of ‘land’ extends to things such as trees, hedges, plants
and flowers, whether cultivated or wild.

More difficulties can be caused by the status of constructions and other items
brought onto the land. Constructions include things like walls, houses and garages.
Very often these will be deemed to have become ‘part and parcel of’ the relevant
land. In some rare cases, however, a construction may remain separate from the
land. In this event it remains personal property (and a chattel). The same issue also
arises with objects other than constructions that are brought onto land. Sometimes
they will remain chattels, being separate from the land. But sometimes they merge
with the land, so becoming part of the land. In this event they are called ‘fixtures’.

The burden of proof in both instances turns on whether the item is attached to the
land or merely rests on its own weight. If it is attached the burden of proof is on the
party seeking to show that it is a chattel, and vice versa. The key issue in either
event is the ‘objective’ purpose for which the item is present; that is, whether it is
objectively there to form a lasting improvement to the land or merely present so that
it can be enjoyed of itself: Holland v Hodgson (1872) L.R. 7 C.P. 328, 335. The test
is objective because it looks to what a reasonable onlooker would make of matters,
as opposed to what the party who brought the item or sited the construction
subjectively intended.

Botham v TSB Bank Plc (Unreported, 30 July 1996)

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D’Eyncourt v Gregory (1866-67) L.R. 3 Eq. 382

On the application of this test to constructions, Lord Lloyd has explained in

Elitestone Ltd v Morris [1997] 1 W.L.R. 687, 693:

‘A house which is constructed in such a way so as to be removable, whether

as a unit, or in sections, may well remain a chattel, even though it is
connected temporarily to mains services such as water and electricity. But a
house which is constructed in such a way that it cannot be removed at all,
save by destruction, cannot have been intended to remain as a chattel. It
must have been intended to form part of the realty.’

If the construction is built in such a way as to be removable, the relevant factors are
very much like those that are applied in the cases concerning alleged fixtures.

2.4 A portion of airspace

‘Land’ extends to such portion of the above airspace as is necessary for the
reasonable enjoyment of it at ground level. Any unauthorised entry into this airspace
is hence actionable as a trespass to land: Bernstein v Skyways & General Ltd [1978]
Q.B 479.

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3. PROPRIETARY RIGHTS IN LAND

3.1 Proprietary (property) rights and personal rights

Owners of land can confer both ‘property rights’ (also called ‘proprietary rights’ and
‘interests in land’) and ‘personal rights’ over their land on other persons.

Property rights over land very significant, as they capable of enforcement against
third parties. In particular:

a. Proprietary rights have the capacity to be enforced against future owners of

the land. (See slide 21.) When a right is so enforceable, it is often described
as being ‘binding’ on the new owner in question.

b. Proprietary rights may be enforced against other third parties who interfere
with their exercise.1 (See slide 22.)

A property right may come about various ways. These ways may broadly be grouped
under two headings:

- By operation of law: this is when a property right arises automatically, on

certain conditions being met. If they are, it does not matter whether the owner
intended the right to arise or not.

- By intention: this heading covers various situations when the landowner

objectively intended the right to arise. They include when a contract between
the landowner and a third party is deemed to have given the latter a property
right; when the landowner grants a property right, having previously
contracted to do so;2 and when the landowner confers such a right unilaterally
(e.g. by way of gift).

1
This is clearly so of ‘legal’ property rights. Whether it is also true as regards ‘equitable’ ones is a contentious
point; but is not an issue of importance in our syllabus.
2
Any such contract must be in writing and signed by both parties: Law of Property (Miscellaneous Provisions) Act
1989, s 2(1).

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Personal rights, by contrast, are enforceable only against the other party/parties to
them. A contractual right to use land (a ‘contractual licence’) is a good example of
this: it is good only against the other contracting party (or parties). Another example
is a ‘bare licence’: a non-contractual permission to use land. Personal rights do not
affect future owners of the land (slide 26); and third parties who interfere with them
are not generally subject to any liability (Hill v Tupper (1863) 2 Hurl. & C. 121; slides
27–28). Note also that no formalities are needed to create personal rights.

3.2 Deciding on whether a property right has been created

Only certain types of right can be proprietary. Case law (sometimes combined with
statute) sets down the requirements for each type of proprietary right: see Section
3.2, below). The permissible rights are introduced in Sections 4, 5 and 6, below.

When deciding whether a property right has arisen by operation of law, one asks
whether or not the conditions for this to happen have been met. In all other
situations, one takes the document/agreement alleged to have created a property
right, and asks what right was objectively intended. If it matches up to the
requirements of any property right, this right will in principle be taken to have arisen.
Failing this, the right can only be a personal one, even if the aim was to create a
property right.

The list of rights that can be proprietary has not stood still over time. Parliament can
obviously create new such rights. Before 1926, moreover, new ones arose when the
courts decided to enforce them against third parties (e.g. Tulk v Moxhay (1848) 2 Ph.
774). Other judges had then to do likewise as a matter of precedent. Since 1926,
however, statute has curtailed this role. Section 1 of the Law of Property Act 1925
stops the courts from creating new ‘legal’ property rights. Section 4 of the Act
arguably does the same for ‘equitable’ property rights (though s 4 has not been
mentioned in any decisions when the issue has since come up).

Various cases have concerned new alleged property rights, whether alleged to arise
by either intention or operation of law. The acceptance or rejection of these claims
shows the role of policy considerations in land law. See slides 35–37.

Even with recognised interests, the courts still play an important role. They are for
example often tasked with deciding how the conditions for particular rights are to be
applied in practice (slides 38–40). They adjudicate upon what the holder of a given
right is thereby entitled to (slides 41–42). 3 Sometimes they have entertained
arguments that the very conditions for a given right should be altered (slides 43–44).

3
Statute often also plays some role in determining the entitlements of a given right-holder.

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They also may have room to modify the rules by which interests come about by
operation of law (slides 45–47).
4. FREEHOLD ESTATES IN LAND

4.1 Introduction

4.1.1 Origins of the concept

English land law does not recognise that any person can be the ‘owner’ of land in the
sense that Civil Law systems do. This is because it is underpinned by the theory that
the Crown ‘owns’ all land, which notion has its origins in the Norman invasion of
1066. Instead, persons can instead hold ‘estates’ in land. None of these estates can
last forever.

‘The land itself is one thing and the estate in the land is another thing, for an
estate in the land is a time in the land or land for a time.’ ( Walsingham's
Case (1573) 75 E.R. 805, 815.)

An estate in land, therefore, is a right to enjoy land for a time, whether in the present
or the future. Different types of estate exist for different lengths of time; and more
than one estate can exist in land simultaneously.

As we will see shortly (Section 4.2), the Crown can create freehold estates, as can
estate holders themselves. But in order to make sense of these ideas, we must first
describe the relevant types of estate that can exist.

4.1.2 Types of freehold estate

Freehold estates are ones of indeterminate duration. The event that will bring them
to an end is known but not predictable, in the sense that one cannot say with
certainty at the outset of their existence when that event will occur.

(i). i. Fee simple: this is the amplest estate that one can have in land. A fee simple
estate lasts for so long as the present owner of it has heirs (for example,
through sale or inheritance). This is by a considerable margin the most
common freehold estate. It is common for its holder (or holders) to be described
as the ‘owner’ (/‘owners’) of the land.

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(ii). ii. Fee tail: a fee tail estate (or ‘entail’, ‘estate tail’ or ‘entailed interest’) is one
that passes down to the lineal descendants of the ‘grantee’ (the person first
granted the right), most usually through succession by eldest male children.
Since 1 January 1997 it has not been possible to create new fee tails.

(iii). iii. Life estate: a life estate exists for the lifetime of the original grantee. Its
holder is often (albeit somewhat confusingly) called a ‘life tenant’.

Freehold estates are further classified according to whether they are (i)
absolute, conditional or determinable; and (ii) in possession, in reversion
or in remainder. We are only really interested in estates that are ‘absolute’
and ‘in possession’. An ‘absolute’ estate is one that cannot be terminated
early (‘determinable’ or ‘conditional’ ones can be). An estate ‘in
possession’ is one that gives a present right to enjoy land, as opposed to
one (in reversion or remainder) that gives a right to enjoy it in the future
(see slides 56–57).

4.2 The source of ‘legal’ freehold estates

4.2.1 The position up to 1926

We have seen that, after the Conquest in 1066, the Crown became the ‘owner’ of all
land. It could then grant estates in it. These grants commonly came to take the form
of a fee simple absolute in possession. If the Crown wished to grant a freehold
estate less than a fee simple absolute in possession in a plot of land, it became clear
that it would also need to confer some other freehold estate, so as to ensure that
between them the two estates added up to a fee simple absolute in possession (e.g.
a life estate to A, followed by a fee simple in remainder to B). 4

When the Crown had granted a fee simple estate in land, its holder could also create
lesser estates out of it. One way to think of this is to imagine the fee simple being
split into smaller fragments of time. For example, a fee simple holder could divide
their estate up into a life estate followed by a fee simple in remainder.

4
Once a fee simple absolute in possession (or other estates that add up to one) had been conferred in a given
plot of land, the Crown could not grant further ones in it.

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These estates, whether granted by the Crown or created by the holder of such an
estate who divided it up into lesser estates, were called ‘legal’ estates. (This is as
opposed to ‘equitable’ estates: on which, see generally Section 4.4.)
Legal freehold estates, whether created by the Crown or an estate holder, could also
in principle be sold and gifted from person to person. (For example, the Crown might
grant a fee simple to A, who then sells it B, who gifts it to C.) The way by which
estates are transferred has changed over time; 5 but by the 1800s it had become
standard practice to do so by using a ‘deed’.

If all of the legal estates in a given plot of land came to an end, or if no such estates
had ever been conferred over it by the Crown, that land could be enjoyed by the
Crown. (Such land has come to be known as ‘demesne’ land.)

The theory through into the 1800s, therefore, was that the legal fee simple absolute
in possession in any plot of land – or, whenever it was split into lesser legal freehold
estates, the individual estates that comprised it – had been transferred from person
to person, and could trace its origin back to a Crown grant.

4.2.2 The Law of Property Act 1925

The Law of Property Act 1925 (which came into force on 1 January 1926) made
some crucial changes to this system. Unless the land is demesne land, the Act
mandates that in any plot of land there must be a legal fee simple absolute in
possession. This estate began in principle with a Crown grant. 6 Two changes were
made by the 1925 Act in order to arrive at this result:

a) If, at the time the Act came into force, the legal fee simple absolute in
possession in any plot of land was split into any smaller legal freehold estates,
the Act combined them into a legal fee simple absolute in possession. 7

b) From then on, s 1 of the Act makes it impermissible to split this legal fee
simple absolute in possession into lesser freehold estates.

5
Originally, for example, freehold estates in possession were transferred by a ceremony called ‘feoffment with
livery of seisin’ (no documentary evidence being needed, even though it was commonly used).
6
We say ‘in principle’, because, by the time of the 1925 Act, it was tolerably clear that a legal fee simple absolute
in possession could also be produced by adverse possession (‘squatting’) of land. After a period such squatting
would nullify the Crown grant estate. Thereafter it would be the legal fee simple taken by the squatter that would
now be the important one. It would play the role formerly played by the Crown grant estate (see topic 8).
7
The prior legal freehold estates were then deemed exist as ‘equitable’ estates behind a trust (on trusts, see
Section 4.4).

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These legal fee simple estates can of course still be passed on. Section 52 of the Act
requires a deed for such transfers. The modern requirements of a valid deed are set
down in s 1 of the Law of Property (Miscellaneous Provisions) Act 1989). 8
Registration of the transfer is also usually necessary today (see Section 4.3).

If the legal fee simple comes to an end today, the land once again becomes
‘demsnse land’, just like as happened before 1926. This is the doctrine of ‘escheat’.
The Crown can then grant a new legal fee simple in that land to another person.

4.3 ‘Registered’ and ‘unregistered’ land

The legal fee simple estate in any given plot of land can also be described as
‘registered’ or ‘unregistered’

A registered fee simple is one, the title to which (i.e. ownership of it) is
recorded at the Land Registry. One may hence prove its ownership by
reference to the Land Registry. Each transfer of the estate must not only be by
deed, but it must also be registered (by sending off the required documentation
to the Land Registry, which then updates the register accordingly).

An ‘unregistered’ fee simple is one, the ownership of which is not recorded at

the Land Registry. The ownership of such estates is proven by showing a chain
of ‘title deeds’.

In practice, lawyers and writers often talk about ‘registered land’ and ‘unregistered
land’. ‘Registered land’ is when the ‘legal’ fee simple in it is registered at the Land
Registry; ‘unregistered land’ is when that legal fee simple is not so recorded.

Registration of land has become progressively more common since the Land
Registration Act 1925. Any sale or gift of an unregistered fee simple must now be
registered within three months of the transfer of the estate. Once an estate becomes
registered, it cannot at any point thereafter become unregistered once again. Today
some 95% of legal fee simple estates are registered.

Registered conveyancing is seen to be simpler than unregistered conveyancing. In

addition, the rules on when proprietary interests affecting registered legal estates
bind purchasers of them are different to those that apply when one purchases an

8
Note also that any contract containing an obligation to sell or transfer an interest in land must be in writing and
signed by both parties: s 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989.

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unregistered legal estate. The registered land rules are perceived to be fairer. We
will consider the rules of both ‘unregistered land’ and ‘registered land’ in topic 7.
4.4 The ‘trust’

4.4.1 Introduction

In Section 4.3, we noted the idea of a ‘legal’ freehold estate. By this, we refer to a
freehold estate which in theory originated in a Crown grant. 9 Today this can only be a
fee simple absolute in possession (see Section 4.2.2, above). Before the LPA 1925
came into force on 1 January 1926, ‘legal’ freehold estates could also be other types
of freehold estate (Section 4.1.2, above).

The holder of a legal fee simple absolute in possession may be called the ‘legal
owner’. The starting point is that the owner of this estate is entitled to use the powers
that come with it for their own benefit. However, this default position is overridden if a
‘trust’ comes into existence (for when this happens, see Section 4.4.2.). When
occurs, the legal owner(s) are called ‘trustees’. They must then use their rights as
legal owners for the benefit of certain other person(s) (called the
‘beneficiary’/’beneficiaries, or the ‘equitable owner(s)’), of whom they may be one.
Various duties are imposed on trustees to this end, and the beneficiaries have
standing to sue for breaches of them.

This interest held by the beneficiaries is a property right. It is called the ‘equitable
estate’, the ‘equitable interest’ 10 or the ‘beneficial interest’. As a proprietary right, it
can in principle bind anyone to whom the relevant legal fee simple is transferred (see
Section 4.4.4). If it does bind the transferee(s), they must continue to act as
trustee(s).

The precise type of equitable estate taken by the beneficiary(ies) – they can be of
any of the types of freehold estate note above – will turn on the circumstances in
which the trust arose. In all of the situations which we encounter in this module,
however, the equitable estate will be an equitable fee simple. The way in which the
estate is owned (i.e. the shares in it) if there are multiple beneficiaries is considered
later in topic 4.

It is important to note also that there is no prohibition on a person being both a

trustee (a legal estate holder) and a beneficiary. Such trusts are in fact very
common.

9
Though it could also now arise by ‘adverse possession’ of land: see topic 8 (and footnote 6, above).
10
The term ‘equitable interest’ is also used to describe other types of proprietary right that are ‘equitable’ (see
Section 6.2), so it is important to be clear about the sense in which the term is being used.

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4.4.2 When do trusts arise?

When a legal fee simple is not held on trust, the holder of it is called the ‘absolute
owner’. There are however various ways by which an unencumbered legal fee
simple could become subject to a trust. The situations in which this can happen are,
in practice, spoken of as the ways in which a trust can be ‘created’, or can ‘arise’.
They can be categorised as follows:

- Express trusts: these occur when an owner validly declares a trust to exist
over their estate, or when they transfer it to another person(s), and validly
declares that they are to hold as trustee(s); 11 and

- Implied trusts: these arise by operation of law. They can be ‘constructive’ or

‘resulting’, depending on how they come about.

When an express trust is created (or provided for in a will), terms may be stipulated
at the time (or in the will) by the party creating the trust. These can then govern how
the trustees must act in managing the property.

4.4.3 Why be a trustee?

Sometimes, trustees are not trustees by choice. This can be the case with trusts
arising by operation of law. But often there are reasons for wanting to be a trustee.
When one is a beneficiary, for example, being a trustee involves one in the decision-
making regarding the land, which may be desirable. Some trustees act in a
professional capacity and are paid for doing so. On other occasions, an adult may
act as a trustee as a favour; for instance, when the beneficiary is a minor, and the
trustees are (or include) relations of the minor.

4.4.4 Purchasers and land held on trust

The precise details of when equitable estates bind purchasers of the legal fee simple
are considered in detail topic 7. One point is, however, worth stressing even at this
stage. Even when a legal estate is held on trust, and so the equitable ownership of
land is, in theory, the ‘valuable’ ownership of it, prospective purchasers of freehold
land will virtually always look to buy, not the equitable fee simple, but the legal one.
There are very good reasons for this.

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They can also leave the legal estate to be held on trust in a will.

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i. Whereas the legal ownership of land is usually quite easy to establish

(Section 4.3, above), the equitable ownership may be much harder to work
out, so that a prospective purchaser of the equitable estate may be unsure
who to deal with.

ii. It is a fundamental policy of the Law of Property Act 1925 that any prudent
buyer of a legal fee simple can ensure that they take free of any equitable
freehold estate affecting it. This is done by triggering the doctrine of
‘overreaching’. A buyer who ‘overreaches’ in effect wipes the slate clean of
the former equitable freehold ownership of the land when buying the legal fee
simple. Overreaching is looked at in topic 7.

4.4.5 The historical origins of trusts

Trusts first arose in the 13 th and 14th centuries. Owners of legal estates would
sometimes wish to leave it to another person, (say, X), the understanding being that
X would hold the estate ‘to the use of’ some other individual(s) (say, Y). The
‘common law courts’ refused to enforce such understandings, which they regarded
as giving rise to only moral duties. As far as they were concerned, X was the owner
of the estate.

In consequence, parties who were intended to have the enjoyment of the land in
question began to petition the King (and from the 1300s the King’s Chancellor, who
came to preside over the ‘Court of Chancery’). A different view of matters was taken
by the Chancellor. They did not deny X was the owner of the estate in question, but
decreed that it would be unconscionable for X to ignore the claim of Y. The
Chancellor would thus order that such estate-holders carried out the directions
imposed on them. Thus X became a trustee, and Y a beneficiary. Once the Court of
Chancery accepted that Y’s right was capable of binding persons to whom the legal
estate was transferred, it became clear that beneficiaries had a proprietary right in
the land.

The rather strange situation, by which the common law courts recognised only legal
estates, and the Court of Chancery enforced equitable ones, was ended by the
Supreme Court of Judicature Act 1873. Trusts today are recognised and enforced in
all courts.

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5. LEASEHOLD ESTATES

5.1 Introduction

A ‘leasehold estate’ (sometimes called a ‘lease’ or a ‘term of years absolute’ 12) differs
from a freehold estate in that it is for a determinate duration. Another way of
expressing this idea is that a leasehold estate is for a ‘term certain’. This term can be
of any length (e.g. one week; 125 years; 5,000 years).

The Crown can grant a leasehold estate in demesne land. Much more importantly,
they can be created (i) by holders of legal and equitable freehold estates; and (ii) by
those with leasehold estates.

A person granted a leasehold estate is often called a ‘tenant’, and the person who
conferred the estate is often called the ‘landlord’. The tenant(s) are entitled to
possess the land to the exclusion of the landlord(s). A leasehold estate is usually
granted as part of a wider contractual agreement as between the landlord and the
tenant, with obligations on both sides (e.g. the tenant agreeing to pay rent).

Leasehold estates can be assigned (a deed being necessary for this purpose). The
new tenant in this event steps into the shoes of the old one.

5.2 Leasehold estates can be legal or equitable

A leasehold estate can be ‘legal’ or ‘equitable’: s 1 LPA 1925. It will be legal if it is (i)
created by a legal estate holder; and (ii) it meets the formality requirements to be
legal. It will be equitable if either:

12
The word ‘absolute’ here adds nothing, because there is no such thing as a ‘conditional’ or ‘determinable’ term
of years.

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a) it was created by a legal estate holder, does not meet the formality
requirements to be legal, but Walsh v Lonsdale (1882) 21 Ch. D. 9 applies. In
order for the doctrine in Walsh to apply today, there must be an agreement
that is in writing and signed by both parties (s 2(1) of the Law of Property
(Miscellaneous Provisions) Act 1989), and it must be specifically performable.
(In terms of this latter point, land is always treated as unique.).

b) it is created by an equitable estate holder.

There remain some differences as between legal and equitable leasehold estates.
Most importantly, the rules on when legal leases bind third parties are different to the
rules for equitable leases. These rules are explored chiefly in topic 7. On the
rationale for allowing both legal and equitable estates, see Section 6.2.2, below.

5.3 Legal leasehold estates can be held on trust

A legal leasehold estate can be held on trust, just like a legal freehold estate. (This
likewise originally owed to the position taken by the Court of Chancery.) In this event
the owners of the legal leasehold estate are ‘trustees’ of it, and the owners of it at
equity are the ‘beneficiaries’ of it.

Similarly to what was said in Section 4.4.4, a prospective purchaser of a lease would
also almost certainly not look to buy the beneficial interest in that lease. Instead, they
would be content to purchase the legal leasehold estate itself. Again, this is because
a sensible purchaser can ensure that ‘overreaching’ occurs when they purchase
such a legal estate.

5.4 Legal leasehold estates can be ‘registered’ or ‘unregistered’

In Section 4.3, above, we saw how a legal fee simple can be ‘unregistered’ or
‘registered’. The same is also true with legal leasehold estates. In basic terms, the
rule today is that any legal leasehold estate created today for more than seven years
will have to be registered at the Land Registry.

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6. OTHER PROPRIETARY RIGHTS

6.1 The types of right

In addition to estates in land, there are also various other types of proprietary right.
These rights can in principle only be created by estate holders (whether freehold or
leasehold,13 and whether or legal or equitable14).

The rights in this bracket may be broadly divided up as follows:

- Rights of limited advantage over another’s land : an important example of such

a right is an easement. This is a right held by one landowner to enjoy some
limited privilege over the land of a nearby landowner (e.g. a right of way). The
restrictive covenant provides another example. The owner of Greenacre may
promise not to do something over their own land in favour of a nearby
landowner. This can give the promisee a property right over Greenacre.

- Rights concerning the sale of estates land : A good example of a privilege of

this type is an option to purchase. This right allows its holder to demand a
sale of a particular estate to them, at any time during a specified period, for a
pre-agreed price.

- Security rights over land: If an estate is offered as collateral for the payment of
a loan, the lender takes a proprietary right in the land in question. Such rights
commonly take the form of a ‘charge’..

6.2 Legal and equitable rights

13
Such rights do not bind the tenant’s landlord. Tenants cannot grant property rights to exist for a longer duration
than their lease. Tenants can also confer personal rights.
14
It is uncommon in practice for equitable freehold estate owners to do so. Equitable leasehold estate owners do
however more commonly create property rights.

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6.2.1 An overview

One must distinguish between ‘legal’ and ‘equitable’ rights when considering these
other proprietary rights. Those rights that can be ‘legal’ or equitable are listed in s
1(1)-(2) of the Law of Property Act 1925. Those rights that are not listed there can
only be equitable: s 1(3).15 Statute also now governs the formalities for creating
these privileges, as well as which third parties they bind.

Whether a right is legal or equitable usually makes no difference at all as between

the parties who created the right. The important differences between legal and
equitable rights instead concern: (a) how they are created; and (b) which third parties
they bind. For example, it will be seen that whereas before 1926 legal rights bound
any purchaser and equitable ones bound everyone except ‘Equity’s darling’, 16 the
modern rules are very different, but still distinguish between legal and equitable
rights.

6.2.2 The rationale for legal and equitable rights

There are reasons for having both legal and equitable rights. Firstly, and as regards
those rights that can only be equitable, the idea is that some rights should in
principle to bind third parties less easily than other ones. By making these rights
equitable only, they are then governed by the less generous rules on when these
rights bind buyers.

Secondly, and as regards rights that can be either legal or equitable, there is a trade-
off between ‘formality’ requirements, on the one hand, and rules on binding third
parties, on the other hand. The higher standard of formality required for such rights
to be legal makes them easier for third parties to discover; 17 and so it is appropriate
that they bind them more easily. If this higher standard is not met, but there has still
been a sufficient degree of formality, the idea is that the right still deserves to be
equitable, but in consequence is slightly less likely to bind third parties.

6.3 Transferring legal and equitable interests in land

15
It is unclear whether it is open to the courts to accept entirely new equitable proprietary rights in this latter
category; some authors argue that this is prohibited by s 4(1) LPA 1925.
16
This term describes a good faith purchaser of a legal estate in the land for valuable consideration without any
notice (actual, imputed or constructive) of the relevant equitable right.
17
There is an exception to this higher standard of formality for leasehold estates, to be found in s 54(2) of the
Law of Property Act 1925. This exception (and the reasons for it) are considered in the leases and licences topic.

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Transfers of these proprietary rights are permitted. One must however comply with
certain formality requirements. In order to transfer a legal proprietary right, one must
use a deed: Law of Property Act 1925, s 52. A valid transfer of an equitable
proprietary right (e.g. an option to purchase) must be in writing and be signed by the
person transferring it: Law of Property Act 1925, s 53(1)(b).

Note also that any contract containing an obligation to sell or transfer an interest in
land must be in writing and signed by both parties: s 2(1) of the Law of Property
(Miscellaneous Provisions) Act 1989.
7. CONCLUSION

7.1 A bird’s-eye view of topic one

7.1.1 The legal fee simple as ‘ownership’ of a plot

Imagine any plot of land in England and Wales. The ‘plot’, for this purpose, includes
not only its surface, but also constructions that are ‘part and parcel’ of it, fixtures on
it, the ground below the surface to a reasonable depth and a portion of the airspace
above.

Presuming that our plot of land is not ‘demesne land’, there will be a legal fee simple
estate. This legal fee simple will originate either: (i) in a Crown grant; or (ii) from a
taking of adverse possession. One cannot split this estate up into smaller legal
freehold estates (e.g. a life interest followed by a fee simple in remainder).

The ownership of this legal fee simple can be seen as the ‘legal ownership’ of the
land. The current ownership of this legal fee simple is usually ascertained by the
Land Registry record (for registered estates), but sometimes occasionally by the title
deeds (i.e. for unregistered estates). This estate can be bought and sold. A deed is
necessary for its transfer, as is registration if it is registered.

7.1.2 There may or may not be a trust of the legal fee simple

The legal fee simple in our plot of land may or may not be held on trust. If it is not,
the legal fee simple holder is the ‘absolute owner’. If however it is held on trust then,
in all of the cases that concern us, 18 this will mean that there is an equitable fee
simple in the plot of land. The holder(s) of this equitable fee simple are the
‘beneficiaries’ or ‘equitable owners’; those who have the legal fee simple are the
18
Other equitable estates can also operate behind a trust (e.g. an equitable life estate followed by an equitable
fee simple in remainder/reversion), but we are not really concerned with this.

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‘trustees’. Not uncommonly, the trustees and beneficiaries are the same persons. In
essence, when there is a trust the holder(s) of the legal estate enjoy the powers that
come with it, but must manage the land for the benefit of the equitable owner(s).

An equitable fee simple is a proprietary right, and so may bind buyers of the legal fee
simple. Nevertheless, prospective purchasers of the land will still virtually always
wish to buy the legal fee simple. If the seller is the ‘absolute owner’ this is readily
comprehensible; but even when the land is held on trust, any prudent buyer can
ensure that, when they buy the land, they will take free of any equitable fee simple
affecting it. This can most obviously be done by the process of ‘overreaching’.

7.1.3 There may or may not be leasehold estate(s)

Various other rights may exist over our plot of land. One of the most important such
rights is the leasehold estate. Such an estate may be granted by any estate holder in
the land. It can be legal or equitable. When it is created by a legal estate holder,
whether it is legal or equitable depends on the formalities with which it was created.
Equitable estate holders can only create equitable leases. There are different rules
for when legal and equitable leases bind purchasers of the land.

When there is a leasehold estate, the holder(s) of it (‘the tenant(s)’) are entitled to
possess the land to the exclusion of the estate owner(s) who created it (the
‘landlord(s)’). The lease agreement will usually provide that an ongoing rent is
payable in return for this possession.19

Leasehold estates can be held on trust in the same way as legal fee simple estates
can be. Legal leasehold estates can also be described as being ‘registered’ or
‘unregistered’.

7.1.4 There could be other proprietary rights and personal rights

Finally, any estate owner in the land – most obviously, the legal fee simple holder –
may have conferred other rights over our plot of land. Some of these rights may be
‘personal’ (e.g. a contractual right to play cricket; an oral permission to have a
picnic). These privileges will not bind any purchaser of the land.

19
Matters differ if our plot of land has flats or apartments on it. In this event it is standard that the legal fee simple
owner(s) to have granted very long leasehold estates (e.g. 125 years) over each of the flats, paid for upfront by
the original tenant. Due to its length, and the lack of a continuing obligation to pay rent, such an estate is loosely
treated as if it represents the ‘ownership’ of the flat in question.

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Some of these rights may also be proprietary. These rights can be legal or equitable.
Whether a privilege is legal or equitable will depend on what type of right it is and
how it was created. These rights can in principle bind later purchasers of the legal
fee simple, in accordance with the rules to be considered in topic 7. These rules
again differ according to whether the right in question is legal or equitable.

7.2 Policy issues in land law

Although it is sometimes a quite technical subject, land law also raises important
policy issues. We will often encounter cases that raise fundamental questions about
why the courts are deciding cases in the way that they are, and whether these
reasons stand up to scrutiny.

Many factors may influence judicial decision-making in land law, whether or not they
are always openly acknowledged to do so. Some examples of considerations that
may play a role are as follows:

a. The importance of ensuring that land (as a vital and finite commodity) is used
in an effective way.

b. The autonomy of an estate owner to decide when to (and when not to)
transfer away, or grant interests affecting, their estate.

c. A desire to protect persons who, for whatever reason, are perceived to be

vulnerable.

d. The importance of not undermining the aims of formality requirements for the
creation and transfer of interests in land.

e. The desire to ensure that such formality requirements do not either unduly
prejudice persons or allow owners to get away with unacceptable conduct.

f. The importance of ensuring that banks are able to lend money with
confidence in the security (i.e. a house) offered for it.

g. The desire for property rights to be sufficiently certain in terms of their limits
and incidents, so that third parties can be sure of their position without too
much difficulty.

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