Property and land law

Law CBE

Classification of property in English law

In English law, property is categorised either as realty or as personalty, but there are a number of further subcategories. Chattels are personal property that includes both movable items and certain interests in land, such as leases. Choses are personal rights to both tangible and intangible things.

Realty

Realty refers to freehold land and buildings. It is considered immovable property and includes the land itself and any structures permanently attached to it. Most residential houses in the UK are owned freehold, so are realty.

Ownership of realty is controlled through the possession of the deed for the property which is submitted to the UK Land Registry.

Personalty

Personalty encompasses all property that is not classified as realty. It includes movable items and other types of property that can be owned but are not fixed to the land.

Under personalty:

Chattels real

Chattels real are a subset of personalty and refer specifically to leasehold interests in land. This includes property that is held by lease, making it a form of movable property with a legal interest in land. Most residential apartments and flats in the UK are owned leasehold, usually with a 99 year lease. This means they are chattels real.

As with realty, ownership is controlled through the the deed for the property which is submitted to the UK Land Registry.

Chattels personal

Chattels personal are another subset of personalty and include all movable property that is not land or buildings. This category is further divided into tangible and intangible items.

Under Chattels personal:

Chose in possession:

Chose in possession are tangible movable items that can be physically possessed. This includes furniture, vehicles, plant, machinery or equipment.

Ownership of these items is controlled through actual possession of the item, and by documentation to prove it, such as the log V5C log book for a vehicle, or a receipt for a purchased item. Claims for theft of property are made through the police and in criminal law.

Chose in action:

Chose in action are intangible rights or claims that do not have a physical existence but can be legally enforced. This includes debts, company shares, goodwill and intellectual property (IP) rights to creative or innovative works.

A chose in action is a personal right that can can be registered. Ownership or unauthorised use can only be claimed or enforced only through legal action in civil law.

Scots law

In Scotland, the law of property classification is somewhat simpler; property is classified into two main categories:

• heritable property

• moveable property.

Heritable property refers to land and anything permanently attached to it, such as buildings and structures.

Moveable property encompasses all other types of property that are not considered heritable.

Moveable property is further subdivided into corporeal moveables and incorporeal moveables.

Heritable property

Heritable property refers to immovable property, such as land and buildings. It includes the land itself along with any buildings and permanent fixtures or structures. Ownership of heritable property is controlled through the possessions of the deeds for the property, submitted to the UK Land Registry.

Moveable property

Moveable property encompasses all property that is not classified as heritable property. It includes items that can be physically moved and are not fixed to the land.

Under moveable property:

Corporeal moveables

Corporeal moveables are a subset of moveable property and refer to tangible items that can be physically possessed. This includes furniture, vehicles, plant, machinery or equipment.

As with choses in possession in England, ownership is controlled through actual possession of the item, and by documentation to prove it, and claims are primarily made through law enforcement.

Incorporeal moveables

Incorporeal moveables are another subset of moveable property. It includes intangible rights or assets that do not have a physical presence but can be legally owned, such debts, company shares, computer software, intellectual property rights or goodwill.

As with the English equivalent, incorporeal moveables are personal rights to property that can only be claimed or enforced by legal action.

Fungibility

Fungible property refers to items that are so similar to each other that they can be easily exchanged or replaced with others of the same kind and quality. For example, litres of petrol or bags of sugar are all considered fungible because any litre of petrol or bag of sugar is essentially the same as another of its kind. This makes them interchangeable without any loss of value or function.

In English law, fungible property can be either:

• choses in possession

• choses in action.

In Scots law, fungible property can be either:

• corporeal moveables

• incorporeal moveables.

Examples:

Currency - one Bitcoin is identical to any other, the same way one £10 note is the same as another.

Commodities - one barrel of crude oil is the same as the next

Manufactured goods - identical manufactured items, like electronic components, are interchangeable and functionally the same.

Shares - one share in a company is the same as another share of the same company of the same class.

Why are fungibles important?

• Legal and contractual clarity

Legal disputes are easier to settle with fungible items ; simplifies valuation and compensation due to interchangeable value.

• Trade, transactions and liquidity

Fungible items can be easily traded or exchanged because each unit is identical to the other. Means smooth transactions in markets and assets more liquid. Can be bought and sold quickly without significantly affecting their price.

• Standardisation and simplified accounting

Consistent in quality and measurement, makes it easy to trade and manage these assets, simplifying bookkeeping and inventory management.

Types of intellectual property (IP)

There are four key types of IP:

• patents

• trademarks

• copyright

• designs.

Patents:

Patents cover inventions, which usually have an industrial or domestic purpose. Includes inventions of new processes, machines, pharmecuticals, synthetic molecules, chemical structures, polymers, and alloys. It can also encompass formulations for cosmetic products or recipes for new food or drink products.

To be eligible for patent rights, the inventions must be functional, new and have industrial use.

Patents give exclusive rights to your invention (only one who can make, use, or sell it) which last 20 years but need to be updated every 5 years.

Need to register for a patent through the Intellectual Property Office (IPO) in the UK.

Statutory enforcement - if someone uses your patented invention without permission, you can sue for patent infringement under statutory law.

Trademarks:

Trademarks protect signs that distinguish your goods or services from others. These signs can be logos, brand names, and even sounds (jingle).

Gives exclusive rights to use your sign and prevent others from using a similar one. Lasts 10 years in the UK but can be renewed at the end of every 10 year period.

Can register for it at the IPO.

Whilst registered trademarks offer stronger protection, unregistered trademarks can still be defended through common law actions like ‘passing off’ (someone uses your sign or branding similar to it leading consumer to believe their goods and services are associated with your brand).

Copyright:

Copyright protects original works, preventing others from copying or using them without permission. This includes: literary, musical, films, paintings, photographs, architectural designs.

Gives exclusive rights to reproduce, distribute, perform, display or license your work - you control how your work is used and can benefit financially from it.

Generally lasts the creator’s lifetime plus 70 years from the end of the year in which they died. But for films, due to its collaborative nature, copyright is taken from the last survivor of the director, the writer and the composer. After copyright expiration, the creations are considered public domain.

Registration is not needed - copyright protection is automatic as soon as the work is created and fixed in a tangible form, such as being written down or recorded.

Common law actions - of copyrighted work is used without permission, you can take legal action for copyright infringement.

Designs:

Design rights protect the visual appearance of a product, including its shape, configuration, pattern, or ornamentation. This allows you to control how your design is used and reproduced. For example, the iconic shape of the Coca-Cola bottle is protected by design rights, as is the distinctive pattern of Burberry's tartan.

Design rights give you exclusive rights to use your design, preventing others from making, using, or selling products that look substantially similar. Registered rights last for up to 25 years, provided they are renewed every 5 years. Unregistered design rights offer protection for up to 3 years from the date the design is first made available to the public.

Must be registered with the IPO to ensure rights are recognised.

Common law actions - if your design is used without permission you can take legal action for design infringement.

Other IP : Confidential information

When someone shares commercial or personal confidential information under the promise of confidentiality, there is a right to prevent its misuse or unauthorised disclosure. This is crucial in both business and personal contexts to safeguard sensitive data.

Example, know-how such as the Coca-Cola secret formula is a secret kept confidential, giving it a competitive edge in the market.

Show-how - subset of know-how where confidential information is demonstrated practically rather than written down, e.g. a unique manufacturing process might be shown to an employee through hands-on training rather than documented in a manual.

To protect such confidential information, establish clear conditions of confidence like:

• Non-disclosure Agreements (NDAs) - legal contracts that outline what info is to be kept confidential and the consequences of breaching the agreement.

• Confidentiality clauses- often included in employment contracts or business agreements. These specify the obligation to keep certain info private.

• Practical measures - such as restricting access to sensitive info, training staff on the importance of confidentiality etc.

Legal action can be taken if someone breaches the conditions of confidence.

Licensing and franchising

Licensing

A licence is a formal agreement in which the owner of an intellectual property (the licensor) grants permission to another party (the licensee) to use their IP, in return for royalty fees. In return, the licensor agrees not to take legal action against the licensee for using the IP. Licences can be tailored to cover specific products, actions, or even particular commercial or technical fields.

Licences come in two main types:

• Non-exclusive licences allow multiple licensees to use the IP simultaneously.

• Exclusive licences grant the licensee the sole right to use the IP in a defined area. For example, a licence that allows one company alone to use a patent in a particular country is an exclusive licence.

Spotify licenses music from record labels and artists. The record labels, as licensors, allow Spotify to stream songs to its users. The artists and record labels receive royalties based on the number of streams their songs receive.

Franchising

Franchising takes licensing a step further. In a franchise arrangement, the franchisor grants the franchisee the right to operate a business under a well-defined and established business model. This is a common approach for many coffee shops and fast food restaurants.

By buying into a franchise, the franchisee gains access to a proven business format and benefits from the franchisor's brand recognition, operational systems, and market presence. In return, the franchisee must adhere to the franchisor’s guidelines to maintain consistency and protect the brand’s reputation.

Under a typical franchise agreement, the franchisee receives a licence to use the franchisor’s trademarks, designs, and know-how. This allows the franchisee to operate under the franchisor’s name while benefiting from their established goodwill and business concept.

Possession versus ownership

Possession

Possession is all about control. If you have control over something, you're in possession of it.

Let’s consider an example. Li owns a laptop and she lets Jordan borrow it to complete a project. While Jordan is using the laptop, they’re in possession of it because they have control over it. However, Jordan doesn't own the laptop – Li does.

Possession means having physical control or custody of the property, but it does not imply ownership, and it doesn’t grant any rights.

Ownership

Ownership is more comprehensive. If you own something, you have various rights over it. These include:

• the right to use it as you like (and keep others from using it)

• the right to change or even destroy it

• the right to sell, give away, or pledge it

• the right to get it back from anyone else.

All these rights come together to form the concept of ownership. So, when we say someone owns something, it means they have this bundle of rights associated with that property.

Limits

Ownership rights may not be absolute, meaning an owner cannot always do whatever they want with their property. For example, if you own a pet, you can't neglect its well-being even though you have the right to keep it. Even with this limitation, you’re still the owner of your pet. If you own a car then you need to maintain it to ensure it’s safe for other road users. If you fail to do that then you’re still the owner of the car, and are accountable for it.

Ownership rights are also divisible, meaning they can be split or shared without losing ownership. For instance, lending a property to someone else transfers possession temporarily, but the owner retains the right to regain possession. Thus, ownership remains intact even if some rights are temporarily transferred.

Ownership at common law and in equity

The principles of common law and equity can significantly impact ownership rights.

Common law is based on judicial decisions and precedents and is automatically applied. At common law, ownership is straightforward and is referred to as legal ownership.

Equity addresses the inconsistency and inflexibility of common law, and is only applied at the discretion of the court. Equity can modify legal ownership rights to ensure fairness, especially in situations where strict adherence to common law would result in an unjust outcome. This is referred to as beneficial ownership.

Usually, one person has both legal and beneficial ownership of property. In this case, they are said to be in sole control of that property. They have both legal and beneficial ownership and are said to be the absolute owner of it.

Imagine that Li owns a car outright. She has both legal and beneficial ownership of the car. This means she has the right to use the car, sell it, or even destroy it if she wishes. She is in sole control of the car and is considered the absolute owner of it.

Sometimes, more than one person can own property, in which case that property is in co-ownership of both persons. In these cases, all co-owners have both have legal ownership (under common law) and beneficial ownership (in equity), although how this is shared depends on the type of co-ownership.

Imagine Li and Jordan jointly own a flat. They both have legal ownership under common law and beneficial ownership in equity. This means they both have the right to use the flat, make decisions about it, and benefit from any income it generates. In this case, the flat is in co-ownership, and both Li and Jordan share control and ownership rights equally.

Occasionally, there is a division of the rights of ownership for property. This is where one person has legal ownership and another person has beneficial ownership. When this happens, a trust is created. This means that while one person (the trustee) holds legal title to the property, another person (the beneficiary) enjoys the benefits of ownership.

Li owns another house that she rents out to a tenant. She decides to use that house in a trust that she sets up for her niece, Sarah. Li is the trustee and holds the legal title to the house. Sarah, as the beneficiary, has beneficial ownership of the house. This means that while Li manages the house and holds legal ownership, Sarah enjoys the benefits of the rental income generated from the property. The trust ensures that Sarah's interests are protected while Li manages the property.

Of course, the tenant only has possession of the house and the right to use it under a lease agreement.

Co-ownership of property

Property may be owned by one person or by several people together, a situation known as co-ownership or joint ownership.

All co-owners have both legal ownership and beneficial ownership.

Legal ownership is under common law, and refers to the formal, documented title of the property.

Beneficial ownership in equity covers the rights to enjoy the benefits and use of the property, such as income derived from it or the right to live in it.

In English law, property can be co-owned in two ways:

• joint tenancy

• tenancy in common.

Both joint tenancy and tenancy in common are recognised in common law and equity, meaning that co-owners hold both the legal title and the beneficial interest in the property.

Joint tenancy

Joint tenancy is a form of co-ownership where two or more people own property together as a single unit. The property is not divided into shares, and each co-owner has equal rights to the entire property.

There are a number of consequences of this type of joint ownership:

Unified ownership

Each co-owner has rights to the whole property, not just a fraction of it. Joint tenancy is characterised by four unities:

• Unity of possession: every co-owner is entitled to every part of the property, meaning no one can exclude another from any part of it.

• Unity of interest: each co-owner’s interest in the property must be identical in extent, nature, and duration.

• Unity of time: the interest of each co-owner must start at the same time.

• Unity of title: each co-owner must derive their title from the same action or document.

Restriction on alienation

No single co-owner can sell or gift the property without the consent of all co-owners. Any attempt to do so may only have effect in equity, not common law.

Right of survivorship

On the death of one co-owner, their interest in the property automatically passes to the surviving co-owners, known as the ius accrescendi. The deceased co-owner cannot leave the property to beneficiaries in their Will, nor can it pass to successors on intestacy.

Severance of joint tenanacy:

A co-owner can separate their equitable interest from the other joint tenants through severance, converting the ownership into a tenancy in common. This must be done in writing and delivered to all other co-owners. From this point, each co-owner can deal with their share independently, and the right of survivorship no longer applies.

Effects of severance:

• Upon severance, the ownership converts into a tenancy in common, and the right of survivorship no longer applies. The co-owner who severed their share will now have a proportionate share of the property and can deal with their share independently.

• Severance takes effect only in equity, as common law does not recognise tenancy in common as a form of joint ownership. Because of this capability, property co-owned as joint tenancy is sometimes called ‘severable property’, and a co-owner's interest is referred to as their ‘severable share’.

Example: If Alex decides she wants to have her own distinct share of the holiday cottage, she can initiate severance. Once severed, she and Sam will own the property as tenants in common, and Alex’s share can be passed on to her heirs.

Tenancy in common

In a tenancy in common, each co-owner has a distinct, undivided share in the property. These shares can be unequal, and each co-owner can independently deal with their share.

This means that while each co-owner has a specific percentage of ownership, the property itself is not physically divided. The shares can be unequal; for instance, if two tenants in common own property with a 60:40 split, one person owns 60% and the other owns 40% of the entire property.

For example, Mia and Leo own a static caravan near the seaside as tenants in common. Mia owns a 60% share of the caravan, while Leo owns a 40% share. This means they both have rights to use the entire caravan, but their ownership shares are unequal. As a result, Mia uses the caravan for 60% of the year, and Leo for 40%. The unity of possession is maintained because neither Mia nor Leo can exclude the other from any part of the caravan.

Tenancy in common is recognised only in Equity.

Unified usage

Each co-owner has the right to use the entire property. However, any income generated from the property is distributed according to each owner's proportional share.

Independent alienation

A single tenant in common can sell or gift their share of the property without needing the agreement of the other co-owners.

Inheritance

Upon the death of a tenant in common, their share does not automatically transfer to the surviving co-owners. Instead, the deceased's share can be bequeathed in their will or passed on to their heirs under intestacy laws.

Conversion restrictions

Co-owners holding property as tenants in common cannot convert their ownership into a joint tenancy.

Example: If two friends own a property as tenants in common, they cannot change this arrangement to a joint tenancy without first severing their tenancy in common and then creating a new joint tenancy agreement.

Co-ownership of land and buildings

In law, when we refer to land we automatically include buildings and various other features that are present on the land.

In English law, co-ownership of land is governed as a trust by the Trusts of Land and Appointment of Trustees Act 1996 (TLATA). Under this act, co-ownership of land is always considered a trust. Legally, there is only one form of co-ownership for land: joint tenancy.

However, in equity, co-ownership of land can take the form of either a joint tenancy or a tenancy in common. This means that only the beneficial interests (the equitable interests) of co-owners can be severed.

Example: When Alex and Sam purchased their holiday cottage, they were considered joint tenants at law. However, in equity, they may hold the property either as joint tenants or as tenants in common. If they choose to sever their beneficial interests, they will transform their co-ownership from a joint tenancy to a tenancy in common, where each can deal with their share independently.

Co-ownership in Scots law

In Scots law, co-ownership can take the form of joint property or common property.

Common property:

Similar to tenancy in common in English law, each co-owner has a distinct share that can be disposed of separately.

Ownership: Each co-owner holds a specific, undivided share in the property. These shares can be unequal, and each co-owner can independently manage their share.

Inheritance: Upon death, a co-owner’s share passes according to their Will or under the rules of intestacy.

Severance: In common property, each co-owner can freely transfer, sell, or gift their share without needing the consent of the other co-owners. This transaction does not affect the ownership status of the remaining co-owners.

Example: If Fiona and Amina co-own a piece of land as common property, Fiona can decide to sell her 70% share without needing Amina's consent. This transaction does not alter Amina's 30% share or the common property arrangement.

Joint property:

An unusual form of co-ownership, joint property is held by members of a specific group, such as trustees or club members. There are no separate shares, and upon death, the interest accrues to the surviving members.

Ownership: The property is held collectively by the group, and no member has a distinct share. All members have equal rights to the entire property.

Inheritance: Upon the death of a member, their interest in the property does not pass to their heirs but accrues to the surviving members.

Severance: Severance is not applicable to joint property because the co-owners do not have distinct, individual shares. The property remains collectively owned by the surviving members.

Example: If the Govan Community Trust jointly owns a community hall, no individual trustee can sell or transfer their interest in the hall. Upon the death of a trustee, their interest automatically accrues to the surviving trustees.

Ways to acquire property

• Buying - you pay for it, you own it.

• Gifts - someone gives you something, now you own it.

• Exchanges - trade one thing for another

• Creating - make something new, like building a able or writing a book

• Natural produce - own the natural products of your property. E.g. a farmer owns the calves born from their cows, or the apples that grow on your apple tree.

Transferring ownership

Whether property is bought, gifted, exchanged, created or grown, when property changes hands from one person to another, the transfer of ownership involves specific steps and timing. These vary depending on the type of property.

When these formalities are completed, the property is said to ‘vest’ in the new owner, meaning they officially become the new owner of the property from that point.

Choses in posession:

Choses in possession in English law are tangible movable items that can be physically possessed. In Scots law these are called corporeal moveables.

Ownership vests when you physically receive the item. For example:

• you own a new shirt you’ve bought from when it’s handed to you at the checkout

• an item you bought online is yours once it’s delivered to your door

• you own a car you’ve paid for once you’re handed the keys.

Whilst you gain practical ownership and physical possession when you receive the item, full legal ownership might require additional steps. For high-value items, a contract is often necessary, and ownership is suspended (it’s in abeyance) until the contract is finalised.

Land:

When land is being sold in England, Wales, or Northern Ireland, a contract of sale is signed by both parties when the buyer pays a deposit. At this point, the buyer acquires an equitable interest, and the seller becomes a trustee for the buyer. This will be followed by the contract completion when the buyer pays the balance of the purchase price.

Ownership of land legally changes with a written transfer document. The exact document depends on whether the land is registered or unregistered:

• Registered land is listed in the Land Register, so to prove ownership you can refer to that. Changing ownership involves the buyer completing a transfer document (typically a TR1 form) to update the Land Register with their name as the new owner. Ownership vests when the register is updated.

• If land is unregistered then it has not changed hands since the Land Register was introduced in 1925. In this case, ownership is proved by the title deeds. Transfer of ownership involves a conveyance document, and ownership vests when this is executed. However, it is advisable to then register the land to make the ownership public and to protect the buyer’s interest.

Scottish land:

Ownership of land in Scotland changes with a written transfer document known as a disposition. The process involves registering this disposition in the Land Register of Scotland.

Ownership vests when the Land Register is updated with the new owner’s name. This ensures that the new owner's rights are officially recorded and recognised.

The process in Scotland is streamlined to ensure there is a clear and public record of land ownership.

Shares:

Ownership of shares transfers with a completed stock transfer form.

The transfer is finalised, and ownership vests, when the company's share register is updated with the new owner’s details. This means that the new owner’s name must be recorded in the company's official records for the transfer to be complete.

What is land?

Airspace -

The height varies due to factors like neighbouring properties, local planning regulations, or just what’s practical.

For instance, an electricity company can't just hang wires over your garden without permission, a crane can’t operate above your land without your permission etc.

Buildings and fixtures -

Any structures and buildings on the land are part of the land.

Fixtures attached to buildings also become part of the land. To determine if a chattel is a fixture, we consider:

• The degree of annexation. How firmly is it attached? If removing it will cause considerable damage, then it’s a fixture.

• The purpose of annexation. Is it meant to be a permanent improvement to the building? If yes, then it’s a fixture.

Natural produce

Naturally occurring items like fruit, grass and woodlands are part of the land.

However, crops that require human intervention, like a farmer's wheat, are not part of the land.

Ground covered with water

Bodies of water – from ponds and streams to rivers, lakes and waterfalls – are all part of the land.

Physical soil and subsurface

This covers everything from the soil to the minerals and archaeological finds buried beneath it.

Unfortunately, not everything beneath the soil belongs to you. In the UK, any gold, silver, oil and gas is owned by the Crown, and coal is owned by the Coal Authority. In general, everything else is yours.

Interests and estates

All land is theoretically owned by the Crown, so ordinary people can’t own land.

However, people can own rights, privileges and powers in relation to a piece of land. We refer to these rights and privileges as their interest in the land. A person's interest in land encompasses their rights to possess, use, enjoy, control and benefit from it.

These interests can vary in scope and duration, and they are defined by the type of estate a person holds. An estate is the legal term that simply defines the interest of the estate holder – it defines the rights and privileges they have over that piece of land.

We can own two types of estate: freehold and leasehold.

Freehold Estates:

A freehold estate, also known as a fee simple, represents the most complete form of ownership you can have over land. Imagine it as holding an indefinite ticket to enjoy your land without worrying about an expiration date.

The key attributes of a freehold estate include:

• Indefinite duration, meaning the estate can be owned indefinitely and passed down through generations.

• Absolute in possession, so you have immediate and unconditional rights to use the land as you wish.

• Rights and responsibilities, which mean that while you can sell, lease, or develop the land, you must also abide by any legal restrictions or obligations, such as planning regulations and property taxes.

This type of property is classified as realty, which includes the land itself and any structures and fixtures permanently attached to it.

Leasehold Estates:

A leasehold estate grants the owner the right to use and occupy the land for a set period of time. A leasehold is like renting a car for a specified period. While you have the right to use the land for a set time, the ownership ultimately reverts back to the freeholder when the lease expires.

Under a leasehold, land is granted by the freeholder (the landlord or lessor) to a leaseholder (the tenant or lessee), under the terms of a tenancy agreement. Often this is for 99 years, but this can vary. Subject to the tenancy agreement, the tenant can also sub-lease the land to a sub-lessee for a period of time shorter than the original leasehold estate.

Key points about leasehold estates include:

• Fixed duration, where leaseholds are granted for a specific number of years, months, or even days.

• Rights to use mean that you can only use the land as agreed in the lease terms, which may include living on it, running a business, or sub-leasing it to another party.

• Reversion to freeholder, so at the end of the lease period, the land reverts to the freeholder unless a renewal is negotiated.

This type of property is classified as a chattel real, a subset of personalty, referring specifically to leasehold estates in land.

Freehold reversionary interests

When a leasehold or sub-leasehold estate is created, the original owner of the freehold estate retains a reversionary interest in the property.

This means that while the leaseholder has the right to use the land for the duration of the lease, the freeholder retains certain future rights.

• Right to reclaim

Once the lease term ends, the freeholder can reclaim full possession of the land.

• Right to rent

During the lease period, the freeholder is entitled to collect rent from the leaseholder, and to enforce lease terms.

• Possession with conditions

Although the freeholder's interest will take full effect in the future, they still maintain certain rights and responsibilities over the land, ensuring it is used in accordance with the lease agreement.

Interests in land

Interests in land can also involve rights over another person’s estate. These types of interests can significantly impact how both parties use, enjoy, control, and benefit from that estate.

Key types of interests in land:

Easements:

Is the right to use another person’s land for a specific purpose. E.g. right of way - one person has the right to cross another’s land to access their own property.

Profits a Prendre:

‘Rights to take’ natural resources from another’s land. E.g. fishing rights, the right to harvest timber, the right to extract minerals.

Covenants:

A promise made in relation to land. Can be positive: requiring someone to do something, like maintaining a hedge. Or negative: preventing someone from doing something, like building a high fence. Regulates land use.

Mortgages:

A mortgage is an interest in land to secure a loan. When you take out a mortgage, the lender has a legal interest in your property until the loan is repaid. If the borrower defaults on the loan, the lender can enforce the mortgage and force a sale of the property to recover the debt.

Estate contracts:

These contracts create interests in land when someone agrees to buy or sell an estate. These contracts are binding and establish rights and obligations between the parties involved. E.g. when person a A agrees to purchase a freehold property to person B, they decided to enter into an estate contract that outlines the terms of the sale, including the purchase price, completion date, and any conditions that need to fulfilled before the sale can proceed. This gives person A an equitable interest in person B’s property.

Licenses:

A licence is permission to do something on someone else’s land that would otherwise be illegal, such as trespassing.

Licences usually don’t create an interest in the land and are often contractual. e.g purchasing a ticket to a concert at a venue grants a licence to enter the venue for the event.

Leasehold estates

To create a valid lease, several key conditions must be met:

• Right to exclusive possession

Tenant has legal right to live in a flat and can exclude everyone, including the landlord from entering without permission.

• Certainty of duration

The lease must specify a clear start and end date. Even with a month-to-month lease, each rental period must be clearly defined and agreed upon in the tenancy agreement.

• Defined premises

The lease must clearly outline the exact property being rented. E.g. address, unit number, any additional spaces like a parking space.

• Rent and payment terms

Rent is not actually required for a valid lease, Leases can be for rent, for a premium (a one-off payment), or both, or can be granted for no payment at all. But any rent must be clear and certain though can be subject to periodic reviews.

• Long residential leases

Leasing a property for more than 21 years needs to meet certain legal requirements (Leasehold and Freehold Reform Act 2024 for England and Wales, but not for Scotland).

Leasehold covenants

When someone is given a valid lease, they become the owner of a leasehold interest in the property. This means they have the right to use the property for a certain period, but they don't own it outright. The lease sets out the terms of the agreement between the landlord (the property owner) and the tenant (the person leasing the property).

A lease has two key parts:

1. The tenant has a right to use the property, which is governed by land law.

2. The tenant also has rights and responsibilities towards the landlord, which are governed by contract law. Because of this, leaseholds are considered personal property, not real property. Historically, before 1500, leasing property was seen purely as a contractual arrangement without creating any ownership interest.

The contract terms, known as leasehold covenants, can include specific agreements such as paying rent, maintaining the property, not subleasing it, or not transferring the lease to someone else. Additionally, some terms are usually implied into every lease agreement by default. These covenants can be explicitly agreed upon or implied by law.

Implied obligations of the landlord

• Quiet enjoyment: Jacob must not interfere with Samira's use of the property. For example, he cannot enter the flat without giving notice or disrupt her living conditions.

• Repair and fitness for habitation: the flat, especially if furnished, must be fit for living and kept in such condition throughout the lease term.

Implied obligations of the tenant

• Pay the rent: Samira must pay the agreed rent of £900 monthly.

• Pay rates and taxes: Samira is responsible for paying any council tax and bills associated with the flat.

• Allow landlord access: Samira must allow Jacob access to the flat for necessary repairs, provided he gives her appropriate notice.

• Return the property in good condition: At the end of the lease, Samira must return the flat in good condition, addressing any dilapidations.

Ending a leasehold estate

A leasehold estate may come to an end (i.e. be “determined”) in a number of ways:

• expiry

Ends on date agreed.

• notice to quit

Either landlord or tenant give notice to end the lease earlier if the lease agreement allows for it.

• by merger

If tenant decides to buy the property from the landlord, the lease merges with the freehold interest and ends.

• by surrender

Tenant can can surrender the lease by giving the keys back to the landlord before the lease term ends, with the landlord’s agreement.

• by forfeiture.

If the tenant seriously breaches the lease terms, such as not paying rent, the landlord can end the lease through forfeiture.

Special types of lease

There are a few unique types of tenancies, in particular:

• tenancy at will

If Samira stays in the flat after the lease expires and without a formal lease, but with Jacob’s agreement, then Jacob can end the tenancy at any time.

• tenancy at sufferance

If Samira stays in the flat after the lease expires without Jacob's consent, then she is liable for rent and Jacob can reclaim the property at any time.

• adverse possession.

If someone occupies a property without the owner's permission for a long period (usually 10 years for registered land) and meets certain legal conditions, they may be able to claim legal ownership. This is also known as squatting.

These tenancies are special because they don't offer the same stability or predictability as standard leases. They often exist in more flexible or uncertain rental situations.

Lease versus Licence

A lease gives you a right to use a property for a certain period, making you a tenant with specific legal rights.

A licence is simply a permission from the property owner (the "licensor") that allows you to do something on their property that you wouldn't otherwise be allowed to do. Without this permission, you could be considered a trespasser.

Licences usually don't give you any ownership rights in the property. For example, if Samira buys a concert ticket at a local music venue, so she has a licence to enter the venue for the event.

Common law rules for identifying property locations

Property is subject to the legal jurisdiction that it is located in. This can significantly impact its tax treatment. The rules that govern this are called lex situs.

For instance, an individual not domiciled in the UK at the time of their death will generally not be subject to inheritance tax on property situated outside the UK. Therefore, it's crucial to identify where property is located by applying the lex situs rules.

Common law rules:

• Land

Is taxed where it physically lies (that jurisdiction)

• Chattels personal

For personal possessions - wherever you leave them is where they’re taxed. E.g. a painting you own is hanging in a gallery in Paris is considered to be situated in Paris.

• Debts

Debts follow the debtor. E.g. a bank account is considered to be where the bank branch specifically holding the money is located. Personal loans or credit cards are located where the lending institution or creditor is registered.

• Shares

Are tied to the company’s share register - so are situated wherever that register is kept. But, if the shares are bought through a broker, their location can be influenced by the broker’s jurisdiction. For example, if you purchase shares in a US company through a UK broker, the shares may be considered to be located in the UK for tax purposes due to the broker’s jurisdiction.

• Goodwill

Is situated where the business operates. If goodwill is generated from customers in different countries, it is still considered to be located where the main business operations are based. E.g. if you own a restaurant in Berlin, the goodwill associated with the business is considered to be situated in Berlin, regardless of where you live.