English Land – For Beginners

Derek McConnell introduces money advisers to the mysteries that are known as English .

Legal and equitable rights draws a Within the field of proprietary rights in land, English land law draws a fundamental distinction fundamental distinction between legal rights and equitable rights. In one way, between legal rights and In the beginning … particularly in the context of a trust, legal equitable rights rights can be said to represent form The origins of the medieval theory of whereas equitable rights represent English land law lay in the Norman substance. Where a person purchases, for arise either by way of express agreement invasion of 1066. By virtue of that act of instance, a with his/her or more usually by implication. The rights conquest the king acquired the ultimate own money, s/he will own both the legal of the beneficiary are enforceable against to all land in England. However, the and the equitable in that property. third parties. Prior to the 1925 legislation sovereign, over time, granted individuals There will be no separate equitable estate the rights of a beneficiary were interests in land whereby they became as that will have been absorbed in the enforceable against all persons other than the owners, not of the land itself, but an legal estate. Where, however, that person “a of a legal estate for “estate” in land, each estate being graded buys that property in his/her sole name valuable consideration without notice with reference to its temporal duration. with money advanced by a third party, (whether actual or constructive)”. In the The estate is the primary where it is intended that the third party context of land where the title remains as being an estate of will be the “real” owner, then the legal unregistered at HM Land Registry this unlimited duration and although in theory estate will be vested in the buyer but the concept still has application. In this way, inconsistent with the medieval theory of equitable estate will vest in the third a mortgage lender who advances money is for all practical purposes party. Equitable rights in property are by way of remortgage and as such equivalent to the full of land. generated by virtue of judicial recognition acquires legal rights by virtue of the legal The tenant of an estate in fee simple is of conscience driven obligations which charge will be bound by the equitable sometimes called the “freeholder”. The require an estate owner to deal with an rights of a person in occupation unless freehold owner of land is capable of asset in a certain way, in this example, to reasonable steps have been taken to granting a subordinate “leasehold” hold the property acquired for the benefit identify the nature of the occupier’s interest to another individual whereby of the third party. Conscientious equitable rights. that person is given an interest known as obligation takes priority over strict legal a or “term of years absolute” which rights. Such equitable rights, when they Distinction between denotes exclusive of the arise, are not so much “carved out of” the property for a defined term certain. In legal estate as “engrafted” upon it. The registered and turn, subject to any restrictions imposed “trust” provides the classic circumstance unregistered title by the freeholder in the lease, the where equitable ownership diverges from leaseholder is capable of granting a legal ownership. In a trust, the formal title The most fundamental structural sublease (for any period shorter than the in the asset (for example, the legal estate classification in English land law is the duration of the “head” lease). Major in fee simple) is vested nominally in one distinction between estates whose title codification of English land law took place or more persons as trustees. The strict has been registered (ie centrally recorded) in 1925 with the passing of the Law of duty on the trustee is to hold the asset so at HM Land Registry and those whose Property Act 1925. That legislation, as to provide beneficial enjoyment of the titles have not. The concept of titles to which still contains the essential corpus trust asset for the beneficiaries of the being recorded at a central of English land law, adopted the following trust who are entitled in this case to the register began with the concepts. equitable estate in fee simple. Trusts can Act 1925. The relevant legislation is now

8 QUARTERLY ACCOUNT SUMMER 2007