LEVEL 3 - UNIT 4 LAND LAW SUGGESTED ANSWERS JUNE 2010

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1 Note to Candidates and Tutors: LEVEL 3 - UNIT 4 LAND LAW SUGGESTED ANSWERS JUNE 2010 The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the June 2010 examinations. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. ILEX is currently working with the Level 3 Chief Examiners to standardise the format and content of suggested answers and welcomes feedback from students and tutors with regard to the helpfulness of these Suggested Answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners reports which provide feedback on student performance in the examination. Section A 1. The two legal estates (candidates to name one) are: Fee simple absolute in possession Term of years absolute 2. A fixture is an item which is attached to land or to a building on land. An example would be fitted kitchen units or fixed central heating or water pipes within a house. The significance of a fixture is that it forms part of the land and so passes automatically with the land on sale unless the removal is specifically agreed before sale. 3. The landowner has rights to the airspace above his land only to the height needed for ordinary use and enjoyment of the land, as established in the case of Bernstein v Skyviews Ltd [1978], or shown under the Civil Aviation Act (a) The class of title is shown in the Proprietorship Register; (b) Rights benefiting the land are shown in the Property Register. 5. (a) A joint tenancy can be severed in equity in the following ways (candidates to outline one method only): Page 1 of 7

2 (i) By notice in writing under s.36(2) Law of Property Act 1925 served by one joint tenant to the others, with the intention to sever the joint tenancy immediately; (ii) By an act of one joint tenant operating on his interest, such as his bankruptcy, grant of a lease or mortgage over his interest, contract for sale of his interest; (iii) By mutual agreement (which can be oral) to hold the property as separate shares; (iv) By a course of dealing showing intention to sever e.g. discussions or negotiation (if showing sufficient intention) or physical partition. (b) The result would depend on the number of joint tenants. If there are more than two joint tenants, and only one joint tenant serves notice under s.36(2) or does an act operating on his interest, the result would be that he now holds his interest as a tenant in common in equity. The rest of the joint tenants remain as joint tenants. Severance by mutual agreement or course of dealing only involving one of the joint tenants would have the same result. If there are only two joint tenants, any of the methods of severance would convert the equitable joint tenancy into a tenancy in common. Tenants in common own separate shares and the principle of survivorship does not apply to them. 6. The deed must be in writing, show an intention on the face of it to be a deed, and be signed and witnessed. 7. (Candidates to outline two events). Under the Land Registration Act 2002 first registration is compulsory following: a sale of land when the title is transferred; a lifetime gift of land by the owner; an assent (transfer to the person inheriting after the death of the owner); a transfer of land under a court order (e.g. following divorce); first legal mortgage of unregistered land; the creation or sale of a legal lease with over 7 years left to run. (In the case of the lease it will be the leasehold title which must be registered, rather than any unregistered freehold out of which it is created). 8. A legal easement can be created under the rule in Wheeldon v Burrows (1879). 9. A profit a prendre is the right to go on to another s property to take some benefit from it or make some use of it. Examples would be rights to fish, to shoot game, take timber or graze animals. 10. The covenantee has the benefit of the covenant. The covenantor has the burden of the covenant (as he has agreed to observe the covenant). Page 2 of 7

3 11. A constructive trust would arise where there is ownership of land by two or more people but one of them, who is not named on the title, has made a direct or indirect contribution towards the purchase. For a constructive trust to arise there must be a common intention or agreement between the parties and contribution which the courts will recognise as sufficient. A common intention can be express (such as a promise) or by conduct which is recognised by the court as an express common intention. The contribution must be towards the purchase or mortgage instalments. This was confirmed by the House of Lords in Lloyds Bank v Rosset [1991] where contribution towards renovation and decoration were held to be insufficient. 12. A repayment mortgage is usually repayable over a fixed length of time. Regular instalment payments are made consisting of part interest and part capital. The capital element will increase towards the end of the mortgage period, until at the end the whole loan will be repaid. Section B Scenario 1 1. The shrubs and mature trees form part of Brenda s garden. As landowner she owns the land as defined in s205 (1)(ix) Law of Property Act This includes the land surface and things attached to it. She is entitled to remove such items, unless the trees are protected by a Tree Preservation Order. 2. (a) A valid contract for the sale or other disposition of land must: be in writing incorporate all expressly agreed terms be signed by both parties. The agreed terms can be in one document signed by both parties, or where contracts are exchanged contained in each document signed by each party. (b) s2 Law of Property (Miscellaneous Provisions) Act (a) The other classes of freehold title are Possessory Freehold and Qualified Freehold. (b) Advantages would be any of the following: Easier proof of title just through supplying an official copy of the land register; this simplifies the process and reduces costs; The land register entries include an accurate plan; Easier documentation a simple transfer in a standard format is used to transfer ownership; For the purchaser it is easier to discover protected third party interests from inspecting the register, such as any restrictive covenants registered against Brenda s title; If an error is made by the Land Registry, compensation is payable and the register can be amended. Page 3 of 7

4 4. (a) Jim s agreement with Carl contained two covenants. The issue here is whether the burden of the covenants has passed to Brenda. (The burden is the obligation to keep the covenant). Jim, as the original covenantee, still has the benefit of the covenant. If the burden has passed to Brenda, then Jim could legally object to Brenda s business use and could refuse his permission for alterations. The burden of a covenant will not pass at common law. However, the burden of a covenant can pass in equity under the rule first developed in Tulk v Moxhay [1848] if certain conditions are met. The conditions are: the covenant must be restrictive (negative in nature even if positively worded); the burden of the covenant must be intended to pass with the land; if not apparent from the wording the intention is assumed under s.79 Law of Property Act 1925 unless otherwise stated; there are two pieces of land and the covenant on the servient land benefits the other piece (the dominant land); the buyer of the burdened land must have notice of the covenant. For a covenant made after 1925 the notice is through registration against the servient land, either at the Land Charges Registry (for unregistered land) or at the Land Registry (for registered land). Applying these rules to Brenda s situation: both covenants are restrictive. Though the first one relating to use is worded positively, it is in fact restrictive as it restricts the use of the house to one purpose only; it is assumed that the burden was intended to pass; there is no indication otherwise; the covenants would benefit Jim s land; the question is whether the covenants were registered against the house at the time she bought it from Carl. She has Absolute Freehold Title so the covenants should be registered at the Land Registry and shown in the Charges Register of her title. If they were then Brenda is bound by the covenants and is entitled to object. (b) The agreement could be terminated by: release by Jim, either express by deed or implied, as where Brenda commits breaches of covenant and Jim takes no action; Brenda s land and Jim s land coming into common ownership; By an order of the Lands Chamber of the Upper Tribunal (which exercises the powers of the former Lands Tribunal) 5. The Kempston Bank plc should protect its interest by registering the legal charge at the Land Registry. The Bank s legal charge will be shown in the Charges Register of Brenda s title. Scenario 2 1. Ali was not entitled to tunnel into another s land without permission. If he does so without permission, he is trespassing as the landowner owns the subsoil under his land. So the neighbour is entitled to object. Page 4 of 7

5 2. Fatima is likely to have a beneficial interest as a part owner under a resulting trust of land. This has occurred because she made a contribution towards the purchase price at the time of the purchase but the property was only put into Ali s name, as in Bull v Bull [1955]. Equity presumes that Ali will hold the legal title in the property on trust for them both in proportion to their individual contributions. This is an equitable presumption and can be rebutted by evidence of the contribution being a gift or a loan. This does not seem to be a gift here as Fatima regarded the property as an investment. She also did not speak of the contribution as being a loan. 3. (a) Under s.14 Trusts of Land and Appointment of Trustees Act 1996, any person with an interest in a trust of land can apply to the court for an order for sale. Fatima could therefore make the application as the beneficiary under a trust. (b) The list of factors is set out in s.15 (1). Particularly relevant here would be: The intention of the person(s) who created the trust; The purposes for which the property is held; Other relevant circumstances can also be taken into account, e.g. Fatima s wish to buy another property. (c) Applying these factors, the purpose when buying the property was to provide a home for Ali and his elderly mother. This purpose still seems to be continuing, so the court may well not order a sale. Though Fatima wishes to buy a larger property, and her purpose was an investment, she does have her own home. 4. (a) Where a trust of land is purchased, the buyer will want to ensure that he or she takes it free of any beneficial trust interests there may be. Under the process of overreaching, where purchase money is paid to at least two trustees the beneficial interests are transferred from the land to the purchase money. In this case Ali is the sole trustee. Overreaching will not occur if he alone conveys the property (Williams & Glyn s Bank v Boland [1981]). (b) So another trustee must be appointed to receive the purchase money with Ali. If this is done and the buyer pays to both, then the buyer takes the land free from beneficial interests. (c) If overreaching occurs Fatima will now have an interest in the proceeds of sale in proportion to her contribution rather than in the property. Scenario 3 1. Marina has been granted an easement. She should protect this by registering the easement against the neighbour s registered title, so that the easement is shown in his Charges Register at the Land Registry. The benefit of the easement would be shown in Marina s Property Register. 2. (a) Marina appears to have an easement as it has the features identified in Re Ellenborough Park [1956] which are: Page 5 of 7

6 two pieces of land (servient and dominant tenements) the easement over the servient tenement benefits the dominant tenement separate ownership of the tenements the right is capable of being granted as it is sufficiently definite. it is not a claim for total possession. (b) (i) The most likely method of acquisition will be by prescription. This occurs where for a long period a person has exercised a right with the characteristics of an easement, so that the law will presume that the right was granted. The necessary elements are: there must be continuous (i.e. regular) use; the use must be by and against a fee simple owner; the use must be as of right, i.e. without force, not secretly and without permission; use under one of the three bases of prescription: at common law: though strictly this is use since time immemorial (1189), the courts will accept use for 20 years as fulfilling this period; under lost modern grant: use for about 20 years will allow the courts to use a legal fiction to say that a grant was made but the deed has been lost; under the Prescription Act 1832 where 20 years use is sufficient, though use for 40 years means that the easement cannot be defeated. Applying these conditions to Marina s case, the track seems to have been used regularly by the owners of Marina s freehold house against the freehold owner of the field. There is no suggestion of any force, secrecy or permission given in connection with the use. Use by previous owners of the dominant land can be added together to make up the time periods, so long as there is no break, so here there would be over 20 years use of the track and so sufficient under the Prescription Act (ii) As a legal easement created by prescription, it ranks as an interest which overrides registration and so is binding on a purchaser under the Land Registration Act 2002 as from 13 October 2006 if: it is obvious from a reasonable inspection of the land, or known to the person to whom the disposition is made, or exercised within the year before the disposition. 3. (a) Under s.103 Law of Property Act 1925, the Bank could exercise its power of sale if: interest payable is more than two months in arrears; or the capital has been called in (i.e. repayment has been requested) and there is no payment after 3 months; or there is some other breach of the mortgage conditions. (b) The Bank should obtain the best price available in the circumstances. There is a duty to take reasonable care when selling and to exercise good faith. Page 6 of 7

7 4. It will not be necessary to register the lease. Leases for under 7 years which start when granted cannot be registered with a separate title. They are protected as interests which override registration. Page 7 of 7