Law of Property Act 1925 Lecture

OVERVIEW

This guide is intended to help you with some of the more significant aspects of the Law of Property Act 1925. Because this guide is about one statute in particular, any references to sections in this guide will be highlighted in green for ease of use. This guide will not be a section-by-section assessment of the entire Act. Instead, it will examine those sections which are most often cited in a Land Law syllabus. Therefore, there will be a degree of veering back and forth between sections of the Act. The guide is structured by topics rather than the numerical order of the sections in the Act. It is hoped this will make the guide easier to navigate and understand.

It is recommended that as you go through this guide you make frequent reference to your statute exam book. It may be the case that you are allowed to annotate your exam book, in which case you can insert some of the points in this guide that are most helpful to you. However, please check to make sure that you are allowed to annotate, because some examiners will only allow highlighting and will not allow annotation.

Because this guide is all about the Law of Property Act 1925, hereinafter it will be abbreviated to the LPA. In the event that subsequent Law of Property Acts are mentioned, they will be named fully and given their year, e.g. the Law of Property (Miscellaneous Provisions) Act 1989.

CREATION OF LEGAL RIGHTS

The estates, interests and charges which can subsist at law in England and Wales are set out in s.1 of the LPA. These are rights which are ‘authorised to subsist or to be conveyed or created at law’ (s.1(4)).

The first two are estates in land. The remaining rights are legal interests or charges:

• The fee simple absolute in possession
• The term of years absolute (on which more below)
• Easements and other rights or privileges over land for an interest equivalent to either of those estates
• Profits à prendre for an interest of equivalent duration
• Charges by way of legal mortgage
• Rentcharges in possession, perpetual or for a term of years absolute, and the similar charges on land not created by an instrument within s.1(2)(d). The Rentcharges Act 1977 generally prohibits new rentcharges, subject to exceptions including estate rentcharges
• Rights of entry over a legal term of years absolute or annexed to a legal rentcharge.

What should also be noted about the creation of legal rights is that any proprietary rights which are not included in this group can take effect only in equity (s.1(3)). A legal estate cannot be held in an undivided share or by a minor (s.1(6)). Examples of rights which are equitable only include:

• Determinable fee simple estates,
• Restrictive covenants,
• Estate contracts (including options), and
• Beneficial interests existing under a trust of land.

When a party seeks to convey land to another, that conveyance of land, or of any interest in land, must (with exceptions) be made by deed, otherwise it is ineffective to convey or create a legal estate (s.52(1)). A contract for the disposition is distinct from the conveyance. It generally needs to satisfy s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, including the requirements for signed writing and incorporation of all expressly agreed terms.

Certain estates can however subsist at law without any of the usual requirements for compliance with form or due registration. In the LPA, a good example of such estates are those leases which take effect in possession for a term of not more than three years at the best rent reasonably obtainable without a fine or premium (s.54(2)).

Definitions

The LPA provides a set of key definitions in s.205

A conveyance is defined to include mortgages, charges, leases, and other various other methods of ‘assurance of property or of an interest therein by any instrument, except a will;’ and it defines disposition as including ‘a conveyance and also a devise, bequest, or an appointment of property contained in a will’ (s.205(1)(ii)). So in lay terms, a conveyance is made by an instrument other than a will. A disposition includes a conveyance and can also be made by will.

Property is defined as including ‘any thing in action, and any interest in real or personal property’ (s.205(1)(xx)).

Purchaser is defined as ‘a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property’ (s.205(1)(xxi)). In Part I and where expressly provided elsewhere, the purchase must be for money or money’s worth.

Terms of years absolute, as found in s.1(1)(b), is comprised of several parts. The “term of years” is commonly known as a “leasehold estate” and the owner is referred to a leaseholder rather than a freeholder. The term of years is a granting by the lessor (the landlord) to the lessee (the tenant) a right of exclusive possession of land for a fixed or periodic term.

The period can either be fixed and therefore self-determining, or periodic and therefore continuing from period to period until validly terminated. Statutory security of tenure may continue a tenancy or restrict how it can be ended. In England most private assured tenancies are periodic under the Renters’ Rights Act 2025. Occupation contracts in Wales are governed by the Renting Homes (Wales) Act 2016. A term of years does not even have to last for a year or more: it can be for one week or 10 million years (s.205(1)(xxvii)). Further, any area, regardless of size, can constitute a tenancy if granted for a defined period as the ‘exclusive domain of a particular individual’ (AG Securities v Vaughan [1990] 1 A.C. 417 per Lord Oliver of Aylmerton).

Given the absence of a narrower statutory definition of a ‘term of years’ in s.205(1)(xxvii), the courts have been left to identify the core components of a leasehold. In the case of Street v Mountford [1985] A.C. 809, Lord Templeman described a tenancy in the following terms:

1. Exclusive possession
2. For a fixed or periodic term certain, and
3. Usually in consideration of a premium (i.e. a lump sum) or periodical payments. Rent is not essential to a lease (s.205(1)(xxvii); Ashburn Anstalt v Arnold [1989] Ch. 1).

Two less common types of leasehold are the so-called “leases for life” and “leases until marriage”, and their civil partnership equivalent. Where granted at a rent or for a fine, these are statutorily converted into a 90-year term. After the relevant death, marriage or formation of a civil partnership, the term may be determined by at least one month’s written notice expiring on a quarter day applicable to the tenancy (s.149(6)).

FORFEITURE

Where the lease reserves a right of re-entry for breach and the landlord has not waived it, a landlord seeking to forfeit for a breach other than non-payment of rent must generally adhere to the special notice procedure laid down by LPA’s s.146. The landlord is not permitted to exercise any right of re-entry or forfeiture of the property until the requirements of this section are met. Special exceptions include those in s.146(8)–(11). Relief for non-payment of rent is governed separately, including by s.138 of the County Courts Act 1984 in county court proceedings. Assured tenants in England and occupation contract-holders in Wales have separate statutory protection against possession.

The s.146 notice is intended, by its notice requirements, to instil notions of due process and proportionality upon the compulsory divesting of a substantial property asset. The requirements of such a notice are that it (per s.146(1)(a)-(c)):

1. Specifies the tenant’s particular breach of which complaint is made by the landlord;
2. Require that the tenant remedy the breach ‘if the breach is capable of remedy’, and
3. Require compensation in money for the breach if the landlord seeks it.

The purpose of the notice and its procedure is ‘to give even tenants who have hitherto lacked the will or the means to comply with their obligations one last chance to summon up that will or find the necessary means before the landlord re-enters’ (Expert Clothing Service & Sales Ltd v Hillgate House Ltd 1985 WL 1167522 per Slade LJ).

For a long lease of a dwelling, a s.146 notice for a breach within s.168 of the Commonhold and Leasehold Reform Act 2002 generally requires an admission or a final determination of breach. After a determination the landlord must wait 14 days. Section 167 bars forfeiture for unpaid rent, service charges or administration charges unless the total exceeds £350 or some of it has been due for more than three years. Section 81 of the Housing Act 1996 separately requires admission or final determination of service or administration charges before forfeiture. Following a determination under that section the landlord must wait 14 days.

For qualifying repairing covenants under leases granted for at least seven years with at least three years left, the notice must explain the tenant’s right to serve a counter-notice within 28 days. A timely counter-notice requires the landlord to obtain the court’s leave to proceed (Leasehold Property (Repairs) Act 1938, ss.1, 7).

Capable of remedy

Where a breach is ‘capable of remedy’, the tenant must remedy their breach ‘within a reasonable time’ after the service of the notice. If the tenant remedies the breach and makes any reasonable compensation required within that time, the landlord cannot forfeit for that breach. Even if the tenant does not do so, the tenant may apply for relief. The court retains a broad statutory discretion for the granting of relief against forfeiture for breaches of covenant other than non-payment of rent (s.146(2)).

Breaches of negative covenants are regarded as ordinarily capable of remedy, so long as the ‘mischief caused by the breach can be removed’ by belated compliance with the tenant’s covenants (Savva and Savva v Houssein (1997) 73 P. & C.R. 150). However, a completed assignment or subletting without the required consent is treated as irremediable, which leaves the tenant entirely dependent on the court’s discretion to exercise relief from forfeiture (Scala House and District Property Co Ltd v Forbes [1974] Q.B. 575, also see below). Generally, the approach is that negative covenants, if breached, are nevertheless capable of remedy (and if so remedied would preclude forfeiture) if the harm inflicted on the landlord can be effectively removed by due compliance in tandem with the provision of compensation by the tenant (Bass Holdings Ltd v Morton Music Ltd [1988] Ch. 493).

Key points:

• Where the landlord is taking steps to forfeit but has not yet instituted possession proceedings against the tenant
• Or, the landlord has obtained a court judgment for possession against the tenant, but has not yet executed this judgment by physical re-entry
• Or, where the landlord elects to forfeit the lease, not by obtaining and executing an order for possession but instead by exercising his right of peaceable re-entry where it is available upon the demised premises,
• Then in any of the above circumstances the tenant can ask the court for relief from forfeiture.

Not capable of remedy

Where the breach is not ‘capable of remedy’, the object of the notice procedure is simply to enable the tenant to ask for the court’s discretion to grant relief. The court would examine the gravity of the breach and the disparity between the value of the property of which forfeiture is claimed and the extent of the damage caused by the breach. Things which are of relevance may include the demeanour of the tenant, particularly where they have been evasive and/or aggressive about the breach (Akici v LR Butlin Ltd [2006] 1 W.L.R. 201).

In exercising its discretion the court considers whether the landlord’s position has been ‘irrevocably damaged’ by the breach (WG Clark (Properties) Ltd v Dupre Properties Ltd [1992] Ch. 297). Relief is normally granted in cases of relatively minor or unintentional breach or where a breach has been effectively remedied, but irremediability is a factor in the discretion, not a bar to relief (Dunraven Securities Ltd v Holloway (1982) 264 E.G. 709). Even after a deliberate breach, relief may be granted on terms requiring a sale of the lease (Freifeld v West Kensington Court Ltd [2015] EWCA Civ 806).

Returning to negative covenants, it may be the breach is irremediable if the breach is of such a nature that it cannot be remedied by the mere cessation of the prohibited activity (and potentially even the provision of compensation by way of payment). In these cases it is a question of whether ‘the taint lingers on and will not dissipate within a reasonable time’ (Expert Clothing Service & Sales Ltd v Hillgate House Ltd 1985 per O’Connor LJ). If such is the case, the tenant cannot prevent forfeiture by stopping the activity alone, but may still seek relief.

Key points:

• Where illegal use leaves a lasting stigma, cessation of the activity may not remedy the breach. Whether to grant relief from forfeiture is a separate question.
• A conviction may help prove a breach, but the landlord must show that the conduct fell within the covenant and that the right to forfeit has not been waived.
• Even where the prohibited activity was lawful, the question is whether its effects on the premises can be remedied within a reasonable time.

STATUTORY REQUIREMENTS

Where an express trust is declared relating to land during life, it is normally enforceable only if it is ‘manifested and proved’ by some writing signed by a person able to declare the trust (LPA s.53(1)(b)). A declaration may also be made by a will complying with the applicable testamentary formalities (Wills Act 1837, s.9). The signature of an agent as such is insufficient under s.53(1)(b) (National Iranian Oil Co v Crescent Gas Corporation Ltd [2025] EWCA Civ 1211). (You may recall that this section is discussed in your Equity & Trusts Law syllabus.) This requirement for complying with formalities dates back to the Statute of Frauds 1677, and performs two related functions. First, it can prevent or mitigate litigation that would otherwise arise from allegations of mistake or fraud relating to beneficial ownership, especially where those allegations are raised many years after the disputed events. Second, it is consistent with English land law in the sense that informal arrangements tend to be seen as having inferior status.

The requirement of written evidence also serves the purpose of discouraging the use of informal and colloquial language for giving rise to (perhaps unintended) trust relationships, especially in the domestic context. A trust ‘does not come into being merely from a gratuitous intention to transfer or create a beneficial interest’ (Austin v Keele (1987) 10 NSWLR 283, PC (on appeal from New South Wales) per Lord Oliver of Aylmerton). The result is that a failure of complying with the formalities under s.53(1)(b) will be a ‘merely voluntary declaration of trust… unenforceable for want of writing’ (Gissing v Gissing [1971] A.C. 886 per Lord Diplock). The section requires ‘that the declaration of trust be evidenced in writing rather than that it be in writing’ (JD Feltham, ‘Informal trusts and third parties’ (1987) Conv. July-August 246). In other words, the declaration may be oral. A later signed document can suffice if it records the material terms of the trust.

The subsection which immediately follows deals with a different transaction: ‘a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will’ (s.53(1)(c)). Here it is the disposition of the existing equitable interest which must be in signed writing or by will. An agent lawfully authorised in writing may sign the disposition.

Exceptions to the formalities requirement

Despite the aforementioned concern in English land law with maintaining consistent adherence to formality, the LPA does incorporate a recognition of the need for equity to sometimes go beyond formalities and to therefore make certain trusts enforceable even if they do not comply with the typical formalities requirements. This is based on the principle that compliance with the rule may result in an act which is unconscionable and against equitable principles.

The result is that certain types of trusts are recognised by the LPA as valid and enforceable even if they do not comply with the formalities requirements. In the LPA, s.53(2) indicates that the requirement for documents being ‘manifested and proved’ does not affect the ‘creation or operation of resulting, implied or constructive trusts.’ The absence of signed evidence of an express trust is not itself enough. The facts must establish the resulting, implied or constructive trust relied upon.

One instance where this applies in land law (rather than purely equitable) context is where the requirement for documents to be proved in writing is abrogated in order to prevent the commission of a fraud by the trustee. Where A acquires a title in land from X on terms of A’s express oral (and unwritten) undertaking that he will, at the time of acquisition, hold the land on trust for B, A is subject to a fiduciary obligation towards B, because it would be fraudulent and inequitable for A to rely on the writing requirement to avoid the consequences of the fiduciary obligation that had been placed on him and thereby profit from his own fraud (Rochefoucauld v Boustead [1897] 1 Ch. 196; [1898] 1 Ch. 550; Khan v Khan [2025] EWCA Civ 1436).

Examination consideration: Even though this formalities requirement is more likely to be a topic of discussion in an Equity exam rather than a Land Law exam, it can be helpful in a Land Law exam to at least have this section to hand. There may be an opportunity to score easy points if you note in a problem question that an owner declares that they hold land on trust but there is no signed evidence of the declaration. A declaration during life does not require a will. When you cite s.53(1)(b) here, you show your awareness of this requirement in land law.

MORTGAGES

When a mortgagee (the lender) obtains a charge over the mortgaged property against the mortgagor (the borrower), a mortgage made by deed normally carries a statutory power of sale once the mortgage money becomes due (ss.87–108, particularly s.101(1)(i)). Unless the deed varies the statutory conditions, s.103 permits its exercise when payment is in default for three months after notice requiring payment, when interest has been unpaid for two months after falling due, or when another qualifying mortgage obligation has been breached. A legal mortgage of an unregistered estate must be created by deed (s.52(1)).

There are one of two ways in which such a mortgage (i.e. over unregistered land) entered by deed can take form. The first is a charge by way of legal mortgage: the recipient of the charge by way of legal mortgage (the recipient being the lender) is deemed to have the ‘same protection, powers and remedies’ (including the right to take proceedings to obtain possession) as if a term of 3,000 years had been created over a freehold or, over a leasehold, a sub-term one day shorter than the mortgagor’s term (s.87(1)). The first legal mortgagee of an unregistered estate is thereafter entitled throughout the term of the mortgage to retain the title deeds pertaining to the mortgaged property while the title remains unregistered (ss.85(1), 86(1)). A protected first legal mortgage of an unregistered freehold or lease with more than seven years to run triggers compulsory first registration, normally within two months (Land Registration Act 2002, ss.4, 6–7).

The second is a mortgage by demise or subdemise. Under this type of mortgage, the security granted to a lender is in the form of a long lease in the borrower’s land, usually for a term of 3,000 years, though there is usually no intention that the lender would be assuming physical possession under the lease (s.85(1)). If the mortgaged estate is itself a leasehold, then any mortgage by long lease (whatever its term), must take effect by subdemise. This subdemise is carved out of the leasehold estate for a period ‘less by one day at least than the term vested in the mortgagor’ (s.86(1)). This method is somewhat archaic. A registered estate cannot be mortgaged by demise or subdemise. The grant of a legal charge over it must be completed by registration (Land Registration Act 2002, ss.23, 27).

Accelerated sale procedure

A mortgagee, once their power of sale is exercisable, is prima facie entitled to exercise it for their own purposes at any time of their own choice (Parker-Tweedale v Dunbar Bank plc [1991] Ch. 26 per Nourse LJ). The mortgagee must act in good faith and take reasonable care to obtain the proper market value at the time of sale (Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch. 949). There is a further limitation on the mortgagee’s power to determine the date and time of the sale. A defaulting mortgagor (borrower) can accelerate the sale of the mortgaged property by invoking the court’s discretion under s.91(2) to order sale at the request of either the mortgagor or the mortgagee, notwithstanding that ‘any other person dissents.’ In other words, a mortgagor can ask the court to order an earlier sale.

Key points:

• S.91(2) provides a kind of lifeline to mortgagors who are otherwise finding it difficult to escape a mortgage which imposes ever greater and unsustainable debt obligations.
• This acceleration of the sale timetable can therefore act as a counter to the mortgagee’s choice of when to sell. Where the mortgagee or its receivers are already selling, the court needs a substantial reason to take conduct of the sale away from them. The borrower’s assertion that the price is too low is not enough (Fairmont Property Developers UK Ltd v Venus Bridging Ltd [2025] EWCA Civ 1513).
• This does not however extinguish the debt obligations. Any shortfall remains a personal debt of those liable for it, subject to the rules of bankruptcy.

The use of s.91(2) by the mortgagor can also be an effective means of pushing forward with a sale where there is otherwise a conflict of interest on the part of the mortgagee. A sale by the mortgagee to himself for example is ‘no sale at all’ and is invalid, even if the sale price is the full value of the mortgaged property (Farrar v Farrars Ltd (1888) 40 Ch. D. 395). Here, an application under s.91(2) may be the only means of sale where the only potential purchaser is the mortgagee.

Foreclosure

Foreclosure is an especially, perhaps the most, draconian and strongest remedy open to the mortgagee in the event of default by the mortgagor. Foreclosure effectively leaves the entire value of the mortgaged land in the hands of the mortgagee, thereby taking from the mortgagor any of their equity in the land, even where the property is worth more than the mortgage debt. It is the final foreclosure order that extinguishes the equity of redemption. Because of its drastic nature (compare for example a mortgagee exercising a power of sale and accounting for any surplus after payment of the sale costs and secured debts), the remedy of foreclosure is only available on an application to the court (ss.88(2), 89(2)). Given this, foreclosure actions are ‘almost unheard of today and have been so for many years’ (Palk v Mortgage Services Funding plc [1993] per Nicholls V-C).

Equitable mortgagee

For an equitable mortgagee, the remedies available to them will differ from those which are open to a legal mortgagee. An equitable mortgage made by deed may carry the statutory power of sale. Without a statutory or express power to sell, the mortgagee must apply to the court for an order permitting sale of the property charged (ss.90(1), 91(2)). The mortgagee may also opt to appoint a receiver, though the statutory power to do is only available in respect of mortgages created by deed and, under the statutory terms, becomes exercisable when the power of sale is exercisable (ss.101(1)(iii), 109(1)).

CHATTELS AND FIXTURES

In the LPA, s.62 includes fixtures among the things which pass on a conveyance of land unless a contrary intention is expressed. A fixture is already part of the land before the conveyance. The section does not define fixtures or make them incapable of removal. A tenant may, for example, have a right to remove a tenant’s fixture.

Much of the discussion in chattels and fixtures is found in case law, and a fuller discussion of those cases can be found in the other syllabus revision guide entitled ‘Fixtures and Chattels’. For now, it should suffice to give a brief definition of fixtures.

The test for examining whether something was a fixture or not comes in two parts (Elitestone v Morris [1997] 1 W.L.R. 687 per Lord Lloyd of Berwick). The first part is undertaken by examining the degree of attachment or annexation of the item to the land. The greater the degree of attachment, the more likely it is that the item is a fixture. The second part refers to the purpose for which the item was attached to the property, assessed objectively. In Elitestone, a bungalow resting by its own weight which could be removed only by demolition was part and parcel of the land itself.

You will recall that in contrast an item that is defined as a chattel is in a sense defined by its non-status as a fixture: it remains personal property, even if attached for its better enjoyment as an item in its own right. In those instances, where the item is the chattel, the person who owns the item will continue to be the owner of the item even after the land on which it rests, or rested, has been conveyed to another person. For an item to be deemed as a fixture, what matters is whether the purpose of annexation was the lasting improvement of the land (D’Eyncourt v Gregory (1866) LR 3 Eq 382). Conversely, if the object was only affixed to the land because such affixing was the only means for the person to enjoy the item, then the item is likely to be a chattel (Leigh v Taylor [1902] A.C. 157).

OVERREACHING AND NOTICE

Restrictions

Restrictions are commonly entered in the register in order to make sure that over-reachable trust interests are in fact overreached. A sale by trustees acting within their powers overreaches the beneficial interests under the trust when any capital money is paid to at least two trustees or a trust corporation (ss.2(1)(ii), 27(2)). This means that a subsequent disponee (the person in receipt of the disposition of the land) takes title absolutely free of the beneficial trust interests. However, the beneficial interests are preserved in the capital proceeds of sale held on trust. A mortgage can also overreach. The beneficiaries may retain an interest in the equity of redemption but cannot assert it against the lender, even if in actual occupation (City of London Building Society v Flegg [1988] A.C. 54).

The benefit is therefore twofold. First, it ensures that the disponee takes the title of the property free of the interests overreached. Second, on a sale the beneficiaries have their interests in the proceeds held on trust.

Bona fide purchasers

Bona fide purchasers of a legal estate for valuable consideration without notice are able to avoid the impact of equitable interests in unregistered land which are governed by the doctrine of notice if certain conditions are met. The full list of requirements are found in the syllabus revision guide entitled ‘Unregistered Land.’ For our purposes here, the LPA applies in several ways for the conditions that a party must fulfil in order to benefit from the bona fide purchaser rule that was referred to in Pilcher v Rawlins (1871-72) L.R. 7 Ch. App. 259.

According to the LPA, the purchaser must take a legal estate in the land concerned; if they take a charge ‘by way of legal mortgage’, they are regarded as having ‘the same protection’ as if a legal estate had been created in their favour (s.87(1)).

Next, the LPA applies to the crucial doctrine of notice in the context of the bona fide purchaser rule. The LPA defines the varying types of notice: actual notice is where the purchaser is consciously aware of all the relevant matters at the time of purchase, and such matters of which they are aware are said to be ‘within his own knowledge’ (s.199(1)(ii)(a)). That section also defines constructive notice as relating to matters of which the purchaser may or may not be consciously aware but would have been consciously aware had they taken reasonable care to inspect both land and title (s.199(1)(ii)(a)). Finally, imputed notice is attributed to a purchaser where the purchaser’s agent knew the relevant matters in the same transaction, or would have discovered them by reasonable inquiries and inspections (s.199(1)(ii)(b)).

Registration in a register under the Land Charges Act 1972 or in the local land charges register is deemed actual notice of the registered matter while registration remains in force (s.198). For land charges the 1972 Act determines the effect of non-registration. An official search certificate is conclusive in a purchaser’s favour according to its terms (Land Charges Act 1972, s.10(4)). A Notice on a registered title is governed instead by the Land Registration Act 2002, s.32.

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