Land Law Cheat Sheet (DRAFT) by livjharrison

Mortgagee:

The lender who loans money to fund the property purchase.

Mortgage:

A propri­etary right.

The deed must be registered at the Land Registry.

A borrower has an equitable right to redeem the mortgage (i.e. pay it back).

A lender may not use its position to impose terms that would be considered morally repreh­ensible or uncons­cio­nable.

A mortgage loan can be set aside for undue influence.

Issues of priority arise where the loan is in default and there is not enough money to pay back all the lenders.

2. Power to then sell it.

If the mortgaged property is wholly­/partly used as a dwelling and the borrower can show they are able to repay the arrears and continuing payments due, the court is likely to postpone the order for possession.

E.g. they must sell the property at market value and seek expert advice as to the manner of sale.

Parties, date, defini­tions, interp­ret­ation provisions:

Date of the lease.

A section giving guidelines on interp­ret­ation and defini­tions.

Tenant covenants:

A tenant may do all things that an owner of an estate can do unless the lease prohibits such actions.

e.g. obligation to pay rent, whether the tenant can make altera­tions; whether tenant can assign­/un­derlet the premises.

Landlord covenants:

If the lease is a lease of part of a building, the landlord may covenant to provide services, maintain common areas and to insure the building.

Guaran­tor's covenants:

An indivi­dua­l/c­ompany guarantor may also be a party to the lease.

Provisos, agreements and declar­ations:

Miscel­laneous section dealing with a number of matters.

Rights granted:

Any easements over the property or parts of the building.

Rent review provisions to review rent at regular intervals.

Prescribed lease clauses:

Where you are granting a regist­rable lease, your lease must include a list of Prescribed Lease Clauses at the front.

Security of tenure:

A business may request a new tenancy at the end of their lease.

............Advantages...........

Can invest in fitting out the premises and making them suitable for their purposes.

Do not have to worry about consid­erable upheaval caused by having to move at the end of contra­ctual term.

Tenant is encouraged to look after the premises.

............Disadv­antages...........

Complying with requir­ements can be quite compli­cated.

Any tenancy:

Fixed term or periodic tenancies can benefit from security of tenure.

Occupied by the tenant:

If a tenant leaves the premises vacant, they do not have security of tenure.

For the purposes of a business:

For any trade, profession or employment

A tenant taking a small amount of lodgers without profit is not for business purposes, nor is a premises offering free Sunday school sessions.

S 43 Landlord and Tenant Act 1954 specif­ically excludes some types of tenancies from security of tenure:

Service tenancies (lease granted as part of a tenant's employ­ment)

............Contracted Out Tenancies...........

A periodic tenancy that qualifies for security of tenure cannot be contracted out.

............Procedure for Contra­cting Out...........

Stage 1:

The landlord must serve a warning notice on the tenant in a prescribed form.

It must be served before the parties complete the lease.

It must be provided before the parties complete the lease.

If lease completion is >14 days, the tenant must provide a statutory declar­ation (declared before an indepe­ndent solici­tor).

Absolute:

Qualified:

Fully qualified:

Landlord is not entitled to refuse its consent on grounds which have nothing to do with the landlord and tenant relati­onship.

Note: Statutes relating to user, altera­tions and alienation covenants intervene with regards to qualified covenants.

............Assigning a Lease...........

Most leases contain restri­ctions on assignment so that the landlord has to consent and has control over who ends up being the tenant.

A covenant against sub-le­tting the whole does not prohibit a subletting of part.

Deed:

S 52 LPA 1925 requires a deed.

No short lease exception: the assignment still must be by deed.

Regist­ration:

If the lease is registered at the Land Registry, the deed of assignment must also be registered to update the registered proprietor of the lease as the assignee.

The landlord, tenant & assignee are all party to it.

Sublet­tin­g/s­ubl­eas­ing­/un­der­letting involves a tenant granting a lease out of its own lease.

Regist­ration.

The deed must be registered if the term is for over 7 years.

The landlord, tenant & undert­enant are all party to it.

Absolute covenants:

Where a property is not capable of being sub-di­vided, leases will contain an absolute prohib­ition of underl­etting of part of the property.

Qualified covenants:

S 19(1)(a) converts a qualified covenant into a fully qualified covenant.

Not necessary for the landlord to justify conclu­sions for refusing consent, if those conclu­sions might have been reached by a reasonable person in the circum­stances.

Where a tenant applies to the landlord in writing for consent (s 1 LTA):
- the landlord must give written consent within a reasonable time (~28 days from receipt);
- the burden is on the landlord to provide reasonable refusal; and
- written reasons must be provided.

If the landlord does not comply with requir­ements, it may be liable for tortious damages for breach of statutory duty.

Reasonable:

Unsati­sfa­ctory tenant’s reference.

The existing tenant is already in breach of covenant.

Proposed assignee was already a tenant of the landlord in another property which is difficult to re-let.

S 19(1) LTA 1927:

Applies to any lease granted on/after 1 Jan 1996 - new leases.

L & T can agree conditions* subject to which consent may be granted.

AGA:

Authorised Guarantee Agreement

Outgoing T promises to perform incoming assignee's obliga­tions under lease if it defaults*.

L will only ever have the current T and T immedi­ately prior to current T on the hook.

............Original Parties...........

Privity of estate:

Exists between any current L and current T of the property.

Upon assignment of the lease of revers­ionary interest:

- There will be no privity of estate between original L & original T.

T assigns its interest to a successor in title:

L sells its revers­ionary interest:

............Rules for Leasehold Covenant Enforc­eab­ility...........

Created before 1 Jan 1996.

Privity of contract means original L & T remain liable for breaches of covenants by their successors for entire lease duration.

New leases:

Abolishes privity of contract.

Tenants:

A T with a new lease will obtain an automatic release from the T's covenants upon assignment (s 5 LCTA).

T remains liable for breaches of covenant occurring during their period of occupation.

Landlords:

There is no automatic release of the L upon assignment of the reversion of a new lease.

If T refuses to release the outgoing L, L can apply to the court.

When L assigns the revers­ionary interest, the incoming L acquires the benefit and burden of the covenants.

............Suing a Former Tenant...........

Should the assignee be unwill­ing­/unable to comply, L may look to other parties for compen­sation for breaches of covenant committed by a subsequent assignee*.

If the outgoing T has provided an AGA on assign­ment, L could sue the former T who is guaran­teeing obliga­tions of their immediate successor.

The presence of an AGA provides L with a choice:

- If current T is not worth suing, L can sue the outgoing T acting as a guarantor for current T through AGA. The potential remedy is limited to damages.

............Indemn­ities for Assign­ments...........

The assignee agrees with the outgoing T to pay the rent & perform all covenants for the remainder of the lease.

Where there is no express indemnity covenant, the former T could claim indemnity at common law under Moule v Garrett.

Indemnity is of little value - if the assignee was worth suing, L would have done so initially.

S 3(5) LTCA allows restri­ctive covenants in new leases to be enforced against any owner/­occ­upier of the premises.

Some sections of LTCA apply to old & new leases.

Fixed charge = arrears of rent, service charge or insurance premiums.

S 18 - Liability for variations:

Former tenants and guarantors are not liable to pay any additional amounts owing in respect of unanti­cipated variations made to the lease after the assignment.

The former T would then become the immediate L of the defaulting party.

The lease contains the same covenants (except for personal ones).

For a lease to exist, rather than a licence, there needs to be: certain term, exclusive posession, correct formal­ities.

...............................

1. No intention to create legal relations:

Where there is a family arrang­ement, an act of friendship or generosity, it can be presumed that there is a lack of such intention, though this does not automa­tically follow.

2. A service occupancy:

This arises where there is an employ­er/­emp­loyee relati­onship between the landowner and the occupier

A perk of the job does not enable a better perfor­mance of duties.

Mortgages of equitable interests:

Where the borrower holds an equitable interest in the land (e.g. benefi­ciary), any mortgage of that interest will be equitable in nature.

It need only be in writing and signed by the grantor in order to be validly created.

It may be regarded as an equitable mortgage - a contract to grant a legal mortgage - if it is in writing, contains all agreed terms and is signed by mortgagor & mortgagee.

The easement must not leave the servient owner with no reasonable use of the servient tenement - ouster principle.

2. Exercise of the right by the dominant owner must not involve additi­ona­l/u­nav­oidable expend­iture by the servient owner:

If there is a positive obligation on the servient tenement to spend extra money to redeem the right, it is not an easement.

If the servient owner only exercises their right in so far as they are permitted by the dominant tenement, there is no easement.

2. The right must accomm­odate the dominant tenement:

The right must benefit the dominant land, not a person­/bu­siness on the land.

The dominant and servient land must be suffic­iently proximate to each other.

If the dominant and servient land ever came back into common ownership, any easements enjoyed by the would be exting­uished.

Land includes the surface, buildings or parts of buildings on the land, other corporeal heredi­taments and other incorp­oreal heredi­tam­ents.

Incorp­oreal heredi­taments:

The benefit of any propri­etary rights the land has but which have no physical substance.

Airspace:

An owner’s rights in the airspace above his land are restricted to such height as is necessary for the ordinary use and enjoyment of the land and the structures upon it.

Lower airspace:

To such height as is necessary for the reasonable enjoyment of the particular piece of land.

Cranes are deemed to be within lower airspace.

S 76(1) Civil Aviation Act 1982 grants immunity from trespass or nuisance for any innocent flight of aircraft.

A landowner is not entitled to all minerals under his land. All mines of gold and silver belong to the Crown.

Any coal under land belongs to the Coal Authority by virtue of the Coal Act 1938.

All physical land is owned by the Crown.

Freehold estate:

Also known as the fee simple absolute in possession.

If the current owner dies without next of kin and without a will, the land is regarded as bona vacantia and the estate reverts to the Crown.

Designed to meet needs of owners of properties where owners are interd­epe­ndent on each other.

There is a freehold owner and a commonhold associ­ation company.

Associ­ation is respon­sible for mainta­ining the communal areas of the building.

A leaseh­older (tenant) may grant a lease of lesser duration out of their own leasehold, while still retaining the original lease.
- a sub-lease.

Freehold reversion:

The residue of the estate after granting a lease.

The same piece of land may simult­ane­ously be subject to a freehold, lease, sub-lease etc.

Pre-ex­change:

After an offer is accepted, the buyer will make various enquiries before committing to a purchase by the formal exchange of contracts.

The buyer will also want to find out about any propri­etary rights which benefit or burden the land.

1. Exchange of Contracts:

Voluntary and not legally necessary to transfer the estate, but common in practice.

The parties become legally committed to buy/sell the land.

Buyer usually pays a deposit to the seller.

The contract must be in writing.

It must be signed by both parties.

2. Completion:

This occurs by way of a deed - S 52(1) LPA 1925.

The sale triggers a legal requir­ement to register the land.

The document must be labelled as a deed.

The deed must be delivered by dating the document.

For registered land -
Legal title transfers at the point at which the buyer is registered at the Land Registry.

When a piece of land is registered for the first time, it is given a unique title number and the details of the land owner and rights that benefi­t/b­urden a piece of land are recorded.

The Official Copy for each piece of land contains:

The nature of the estate (freeh­old­/le­ase­hold).

2. Propri­eto­rship register:

Details of the owner of the legal estate.

Any restri­ctions on the owner(s) ability to deal with the land.

Details of any leases granted out of the title.

With the exception of those deemed by the LRA 2002 to be 'overr­iding', only interests that have been correctly entered on the register will be enforc­eable against a purchaser.

The best form of ownership.

The land is only bound by interests that are registered on the title or overriding interests.

Very rare to see someone registered with qualified title in practice.

Could be the case where the freehold title is unregi­stered and where the applicant fails to submit evidence of the freehold title when applying to register his leasehold title.

Where there are no title deeds to prove ownership or the deeds have been destroyed, Possessory Title would be given.

May mean that third party interests created before the date of first regist­ration will bind the property even though these are not noted on the title.

Mortgage:

Can be defined as a loan of cash, which is secured by rights granted over property.

The borrower grants the mortgage, not the lender.

Use is more limited than an exclusive right to occupy or use.

Examples: rights of way, drainage, storage and parking on neighb­ouring land.

A rentcharge owner’s right to hold the land if money owed in not paid.

A right of entry in a lease = a forfeiture clause*.

Restri­ctive covenants:

A covenant is a promise.

Estate contracts:

A contra­ctual right to a legal estate, whether freehold or leasehold.

This, together with the maxim that ‘equity sees that as done what ought to be done’*, results in an equitable interest arising from the contract.

The benefi­cia­ry(s) has an equitable interest in the land.

............Remedies...........

- wide range of remedies available

- remedies entirely at discretion of cour

- no discretion as to the merits of the case

-

............Enforc­ement...........

Propri­etary rights:

Can be enforced by an action in rem (use or possession of the land can be recovered).

They do not have to settle for damages if they are deprived of their right.

Fixed list of propri­etary rights:
- freehold estate
- leasehold estate
- easement
- mortgage
- restri­ctive covenant
- estate contract
- beneficial interest in a trust of land

Can only be enforced by a personal action for damages if the right is breached.

Cannot be enforced against third parties.

The nature, creation and protection of rights in land need to be consid­ered:

E.g. If a right to park is an easement but the car is locked out of the garage so unable to use it, this does not fit with the definition of an easement.

Compliance with such formal­ities may ultimately determine whether the right is propri­etary or not.

To be enforc­eable against subsequent owners, the right must be registered at the Land Registry.

............The Legal Test...........

1. Degree of annexation test:

The more firmly the object is fixed to the land or building, the more likely it is to be classified as a fixture.

If the object rests on the land by its own weight, it is generally considered to be a chattel.

Considers why the object is attached to the land/b­uil­ding.

............Fixture vs Chattel...........

- intended to be permanent

- temporary

- kitchen units

- ornamental items, e.g. pictures

- bathroom fittings

- light fittings attached with screws

- objects which cannot be removed without destru­cti­on/­damage

- securely affixed items which are affixed as such purely for better enjoyment of that item

A contract to buy/sell is not the only type of land contract, but they all follow the three-­stage process.

There is no scope for an oral land contract.

Terms may be contained in one document signed by both parties.

............Variations...........

A material term is one which is essential to the nature of the contract.

Land contracts most often create a contra­ctual right to a legal estate

............Effect...........

A land contract may be created through parties trying to create a valid deed but failing.

Binding contracts pass an equitable interest in the land to the buyer - an estate contract.

An estate contract is a propri­etary right in land so it is capable of binding and being specif­ically enforc­eable against third parties.

If the estate contract is not protected but the third party is a donee (gifte­d/i­nhe­rited land), the donee will be bound by a properly created estate contract.

Damages:

Common law remedy.

Measured by the loss which C has suffered as a result of the breach.

A court order compelling the defaulting party to carry out positive contra­ctual obliga­tions.

Regard will be had to the behaviour of both parties.

Injunction:

Equitable remedy.

Not available as of right; at the discretion of the court.

Must come with clean hands

- Capable of being enforced against third parties

- Can only be enforced against the grantor

- Can confer the right of security of tenure

- No security of tenure

- Tenants under leases receive various statutory protection

- No statutory protection for licensees

Certainty of term can be shown by a fixed term or a periodic term.

- exists where the maximum duration of the arrang­ement is known from the outset.

- Techni­cally a lease for one period.

-

- The period goes on extending itself automa­tically until either landlord or tenant give notice to terminate the tenancy - notice to quit.

-

- The 'term' of the periodic tenancy depends upon the period by reference to which the rent is calcul­ated, rather than the intervals at which it is payable.

If a clause appears to defeat exclusion possession but has been inserted into a lease only to make what would otherwise be a lease, appear like a licence, it will be thrown out as a sham.

1. Retention of a key:

A landlord retaining a key to the premises may make it appear as if the occupant does not have exclusive posses­sion.

Is the right of access the landlord has restricted or unrest­ricted?

Retention of a key will not determine the nature of arrang­ement either way.

Services include cleaning, changing linen etc.

3. Sharing clauses:

If the landlord reserves the right to share the property with the occupiers or reserves the right to introduce others to share, this may mean there is no exclusive posses­sion.

The sharing clause may be a sham.

............Business Tenancies...........

A high degree of physical control over the premises and conduct of a business on a land is likely to be indicative of a license.

The general rule:

DEED

The requir­ements of a valid deed are in s 1 LP(MP)A 1989.

A deed must be used.

If not regist­ered, the legal leasehold estate will not have been created.

A deed must be used.

Lease will still take effect as a legal lease.

Leases of 3 years or less:

NO FORMAL­ITIES (so long as requir­ements fulfilled)

The lease need not be regist­ered.

Examples:
- Short fixed term leases (max. term of 3 years or less)
- Express periodic tenancies (w/ tenancy agreement)
- Implied periodic tenancies (occupier is in possession and paying rent at regular intervals).

- Periodic tenancies are only short term when each individual period of tenancy is 3 years or less.

Parties enter into a contract for lease or try to grant a legal lease which fails to comply with the formality requir­ements.

If the occupiers together have the right to exclude all others, including the landowner, then there is likely a lease arrang­ement.

Joint tenancy:

All co-own­ers­/te­nants constitute one single entity.

They are jointly and severally liable for the terms of the agreement.

1. Unity of Possession:

All must be entitled to occupy the whole of the premises.

If the occupiers can show that they each have exclusive possession of a part of the property then it is possible for them to have individual leases of their own part.

All must be jointly liable for the rent.

4. Unity of Title:

All of the occupiers’ interests must derive from the same document or from separate but identical documents which are interd­epe­ndent (i.e. both would have been signed, or neither).

Express legal easements:

Must be created by deed - s 52 LPA 1925.

Easement must be substa­ntively registered at the Land Registry to be legal - s 27(2)(d) LRA 2002.

Burden of the easement is noted in the Charges register of the servient land's title.

Not grante­d/r­eserved for suitable duration term?
Must be:
- in writing
- signed by grantor.