Acquisition and transfer of estates and interests - How to acquire and dispose of legal and equitable interests in land

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Overview

The acquisition and transfer of estates and interests in land are fundamental to property law, especially for the SQE1 FLK2 exam. This article offers an in-depth look at essential concepts, legal principles, and practical applications in this area. By exploring the nature of legal and equitable interests, acquisition and transfer processes, and recent legal developments, students will be prepared for exam success and future practice.

Estates in Land: Legal Foundations

Freehold Estates

Freehold estates, under the Law of Property Act 1925, represent the highest form of ownership:

  1. Fee Simple Absolute in Possession: Offers perpetual rights and freedom of transfer.
  2. Life Estate: Less common, limited to the life of an individual.

Leasehold Estates

Leasehold estates grant possession for a specific term:

  • Duration ranges from short-term rentals to long leases.
  • Governed by acts like the Landlord and Tenant Act 1985 and the Leasehold Reform, Housing and Urban Development Act 1993.
  • May include renewal options or rights to extend (e.g., Berrisford v Mexfield Housing Co-operative Ltd [2011] UKSC 52).

Interests in Land: Legal vs. Equitable

Legal Interests

Formally recognized and enforceable:

  1. Freehold estates
  2. Leases over seven years
  3. Legal mortgages
  4. Legal easements

These require formalities and often registration under the Land Registration Act 2002.

Equitable Interests

Based on fairness:

  1. Beneficial interests under trusts
  2. Equitable mortgages
  3. Estate contracts
  4. Proprietary estoppel claims

These interests may need additional protection steps.

Acquisition of Interests

Acquiring Legal Interests

Involves strict formalities:

  1. Deed Execution: Most legal interests require a deed (s.52 Law of Property Act 1925).
  2. Registration: Some dispositions must be registered for legal title (Land Registration Act 2002).
  3. Specific Requirements:
    • Leases over three years require a deed (s.54(2) LPA 1925).
    • Easements by express grant, prescription, or implication.

Acquiring Equitable Interests

Often through less formal means:

  1. Trusts: Express trusts of land need signed writing (s.53(1)(b) LPA 1925).
  2. Proprietary Estoppel: Arises from reliance on representations (Thorner v Major [2009] UKHL 18).
  3. Constructive Trusts: Emerge from conduct in domestic situations (Stack v Dowden [2007] UKHL 17).

Transfer of Interests

Registered Land

Under the Land Registration Act 2002:

  1. Execution of Transfer Deed: Complying with s.52 LPA 1925 and Land Registry requirements.
  2. Registration: Essential for legal ownership change (s.27 LRA 2002).
  3. Priority Protection: Protect interests through priority searches.
  4. Overriding Interests: Certain interests bind purchasers regardless of registration.

Unregistered Land

Less common, requiring:

  1. Investigation of Title: Careful examination of title deeds.
  2. Deed of Conveyance: To transfer legal title.
  3. Land Charges Searches: To identify third-party interests.
  4. First Registration: Compulsory registration with the Land Registry.

Key Doctrines and Recent Developments

Proprietary Estoppel

Stops landowners from breaking promises relied on to another's detriment:

  • Key elements: assurance, reliance, and detriment (Thorner v Major [2009] UKHL 18).
  • Recent developments in family contexts (Davies v Davies [2016] EWCA Civ 463).

Trusts of Land

Under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA):

  1. Quantification of Beneficial Interests: Finding shares in co-owned property (Stack v Dowden [2007] UKHL 17).
  2. Sole Legal Owner Cases: Sharing beneficial ownership principles extended (Jones v Kernott [2011] UKSC 53).

Adverse Possession

Altered by the Land Registration Act 2002 for registered land:

  1. Ten-Year Rule: Requires ten years' adverse possession before registration.
  2. Notification System: Registered proprietor is notified and can object.
  3. Exceptions: Limited circumstances for registration despite objection (Zarb v Parry [2011] EWCA Civ 1306).

Practical Application: Case Study

Alice owns Greenacre, a registered property, and promised her nephew, Ben, he could live rent-free. Ben invested £20,000 in renovations. Alice sells Greenacre to Clara, who wants to evict Ben.

Analysis:

  1. Ben's Interest: Potential equitable interest through proprietary estoppel.
  2. Binding Clara: Ben's interest may bind as an overriding interest if he's in actual occupation.
  3. Clara's Due Diligence: Should inspect property and inquire about occupants’ interests.

This scenario examines proprietary estoppel, overriding interests, and the importance of property inspections.

Conclusion

Gaining a strong understanding of acquiring and transferring estates and interests in land is essential for SQE1 FLK2 exam success. Key areas include:

  • Differentiating between legal and equitable interests
  • Meeting formal requirements for legal interests
  • The role of registration in securing title and protecting interests
  • The influence of equitable doctrines like proprietary estoppel
  • The impact of case law on land law principles
  • Applying these concepts in practical scenarios

Understanding these principles equips students to tackle the challenges of land law in exams and future careers.