LaND LAW PART 2
UnderstanDing land law
PART 2
AN introduction to land law, PROPERTY & Equity
I am writing this second article to explain to any new student going into the subject a clear understanding of the doctrines of Land Law and principles of Equity.
Life interests
Before 1926, it was possible to create a legal life estate by granting the land to A for life. On the death of A, the life estate would terminate and legal ownership would pass to the person entitled afterward. This undocumented shifting of legal title is prohibited under modern law. So life interests are necessarily equitable and necessarily operate under a trust. It remains very common to use a trust to give a person a beneficial interest in land for his lifetime only.
Originally a document or will was presumed to pass a life estate unless the words of limitation appropriate for some other common law estate were used. Even to A in fee simple passed a life estate to A before 1882 rather than the fee simple. However, since 1925, it has not been necessary to include any words of limitation in order to create a fee simple. These changes, now have reversed the presumption in favor of the fee simple, so that it is now necessary to demonstrate by clear words an intention to create a life interest — invariably and obviously by giving land ‘to A for life’, since section 60(1) of the Law of Property Act 1925 provides that:
“A conveyance of freehold land to any person without words of limitation. . . shall pass to the grantee the fee simple or other the whole interest which the grantor had power to convey in such land, unless a contrary intention appears in the conveyance.”
Future fees simple
Future fees are equitable, that is they operate behind a trust. One example is where there is a prior interest, which prevents the fee giving immediate rights to the land. Thus:
B to A for life, reversion to B in fee simple;
B to A for life, remainder to C in fee simple
Note the terminology: a reversion comes back to the person who gave away a smaller interest, whereas a remainder is something left over to a third person after the gift of a smaller interest. A fee simple will also be equitable if there is some condition (a condition precedent), which has to be satisfied before the interest takes effect. Parents often want to defer the entitlement of their children until the age of 25 or 30, which leaves a gap in beneficial ownership until that age is reached. Thus:
‘to A in fee simple on condition that she qualifies as a barrister’
This acts as an encouragement to her to enter the profession. Until she does so, her interest is not in possession and has no legal effect.
So far we can see we have to first determine whether the land is in fee simple or something else like fee tail or life interest. If you want further to describe it more accurately you have to describe whether the land is held in possession, in the remainder, or in reversion. There are two parts to the description - what the estate is and the way in which it is held, when is it enjoyed? Is it now? After somebody else? There is a third element of the description, which is much less important than the others. Most grants are known as what is called absolute, a better word is unconditional or (no strings attached). Occasionally it is decided to give someone an estate on the land but not unconditionally.
To my son A in fee simple if a graduates
This is a grant but which is suspended, it may never operate, this is a fee simple with a condition precedent. The other form of the condition is where you give it to someone and say if something happens you will take it away again, unfortunately, you do the thing that takes it away in two different ways. One is called the condition subsequent the other is called a determinable fee, the only way of knowing the difference is through the words that are used because they both have the same effect.
Modified fees
Modified fees are ones, which are liable to be cut short at some time in the future. They are now equitable interests. Unfortunately, there are two different mechanisms, by which a fee could be cut short. Determinable fees continue until a specified determining event occurs when the right to possession will shift without the next owner having to take any action. The classic example is:
to A in fee simple until St Paul’s Cathedral falls down, in which event to B
Determinable fees could probably be legal before 1926, but afterward, they are clearly equitable. Conditional subsequent are similar except that the next owner has to choose to bring the prior fee simple to an end by exercising a right to enter the land. Substantially the same estate rendered as a conditional fee simple would be:
to A in fee simple on condition that St Paul’s Cathedral does not fall down, in which event B may enter the land and hold it in fee simple.
Determinable and Conditional Interests
Some of the qualifications that might be put on the length of the estate will not be allowed to exist because it might be contrary to public policy e.g. To A is fee simple until/unless A marries someone of a different race. It would clearly be objectionable as a limitation and therefore struck down. If it is struck down the effect is slightly different, if in the case of something which has been defined as a determinable estate the qualifying condition is struck down then the entire grant is void and A will not get anything. If on the other hand you are looking at a conditional estate and the condition is struck down then it is just the condition that is struck down and A would get the whole lot.
Summary
Examples of Fee Simple and Life Interest. Consider the following:
X conveys Blackacre to Y for life (X has the fee simple in reversion).
X conveys Blackacre to Y for life and then to Z (Z has the fee simple in remainder).
To A in fee simple until A qualifies as a solicitor (determinable interest).
To A in fee simple unless he qualifies as a barrister (conditional interest).
Interests in Land
Before 1925 there were many legal titles to the estate. You could have a successive, concurrent, successive, and concurrent co-ownership interest. For example, X conveys Blackacre to A for life and then to D and E jointly as holders of fee simple in the remainder. Suppose during A’s lifetime D’s share has been divided up upon his death and passed on to twelve other people. There are fifteen people with valid claims and the purchaser would have to ensure that all fifteen people would give the entire fee simply to him. The 1925 Property Legislation simplified matters by reducing the number of estates, which could exist in law is two:
Fee Simple Absolute in Possession - Freehold Estate and;
Term of years absolute — Leasehold Estate
All other types of estates can only now exist in Equity. Life interest, determinable fee simple would have to exist behind a trust. For example, somebody who was the legal owner of the fee simple, holding that fee simple on trust for somebody, who had a life interest or somebody who had a determinable interest.
Propriety interest
In order to enjoy your land you need rights over other people’s land, farms mostly do not come in a single patch of land, and they are dispersed all over because farmers will buy land where they get it. Thus, scattered farms with different crops and animals, require access to water, and winter grazing, as well as summer grazing, is needed. Therefore you are likely to have interdependencies of farms and people will need rights over each other’s land. For example, a farmer may need a right for his cow to walk across the neighboring field to drink from a pond. His neighbor may agree with this and grant a bare license (revocable permission), the problem with this is that he can change his mind and nothing can be done about it.
A contract could be drafted whereby, agreeing to his use of land, prevents him from changing his mind and revoking it. The problem with this is if he sells the land there is no agreement with the new landowner, the doctrine of privity of contract prevents the new landowner from being bound by his predecessor’s contract. Contract rights are weak because of the scope they have, they do not bind many people. This is a farm that is going to go down in generations or one that will be sold, what we need is permanent right over that period. The common law developed a system of grants, which could give you that right this was called an easement.
Easements
If you do it in the correct way it has the same duration as an estate in the land itself, you will have an easement in fee simple. The easement like your estate in fee simple will rescind in the same way as your land and becomes annexed to your land. Therefore an easement goes with one piece of land and can be enforced in the same way an estate can be enforced, against anybody, whether the new owner of that land whether he knows about your right or not.
It is not enforced through restitution but through specific performance. You do not just get damages if he puts a fence up, but you can get a court order to tear down the fence. What we have developed alongside the estates are a series of common law rights which we can call propriety interests. They have the same characteristics as estates in terms of enforcement, remedies, and scope (persons it can be enforced against) and they last as long as the estate.
If you are buying property not only do you have to know if the person selling is the owner but you also have to know what are the rights that go with the land you are buying. You want to know whether conversely, someone has rights over the land you are buying that will bind you when you buy it. This is particularly important because you will pay a lot less for the land, it decreases the value. What we have built up now is a series of rights called property rights, which consist of not only estate but also easements.
The great formative period of the law, when all these things were created was the eleventh to the thirteenth centuries, after this, it became very difficult to create new rights in the law, common law writs and rights dried up. The rules that did exist in the common law could also cause hardship and injustice.
EQUITY
A property right may either be:
1. LEGAL RIGHTS — originally recognised by the courts of common law.
2. EQUITABLE RIGHTS — originally recognised by the chancellery court which, was not recognised by courts of common law.
Courts of common law were the courts that came into being after 1066, to apply the rules that governed the whole of the country after the Norman Conquest. Over the centuries the rules that were applied by the courts of common law became rigid and if you could fit your claim into certain specified categories of a claim then you would probably succeed. If your claim did not quite fit into the rigid preconceptions of the courts of common law then you would not be able to pursue it.
The courts of common law tended to worry about whether people had the right bits of paper and were not at all concerned about what the moral right might be. Dissatisfied claimants who had not got anything from the courts of common law took to complaining to the king and the king took to delegating in consideration of these complaints to his Lord Chancellor over time a new court came into being: The Chancery Court.
The Chancery Court was administering a body of rules known as Equity, which were concerned with the conscience of the person against who the claim was being made then whether the person making the claim could show the right legal bits of paper. Equity was more concerned with substance than with formalities. Equity developed a number of principles (known as the Maxims). For example, Equity is recognized as done, that which ought to be done.
Equity developed the notion of trust. A trust arises where you have a formal owner according to the rules of law but someone else whom the courts of equity think should be entitled to the beneficial interest in the property. What the courts of equity would do is say to the trustee “You must give effect to the beneficial interest of the beneficiary.”
These courts existed in parallel for a number of centuries developing separate systems. The Supreme Court of Judicature Acts 1873 — 75, fused the two systems and since then any court will recognize either kind of right and if there is a clash, the equitable right will prevail. Why does it still then matter whether something is a legal right or an equitable right other than as a matter of history?
Legal rights are more secure than equitable rights because they were always good against the whole world. If what you had acquired was an equitable interest in the property, the courts would only enforce those interests against those people who knew about them. If there was no knowledge then the legal right will prevail. Some interests can only ever be equitable such as rights under a trust.
Examples of equity
Suppose someone agrees with you to buy your land, a written contract, and then he changes his mind. The common law would compensate you for the breach, it would give you money damages, and it would not enforce the promise by making him buy the land. Equity sees that as unfair and Equity as a matter of course will always enforce a contract for the purpose of land, it calls it an estate contract.
Instead of getting damages at common law, you get the land. Moreover, once you know Equity will do that you change your conception of who the landowner is. As far as equity is concerned the loan of that promise and the contract that is signed, for equitable purposes the buyer is inequity, already treated as the owner of that land (this has implications for some people in insurance).
Secondly, suppose you sell a bit of your land, suppose you sell some of your gardens to some developers and you agree they can put one house up because you wish to use the remainder of your garden. If the developer decides to put up more than one house he can be stopped through an injunction, but suppose he sells it to someone else, what is the value of his promise now? There is no agreement (privity of contract) with the new owner, common law will not help you because it is not a matter of grant, and it is a promise.
The promise has been moved out of the steer of Contract Law with its limitations and into the steer of Property Law, where rights are enforceable against anyone, this is a big leap and some equitable rights embody this leap. This would nowadays be called a freehold restrictive covenant. These, are rights, which have no counterpart at common law, they are not estates or propriety interests.
Thirdly, equity takes a common law transaction, such as a mortgage, and sees the rights in that transaction are so unbalanced that it will not let the legal owner enforce that right in full. If you look at the common law rights in a mortgage they are very pro-lender and Equity corrects that and gives the borrower rights in law.
Fourthly, Equity enables us famously to set up trusts and actually take a fee simple and divide legal ownership. The trustee is the legal owner who can exercise the legal rights at common law for example against trespassers, but Equity enables us to say he holds these rights not for himself but for the beneficiaries who have an equitable interest. Here we can see a description of common law rights; however, you have an overlay of equitable rights and interests.
What is property
There are two main categories:
1. REAL PROPERTY — roughly, land.
2. PERSONAL PROPERTY - a residual category including everything else.
The term property includes everything, real property, personal property, i.e. chattels, not just land but also things, which relate to the land. A lot of people live in flats, most flats are held on leases, (freehold flats are a rarity) almost most farms are held on leases. Leases came into the picture to late to form part of the common law property rights, before it became customary to let the property out for terms of years. As a result, leases were left in a rather odd position of being just contractual rather than propriety, with limitations put on contractual rights, in particular privity. You do get access to common law rights but it was too late for it to fit into the scheme of things and be given a classification of real property. Therefore, there is a separate category of leases they are not real property or personal property they are chattels but real, thus chattels are real.
The complicated system of land transfer
Today this makes no difference, but until the 1920’s it made a hell of a difference for one important reason, inheritance. There were different rules for land (real property) and everything else (chattels). A farm could have been partly freehold and partly leased and when the question of inheritance arose, the farm would get split up and go different ways, this was extremely inconvenient.
Another problem, which arose was that over the centuries a lot of the land had been put into family settlements, where the person running the land was a life owner, but when selling the land the buyer will not be able to get the fee simple absolute, because the seller does not have it to sell, it is owned by lots of people who may not want to sell. Even if this is possible a mass of documentation will have to be explored to establish the right consent, furthermore, out of those settlements there will be various financial charges.
The conveyancing process is very slow and very costly. It becomes a major source of income for most solicitors who do not do anything to make it cheaper or quicker. This is what ultimately brings about changes in the system, its dissatisfaction with having to pay (particular businessmen), large amounts of money for uncertain titles to land. So what do you do about it? It takes about a century it took from 1830 to 1920.
Land Registration
If title to land wanted to be proved this was done through deeds, these tell the story and the history of the land in question. Deeds were made of lamb’s skin and were very vulnerable; they could be destroyed in a fire, or destroyed by water, nibbled by rats or even stolen. One idea was the registration of land. Land can be registered in three ways:
Registering deeds
Charges encumbrances
Title registration
The first idea is to register the deeds, at a central register, and then if you lose the deed there is no need to worry because there is a certifiable copy in the registry office. This does some good but it does not go very far, it is only a means of preserving deeds.
The second thing is to record charges on the land or encumbrances on the land. Apart from the title of the land, there are things, which a seller does not tell you. There could be adverse interest in the land, someone could have a right of way on the land, there could be a bankruptcy charge, these are not easy to discover. Unless these are recorded a new landowner would have no way of finding out of adverse charges and buying a property would turn into a gamble.
Lastly, the most ambitious scheme advanced was title registration. Here you have to present your claim to the land the documents, which prove you own the land, to the registry. If this is successfully presented then the registry will replace those documents, with a record that says this piece of land situated here described on this map is owned by X, and these are the mortgages, and these are the easements. This makes the system less complicated, anyone buying the land in the future just needs to look at the register and the one document which states everything.
This method is so much better than anything else and has been in operation for the last 150 years. The reason it has been so controversial, people who were making money from conveyancing thought it would cut out the middlemen and that people would do their own conveyancing themselves. Landowners did not like it because it meant presenting your titles.
There are two reasons why this was not liked. One, most have the title unconvincing and they did not want their title rejected. Second, they did not want people to know how much land they owned. Trying to put this system in place was difficult with the opposition. What everyone wanted was a reform but the system of title registration was not accepted. Parliament was slow in pushing through new land legislation, they had more important issues to debate on because it was of a contentious nature it took a long time, in 1920 a compromise was reached and land law reform came about.