Introduction to land law - Distinction between real property...

Learning Outcomes

This article explains the distinction between real property and personal property, the legal significance of this distinction, and the main types of legal and equitable interests in land. It clarifies how different categories of property are created, transferred and enforced, and how they are likely to be tested in SQE1-style multiple-choice questions and scenario-based problems. It explains how to apply the tests for fixtures and chattels, evaluate borderline items in exam fact patterns, and predict whether they pass automatically on a sale of land. The article sets out the statutory limitation of legal estates and interests, the role of deeds, contracts and registration, and how these formalities determine whether rights are legal or equitable. It highlights how rights bind purchasers under both registered and unregistered title systems, focusing on notices, restrictions, land charges, overriding interests and the doctrine of notice. Finally, it explains the concept and effect of overreaching, enabling candidates to identify when equitable interests are lifted from the land onto the purchase money so that a buyer takes free of them, and to distinguish between situations where overreaching succeeds or fails in typical SQE1 problem questions.

SQE1 Syllabus

For SQE1, you are required to understand the distinction between real property and personal property, and the consequences of this distinction for property rights, transactions, and disputes, with a focus on the following syllabus points:

• the definitions and legal significance of real property (realty) and personal property (personalty)
• the main types of legal and equitable interests in land
• the difference between fixtures and chattels, and the tests used to distinguish them
• how these classifications affect the transfer, registration, and enforcement of property rights
• the statutory limitation of legal estates and interests (s 1 LPA 1925) and the role of formalities (deed and contract)
• registered versus unregistered title: notices, restrictions and overriding interests; land charges and the doctrine of notice
• overreaching of equitable interests on sale and its practical protection for buyers

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the main legal difference between real property and personal property?
2. Which test is used to determine whether an item is a fixture or a chattel?
3. Name two types of legal interests in land recognized by the Law of Property Act 1925.
4. True or false? All fixtures are automatically included in the sale of land unless expressly excluded in the contract.

Introduction

Understanding the distinction between real property and personal property is essential for SQE1. This classification determines how property rights are created, transferred, and enforced. It also affects what is included in a sale, the remedies available in disputes, and the formalities required for valid transactions. This article explains the definitions, legal consequences, and practical application of these concepts, focusing on the types of interests in land and the rules for fixtures and chattels. It also situates those concepts in the two title systems in England and Wales—registered and unregistered—because how rights bind a purchaser turns on registration and overreaching rather than labels alone.

Real Property and Personal Property: Definitions and Legal Significance

Real property (realty) refers to land and things attached to land, including buildings and fixtures. Personal property (personalty) covers all other property, such as movable items (chattels) and intangible rights.

Key Term: real property
Real property means land and anything permanently attached to it, including buildings and fixtures.

Key Term: personal property
Personal property means all property that is not real property, including movable items (chattels) and intangible assets.

Personal property is often divided further:

Key Term: chose in possession
A tangible, movable item capable of physical possession (for example, a car, furniture, jewellery).

Key Term: chose in action
An intangible right enforceable by legal action (for example, debts, rights under a contract, patents and shares).

The statutory definition of “land” in s 205(1)(ix) LPA 1925 includes the surface, buildings, mines and minerals, and other corporeal hereditaments (tangible things attached to the land) and incorporeal hereditaments (intangible rights, such as easements or rents). The law also draws limits: a landowner’s airspace rights extend only to the height necessary for ordinary use and enjoyment (so normal overflight is not a trespass), and certain resources below ground (such as petroleum) are controlled by statute.

The distinction is important because real property and personal property are subject to different legal rules for transfer, registration, and remedies. Real property transactions usually require a deed and registration to create and transfer legal rights, and many rights in land bind third parties as proprietary rights. Personal property is commonly transferred by delivery or assignment, rarely requires registration, and usually binds only the parties to the transfer. In remedies, disputes over chattels often involve conversion or delivery up, while land disputes engage proprietary remedies (injunctions, specific performance) and doctrines that affect third-party purchasers.

Legal and Equitable Interests in Land

The Law of Property Act 1925 (LPA 1925) restricts legal estates in land to two types:

• the freehold estate (fee simple absolute in possession)
• the leasehold estate (term of years absolute)

Other rights over land, such as easements, mortgages, rights of entry and rentcharges, may exist as legal interests if they meet the statutory requirements.

Key Term: legal interest
A property right recognized by law, enforceable against the world, and usually created by deed and (for registered land) completed by registration.

Key Term: equitable interest
A property right recognized in equity, often arising where legal formalities are not met or where the right is not capable of being legal (for example, a beneficiary’s interest under a trust).

Anything not listed in s 1(1) or s 1(2) LPA 1925 can only take effect in equity (s 1(3)). Equitable interests include restrictive covenants, beneficial interests under trusts of land, proprietary estoppel rights and estate contracts. They too can bind third parties, but the mechanism depends on the title system.

In registered land (Land Registration Act 2002), most third-party rights must be protected by entry of a notice on the charges register or a restriction on the proprietorship register to have priority over a registered disposition for value. Some rights have overriding status (for example, short legal leases and the interests of persons in actual occupation) and bind a purchaser even if not entered on the register. By contrast, in unregistered land, the validity of equitable rights against a purchaser turns on registration as a land charge (Land Charges Act 1972) or, failing that, the doctrine of notice.

A practical safeguard for purchasers in both systems is overreaching. Where capital money is paid to at least two trustees (or a trust corporation) of a trust of land, equitable interests under the trust are removed from the land and attach to the money, so the buyer takes free of those interests.

Key Term: overriding interest
A limited class of rights that bind a purchaser of registered land despite not being entered on the register (for example, certain legal easements, short legal leases and interests of persons in actual occupation), subject to statutory conditions.

Key Term: overreaching
The statutory process that transfers certain equitable interests (typically under a trust of land) from the land to the purchase money when the buyer pays capital money to two trustees or a trust corporation.

Legal interests bind everyone, while equitable interests may be lost to a bona fide purchaser for value of a legal estate without notice in unregistered land unless protected by registration as the correct land charge. In registered land, priority is governed by the LRA 2002 priority rules (not the doctrine of notice), so the question is whether the interest is protected by notice/restriction or qualifies as overriding.

Fixtures and Chattels: The Practical Distinction

When land is sold, the buyer is entitled to all fixtures unless the contract states otherwise. Chattels remain the seller's property unless specifically included. In practice, conveyancers use a Fittings and Contents Form to avoid disputes, listing items included and excluded in the price.

Key Term: fixture
A fixture is an item attached to land or a building in such a way that it becomes part of the real property.

Key Term: chattel
A chattel is a movable item that remains personal property and is not part of the land.

The courts use two main tests to distinguish fixtures from chattels:

• degree of annexation: How firmly is the item attached? A substantial or permanent attachment raises a presumption of fixture; if it rests by its own weight, the presumption is chattel.
• purpose of annexation: Was the item attached to improve the land/building (fixture), or for the better enjoyment of the item itself (chattel)? The purpose test is usually decisive.

Typical outcomes include:

• fitted kitchen units, plumbed sinks, integrated appliances and bathroom suites: normally fixtures
• freestanding white goods, curtains and blinds, rugs and carpets (unless glued in a way showing permanence): generally chattels
• items forming part of architectural design (for example, decorative stonework built into walls): more likely fixtures
• prefabricated structures resting on their own weight, movable garden ornaments and freestanding sheds not fixed to foundations: often chattels

Worked Example 1.1

A seller removes a fitted oven and built-in wardrobes before completion. The buyer claims these should have remained. Are these items fixtures or chattels?

Answer:
Both the oven (if built-in) and the wardrobes (if fitted) are likely to be fixtures, as they are attached to the property to improve its use. The buyer is entitled to them unless the contract allows removal.

Worked Example 1.2

A heavy statue is resting by its own weight in the garden. Is it a fixture or a chattel?

Answer:
If the statue is not attached and can be moved without damage, it is likely a chattel. However, if it forms part of an overall garden design, it may be a fixture.

Worked Example 1.3

Are wall-to-wall fitted carpets and curtain poles part of the land on sale?

Answer:
Curtain poles and rails fixed to walls are commonly viewed as fixtures unless the contract excludes them. Carpets are usually chattels because they are installed for the better enjoyment of the carpet itself. If carpeting is glued or nailed in a manner indicating permanence, it may be treated as a fixture.

Worked Example 1.4

A timber garden shed sits on a concrete slab but is not bolted down. Is the shed a fixture?

Answer:
The shed rests mainly by its own weight and can likely be moved without damaging the land; it is usually a chattel. If bolted to foundations and intended as a permanent outbuilding, it may be a fixture.

Worked Example 1.5

Solar panels affixed to the roof via brackets wired into the property’s electrical system—fixture or chattel?

Answer:
The degree of annexation and purpose (improving the building’s energy system) point strongly towards a fixture, unless the contract specifies otherwise.

Worked Example 1.6

A houseboat moored to a jetty with connections for power and water. Is it part of the land?

Answer:
Houseboats are typically chattels. Even with utility connections, they are not ordinarily annexed to the land in a manner making them part of the realty unless the structure is intended to be permanent and cannot be removed without destruction.

Why the Distinction Matters in Practice

The classification of property as real or personal, and as fixture or chattel, affects:

• what is included in a sale of land
• what can be used as security for a mortgage (mortgages over land include fixtures but not chattels)
• the remedies available in disputes (for example, injunctions versus delivery up)
• the registration and transfer requirements and whether rights bind a purchaser

In conveyancing, sellers and buyers should clarify expectations through the Fittings and Contents Form and the contract. Mortgagees rely on fixtures remaining with the mortgaged land; removing them can breach mortgage covenants. Landlords and tenants address fixtures and fittings in lease covenants, often allocating responsibility for installation, repair and removal. In all cases, the degree and purpose of annexation tests guide outcomes if disputes arise.

Legal Formalities and Registration

Legal estates and interests in land must usually be created by deed and, for registered land, completed by registration to be effective as legal rights. Equitable interests may arise where legal formalities are not met, or where the right is not capable of being legal (such as a beneficial interest under a trust).

Key Term: deed
A deed is a formal, written document that is signed, witnessed, and intended to be a deed. It is required for most legal property transactions.

The key formalities are:

• creating or transferring legal estates or interests: requires a deed (s 52 LPA 1925) complying with s 1 Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989) and, for registered land, registration of registrable dispositions (for example, transfer of the freehold, grant of a legal charge, legal lease exceeding seven years) under the LRA 2002
• short legal leases: leases not exceeding three years may be created without deed if certain conditions in s 54(2) LPA 1925 are met (for example, best rent, in possession)
• equitable rights: often arise from a valid written and signed contract that is specifically enforceable (s 2 LP(MP)A 1989), reflecting the maxim that equity treats as done that which ought to be done (for example, equitable leases or estate contracts)
• registration to protect priority in registered land: notices on the charges register protect most third-party interests; restrictions on the proprietorship register control how the legal estate may be dealt with (for example, ensuring trustee consent before disposition)
• overriding interests in registered land: certain legal rights bind a purchaser despite not appearing on the register (short legal leases, some legal easements, interests of persons in actual occupation subject to statutory limitations)
• protection in unregistered land: legal rights generally bind the world; equitable rights must be recorded as the correct class of land charge (for example, C(iv) for estate contracts, D(ii) for restrictive covenants). If not registered, they may be void against a purchaser for value of a legal estate

Overreaching offers buyers further protection. Where a trust of land exists and capital money is paid to two trustees (or a trust corporation), beneficiaries’ equitable interests are transferred from the land to the purchase money. The buyer takes the land free of those equitable interests, provided the statutory conditions are met.

Summary Table: Real Property vs. Personal Property

Key Point Checklist

This article has covered the following key knowledge points:

• The statutory framework limits legal estates to freehold and leasehold and legal interests to a closed list (including easements, mortgages, rights of entry and rentcharges); other rights take effect in equity.
• Real property (land and fixtures) and personal property (chattels and intangibles) follow different rules for creation, transfer, registration and remedies.
• Personalty includes choses in possession and choses in action; knowing the difference helps classify items correctly in conveyances and disputes.
• Legal interests in land are normally created by deed and, in registered land, completed by registration; equitable interests often arise from specifically enforceable written contracts.
• In registered land, priority depends on the LRA 2002 regime: protected by notice/restriction or overriding if statutory criteria are met; in unregistered land, equitable rights must be registered as land charges or risk being void against purchasers for value.
• Overriding interests (for example, short legal leases and interests of persons in actual occupation) may bind purchasers of registered land without registration, subject to statutory qualifications.
• Overreaching removes equitable interests under trusts of land from the land and attaches them to purchase money if capital money is paid to two trustees or a trust corporation.
• Fixtures versus chattels is determined by degree and purpose of annexation; fixtures pass with the land unless excluded, and form part of mortgage security; chattels do not.
• Practical steps such as using the Fittings and Contents Form, and precise contract drafting, reduce disputes over what is included on sale.

Key Terms and Concepts

• real property
• personal property
• chose in possession
• chose in action
• legal interest
• equitable interest
• overriding interest
• overreaching
• fixture
• chattel
• deed