Property law of lease, easement, trust

This question is regarding lease, easement, trust and right of pre-emption in a registered disposition and so need to discuss each one step by step.

As far as lease granted to imran is concerned, it is a legal and fixed for two years. According to s.52 of law of property act 1925 all the documents creating and transferring a legal estate must be by deed and a deed is defined in s.1 of law of property miscellaneous provisions act 1989. Therefore, the lease granted to imran should also be by deed. However, there is an exception to s.52 under s.54 (2) of law of property act 1925 and that is short lease exception. It means a lease, which does not exceed three years. Here imran is protected under s.54 (2) as the lease granted to him is less than three years.

s.54 (2) also provides that there is no need for a deed to create a legal estate. It has to be in possession and start immediately not at some time in future (Long v Tower Hamlets LBC 1998 CH 197). Imran has an immediate entitlement to possession and the estate has been created by a simple oral agreement (Hammond v Farrow 1904 2kb 332).

As far as the entry of notice is concerned, it binds the purchaser for a valuable consideration under s.29 of land registration act 2002. However, imran's interest does not require an entry of notice under s.33 of land registration act 2002 as his lease is for less than three years.

Imran's interest is also capable of being an overriding interest. Schedule 3 land registration act 2002 Para 1 says that legal leases for less than 7 years override registered dispositions, so imran's interest is binding on the new purchaser and Emily will have to let imran to continue to live in the house until the termination of his lease.

While discussing Aunt Mildred's interest in the property we need to discuss what kind of interest she has in the property. Where a land is owned by one or two persons and others has contributed to the purchase price then equity intervenes therein and a trust arises and the person who has made financial contribution to the purchase price would have an equitable interest in the property and such kind of trust is known as resulting trust.

Aunt Mildred contributed one third of the purchase price so she has an equitable interest in the property under resulting trust. Julie and zac hold the legal estate on trust for themselves and for Aunt Mildred. All three of them are beneficiaries holding equitable interests in the property known as resulting trust. (Dewar v Dewar 1975 1 WLR 1532).

We also need to consider the Doctrine of Overreaching. It applies when land subject to trust is sold. The beneficial interest in the estate on that sale turns in to money. The beneficial interest of the owner therefore moves from an interest in the land to an interest in the money and it is called overreaching.

The interests of the beneficiaries who are in the actual occupation of the land could bind the purchaser under schedule 3 Para 2 of land registration act 2002. here also aunt Mildred is in actual occupation of the land subject to trust and could bind Emily as Mrs Boland's interest bound the mortgagee under earlier provisions of s.70(1)(g) of land registration act 1925 in Williams & glyns bank v Boland 1981 AC 487.

But if the capital money is paid to two trustees, the overreaching provisions operate to overreach even an overriding interest as happened in (city of London building society v flegg 1988 AC 54) and more recently in (Birmingham midshire mortgage services ltd v sabherwal (2000) 80 P & CR 256). So under s.2 sub section (1) and (2) of law of property act 1925 aunt Mildred's equitable interest is capable of being overreached by Emily if the statutory requirement in respect of the payment of capital money arising under a disposition upon trust for sale are complied with.

As far as rajinder's right of easement is concerned, we need to know whether it is a legal or equitable easement. To establish a legal easement according to s.1(2) of law of property act 1925 it should be either forever or for a fixed period of time but if such is not the case then the easement could be an equitable easement under s.1(3) of law of property act 1925. Here the easement granted to rajinder is for a fixed period so satisfy the requirement of s.1 (2) of law of property act 1925.

Another requirement for a legal easement is method of creation. According to s.52 (1) of law of property act 1925 to be a legal easement it should be created by deed. Here the easement has been created by deed but in order to take effect at law expressly created easements should be registered under s.27 of land registration act 2002. in current situation if the easement has been registered under s.27 of land registration act 2002 then it would be capable of binding Emily as new purchaser but if he fails to register it under s.27 then it will be equitable even if created by deed.

Anita's interest in the property that is a right of pre-emption is an equitable interest and it should be in compliance with s.2 of law of property miscellaneous provisions act 1989. According to s.2 of Land Charges Act 1972 there are certain interests which can be registered as land charges. Right of pre-emption is a type of estate contract which comes in class c(4) under s.4 of Land Charges Act 1972.

Anita's right of pre-emption is also subject to registration under s.2 of Land Charges Act 1972. If Anita registers her right then it will be capable of binding anyone acquiring the land such as a subsequent purchaser. According to s.198 of Law of Property Act 1925, it will also be capable of constituting actual notice to all persons and for all purposes connected with the land. If she fails to register it then according to s.4 (6) of Land Charges Act 1972 Emily will not be affected by it (Midland Bank Trust Co. v Green 1981 AC 513) because the estate in question is a legal estate and it will be void only if Emily is a purchaser for money or money's worth.

s.52 (Law of Property Act 1925)

s.1 (Law of Property Miscellaneous Provisions Act 1989)

s.54 (2) (Law of Property Act 1925)

Hammond v Farrow 1904 2KB 332

Long v Tower Hamlets LBC 1998 CH 197.

s.27 (Land Registration Act 2002)

s.29 (Land Registration Act 2002)

s.33 (Land Registration Act 2002)

Schedule 3 Para 1(Land Registration Act 2002)

Dewar v Dewar 1975 1 WLR 1532

s.70 (1) (g) (Land Registration Act 1925)

Williams & Glyn's Bank v Boland 1981 AC 487

City of London Building Society v Flegg 1988 AC 54

Birmingham Midshire Mortgage Services LTD v Sabherwal (2000) 80 P & CR 256

S. (2) SUB SECTION 2 & 3(Law of Property Act 1925)

s.2 (Land Charges Act 1972)

s.4 (Land Charges Act 1972)

Midland Bank Trust Co. v Green 1981 AC 513.