Interests in Land - Legal and Equitable

Interests in land - A right a person has over someone else's land

Two types of interest:

1. Legal interest - legal right to it, Common law acts in rem,  (enforceable against everyone)  

2. Equitable interest - a title that indicates a beneficial interest in property, Equity acts in personam (a right enforceable against certain persons). It is a right that was originally only recognized by the Court of Chancery.

Legal and equitable interests in land have one common feature: they are proprietary rights in land

Proprietary rights - capable of binding third parties

Legal Interests in Land

There are a limited number of of legal interests under LPA 1925 - easements, profits à prendre and mortgages. All other interests in land are from equity only. Legal interests in land:

Easement - gives the right to use the land of another, or to prevent it being used in a certain way

Profit à Prendre - gives the right to take something from the land

For these to be legal the right must be held for an indefinite or definite amount of time. They cannot be legal interest and must be equitable as easement is for life.

Rentcharge - Rights to a periodic sum of money secured on land independently of any lease or mortgage e.g. seller of land reserves an annual payment for it secured by a rent charge.

No new rentcharge can be created after 22 July 1977 most rent charges will be extinguished by 2037

Mortgage - A charge on land to secure a debt

The common feature of any charge is that they are periodical payments with which land was burdened by law. A re-entry in a lease e.g. if the tenant fails to pay rent - is made an interest in the land self. It can be attached to a legal rentcharge to secure payment of the rent.

Easement, profit and mortgage are likely to come up as problem questions and common legal interests quest.

s.52(1) LPA 1925 - requires the use of a deed to create or convey a legal estate or interest in land

Equitable Interests in Land

Are applied where the strict rules of common law would not have created a fair outcome. However, if it was created by a deed then it cannot be an equitable interest.

Trust - where the property is held by one person on trust of another

Often trusts are not created by parties agreeing to set up a trust but by one person paying part of the purchase which is held in another’s name. If it is created with an interest in land then equity could enforce it using specific performance or restrain a breach with an injunction. This means that where there isn’t a deed but there should be equity may still regard the interest subsisting in land as an equitable interest.

Specific Performance - a court order which commands the performance of a contract

Injunction - A court order which either orders a lawful act to be done or restrains an unlawful act.

The word grant usually indicates deed, e.g the right of way is granted by X to Y and not granted

‘Agrees to grant’ indicates just an agreement as it stipulates that it will happen in the future. It enforces a contract to grant an interest in the future

S2LPA 1989 (miscellaneous) states ‘Contracts for sale etc. of land to be made by signed writing’. ‘incorporating all the terms which the parties have expressly agreed’ and be signed by all parties.

S2 (5) LPA 1989 (miscellaneous) ‘nothing in this section affects the creation or operation of resulting, implied or constructive trusts’.

Equity will enforce a contract for an equitable easement if it follows that criteria. If an agreement does not satisfy the requirements it could still be enforceable under the principles of constructive trusts or proprietary estoppel. Contracts before this date do not need to be in writing.

Keay v Morris Homes Ltd 2012 -  Not possible to say on the facts if the works agreement was expressly agreed term of the variation of the sale agreement (Lees 13)

Covenants - Where a person covenants in a deed not to use his land in a certain way or to do something on his land e.g. to keep fences in repair or not to build on the land.  (only ever been enforced in equity)

Rights created by proprietary estoppel may also be regarded as equitable interest’s e.g. if a person has acquired the land by gift or inheritance then that person has all equitable rights