Freehold properties

All the five properties owned by Miss Stanfield can be classed as freehold properties as each property satisfies section 1(1)(a) Law of Property Act 1925. (S.1(1)(a) LPA), which states “an estate in free simple absolute in possession”, so therefore Miss Stanfield has the authority to grant a lease.

However there are two types of interests in legal estates, either a legal lease is granted which can be found under S.1(2) LPA or under S.1(3) which states “all other estates, interests, and charges in or over land take effect as equitable interest”, and equitable lease is granted.

For property one the interest is a lease and under S.1(1)(b) LPA this interest is capable of being a leasehold estate as it is issued for a term of four years absolute, so therefore is capable of being legal.

However for it to be created legally it must have been created by deed which must comply with S.52(1) LPA which states that “all conveyances of land or of any interest therein are void” if not created by deed. The deed must also comply with Section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (S.1 LPMPA) which requires that the document states that it is in itself a deed and must be signed by the individual in question, witnessed and delivered.

Although by looking at how this agreement was made, there is no evidence of it being created by deed, by Miss Stanfield, so therefore it is merely a contract of agreement and has not met the requirements of S.1 LPMPA and S.52(1) LPA.

However as Mr A has been allowed into possession of property one, in these circumstances this lease can be classed as a tenancy at will so therefore can be said to be legal. A tenancy at will can only be terminated if four weeks' notice is given. Also the fact that Mr A had paid his monthly rent to Miss Stanfield it means she has accepted the tenancy at will, the lease could therefore be converted into a legal periodic tenancy.

In Martin v Smith it was stated that “the period is based on the period for which the rent is to be paid as set out by the contract, that is not on how the rent is paid but on how it is calculated”. Mr A pays a sum of £650 on a monthly basis to Miss Stanfield to which she accepts, therefore a monthly periodic tenancy is created.

For an equitable lease to be made a contract in writing has to be made between the parties and signed if complied with under S.2(1) LPMPA 1989. Looking at this scenario it can be said that both Mr a and Miss Stanfield have agreed to the terms of the contract and we assume that it is written an signed, so therefore Mr A has an equitable lease too.

Under the doctrine in Parker v Taswell it states “a court of equity would perfect the imperfect lease by granting specific performance of the contract”. This suggests that Miss Stanfield will be made to give Mr A a deed as Mr A will be awarded an order for specific performance, so then MR A will then have a legal lease for four years.

Mr A can be said to have an equitable lease and monthly periodic tenancy. However in Swain v Ayres it was stated that both types of lease cannot co exist. But the Supreme Court Act 1981 section 49 provides that “where there is a conflict between the rules of common law and rules of equity, equity will always prevail”. So therefore the equitable lease for Mr A will prevail.

For Mr A to keep his equitable lease it has to be looked at in detail to see if certain pre conditions are met so any potential third party purchasers will be bound by Mr A's equitable lease. Under S.2(1) LRA an equitable lease is not capable of being substantively registered but an overriding interest can be used to protect the equitable lease.

The Land Registration Act 2002 gives two classes of interest which are capable of being an overriding interest, schedule 1 (Sch1) and schedule 3. As property one is already registered it is governed by schedule 3.

Sch3 para1 only applies to legal leases and as in this scenario the interest is an equitable lease this cannot be used. However Sch3 para2 could help Mr A bind any third party to a purchase of property one as he has “interest of a person in actual occupation”. Also as Mr A has already been allowed possession into property one he could claim against any third party thus having an overriding interest.

However a person needs to establish a right in the named property and must have regard to the general law, but the right will not override registration if the right is not capable of binding a purchaser. So the question that arises is that can Mr A prove that has a right in property one and has actual occupation of the property, then it can be said he has an overriding interest in the property.

In the case of Walsh “an equitable lease can be seen to be valid proprietary right”. As Mr A has an equitable lease it can said that Mr A has a right in property land.

In Hodgeson “actual occupation should be construed literally and meant a mere physical presence”. However in the case of Abbey National it was said by Lord Oliver that actual occupation should “involve some degree or permanence and continuity which would rule out mere fleeting presence”.

By looking at case law it can be said, Mr A has actual occupation of property one as he is in possession of the property this shows that he has some degree of permanence and the fact that he has not yet completed his four year lease it shows continuity of the property in the future, therefore Mr A will be able to claim the protection of Sch3 para2.

“Most interests that are not registerable dispositions need to be entered on the charges register or proprietorship register as either notices or restrictions”. Mr A can use two types of notice, firstly by a unilateral notice in which Mr A will enter but without the consent of Miss Stanfield, or by agreeing with Miss Stanfield. Once the notice is made, the lease will be protected against any future purchaser of the property.

For property two the interest is a lease as it satisfies S.1(1)(1)(b) LPA, this interest is capable of being a leasehold estate as it is issued for term of twelve years absolute. However for it to be created legally it needs to be created by deed, S.52(1) LPA. By looking at the facts of the case it can clearly be said it has not been created by deed.

However Miss B has been allowed possession for twelve months so this lease can be classed as a tenancy at will so therefore can be classed as legal. The tenancy at will, will be transferred to a monthly periodic tenancy if Miss Stanfield has accepted the rent of £600 monthly from Miss B.

Whether or not Miss B can or can't claim her equitable lease, she will always have the legal monthly periodic tenancy available to her. If followed by case law, Mercer v Liverpool where it states “legal estates bind the world”, Miss B's legal tenancy will carry on and any new owner of the property will be bound by Miss B's tenancy.

For an equitable lease to be made it has to comply with s.2(1) LPMPA 1989, which states a contract of agreement needs to be made, in writing, signed and witnessed.

Miss Stanfield only sent a letter to Miss B regarding her to let the property. A contract was never made or signed, so it an equitable lease was not executed properly. However if it is suggested by the court that the letter does fulfil the needs of a contract then Miss B has an equitable lease, and as we know equity always prevails.

But property two is unregistered freehold land. In unregistered land the equitable interest has only the protection of either; Registration as a land charge at the land charges registry, or the doctrine of notice. By looking at the Land Charges Act 1972 (LCA), class C(iv) section2(4) will make bound any potential purchaser of the property. Also under S.3(1) LCA, the charge needs to be registered against the name of the estate owner and not the property, registration is governed by S.198(1) LPA 1925.

Miss B can therefore register the property under Class C(iv) S.2(4) LCA 2002 to make bind any third parties from taking possession of the property. However when making the application to the registrar, Miss B must register it against Miss Stanfield and not the property otherwise the land charge entry will be void, as seen in Barrett v Hilton Developments LTD.

For property three the interest is a lease as it satisfies S.1(1)(b) LPA, the interest is capable of being a leasehold estate as it is issued for six years absolute. By looking at the facts of this case, it can be seen that the lease is created by deed, so therefore it satisfies S.52(1) LPA 1925. The lease between Miss Stanfield and Mr C is therefore capable of being legal.

Section 27(1) LCA states “If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met”. Mr C needs to register his lease by registration at the land charge registry for it to operate in law. However S.27(2)(b)(i) LCA states that only leases held for over seven years can be registered so therefore as Mr C's lease was only for a fixed term of six years, the lease is therefore unable to be substantively registered.

However the classification of overriding interests may be used here for the lease to be registered. As Mr C has a legal lease on registered freehold land, sch3 LRA can be used as a protection against a purchaser of the land. So therefore it can be said that Mr C legal lease will be overriding.

The classification of notice under S.32(1) LRA could also protect Mr C as none of the interests in property three are excluded in S.33 LRA, so consequently Mr C will be protected against a potential purchaser of property three.

The interest in property four is a lease as it satisfies S.1(1)(b) LPA and the interest is capable of being a leasehold estate as it is issued for term of two and half years absolute. By looking at the facts of the case it can be seen that Miss Stanfield agreed verbally to let her friend Mrs D stay at the property. There was no written contract or deed made.

However S.54(2) gives out exceptions where a deed does not have to be made, it relates to this case as this is a lease for less than three years and comes under one of the exception rules so Mrs D does not need a deed. Miss Stanfield's and Mrs D's verbally agreed agreement is said to be legal.

As property four is unregistered freehold land but a legal lease exists, the common law approach will be taken suggesting that the legal interests in unregistered land will make any potential purchasers of the property bound by the lease, Liverpool V Mercer.

For Property five the interest is a lease as it satisfies S.1(1)(b) LPA and the interest is capable of being a leasehold estate as it is issued for a term of fifteen years absolute, so therefore capable of being legal.

For the lease to be created legally it must satisfy S.52(1) LPA, which states a valid lease must be made by deed. In this scenario the lease between Miss Stanfield and Mr and Mrs E is created by deed, thus making it a legal lease. As the lease is for fifteen years, thus being over seven years, under S.27(2)(b)(i) it needs to be substantively registered. Also the fact that the lease was granted in January 2005 but commenced in March 2005, S.27(2)(b)(ii) LRA states it as a “reversionary lease” and this has to be registered as registerable disposition. Once registration is complete any potential buyer will be bound by the legal lease.

However Mr and Mrs E can be said to also have an equitable lease as it satisfies S.2(1) LPMPA 1989. So for example, if Mr and Mrs E fail to register the legal lease, they still have a valid equitable lease. As an equitable lease is not capable of being substantively registered, an overriding interest can be used to protect the equitable lease. Sch3 para2 can be used as a protection by Mr and Mrs E because they both have an interest in the land and both have actual occupation on the land so therefore the interest overrides registered dispositions of the land.

If Miss Stanfield wish to sell her properties she needs to take the following into consideration, In my opinion, Mr A, for property one, can make his lease binding both legally and equitably but common will prevail. Miss B can equitably bind any third parties for property two. Mr C can legally bind any future purchasers as he obtains a deed for property three. Mrs D can protect property four as the agreement falls within the exceptions under S.54(2) LPA so she has a legal lease. Mr and Mrs E can rely on both legal and equitable lease for property five.