1 - The nature and principles of land law

What is the nature and principle of land law?

This chapter will give you the necessary introduction to a wide range of basic principles that you must understand when considering a land law question, such as the differences between real and personal property, the different tenures in land, how to acquire and dispose of both legal and equitable interests and legal formalities required to create these interests.

There is no single explanation that we can give you which will explain exactly what ‘land’ is. It has a rich historical background and mix of common law, statute, policy and practice which is rarely seen in other legal disciplines. This chapter will start to explore some of these basic, but important, principles, which we will then cover in greater detail in the rest of this book.

What is land?

There is no specific definition of what would encompass all ‘land’. One definition has been provided by the Law of Property Act 1925 (LPA 1925) but before we consider this, a sensible starting point would be to break ‘land’ down into two separate components and consider the distinreal property and personal property. The LPA 1925 does not provide clarity between these two types of property, but it does give us some important terms that we will consider throughout this chapter.

Key term: real property
Real property relates to all property which is generally considered to be immovable. So, this would be the land itself, but it also relates to any third-party rights in the land.

Key term: personal property
Personal property relates to anything which is not the ‘real’ property, so anything that could be moved.

What is the definition of land?

The definition of land
We can now consider the partial definition of land that is provided for by the LPA 1925 which is as follows:

‘Land’ includes land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of buildings …and other corporeal hereditaments; … and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or derived from land; … and ‘mines and minerals’ include any strata or seam of minerals or substances in or under any land, and powers of working and getting the same …; and ‘hereditament’ means any real property which on an intestacy occurring before the commencement of this Act might have devolved upon an heir.

So, as you can see, this could be quite confusing if read without a greater understanding of what ‘land’ can consist of. We shall break this down further as follows:

What is land of any tenure?

This means land which is freehold or leasehold. We will consider these in greater detail in Chapter 4 and Chapter 5.

What is mines and minerals?

This is usually considered with an old Latin maxim translated to ‘he who owns the land owns everything reaching up to the very heavens and down to the depths of the earth’; however, that does not give the owner unlimited rights and the courts and statute have set out some exceptions to this. Any coal, natural gas or oil beneath the land are deemed, by statute, to be the property of the Crown.

Revision tip
Fracking is something which is generating increasing concern with the public and as such, it is something that is now regularly raised with practitioners. This falls within a ‘mine and mineral’ so knowing who owns or has the rights to these is necessary to advise a client on these issues.

What is airspace?

This is another important consideration when looking at who owns the ‘land’ above the physical property. The courts have given clarification on the Latin maxim: ‘he who owns the land owns everything reaching up to the very heavens and down to the depths of the earth’, when considering cases relating to airspace and actions of trespass. Practice example 1.1 gives an example of this.

Practice example 1.1
The owner of a large country estate has brought an action in trespass against a local company for flying over and taking photographs of his land. Does the airspace form part of the claimant’s land?
These are the facts of Bernstein v Skyviews and the judge held that the owners’ rights in the airspace above the land extended ‘to such height as is necessary for the ordinary use and enjoyment of his land’. Above this height the landowner has no more rights than the public as aircraft flying at a normal height do not trespass upon land. The claimant lost the case.

What is Corporeal hereditaments?

This is an old expression, but it simply means ‘any real property having a physical form’. The hereditaments part simply means ‘something that can be inherited’. Historically, for inheritance purposes it was essential for parties to establish the extent of real property. This would not only include the actual buildings on the land, but any other tangible items such as plants, animals, water and fixtures. Fixtures will be considered separately in this chapter.

Revision tip
When revising, keep in mind these distinctions:

• Plants: ‘Land’ will include any plants, trees and flowers that are attached to it and form part of it.

• Animals: Strangely, animals can form part of the ‘land’ but only if they are found dead on the land. Wild animals will not form part of the land while they are alive.

• Water: This is a rather complicated provision but, generally, any water which passes over or flows through the land will not form part of it. Landowners may have rights to take from the water, such as fishing rights, but they cannot extract great volumes of this water without prior permission from the appropriate authority.

What is Incorporeal hereditaments?

These are the opposite to corporeal hereditaments and relate to anything that does not have a physical form, such as a right of way, rights of light or receiving rent from the land.

What is fixtures and chattels?

Fixtures and chattels are considered under the heading of ‘corporal hereditaments’, but they also have their own particular set of rules when determining which items fall into which category and so it is best to consider these separately. A good starting point is to understand what both terms mean.

Key term: fixture
Fixtures are objects that are considered to form part of the land and which will be transferred with that land automatically when it is sold, for example, a fitted kitchen unit. If the structure could only be removed by some form of demolition, then it is likely to be a fixture.

Key term: chattels
Chattels are personal possessions and have no connection or fixture with the land. Chattels will remain in possession of the owner and removed by them when they sell the land. For example, pictures on the walls.

Practice example 1.2 gives an example of how to differentiate between fixtures and chattels.

Practice example 1.2
The owner of a weaving mill purchased some looms to use with the mill (a loom is a device used to hold the threads under tension). They were attached to the stone floor by nails into wooden beams and could easily be removed. The owner failed to keep up mortgage repayments and the mill was repossessed. Were the looms fixtures (forming part of the land the mortgage company could repossess) or were the looms chattels and remained in possession of the owner?

These are the facts of Holland v Hodgson where the judge said that the test to determine whether an item was a fixture or a chattel was twofold. There needed to be consideration of:
a) the degree of annexation, which indicates that if detaching the object from the land would mean destroying it or causing significant damage, then it would be a fixture. If on the other hand it is simply resting on the land by virtue of its own weight, such as a wooden bungalow resting on concrete pillars, it would be considered a chattel.
b) the purpose of annexation, which does not consider the physical attachment, but considers why the item has been placed on the land. If there is an intention that it will be a permanent addition then it will be a fixture. If, however, it is there merely for convenience or for the purpose of creating a temporary improvement, then it will be a chattel.

The judge held that the looms were fixtures as they had been attached to the land.

What is different ways in which land can be owned?

Now that you have some understanding of what ‘land’ is, it is important to understand the ways in which someone can own land. An important point to make at this stage is that whilst we talk of ‘owning’ land, the reality is that the Crown are the absolute owners of all land in England and Wales. This is a clear relic of the historical aspects of land law as the Crown hold the tenure of all land and have granted licences of this land to individuals who then hold an estate in land, whilst others may acquire an interest in land.

By itself, the term tenure has very little impact on everyday land law practices, but the doctrine of this term remains an important one to be aware of. All historical ‘tenures’ were ended under the Tenures Abolition Act 1660, but the Crown continue to hold ‘tenure’ of land which means that should someone who has been granted an estate in land (now commonly known as the landowner), die without relatives or a Will, then the land would pass back to the Crown

Key term: tenure
Tenure means ‘to hold’ and is the relationship between the landowner and the Crown.

Key term: estate in land
The term estate denotes how long a person will own that piece of land. There are only two types of legal estates available today and those are freehold (forever) and leasehold (for a fixed term). These will be explained in much greater detail in Chapter 4 and Chapter 5.

What is the distinction between legal and equitable estates in land?

The legal system for land law in England and Wales is separated into two distinctive parts, which are law, or legal ownership, and equitable ownership. Whilst land law would be far simpler if everyone had demonstrable legal rights in land, everyday life usually allows for third parties to have rights over land that belong to others, such as the right to pass over a neighbouring drive to access your own property.

As such, you will see that we have this dual system of law, and it is common to see land ownership divided into these two separate parts of law and equity. You will see many references to this dual system of law and equity throughout this book as it is a key concept of land law.

Key term: legal ownership
The legal ownership can be more commonly referred to as the formal and paper ownership, so the name on the title deeds. This will represent who has the legal right to sell or transfer that piece of land.

Key term: equitable ownership
This relates to any beneficial rights an individual or third party may have in the property, including the right to take money from it.

It is important to have a good understanding of these principles as whilst the legal ownership, or paper deeds, could show the property is owned by two different individuals, just looking at the deeds will tell you nothing about what could happen in equity, or what is fair between these legal owners. So, we also need to be aware of the equitable rights that they each have in this property.

Whilst both terms will be explored further in later chapters, Practice example 1.3 gives an example of how these two principles work.

Practice example 1.3
James and Nicola are the legal owners of 29 Domino Lane. If they are both named on the title deeds and so have legal (or paper) ownership, then they will both have the right to sell or transfer the property. What would their ownership rights be if they were not both named on the title deeds but had both contributed towards the purchase price?

This can be a common occurrence and if, for example, Nicola purchased the property in her sole name and is the only party shown on the legal title (title deeds) but James contributed £50,000 to the purchase price then James would hold an equitable interest by way of a resulting trust, which is explained later in this chapter. Nicola, however, would be the only person entitled to sell or transfer the legal title of the property, unless James obtains an order from the court.

Figure 1.1 shows how legal and equitable owners can be different people.

To fully understand this principle, the next important consideration is exactly how individuals can acquire or transfer these legal estates, and how they can acquire legal and equitable interests in land.

How to acquire and transfer legal estates in land?

There are now only the two legal estates that we have already mentioned, those being freehold and leasehold. Any other type of interest in land would be considered an equitable interest.

The most common way in which someone can acquire the legal estate in land would be by one individual purchasing land from another individual or inheritance under a Will, a transfer from parents to their children or by other means such as adverse possession, which is outside the scope of this revision guide.

Regardless of the way in which this legal estate can be acquired or transferred, it must be created by a deed.

Key term: deed
The Law of Property (Miscellaneous Provisions) Act 1989 (L(MP)A) sets out the formal requirements of a deed, which are:

• It is clear on the face of it that it is intended to be a deed.

• It is validly executed as a deed by the parties that are subject to it.

For a legal estate, this deed must also be registered with HM Land Registry to be valid, but we shall consider that in greater detail in Chapter 4.

How to acquire and dispose of legal and equitable interests in land?

Determining how to create a legal estate is somewhat straightforward, but there is a greater level of complexity when considering how to determine the validity of legal and equitable interests in land.

Legal interests in land
There are currently four legal interests in land. These are:

• easements (Chapter 6)

• legal mortgages (Chapter 8)

• a rentcharge, which is paid by the landowner of a freehold estate to a third party who normally has no other interest in the property. These have changed significantly since the introduction of the Rentcharges Act 1977, which looks to extinguish all rentcharges by 2037.

• rights of entry, this could be to a third party to legally take or resume possession of a property, such as if a tenant has breached the terms of a lease.

As with legal estates, the creation and disposal of legal interests in land is quite straightforward and there must be a deed which meets the requirements of LP(MP)A 1989. This would also need to be registered with HM Land Registry to hold its legal status.

Figure 1.2 sets out the two legal estates and the four legal interests which can currently be created.

The creation and disposal of equitable interests is more complicated.

What are Equitable interests in land?

Should there be a failure to fully comply with the requirements to create a legal interest in land, such as not registering this with HM Land Registry, or if you have an interest which does not fall within the list shown in Figure 1.2, then that particular interest will take effect in equity only. The most common of these are:

• restrictive covenants

• beneficial interests under a trust

• estate contracts.

What are Restrictive covenants?

These are considered in greater detail in Chapter 7 and are rights over land by third parties who have no legal interest or ownership in the land. They are a promise by one landowner to another specifying certain things that they will not do upon the land. Some examples include:

• not keeping poultry or chickens on the land

• not altering the structure of the property without consent

• not using the property for any trade, business or other profession

• not keeping caravans or boats on the property.

Some of these covenants are a sign of the historical origins of how land was transferred, as the landowners would have tried to prevent certain competition within rural or farming communities; others are a sign of larger, modern developments where builders try to preserve the aesthetics of a housing estate and as such are part of a building scheme, which is a form of restrictive covenant.

Key term: building scheme
A restrictive covenant that forms part of a building scheme simply means all the properties will be subject to the same restrictive covenants. There is a specific system of enforcement that requires every property to be both servient land and also dominant land for the other properties. This allows for mutual enforcement of these restrictive covenants between the landowners. These are terms that we will explore in greater detail in Chapter 7.

What are beneficial interests under a trust?

Whilst it is common for a trust of land to be made expressly between the parties, by way of a deed, this interest can also arise as an equitable interest and can be imposed in law in three ways:

• constructive trusts

• resulting trusts

• proprietary estoppel.

They all have the same basic principle, in that it is a claim by someone who believes they have a beneficial interest in the property, and they wish to try to override the legal ownership. However, both constructive and resulting trust can be implied by the court due to the actions of the parties, and proprietary estoppel acts as a defence to prevent one party going back on a promise or from taking advantage of another’s misbelief about their own legal rights in a piece of land.

• Constructive trusts arise where one party, who is not a legal owner of the property, contributes substantially to the repayment of the mortgage or pays for some substantial improvements to the property. Practice example 1.4 gives an example of how this could arise.

Practice example 1.4
Sarah purchases a property in her sole name for £275,000 and is the sole legal and equitable owner. Her mortgage repayments are £750 each month. After two years Georgina moves in with Sarah and starts contributing 50% to the mortgage payments each month; she also pays to renovate the house by contracting a single storey extension to the rear of the property and creating a large kitchen/diner/family room. The cost of this work amounts to around £50,000, which Georgina pays for using some inheritance. Sarah has spoken to Georgina about the property also being ‘her house’ and that everything is shared equally. Does Georgina have any interest in the property?

This is a very common scenario and there will be a plethora of case law which considers this exact issue. One of the most well-known cases is Stack v Dowden which is similar in nature to this example. Georgina does have grounds to show that a constructive trust has arisen due to the conduct of both her and Sarah. It is clear they both have a common intention, by their actions and words, to share the equitable ownership of the property and, as such, equity will assist Georgina here, in the event that Sarah tries to assert her legal rights in the property and tries to sell without making any contribution back to Georgina.

• Resulting trusts will only arise if one party has contributed to the purchase price of the property but is not a legal owner. Practice example 1.4 shown above gives a very good example of how this equitable interest can arise.

Exam warning
You may receive a question asking which claim your client should make, either proprietary estoppel or constructive trusts, as those are the two which are very similar in nature. This is very difficult to answer without knowing the full context of the background between the parties, but generally, the preferred option for most parties would be a claim for a constructive trust, as the courts would usually look to provide relief to a claimant on the basis of what the parties actually intended; whereas with proprietary estoppel, the relief is generally considered as a minimum to show justice has been served, and there can often be ongoing and complex familial connections when considering any award.

• Proprietary estoppel works to prevent one party going back on a promise or from taking advantage of another’s misbelief about their own legal rights in a piece of land. For example, a landowner may encourage a third party to spend money or effort on the land and makes assurances or promises to this person which makes them believe they will eventually gain some right or benefit to the landowner’s property. So, the basic elements of a claim are that a promise was made, there was reliance upon that promise, and someone acted to their detriment. Practice example 1.5 explains how this could arise.

Practice example 1.5
Stephen worked together on the family farm with his father, Roger, for most of his life. He was paid a wage as an adult which was more or less in line with the drawings taken by Roger at that time. The farm was owned by Roger and Stephen’s uncle, Geoffrey, but there had been repeated promises made to Stephen that he would inherit Roger’s share in the farm. A disagreement arose between Stephen and Roger which resulted in the partnership being dissolved, and Stephen made a claim in proprietary estoppel seeking that he would inherit Roger’s share of the farm. What would the court consider in this case?

These are the very brief facts of Moore v Moore . Stephen was successful in his claim based on the promises made to him throughout his lifetime, with some rather complex financial settlements for the care of his father. Proprietary estoppel cases are heavily dominated by those within farming industries and can be very difficult for the courts to deal with.

What are estate contracts?

This is very much interlinked with conveyancing practice, which is outside the scope of this revision guide, but it is still necessary to be aware of this as a possible equitable interest.

An estate contract will arise at a very specific point in a conveyancing transaction, which is when the parties have exchanged contracts. This is the point at which the transaction becomes legally binding between the parties.

There can sometimes be a delay between this exchange stage and the actual completion taking place. During this time the new owner does not legally own the property but is still legally obligated to pay for the property on the completion date. This could be a precarious position for the new owner, as they could have paid a substantial amount of money at this point without having anything tangible to show for it. As equity aims to achieve fairness, the new owner obtains an interest in the land which is known as an estate contract. It simply confers the right to acquire that piece of land on the agreed completion date.

Figure 1.3 sets out the equitable interests.

Whilst the formation of these equitable interests can be quite subjective, it will be necessary to understand whether a new purchaser of that land would be bound by these interests. This will ultimately depend on whether the land in question is registered or unregistered, which we will consider in further detail in Chapter 2 and Chapter 3.