LEVEL 3 - UNIT 4 LAND LAW SUGGESTED ANSWERS - JANUARY 2016

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1 Note to Candidates and Tuts: LEVEL 3 - UNIT 4 LAND LAW SUGGESTED ANSWERS - JANUARY 2016 The purpose of the suggested answers is to provide students and tuts with guidance as to the key points students should have included in their answers to the January 2016 examinations. The suggested answers do not f 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, f other points not addressed by the suggested answers. Students and tuts should review the suggested answers in conjunction with the question papers and the Chief Examiners repts which provide feedback on student perfmance in the examination. SECTION A 1. The landowner is not entitled to items such as gold and silver (in mines), items of treasure under the Treasure Act 1996, oil under the Petroleum (Production) Act 1934, while coal belongs to the coal authity. 2. The possible remedies are an injunction (court der to stop the trespass) damages (monetary compensation). 3. To answer this question the Candidate should explain one of the following tests: (a) the degree of annexation (attachment); the presumption that, if fixed to land being held down by other than its own weight, the item becomes fixture; (b) the purpose of annexation (attachment): if the attachment is only to display the object f its own benefit, then it remains a chattel (a fitting) despite annexation; (c) the permanence of annexation (attachment): how long will the attachment last. The answer should be illustrated with a case which must be linked to the test explained. F example, Leigh v Tayl (1902) could be used to illustrate the purpose of attachment test. 4. (a) The Land Charges Register applies to unregistered land. The Candidate could give an example such as a second legal (puisne) mtgage, a restrictive covenant, equitable easement, estate contract Class F land charge under the Family Law Act (b) (i) (ii) (c) Any one of the following examples could be given: lease with at least seven years left to run; lease subject to right to buy provisions under statute; Page 1 of 6

2 lease not taking effect within three months of grant; discontinuous lease e.g. timeshare. 5. Any two of the following features can be given: commonholds were introduced by Commonhold and Leasehold Refm Act 2002; a commonhold relates to properties where units are interdependent e.g. flats; a commonhold is created out of a registered freehold; the property is registered as freehold land ; it is split into units; the individual unit holders are registered as freehold owners of their unit. 6. (a) One of the following should be explained: Absolute leasehold, which is awarded when the landld s title is registered, when landld s title produced to Registrar when Registrar is otherwise satisfied with landld s ability to grant lease; Good leasehold, which is awarded where some doubt about landld s ability to grant lease; Qualified leasehold, which is awarded subject to some defect noted on the register; Possessy leasehold, which is awarded subject to some other right. It may be granted to squatter where iginal lease lost (b) This is part of the State guaranteed system of the register. Financial compensation can be paid to a party injured by a Registry mistake, and the register can be rectified amended where necessary. 7. A constructive trust arises where the legal title is held in name of one person but with a contribution from another. Requirements are: a common intention agreement that the non-legal owner is to have a share together with a contribution from that person which is recognised by the court as sufficient. The contribution may be financial the person acting to their detriment. Candidates could illustrate their answer with a case such as Grant v Edwards (1984) where reliance on a promise by the legal owner demonstrated reliance/common intention, Lloyds Bank v Rosset (1991) on what is sufficient financial contribution. 8. (a) Candidates could give any two of the following characteristics: Two pieces of land (dominant and servient tenements); In separate ownership; The easement must be of benefit to the dominant tenement; The easement must be capable of grant, so must be definite and not vague; In addition, there must not be a claim f total possession of the servient tenement, n must any expenditure be imposed on the servient owner. Page 2 of 6

3 (b) Any one of the following methods could be given: By necessity where the dominant land would otherwise be landlocked. The necessity only extends to minimum reasonable use. Candidates could explain that either mere inconvenience is insufficient to claim necessity, refer to a case such as Nickerson v Barraclough (1982); By common intention: both parties must have intended the easement. This easement is illustrated by Liverpool City Council v Irwin (1977); Under Wheeldon v Burrows (1879). This applies where commonly owned land is later separated and befe sale there were quasieasements which were continuous and apparent over the part retained which were necessary f reasonable enjoyment of the land now sold; By s.62 LPA 1925 which applies where an occupier has a licence permission over another s land. Where the title to the land occupied is transferred to the occupier e.g. on renewal of lease conveyance on sale the licence/permission is converted to a full easement over that other land. 9. (a) This statement relates to a positive covenant as referred to in Austerberry v Oldham Cpation (1885) Rhone v Stephens (1994). (b) Candidates should identify the Upper Tribunal (Lands Chamber) as the body which has this power. One of the following grounds should be given: the covenant is obsolete due to changes in character of the property neighbourhood; the continued existence of the covenant would prevent reasonable use of land; the person entitled to benefit of the covenant has expressly/impliedly consented to the discharge; discharge modification will not injure the person entitled to benefit of the covenant. 10. An endowment mtgage is a loan of a capital sum. During the loan period only interest is paid to the lender. In addition, an insurance policy/investment vehicle is taken out, f which premiums are paid to the policy provider. The policy/investment vehicle matures at end of mtgage period with the intention that it will repay the whole of the capital which is still outstanding. Page 3 of 6

4 SECTION B Scenario 1 Questions 1. Under s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, the contract must be in writing, contain all agreed terms and be signed by all parties. 2. (a) Candidates should explain here that the clause was a freehold covenant. To be binding on a later owner (Bob), it must be restrictive in substance, even if positive in fm. The burden of the covenant must be intended to pass. There must be two pieces of land, one benefited by the covenant and the other burdened by it. The covenant must touch and concern i.e. benefit the dominant land and it must be registered against the burdened land in der to give notice of it to subsequent owners. These rules have been developed from the case of Tulk v Moxhay (1848). (b) Candidates should now apply the rules outlined in the answer to Question 2(a) to the Scenario facts. The covenant is restrictive as it limits use of the land sold. There are two pieces of land (2 Silver Strand and 3 Silver Strand). The covenant shows from its wding a benefit to 3 Silver Strand. The intention to pass the burden is assumed under s.79 of the Law of Property Act Finally there would be a need to check whether the covenant was registered against Bob s land at 2 Silver Street befe he purchased. (c) A court could award either damages (monetary compensation) f breach of the covenant, an injunction (a court der) to stop the breach. 3. Bob could obtain an express release from the covenant, by Deed of Release, from Fred, who holds the benefit of the covenant as owner of 3 Silver Strand. Alternatively, Bob could buy Fred s land. This would end the covenant by merger of the benefited and burdened land. 4. A fixture is an item attached to land and so is part of land. It will pass with the land on a sale unless excluded befe sale by agreement between seller and buyer. The Fm states the items to be left taken and so avoids disputes after completion. Scenario 2 Questions 1. Candidates should recognise that the brother s statement was increct as the purchase was as joint tenants in equity. Despite their different contributions, as joint tenants there are no separate shares. The survivship rule applies to joint tenants. The surviv becomes owner of the whole property on the death of the joint tenant who can leave nothing by will. 2. This question requires Candidates to recognise the need f Mary to sever the equitable joint tenancy. This would have resulted in a tenancy in common in equity. Mary and Calvin would then have held separate shares which could be left by will. Candidates should then give an example of how severance could be carried out. F example, Mary could serve on Calvin a written notice of severance under s.36 Law of Property Act (Severance cannot be done by will). 3. Samantha would be able to apply to the court under s.14 Trusts of Land and Appointment of Trustees Act 1996 which relates to the exercise of trustee Page 4 of 6

5 powers. If Mary had severed the joint tenancy, Samantha would have inherited a share in the property under the will. She would be a beneficiary of a trust of land of which Calvin would be holding the legal title as trustee and so eligible to make the application. 4. The court considers various facts, listed under s.15 Trusts of Land and Appointment of Trustees Act Candidates should select from the list in s.15, showing how those selected are relevant to the Scenario facts. The intention of setting up the trust: (to provide a home f Calvin, Mary and Mary s daughters); The purpose f which trust land is held: (as a home f Calvin and Mary s daughters); The interest of any min who might reside be expected to reside there as their home: Teresa is still a min residing in the house as her home and likely to be there while she is still at school. 5. This question requires Candidates to identify the topic of overreaching and to explain the reason f its need in this case. Calvin is the sole trustee of trust land holding the legal title to it. He is holding f himself and Samantha and Teresa as beneficiaries. Overreaching is carried out by payment of purchase money to two trustees. The effect is to transfer the beneficial interests from the land into the proceeds of sale held by the trustees. The buyer then takes the property free from any beneficial interests. Scenario 3 Questions 1. This question requires Candidates to recognise the concept of a clog on the equity of redemption. Brower has the right to redeem the mtgage at any time after the legal date f redemption. A clog on the equity is a term in the mtgage which interferes with this right, such as undue postponement of the redemption date. Such a term is invalid and void so the Bank cannot refuse. Candidates could cite a relevant case such as Fairclough v Swan Brewery (1912). 2. In answering this question Candidates should recognise the issue of whether an overriding interest exists. They should explain that an overriding interest existing at the time of the mtgage is binding on lender though it does not appear on land register. The relevant overriding interest here is the interest under paragraph 2 of Schedule 3 of the Land Registration Act This is the interest of a person in occupation. Applying this to the facts of the Scenario, Mildred was in occupation at the time of the mtgage but had no beneficial interest in the land. Since her contribution to purchase was a gift there was no trust interest, so there was no overriding interest. 3. (a) In this case, there would have been a contribution at the time of purchase to land held in another s name. This creates a beneficial interest in land under a resulting trust. In that case Mildred would have had an interest in land at the time of the mtgage and she was in occupation of the land. Candidates could refer to a relevant case such as Williams & Glyn s Bank v Boland (1980). Page 5 of 6

6 The answer would be different as Mildred would then have an overriding interest binding on the Bank. (b) There would not be a binding interest. While Mildred had an interest in the land through her contribution she was not in occupation at the time of completion of the mtgage. 4. The Bank has a power of sale in a mtgage by deed. The power of sale is exercisable under s.103 Law of Property Act The redemption date must have passed and the Bank can sell when two instalments of interest have been missed. The Bank has a duty of care on sale to act in good faith and achieve market value. 5. Candidates should explain that Absolute Freehold is the best fm of registered freehold title. It is equivalent to fee simple absolute in possession and is subject only to overriding interests and entries on the land register. Candidates could point out that the buyer s mtgage lender will usually insist on this class of title unless there are exceptional circumstances. Page 6 of 6