Distinguishing between Legal and Equitable Estates and Interests in Land

 

 

 

Introduction

Land law is concerned with the rights applicable in or over real property or land and the processes associated with the creation and transfer of land rights and interests[1]. The legal definition of land includes the ‘buildings or parts of building and other corporeal hereditaments, incorporeal hereditaments, privileges, or benefits in, over or derived from land’[2]. This definition indicates that land does not only constitute the physical or tangible assets but also constitutes the intangible elements such as the right to walk across one’s land (easement) and establishment of mortgage covenant. The land law is aimed at guiding the processes of creating, operating, transferring and terminating the rights applicable to land.  One of the distinguishing characteristic of land law is the fact that transactions involving land usually take the form of a contract.  

To understand the land law, different concepts have to be taken into consideration. Amongst the notable concepts entail interests, estates, legal and equitable interests. This paper entails an analysis of a scenario by identifying the estates and interests present and whether they are legal or equitable. The analysis is undertaken in with reference to the applicable statutory or judicial authority.  

Analysis

Evaluation of estates and interests present and determination of whether they are legal or equitable

 In the scenario, Gloria and Ivor purchased 56 Cumberland Way after their marriage, in which each party contributed half the purchase price.  The house was later transferred to Gloria’s name and registered under her name, which was entered into the proprietorship register at HM Land Registry.

The scenario is evidenced by presence of interests and estates in land. Interest in land refers to the duties and rights of all the parties associated with the land. The rights and duties are automatically transferred to the individuals who either inherit or purchase the land. Estates entail major interest in land, which are applicable for a particular duration. According to Law of Property Act, s1 (1), ‘the only estates in land, which are capable of subsisting or being conveyed or created at law are, an estate in fee simple absolute in possession [freehold], and a term of years absolute [absolute]’[3]. The fact that Gloria and Ivor contributed half the purchase price of the property each provides them with substantial interest over the property.  The fact that Ivor restricted the property from being used for business purposes indicates that Ivor possesses significant interest in land.

In spite of the fact that the transfer deed of the property was registered under Gloria’s name, Ivor has an equitable interest over the property because the property was co-owned by both Gloria and Ivor. The existence of equitable interest is underlined by the case of Bull v Bull [1955] 1QB 234 (CA)[4]. In this case, a mother and son contributed towards the purchase of a house which was located on the outskirts of London. However, the property’s conveyance was registered under the son’s name, which made him the property’s legal owner. Both the son and the mother lived in the same house. After marrying, the son considered evicting his mother out of the house because her wife and his mother could not get along. However, the Court of Appeal ruled that her mother had a significant equitable ownership over the property[5]. Therefore, the son only acted as the property’s trustee. Similarly, this rule is applicable in the scenario, which means that Gloria acts as a property’s trustee while her mother possesses equitable interest. Therefore, both Gloria and Ivor possess beneficial entitlement to the property. This element is underscored by the case of William & Glyn’s Bank Limited v Boland [1981] AC 487 (HL)[6].

In the scenario, Gloria and Ivor entered into discussion with Henrietta over the right to use a pathway between the two houses that belong to Gloria and Ivor’s property. As a result of the discussion, Henrietta was granted the right of way along the pathway for a period of 5 years.  Therefore, the transaction led to creation of interest in land.  This aspect is characterised by the presence of significant legal interest, which is founded in law. According to the Land Property Act s (1), providing a particular party the right or privilege over land such as right of way for a specified duration leads to creation of legal interests[7]. Additionally, the transfer of land and the subsequent registration of land under Ivor’s name further indicate the presence of legal interest. Stroud asserts that ‘most legal interests must now be created by deed and completed by registration’[8].

The decision by Gloria and Ivor to convert the house to self contained flats by seeking financial support from Tyne & Wear Building Society by way of a legal mortgage, with the property’s deed used to create the mortgage.  In this situation, Tyne & Wear Building Society has a right over the property until the mortgage is fully cleared. Moreover, the decision to rent one of the flats to Leila led for 6 months led to creation of a lease. The agreement between Gloria and Leila to provide o rent the house to Leila therefore provided Leila ownership over the flat rent during the duration of the lease. Out of the lease agreement, Leila has the right to use other common parts of the flat such as corridors.

 

The origins of and the current relevance of the distinctions

            The distinction between legal and equitable rights applicable in land law is founded on the court of common law. On the basis of common law, the land law is capable of providing remedy on legal and equitable rights if the claimant proofs existence of some formalities and affirming a specific form of action. To promote equity, the court of Chancery considered eliminating the harshness associated with the common law hence leading to provision of equitable remedy for the deserving claimant.  The common law courts dealt with legal rules with the court of equity focused on adjudicating on issues on rules of equity. From the enactment of the Judicature Act in 1875, the courts have been given the power to deal with rules on equity and law hence eliminating conflicts of jurisdiction between courts[9]. In making a determination on whether a particular proprietary right is equitable or legal, it is important for contemporary courts to take into consideration two issues. First, the court must determine whether the right has the capacity of existing as an equitable or legal right. Secondly, the proprietary rights must come into existence through a manner that is duly recognized to result to creation of an equitable or legal right.

 

 

 

 

 

References

Cartwright, John and Maudsley, Ronald, Maudsley & Burn’s land law; cases and materials

            (Oxford: Oxford University Press 2009).

Clarke Alison and Kohler Paul, Property law; commentary and materials (London:

            Cambridge University Press 2009).

Bull v Bull [1955] 1QB 234 (CA) (Swarb.co.UK, 14 Nov. 2016).

<http://swarb.co.uk/bull-v-bull-ca-1955/> 

Davys Mark, Land law (London: Palgrave 2015).

Dixon Martin, Modern land law (New York: Routledge).

Graham John, Lexican of trust and foundation practice; practical definitions and

explanations on the law and practice of trusts and private foundations and associated subjects (New York: Mulberry House Press 2016)

Stroud, April, Making sense of land law (New York: Palgrave Macmillan).

Wilkie Margret, Malcom, Rosalind and Luxton, Peter, Equity and trusts 2014 and 2015

            (Oxford: Oxford University Press 2015).

William & Glyn’s Bank Limited v Boland [1981] AC 487 (HL) (e-lawresources.co.uk, 17 Nov.

            2016)

<http://e-lawresources.co.uk/Land/Williams--and--Glyns-Bank-v-Boland.php>

                     

 



[1] Davys Mark, Land law (London: Palgrave 2015) 18

[2] Dixon Martin, Modern land law (New York: Routledge) 3.

[3] Clarke Alison and Kohler Paul, Property law; commentary and materials (London: Cambridge University Press 2009) 530.

[4] Bull v Bull [1955] 1QB 234 (CA)

[5] Graham John, Lexican of trust and foundation practice; practical definitions and explanations on the law and practice of trusts and private foundations and associated subjects (New York: Mulberry House Press 2016) 117.

[6] William & Glyn’s Bank Limited v Boland [1981] AC 487 (HL)

[7]  Cartwright, John and Maudsley, Ronald, Maudsley & Burn’s land law; cases and materials (Oxford: Oxford University Press 2009) 13.

[8] Stroud, April , Making sense of land law (New York: Palgrave Macmillan) 9

[9]  Wilkie Margret, Malcom, Rosalind and Luxton, Peter, Equity and trusts 2014 and 2015 (Oxford: Oxford University Press 2015) 6.

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