Formalities

• Why formalities?:

  • An increase in the use of the written contract as the main method to generate private law rights. 
  • Rights in land can burden third parties and run with the land: formality is likely to mean that advice and guidance is sought. 
  • Public policy: dealings in property should be done with clarity and care, reducing the need to subsequent litigation. 
  • Where litigation is required, there will be documentary evidence. 
• Deeds:

  • A deed is a performative document which produces legal effects once ‘executed’.
  • No consideration is required for a deed to produce these effects.
  • Only the grantor/transferor needs to sign (alongside a witness).
  • Deeds are normally prepared by a solicitor or conveyancer.
  • If a conveyance additionally requires registration, the deed is sent off to the Land Registry for registration of the transaction.
• The role of equity:

  • Parker v Taswell (1858) 2 De Gex & Jones 559, 570-571
  • ‘If the Legislature had intended to deprive such a document of all efficacy, it would have said that the instrument should be ‘void to all intents and purposes.’ There are no such words in the Act. I think it would be too strong to say that because it is void at law as a lease, it cannot be used as an agreement enforceable in equity, the intention of the parties having been that there should be a lease, and the aid of equity only invoked to carry that intention into effect.’ 
• Walsh v Lonsdale (1882) 21 Ch D 9


  A 7 year lease was 'granted' by written contract (not a deed), and required rent to be paid a year in advance
• Tenant paid rent quarterly

  1. Landlord demanded a year's rent

  2. Landlord exercised remedy of 'distress' and entered the property, seizing machinery and goods in lieu of rent
• Tenant sued in trespass

  There was no legal lease granted
• Tenant's argument


  The agreement is enforceable in equity, on the same terms as the original agreement
• The court ruled in favour of the landlord
• Conflict between the (larger) set of rights under a 7-year equitable lease, and the (smaller) set of rights under a periodic tenancy


  The court is entitled to give primacy to rules of equity
• The requirements for an equitable lease (or any other potentially legal right in rem to operate in equity): 

  • 1. There be writing - written in statute
  • 2. Containing all the main terms - written in statute 
  • 3. Signed by the parties - written in statute 
  • 4. With consideration
  • 5. Clean hands
  • Parker v Taswell; Walsh v Lonsdale (1882); see also: s.2 LP(MP)A 1989 
• Potentially legal rights in rem: 

  *s.1 of LPA 1925 - states the list* 

  • Freehold 
  • Leasehold 
  • Mortgage 
  • Easement
  • All of the above need deed (s.52) and registration (s.27) to take effect at law, subject to leasehold exceptions, and a complicated matter concerning easements (for another day!). 
• Necessarily equitable rights: 

  • Fact-based acquisition of interests:
  • Proprietary estoppel: an assurance of a right in rem relied upon to one’s detriment can give rise to an equity from the moment of detriment (s.116 LRA 2002). 
  • Common intention constructive trust: e.g. payments towards mortgage costs could generate an interest in the mortgaged property 
  • The ‘in rem’ effect of freehold covenants 
  • A deed is needed to produce a covenant, but the effect of the covenant on third parties is a product of equity (not law). 
• Short-lease exception, s.54 LPA 1925:

  *some leases do not require paper such as an oral conversation or WhatsApp that does not go under s.2 of LPA MP 1989

  • A lease is granted at law, without writing, if: 
  • No more than three years
  • Taking effect immediately in possession 
  • At best rent (market rent) 
• Taking effect 'in possession':

  • As opposed to ‘in reversion’ – normally meaning the lease takes effect in the (distant) future. 
  • But s.54 says immediately in possession.
  • So what about an agreement for the lease to take effect just days in the future (as is very common in practice)? 
• Long

  Tenant who agreed to lease retail property from the council on a quarterly basis
• Council


  Landlord who sent Long a letter setting out the key terms, which Long signed (but the council did not)
• Latest date of possible 'agreement'

  4th September 1975
• Tenancy commenced in possession


  29th September 1975
• Long stopped paying rent


  1977
• Council served notice to quit


  September 1983
• Expiry of notice

  March 1984
• Long remained in the premises
• Long applied for registered title under adverse possession


  January 1995
• The council applied for the registration of title to be struck out and succeeded at first instance
• Court of Appeal allowed the appeal and ordered a full trial
• If there was a valid lease


  The expiry of notice in March 1984 was when Long's adverse possession commenced, meaning he had just 11 years – not the 12 years required under the Limitation Act 1980
• If there was no lease granted in writing

  The Limitation Act would take the starting point for adverse possession as the date of the last rent
• How can a lease be ‘granted’?: 

  • By deed (s.52 LPA 1952).
  • But there was no deed in Long.
  • Under the short lease exception (s.54 LPA 1925).
  • But the agreement was made three weeks before possession. 
  • In Equity, under Walsh v Lonsdale/ Parker v Taswell. 
  • But the writing was not signed by both parties. 
  • As a periodic tenancy based on the payment of rent. 
  • Yes – but Long stopped paying rent in 1977. 
• Long v Tower Hamlets LBC [1998] Ch 197: 

  •  Outcome: 
  • Long had been possessing the premises in a manner adverse to the paper-owner’s interests since he stopped paying rent in 1977. There was no lease to speak of from 1977 onwards. 
  • Claim for adverse possession should now be heard at trial.
• Conceptual approaches to title:

  • Possession as a root of title 
  • Relativity of title
  • Chain of transactions 
  • Title by registration
  • The past 100 years or so has seen a movement towards title by registration as the dominant – and now compulsory - method 
• Why title by registration?:

  • Provides stability in the rights affecting land
  • Lowers transaction costs when buying and selling land
  • It protects the reasonably diligent purchaser
  • It allows for effective transactions in land without the need for local knowledge 
  • Is supported by progress in the cartographic representation of land
•  

  Land Registration Act 2002:

  • 1. Substantively registerable estates
  • 2. Interests that must be completed by registration to take effect at law
  • 3. Third party interests capable of registration by Notice against the relevant title 
  • 4. Unregistered interests which override
• Compulsory registration: 

  • Section 4 LRA 2002: 
  • Transfer of registered freehold
  • Grant of a lease of more than seven years
  • Grant of a lease to take effect in the future (>3 months) •Grant of a first mortgage 
• Section 27: registerable dispositions:

  • transfer of freehold 
  • transfer of leasehold
  • grant of lease of more than 7 years
  • grant of lease to take effect >3 months
  • express grant of an easement – registered against burdened title 
  • grant of legal charge (mortgage) – registered against burdened title 
• Land registration principles: 

  1. Mirror principle: the register reflects the rights and interests affecting title. 
  2. Curtain principle: beneficial interests under trust need not be investigated and may remain ‘hidden’ – a purchaser need only concern themselves with the legal owner. 
  3. Insurance principle: the State ultimately underwrites the workings of the land registration system, and will compensate where the system fails an individual. 
•  

  Issues and problems with registration:

  • It remains the case that unregistered interests can still bind a purchaser of the land. 
  • S.58 LRA 2002, the conclusiveness of title by registration (rather than disposition) is assured, even in cases of mistake or following fraud. Other mechanisms are therefore required to rectify fraud. 
  • There remains a ‘gap’ between disposition and registration, potentially opening up opportunities for mistake and fraud.