Freehold Estates

In this scenario, all five properties are owned by Miss Stanfield as estates in fee simple absolute possession (freehold) . Therefore she is capable of granting leases for her freehold estates. In each property a lease interest is present; a lease interest may be either a legal or an equitable interest. Each lease fulfils the statutory definition of a lease, and furthermore fulfils the essential characteristics of a lease which were outlined in Street by Lord Templeman as ‘exclusive possession for a term at rent’ however the characteristic of rent was rebutted in Ashburn.

The status of each lease will be discussed, and whether or not they can bind any future buyers.

Property One:

The interest is that of a lease which is capable of being a legal leasehold estate as the term of years absolute fulfils the required criteria, and thus is capable of being a legal interest.

A legal lease is required to be created by deed, which must clearly state that it is a deed and must be signed, witnessed and delivered, unless it falls with certain exceptions which do not warrant the need of a deed.

As the lease terms are over three years s.54(2) will have no application. According to the facts the lease has not been created by a deed, therefore the lease cannot be a legal interest.

Nevertheless Mr A has been allowed in to possession, as a result of this he has a tenancy at will which either party can terminate without notice at any time. Furthermore If the requirements in Martin are fulfilled the tenancy at will, will automatically transfer in to a periodic tenancy. Periodic tenancies do not need to be in writing for it to be legal as they are below three years in term.

The requirements of a periodic tenancy were outlined in Martin. These requirements have been fulfilled by Mr A as he has taken possession of the land with Miss Stanfield’s consent, in return for a rent sum of £650 to be paid on a monthly basis which Miss Stanfield has accepted. Nevertheless under Javad it was held that payment and acceptance of rent will not automatically convey a periodic tenancy, but both parties must also have the intention to create a legal relationship and a certain type of tenancy. In property one, Miss Stanfield and Mr A entered into possession with the intention to create a six year fixed lease in return for a rent amount as a contract to grant lease was present but had not been performed by deed. Therefore under a defective grant a implied monthly periodic tenancy can arise.

However as Miss Stanfield has agreed in contract to grant a lease to Mr A the requirements for a equitable lease have been completed. Therefore a equitable lease is also present.

Due to the presence of a equitable lease, equity may intervene and grant Mr A specific performance under the doctrine of Parker, which would compel Miss Stanfield to execute a deed, which in aid would grant Mr A a four year legal lease.

Mr A has available to him a legal periodic tenancy and a equitable lease. Both of these tenancies cannot co-exist. As a result of this the equitable lease will take precedent.

In order to protect Mr A’s equitable lease and bind any future buyers, we need to examine the Land Registration Act 2002 (LRA 2002) .

An equitable lease is not capable of being substantively registered. However overriding interests can be used to protect Mr A’s position, overriding interests protect interest in registered land from future buyers. These are outlined in LRA 2002 under schedule 1 and 3, only schedule 3 will be examined as property one is a registered estate.

Paragraph 1 of schedule 3 cannot be used as this only applies to legal lease as equitable leases are not seen to be overriding interest. However under paragraph 2 of schedule 3 if Mr A can prove that he has a right in the land and actual occupation there will be a overriding interest present.

An equitable lease was seen to be a valid proprietary right in Walsh. Therefore Mr A has a right in the land. Furthermore In Hodegson and Williams the courts stated for actual occupation there had to be a physical presence in the estate. Nevertheless in Abbey Lord Oliver outlined that there had to be a continuance presence and not a mere ‘fleeting presence’. Mr A has actual occupation as he went in to possession in June 2008, at the time of disposition of the estate, as long as Mr A has permanence and continuity to his presence in the estate, it will be seen as actual occupation.

Furthermore paragraph 2 of schedule 3 also outline some interests which are not capable of becoming overriding interests even with actual occupation of the estate. Paragraph 2(a)(d) are not applicable to Mr A. Paragraph 2(b) will apply at the time of disposition of the estate if Mr A does not advise the new buyer of his interests in the estate. Paragraph 2(c)(i)(ii) will apply if upon inspection it is not possible for the buyer to establish that Mr A is in actual occupation of the property, provided that the buyer was not aware of Mr A’s right in any way.

Mr A’s occupation in the property is obvious; as a result he will probably be able to claim the protection of the above provision and bind any future buyer.

Mr A is also capable of protecting his interest by way of notice, by placing a charge on the register. An entry on the register by way of notice will not mean the charge is valid, nevertheless if the charge is valid it will be protected against a purchaser of valuable consideration. Furthermore equitable lease are not excluded from being charges by way of notice.

The registrar may enter a notice where he feels otherwise that the interest at hand may take effect as a overriding interest. However once a charge has been registered the charge will lose it overriding status.

Miss Stanfield and Mr A must make a charge application by way of agreed notice or Mr A must make a charge application by a unilateral notice. In the absence of any objections from Miss Stanfield, a unilateral notice will protect Mr A’s right in the same way as a agreed notice.

Thus, Mr A has a interest which is a burden to Miss Stanfield’s registered estate it is possible for Mr A to register it under the above provision. The charge will be placed on the Charges Register and will bind any future buyer.

In general if the equitable lease fails to arise in court, Mr A can still rely on the legal monthly periodic tenancy. The periodic tenancy will be protected as a overriding interest, as a periodic tenancy is a interest recognised at law and Mr A has obvious actual occupation of property one.

Property Two:

The interest is that of a lease which is capable of being a legal leasehold estate as the term of years absolute fulfils the required criteria, and thus is capable of being a legal interest.

A legal lease is required to be created by deed, which must clearly state that it is a deed and must be signed, witnessed and delivered, unless it falls with certain exceptions which do not warrant the need of a deed.

As the lease terms are over three years s.54(2) will have no application. According to the facts the lease has not been created by a deed, therefore the lease cannot be a legal interest.

Nevertheless as Miss B has been allowed in to possession, a tenancy at will will arise. Miss B has also fulfilled the rules in Martin as a result the tenancy at will, will automatically convert in to a legal monthly periodic tenancy. Periodic tenancies do not need to be writing to be legal as they are below three years in term.

However for a periodic tenancy to arise, there must be no contrary evidence, the courts will take into consideration whether or not both parties intended to create a periodic tenancy and whether or not they intended to create legal relations. The case of Javad, has similar facts to Miss B’s position, in this case the court refused to infer a periodic tenancy and held the tenant only had a tenancy at will as there was no intention to create a legal periodic tenancy or a legal relationship.

Miss B took possession one month after she received the letter offering the terms of the lease from Miss Stanfield, the actual occupation and the payment of rent by Miss B may be seen as acceptance to this offer. The courts may also take in to consideration that the original offer was for a term of twelve years, the intention here was not to create a tenancy at will but a fixed term lease. The court may feel that since it has been five years since occupation, the tenant and landlord have failed to execute a legal lease or a estate contract (equitable lease). As the requirements in Martin are complete the courts may give way to a implied legal periodic tenancy. This is however left to the courts discretion to decide.

If the implied periodic tenancy is granted by the court, it will protect Miss B against the world as it exist in unregistered land, all legal interests vested in unregistered land will automatically bind any future buyer, as common law express’s the rule ‘legal rights are good against the world’.

However the purchaser, Miss B or Miss Stanfield can end this periodic tenancy by giving a one month notice.

Property Three:

The interest is that of a lease which is capable of being a legal leasehold estate as the term of years absolute fulfils the required criteria, and thus is capable of being a legal interest.

The facts state the lease was granted by a deed; as a result requirements for creation by deed have been fulfilled the lease is capable of being a legal lease. The lease will be a fixed term lease as it has a certain term of six years present. If a breach occurs either party may sue for damages at common law.

In order to protect Mr A’s position and bind against any third parties, we need to look at Land Registration Act 2002 (LRA 2002) .

Under the LRA 2002 a legal lease can be substantively registered. Mr C’s lease is below seven years in term, therefore it is not capable of being substantively registered or registered as a disposition. Nevertheless some shorter legal leases do require registering, but Mr C’s legal lease does not fall within these exceptions.

However the protection methods of overriding interests and notice may be used to protect Mr C’s interest. (Please refer to property one for a more detailed explanation)

Property three is a registered estate it may be protected by overriding interests. Mr C’s legal lease is a recognised right at law and Mr C has obvious possession of property five. Furthermore protection by notice can also be used as Mr C’s legal lease is not excluded from being a charge . (Please refer to property one for a more detailed explanation)

Both of the above provisions will bind any future buyer to Miss C’s interest.

Property Four:

The interest is that of a lease which is capable of being a legal leasehold estate as the term of years absolute fulfils the required criteria, and thus is capable of being a legal interest.

As the lease term is below three years, it does not require to be created by deed and can still be a legal lease.

However leases below three years are subject to the best rent test. In this case the rent appears to be below market value as other properties in the same location have a much higher rent sum. Also the lease was granted to a friend, the court may assume that there was no intention to create a legal relationship present in this case. As the lease has failed the best rent test and may also fail to establish legal relations between landlord and tenant. The lease will not be legal.

Nevertheless as Mrs D has been allowed in to possession, a tenancy at will will arise. Mrs D has also fulfilled the rules in Martin as a result the tenancy at will, will automatically convert in to a legal monthly periodic tenancy. However a periodic tenancy will not be granted as it is also governed by the best rent test which this lease will fail. And furthermore under Javad there appears to be no intention to create a legal relationship or a periodic tenancy.

As result it is more than likely that court will view this as a tenancy at will or a actual license, thus will not bind any third parties.

Property Five:

The interest is that of a lease which is capable of being a legal leasehold estate as the term of years absolute fulfils the required criteria, and thus is capable of being a legal interest.

The facts state the lease was granted by a deed; as the terms of the lease are over seven years it must be substantively registered as a disposition for it to operate at law due to property five being registered estate.

It is upon Mr and Mrs E to register the lease so that a notice can be placed on the registered landlord’s estate. Otherwise it will only operate as a equitable lease. It is unclear from the facts whether or not the lease has been registered in accordance with the above provisions. The lease can still be registered by Mr and Mrs E at this moment as there is no time limit to complete a registered disposition. It will only become a legal lease once it has been registered; also upon registration the interest will also be awarded the minor protection methods of overriding interests and charges by way of notice. As a result all three protection methods will bind any future buyer.

However if Mr and Mrs E still fail to register the lease it will become a equitable lease. An equitable lease in registered land can be protected by overriding interests. As a equitable lease is a valid interest and Mr and Mrs E have obvious actual occupation of property five. Furthermore protection by notice can also be used as equitable leases are not excluded from being charges by way of notice. As a result both protection methods will bind any future buyer.

Bibliography:

Books:

Clarke S., Greer S., 2008, Land Law Directions, Oxford United Kingdom, Oxford University Press

Gray K, Gray S.F, 2008, Elements of Land Law, United Kingdom, Fifth Edition

MacKenzie J.A, Phillips M., 2008, Textbook on Land Law, 12th Edition, Oxford United Kingdom, Oxford University Press

Thomas, M (Ed.) Blackstone’s Statutes on Property Law 2009-2010, 17th Edition, Oxford United Kingdom, Oxford University Press

Sexton R., Bogusz, B., 2009 Complete Land Law: Text, Cases and Materials, edition one, Oxford United Kingdom, Oxford University Press

Cases:

Abbeyfield (Harpenden) Soc Ltd v Woods [1968] 1 WLR 374

Abbey National Building Society v Cann [1990] 1 All ER 1085

Ashburn v Arnold [1989] Ch 1

Barnes v Barrett [1970] 2 QB 657

Booker v. Palmer [1942] 2 All ER 674

Chartered Trust plc v Davies [1997] 76 P & CR 397

Cobb v. Lane, [1952] 1 All ER 1199

Crago v Julian [1992] 1 WLR 372

Earl of Oxford’s Case in 1615

Hodgeson v Marks [1971] Ch 892

Hussein v Mehlamn [1992] 2 EGLR 87

Javad v Mohammed Aqil [1991] 1 WLR 1007

Ladies’ Hosiery and Underwear Ltd v Parker [1930] 1 ChD 304

Marcroft Waggons Ltd v Smith [1951] 2 KB 497

Martin v Smith (1874) LR9 Ex 50

National Carriers Ltd v Panalpina Ltd 919810 2 W.L.R

Nunn v Dalyrymple (1990) 59 P & CR 231

Parker v Taswell (1858) 2 De G & J 559,

Prudential Assurance Co Ltd v London Residuary Body [1992] 2 Ac 386

R v Tower Hamlets LBC ex parte Von Goetz

Re Maughan (1885)

Street v Moutford [1985] AC 809

Swain v Ayres (1888) 21 QBD 289

Walsh v Lonsdale (1882) 21 Chd 9

Wheeler v. Mercer [1957] AC 426

Williams and Glynn’s Bank v Boland [1981] AC 487

Journals/Articles:

McFarlane B, 2003 Identifying property rights: a reply to Mr Watt, Conveyancer and Property Lawyer, Sweet & Maxwell 2009

Luba J, Williams J.G.P, 2000, Landlord and tenant from A to Z, Landlord & Tenant Review, Sweet & Maxwell 2009

Pawlowski M, 1999, When is a tenancy not a tenancy?, Landlord & Tenant Review, Sweet & Maxwell 2009

Dawson M., Midgley-Hunt J., 1995 Temporary forms of occupation – part II: the role of tenancies at will, Volume 13 number 3 pp.12-15

Internet:

www.lawtel.co.uk

www.lexisnexis.co.uk

www.westlaw.co.uk

Statue:

Land Charges Act 1972

Law of Property (Miscellaneous Provisions) Act 1989

Law of Property Act 1925

Land Registration Act 2002

Supreme Court Act 1981

Protection of Eviction Act 1977