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Interests of Third Parties in Properties

Info: 1510 words (6 pages) Essay
Published: 5th Jan 2021 in Law

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The main issue arising from this problem is the question of establishing various interests of third parties in the two properties, and the differing procedures for doing so, given that Rust Plot is a registered fee simple title, while Umber Plot is an unregistered fee simple title. This brief will attempt to answer the questions regarding the proposed ‘agricultural use only’ deed, whether Steve has any legal interests in the properties as he claims to have, and also whether Traci has an equitable interest in both properties arising from the common law and the doctrine of constructive notice.

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The first issue to be addressed is whether or not the deed produced by Quentin, which outlines Vernon’s promise to use the land for agricultural purposes only, still has a binding effect upon Peter after his purchase of the land. There is, therefore, a claim made by Quentin that there is an existing covenant on the properties which should bind successive owners of the property. There is no evidence in the facts to suggest that the deed is procedurally invalid (i.e. that it does not comply with the formality requirements of section 52(1) of Law of Property Act 1925, and section 1 of the Law of Property (Miscellaneous Provisions) Act 1989), so it will be assumed that the deed is valid in nature. This brief will, therefore, consider whether this deed is binding upon Peter, given that it was created between Quentin and Vernon (the previous owner of the property). Under statutory law, the promises made in leases made by deed will normally become covenants.[1] The courts would normally construe the terms of the lease as covenants unless the language used in the lease clearly makes that term a condition[2] (i.e. the landlord would have a right to automatically bring the term of the lease to an end for breach of a condition, but not for a covenant). So there is no disputing that the deed was binding upon Vernon, the previous owner, and Quentin at some point, so it is therefore incumbent upon me to advise as to whether the deed is now binding on Peter. Section 3 of the Landlord and Tenant (Covenants) Act 1995 provides that the “benefit and burden”[3] of all landlord and tenant covenants in the tenancy shall form part of the premises, and shall pass upon transfer of ownership. This transfer of covenants is pursuant to other provisions, which specifies that if the covenant is personal to another person then it cannot be transferred.[4] Therefore, under the ‘new law’ (provided that the tenancy was granted after the introduction of this Act (1 January 1996)), the covenant will be enforceable against Peter, and thus he will have to use the grounds for agricultural purposes only. If the lease was created before this time, it would fall under the jurisdiction of the old (common) law. The main source of authority for this issue is Spencer’s Case (1583) 5 Co Rep 16a, which states that a third party (i.e. the new owner) can only be bound by previous covenants if:

  • There is privity of estate between the new owner and the tenant; and
  • The covenant “touches and concerns” the premises in question.

Considering these two principles, it would be clear that Peter would also be bound by the covenant under the old law, given that Peter has a privity of estate with Quentin as his new landlord, and the proposed covenant directly relates to the property.[5] Therefore, under either law, Peter would not be able to use the land for his intended building proposals, and must therefore use the land for agricultural purposes only.

The question of Steve’s rights to both properties is dependant upon the legality of the document with which he claims his rights. This document is an old brown envelope, and does not claim to be a deed. Peter claims a legal interest in the land, and thus there is a requirement that this interest must be made by deed.[6] However, the formal requirements for a deed differ depending upon when the deed was executed. Given it is unclear in the facts as to what the date of execution of the deed was, both scenarios will be considered. If the deed was executed prior to 31 July 1990, then there is a requirement that the deed must be signed, sealed and delivered. The facts do not make clear whether the envelope was signed, however it would be reasonable to conclude that the document was not sealed by, at least, a red printed circle containing the letters ‘LS’. Therefore, under the old law, the document would most likely be invalid and Peter would not be bound by it. Under the new statutory law, there are now requirements that the deed must proclaim that it is, in fact, a deed.[7] It must also be signed by both parties, and also witnessed and delivered.[8] The document does not claim to be anything more than an old brown envelope, and therefore cannot be deemed to be a deed, regardless of whether or not the other criteria are satisfied. Therefore, the proposed contract to create a legal interest for Steve in the properties is invalid, and thus he does not have a recognisable legal interest that Peter must honour.

In regards to Traci’s equitable interest in the land, it is enforceable under statute provided it complies with the characteristics of an equitable interest.[9] Under common law regarding unregistered land, it was deemed that the occupation of the land by the wife of the owner of the legal interest will be regarded as separate from that of the husband.[10] Therefore, under this common law provision, it could be argued that Vernon has had constructive notice as to Traci’s equitable interests in the unregistered Umber Plot due to her crops growing in there, while also the fact that her tractor (clearly marked) is garaged in the barn on Rust Plot could also be argued to be constructive notice to both Peter and Vernon.[11] Therefore, the common law recognises that Traci has an equitable interest in both plots of land, and thus she must be considered in any negotiations.

In summary, the law has appropriately addressed the concerns the Peter has raised. There is no way under law that Peter can use the land for anything else but agricultural purposes, and thus cannot build his proposed housing development. Steve does not have any legal interest in either property to either garage his collection of cars, or claim a 10% stake in the crops grown on Umber Plot. Finally, the common law recognises that Traci has an interest in both plots that is not recognised as a legal interest; however relief can be appropriately sourced through turning to the principles of equity.

Bibliography

Books

  • Clarke, A, and Kohler, P, Property Law: Commentary and Materials (2005), London: Cambridge University Press
  • Gray, K, and Gray, SF, Land Law (2006, 4th ed), London: Oxford University Press
  • MacKensie, J, and Phillips, M, Textbook on Land Law (2004, 10th ed), London: Oxford University Press

Legislation

  • Landlord and Tenant (Covenants) Act 1995
  • Law of Property (Miscellaneous Provisions) Act 1989
  • Law of Property Act 1925

Cases

  • Doe d Henniker v Watt (1828) 8 B & C 308
  • Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783
  • Spencer’s Case (1583) 5 Co Rep 16a
  • Williams & Glyn’s Bank Ltd v Boland [1981] AC 487

1


Footnotes

[1] Law of Property Act 1925, s 52.

[2] Doe d Henniker v Watt (1828) 8 B & C 308.

[3] Judith-Anne MacKensie and Mary Phillips, Textbook on Land Law (2004, 10th ed), 213.

[4] Landlord and Tenant (Covenants) Act 1995, s 3(6)(a).

[5] See also P & A Swift Investments v Combined English Stores Group plc [1989] AC 632, 642 for further explanation regarding ‘touching and concerning’.

[6] Law of Property Act 1925, s 52(1).

[7] Law of Property (Miscellaneous Provisions) Act 1989, s 1(a).

[8] Law of Property (Miscellaneous Provisions) Act 1989, s 1(b).

[9] Law of Property Act 1925, s 1(3).

[10] Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783.

[11] See Williams & Glyn’s Bank Ltd v Boland [1981] AC 487, 508 in regards to registered land and equitable interests therein.

 

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