Note to Candidates and Tutors: LEVEL 3 - UNIT 4 LAND LAW SUGGESTED ANSWERS JUNE 2012 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 2012 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. 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. (a) The equity of redemption is the right to redeem the mortgage loan, even before the end of the term. Under an endowment mortgage, only interest is paid to the lender during the period of the loan. The borrower must also take out and pay premiums on an additional security such as an insurance policy. This policy should mature at the end of the mortgage period with a sum sufficient to pay off the capital of the loan. 2. A fee simple absolute in possession is one of the two legal estates (forms of land ownership). A fee estate can be inherited and a fee simple can be inherited by any heir. Absolute means that it is not subject to any limitation, or conditions or premature termination. In possession means that it starts immediately rather than at some time in the future. The estate owner must have the immediate right to go into possession. Alternatively in possession also means the right to receive rents and profits of the land (for example where a tenant is in physical occupation). 3. An easement can be ended by any of the following ways (Candidates to state two): Express release by the dominant owner - often by agreement between the dominant and servient owners; Implied release, for example by abandonment; Statute (normally only for public works); Unity of ownership. 4. The two ways are a notice and a restriction. Page 1 of 6
5. Candidates to name and briefly describe any two of the following: Absolute freehold: equivalent to fee simple absolute in possession. This is the highest form of title, subject only to entries on the register and overriding interests; Possessory freehold: often granted to a squatter, person who claims ownership through occupation rather than purchase. Title is subject to any existing rights; Qualified freehold: this is rare, and is subject to any specified defect stated on the register. 6. The freeholder has rights up to the height for reasonable enjoyment, as demonstrated by the case of Bernstein v Skyviews [1978], or by the Civil Aviation Act 1982. 7. (a) The purchaser can ensure that overreaching occurs through the payment of the purchase money to two trustees. By overreaching the interests of the beneficiaries in the land are transferred to the proceeds of sale now held by the trustees. The purchaser then takes free of the beneficial interests and so is protected from any claims by the beneficiaries. 8. A legal easement is created under the rule in Wheeldon v Burrows (1879). 9. Candidate to outline one of the following methods: Notice in writing under s.36 Law of Property Act 1925 served by one joint tenant on the other(s) with intention to sever immediately (credit is given for citing a relevant case, such as Kinch v Bullard [1998]) Act of a joint tenant operating on his own share, such as bankruptcy or a mortgage A mutual agreement between joint tenants to sever and to hold in separate shares Course of dealing showing that interests are mutually treated as separate and so held as tenants in common. 10. (a) An example of a fixture would be a building attached to land, or items firmly attached to a building such as radiators or spinning looms as in Holland v Hodgson (1872). An example of a chattel/fitting would be a freestanding table or chair within a room. 11. Candidate to outline any two of the following: (a) Covenant is obsolete due to changes in the neighbourhood Continued existence of the covenant prevents reasonable use of land (c) The person entitled to the benefit has expressly or impliedly consented to the discharge (d) The discharge will not injure the person entitled to the benefit. 12. A resulting trust arises when one person owns property and a non-owner has made a financial contribution, not intended as a gift, to the original purchase price. An example is shown in the case of Bull v Bull [1955]. Page 2 of 6
13. The curtain principle means that while the legal title and legal interests are shown on the land register, equitable interests such as trust interests are not shown. The details of them are hidden behind the curtain. SECTION B Scenario 1 Questions 1. The offer and acceptance will become binding on exchange of contracts. S.2 of the Law of Property (Miscellaneous Provisions) Act 1989 states the formalities for a contract for the disposal of land. The contract must be in writing, contain all agreed terms and be signed by all parties. 2. (a) The legal right, if any, would be an easement. The essential features come from Re Ellenborough Park [1956]. There must be two pieces of land (dominant and servient) In separate ownership The easement must benefit the dominant tenement The easement must be capable of forming the subject matter of a grant and so: - not vague - not a claim for total possession - not require any expenditure by the servient owner. (c) The most likely way is through prescription. This requires use as of right (use without force, permission or secrecy). Prescription can be claimed under common law, or lost modern grant or the Prescription Act 1832. For any prescription claim at least 20 years of unbroken use must be shown. 3. The capital repayment mortgage will require regular instalment payments comprising capital and interest over a fixed period designed so that the capital will be paid off at the end of the period. 4. A tenancy in common would be advisable as this would give them separate shares of the proceeds which can be left by will or sold during lifetime. Under a joint tenancy they would own as a whole and not in shares. On the death of the first joint tenant, the survivor would become the sole owner of the whole. Joint tenancy tends to be more suitable for spouses. Since this is an investment property, Caroline and Tom are likely to want to have separate shares which they can control and can, if they wish, use to benefit other people. 5. First registration is required since under the Land Registration Act 2002 the sale and purchase of unregistered land is a trigger for registration. Page 3 of 6
Scenario 2 Questions 1. The elements of a constructive trust are: a common agreement or intention between the parties for a trust, and a contribution from the nonowning person. The contribution must be sufficient and financial and directly towards the purchase price or mortgage instalments before the court will recognise it as sufficient. Indirect contributions are insufficient as shown in Gissing v Gissing [1970] and Lloyds Bank v Rosset [1991]. In that case the court decided that work towards the decoration of the house was insufficient. In Joanna s case, a common intention could be shown from Robert s promise and the fact that Joanna acted on it. However, her contributions were only indirect and not financially direct to the purchase of the house. Therefore they are insufficient and she cannot claim an interest. 2. (a) Robert could object on the basis that the trees are trespassing into his airspace (depending on their height). He has rights in the airspace above his land for the reasonable enjoyment of his land. This is shown in the case of Bernstein v Skyviews [1978]. (Candidates can be credited for citing as an alternative the case of Anchor Brewhouse Developments v Berkley House (Docklands) Developments [1987] where there was trespass into airspace by an overhanging crane). He would have the remedies of an injunction (a court order, perhaps to remove the trees) or damages (financial compensation for any harm is done). He could also remove the branches himself but must return them to the neighbour. 3. (a) The bank should have registered its charge in the charges register of Joanna s title at the land registry. (c) The best class would be Absolute Leasehold title. Here the landlord s title is usually registered at the land registry. If not, his title and ability to grant the lease are still confirmed by the land registry. There are these benefits (Candidates to state any three): Easier proof of title with official copies rather than copies of title deeds Easier documentation with a simple transfer rather than a conveyance An easier check for the buyer on third party interests through inspection of the official copies An accurate title plan compared to what is sometimes only a verbal description of the property in conveyances of unregistered property Registration can aid the speed of the transaction If the transaction is faster, it may be cheaper 4. (a) A deed was necessary to transfer a legal estate. A deed must be in writing and make it clear on its face that it is intended to be a deed. It must be signed by the person making it in Page 4 of 6
Scenario 3 Questions the presence of a witness who attests (signs to confirm that he has witnessed the signature). 1. A Fixtures and Fittings form is a list of items to be taken by the seller and left behind. As a fixture is part of the land it will pass on sale to the buyer unless its removal is agreed beforehand. The purpose of the form is to state what will be taken and so to avoid dispute. 2. The question relates to the issue of freehold covenants. The agreement between Soraya and Malcolm contained covenants of which Malcolm has the benefit (the right to enforce). The burden of the covenants (the obligation to keep them) cannot pass at common law to a successor of the original covenantor (Austerberry v Oldham Corporation (1885)). In equity, the burden can pass if these conditions (developed from Tulk v Moxhay (1848)) are met: (a) (c) (d) The covenant is restrictive The burden was intended to pass (this is shown by the wording of the covenant or implied under s.79 Law of Property Act 1925) The covenant touches and concerns the land of the covenantee (the dominant land) i.e. benefits his land The covenant is registered against the burdened (servient) land. This will be in the Land Charges Registry as a D(ii) entry if the land has unregistered title or in the charges register of the land register entries if the land has registered title. Applying these conditions to the scenario facts: Both covenants are restrictive; Both of them touch and concern Malcolm s land (they are intended to benefit it). If at the time of Abdul s purchase the covenants were registered against Soraya s land, the burden will pass to him and Malcolm can enforce them against Abdul. 3 (a) The bank s power of sale must have arisen which occurs when the legal redemption date has passed. It will be exercisable if: The capital of the loan has been called in and there is no payment within three months, or The borrower is in default of an instalment or interest payment under the loan for at least two months, or The borrower has breached some other condition of the mortgage. S101 and s103 Law of Property Act 1925 apply. The bank must act in good faith and take reasonable care to obtain the best market price. 4. (a) The property register contains a description of the property. Page 5 of 6
The proprietorship register contains the class of title. 5. Soraya would need to provide proof through a summary or copies of the title deeds showing a chain of ownership to the present day. This would usually take the form of an abstract or epitome of title which must start with a good root of title, a conveyance or mortgage which is at least fifteen years old. Page 6 of 6