Wilkie, Luxton & Malcolm: Land Law
Selected Land Law Terms
bailment - n. The transfer of the possession of goods by the owner (the bailor) to another (the bailee) for a particular purpose. Examples of bailments are the hiring of goods, the loan of goods, the pledge of goods, and the delivery of goods for carriage, safe custody, or repair. Ownership of the goods remains in the bailor, who has the right to demand their return or direct their disposal at the end of the period (if any) fixed for the bailment or (if no period is fixed) at will. This right will, however, be qualified by any lien the bailee may have over the goods. Bailment exists independently of contract. But if the bailor receives payment for the bailment (a bailment for reward) there is often an express contract setting out the rights and obligations of the parties. A bailment for which the bailor receives no reward (e.g. the loan of a book to a friend) is called a gratuitous bailment.
beneficiary - n.1. A person entitled to benefit from a trust. The beneficiary holds a beneficial interest in the property of which a trustee holds the legal interest. A beneficiary was formerly known as the cestui que trust.
2. One who benefits from a will.
charge - n.1. A formal accusation of a crime, usually made by the police after interrogation. See also indictment.
2. Instructions given by a judge to a jury.
3. A legal or equitable interest in land, securing the payment of money. It gives the creditor in whose favour the charge is created (the chargee) the right to payment from the income or proceeds of sale of the land charged, in priority to claims against the debtor by unsecured creditors. Under the Law of Property Act 1925 the only valid legal charges are: (1) a rentcharge payable immediately and for a fixed period or in perpetuity; (2) a charge by way of legal mortgage; and (3) certain charges arising under statute (e.g. under the Charging Orders Act 1979). All others take effect as equitable interests. All mortgages and charges over registered land must be registered to be enforceable against purchases of the land; both legal mortgages and equitable charges over unregistered land must be registered as land charges unless the mortgagee or chargee holds the title deeds as security (see registration of encumbrances).
4. An interest in company property created in favour of a creditor (e.g. as a debenture holder) to secure the amount owing. Most charges must be registered at the Companies Registry. A fixed charge is attached to specific assets (e.g. premises, plant and machinery) and while in force prevents the company from dealing freely with those assets without the consent of the lender. A floating charge does not immediately attach to any specific assets but 'floats' over all the company's assets until crystallization. Until this point the company is free to deal freely with such assets; this type of charge is suitable for circulating assets (e.g. cash, stock in trade), whose values must necessarily fluctuate. In the event of the company not paying the debt the creditor can secure the amount owing in accordance with the terms of the charge. If the company goes into liquidation (see winding-up) the order for repayment of debts laid down under the Insolvency Act 1986 is that fixed-charge holders are paid before floating-charge holders. A charge can also be created upon shares. For example, the articles of association usually give the company a lien in respect of unpaid calls, and company members may, in order to secure a debt owed to a third party, charge their shares, either by a full transfer of shares coupled with an agreement to retransfer upon repayment of the debt or by a deposit of the share certificate.
contingent interest - An interest that can only come into being upon the occurrence of a specified event (for example when A conveys land to B provided he marries). As a contingent interest can only come into being in the future, if at all, it cannot exist as a legal estate in land. Before 1997, such a transaction created a settlement to which the Settled Land Act 1925 applied. From 1997, such a transaction gives rise to a trust of land under the Trusts of Land and Appointment of Trustees Act 1996. Contingent interests are consequently equitable interests only. Compare conditional interest; determinable interest.
contract - n. A legally binding agreement. Agreement arises as a result of offer and acceptance, but a number of other requirements must be satisfied for an agreement to be legally binding. (1) There must be consideration (unless the contract is by deed). (2) The parties must have an intention to create legal relations. This requirement usually operates to prevent a purely domestic or social agreement from constituting a contract (see also honour clause). (3) The parties must have capacity to contract. (4) The agreement must comply with any formal legal requirements. In general, no particular formality is required for the creation of a valid contract. It may be oral, written, partly oral and partly written, or even implied from conduct. Certain transactions are, however, valid only if effected by deed (e.g. transfers of shares in British ships) or in writing (e.g. promissory notes, contracts for the sale of interests in land, and guarantees that can at law only be enforced if evidenced in writing). (5) The agreement must be legal (see illegal contract). (6) The agreement must not be rendered void either by some common-law or statutory rule or by some inherent defect, such as operative mistake (see void contract). Certain contracts, though valid, may be liable to be set aside by one of the parties on such grounds as misrepresentation or the exercise of undue influence (see voidable contract).
deed - n. A written document that must make it clear on its face that it is intended to be a deed and validly executed as a deed. Before 31 July 1990, all deeds required a seal in order to be validly executed, but this requirement was abolished by the Law of Property (Miscellaneous Provisions) Act 1989. A deed executed since that date by an individual requires only that it must be signed by its maker in the presence of a witness, or at the maker's direction and in the presence of two witnesses, and delivered. Deeds executed by companies require before delivery the signature of a director and secretary, or two directors, of the company; alternatively, if the company has a seal, the deed may be executed by affixing the company seal. If the deed is a contractual document, it is referred to as a specialty. A promise contained in a deed is called a covenant and is binding even if not supported by consideration. Covenants may be either express or implied. A deed normally takes effect on delivery; actual delivery constitutes handing it to the other party; constructive delivery involved (in strict theory) touching the seal with the finger, and saying words such as "I deliver this as my act and deed". If a deed is delivered but is not to become operative until a future date or until some condition has been fulfilled, it is called an escrow. The recitals of a deed are those parts that merely declare facts and do not effect any of the substance of the transaction. They are usually inserted to explain the reason for the transaction. The operative part of a deed is the part that actually effects the objects of the deed, as by transferring land. The testatum (or witnessing part) constitutes the opening words of the operative part, i.e. "Now this deed witnesseth as follows". The premises are the words in the operative part that describe the parties and the transaction involved. The parcels are the words in the premises that describe the property involved. The testimonium is the concluding part, beginning "In witness whereof", and containing the signatures of the parties and witnesses. The locus sigilli is the position indicated for placing the seal. When a deed refers to itself as "these presents", "presents" means present statements. The advantage of a deed over an ordinary contract is that the limitation period is 12 rather than 6 years (see limitation of actions) and no consideration is required for the deed to be enforceable. See also deed poll.
determinable interest - An interest that will automatically come to an end on the occurrence of some specified event (which, however, may never happen). For example, if A conveys land to B until he marries, B has a determinable interest that would pass back to A upon his marriage. But if B dies a bachelor the possibility of a reverter to A is destroyed and B's heirs acquire an absolute interest. An interest that must end at some future point (e.g. a life interest) is not classified as a determinable interest, but one that could end during a person's life (for example a protective trust) is so classified. A determinable legal estate in land prior to 1925 was known as a determinable fee, but under the Law of Property Act 1925 it can now exist only as an equitable interest. It is exceptionally difficult to distinguish between a determinable interest and a conditional interest. Compare contingent interest.
easement - n. A right enjoyed by the owner of land (the dominant tenement) to a benefit from other land (the servient tenement). An easement benefits and binds the land itself and therefore continues despite any change of ownership of either dominant or servient tenement, although it will be extinguished if the two tenements come into common ownership (compare quasi-easement). It may be acquired by statute (for example, local Acts of Parliament), expressly granted (e.g. by deed giving a right of way), arise by implication (e.g. an easement of support from an adjoining building), or be acquired by prescription. (See also profit à prendre.) An easement can exist as either a legal or an equitable interest in land. Only easements created by statute, deed, or prescription and held on terms equivalent to a fee simple absolute in possession or term of years absolute qualify as legal easements and are binding on all who acquire the unregistered servient tenement or any interest in it. Legal easements over registered land should be registered, but in practice will usually be binding without registration. All others are equitable easements and must generally be registered to be enforceable against a third party who acquires the servient tenement for value in money or money's worth. Under section 62 of the Law of Property Act 1925, when land is conveyed, all easements appertaining to it automatically pass with it without the necessity for express words in the conveyance. See also registration of encumbrances.
equitable interests - Interests in property originally recognized by the Court of Chancery, as distinct from legal interests recognized in the common-law courts. They arose in cases when it was against the principles of equity for a person to enforce a legal right. Originally equitable rights (e.g. a trust, or the equity of redemption under a mortgage) were enforceable against the person with a legal right over property in question. Later, however, those who were given the property by the holder of the legal interests took it subject to equitable interests; later still, anyone who bought property knowing of the equitable interests was bound by them. In the developed law, everyone took property subject to equitable interests except those who bought it and neither knew nor ought to have known of the equitable interests (the doctrine of notice). Since 1925, equitable interests may be protected by the doctrine of overreaching, under the system of land charges, or by notice.
equity of redemption - The rights of a mortgagor over his mortgaged property, particularly the right to redeem the property. This right of redemption allows a mortgagor to redeem the mortgaged property at any time on payment of principal, interest, and costs, even after the contractual date of redemption, as stated in the mortgage deed, has passed. Any clogs on the equity of redemption are void, but the mortgagor's rights may be terminated under certain circumstances (see mortgage).
Before 1926 a mortgage was commonly effected by the transfer of the mortgagor's interest in the property to the mortgagee, but the mortgagor's rights were recognized by equity. Since 1925 the mortgagor retains legal ownership of the property in all cases: the term equity of redemption is still used, however, although the right to redeem is no longer strictly an equitable interest.
estate owner(s) - The owner of a legal estate in land
fee simple absolute in possession - One of only two forms of ownership of land that, under the Law of Property Act 1925, can exist as a legal estate (see also term of years absolute). All others take effect as equitable interests. Fee simple indicates ownership that is not liable to end upon any person's death, with the expiration of time, or on the failure of a particular line of heirs. Absolute means that the owner's rights are not conditional or liable to terminate on the occurrence of any event (except the exercise of a right of re-entry - Law of Property (Amendment) Act 1926). In possession means that the owner's rights are immediate, thus future interests do not qualify, but possession need not imply actual physical occupation (for instance, a person in receipt of rents and profits can be said to be in possession).
incumbrance - see encumbrance (incumbrance) n. A right or interest in land owned by someone other than the owner of the land itself; examples include easements, leases, mortgages, and restrictive covenants. When title to the land is registered (see land registration), encumbrances other than minor and overriding interests are recorded in the Charges Register. Certain encumbrances affecting unregistered land will only be enforceable against third parties if registered at the Land Charges Registry. See also registration of encumbrances.
land certificate - A document issued by the Land Registry to the proprietor of registered land as proof of his ownership of it. See land registration.
legal estate - Ownership of land or an interest in land either in fee simple absolute in possession or for a term of years absolute. Under the Law of Property Act 1925 these are the only forms of ownership that can exist as legal estates in land. All other forms, e.g. life interests and entailed interests, are equitable only.
Legal interest - n.(in land law) A right in or over land. It may comprise equitable ownership of the land (such as the interest of the tenant for life under a settlement), where the legal estate is owned by trustees; or the benefit of some other right over the land of another, such as an easement or rentcharge. Interests of the latter type can be legal or equitable, but under the Law of Property Act 1925 only interests owned on terms equivalent to a fee simple absolute in possession or a term of years absolute qualify as legal interests. A person interested in land is one who has rights in it. See also equitable interests.
minor interests Interests in registered land that cannot be created or transferred by registered disposition, are not overriding interests, and could be overridden by a registered proprietor unless protected by registration. Such interests include the equitable interests of beneficiaries under a settlement and all charges that would be registrable at the Land Charges Department if the land had been unregistered (see registration of encumbrances). Minor interests are protected by registration of a notice, caution, inhibition, or restriction as appropriate.
mortgage - n. An interest in property created as a form of security for a loan or payment of a debt and terminated on payment of the loan or debt. The borrower, who offers the security, is the mortgagor; the lender, who provides the money, is the mortgagee. Virtually any property may be mortgaged (though land is the most common); exceptions include the salaries of public officials. The name is derived from Old French (literally: dead pledge), since at common law failure to repay on the due date of redemption (which in most mortgages is set very early) formerly resulted in the mortgagor losing all his rights over the property. By the rules of equity the mortgagor is now allowed to redeem his property at any time on payment of the loan together with interest and costs (see equity of redemption). The mortgagee has a right to take possession of the mortgaged property as soon as the mortgage is made, irrespective of whether the mortgagor has defaulted. However, this right (1) must only be used for the purpose of protecting or enforcing the security, (2) may be excluded by agreement, or (3) is subject to a power in the court to adjourn proceedings for possession, to suspend the execution of an order for possession, or to postpone the date for delivery of possession, where the mortgaged property is a dwelling house (Administration of Justice Act 1970 as amended). This right is normally used as a preliminary to an exercise of the mortgagee's power of sale. In face of continued nonpayment of the loan, the mortgagee may sell the mortgaged property under a power of sale, appoint a receiver, or obtain a decree of foreclosure.
Under the Law of Property Act 1925 the only valid legal mortgages are (1) a lease subject to cesser on redemption and (2) a deed expressed to be a charge by way of legal mortgage (see charge). All other mortgages are equitable interests only (see equitable mortgage). All mortgages of registered land are noted in the charges register on application by the mortgagee (see land registration), and a charge certificate is issued to him. When mortgaged land is unregistered, a first legal mortgagee keeps the title deeds. A subsequent legal mortgagee and any equitable mortgagee who does not have the title deeds should protect his interests by registration (see puisne mortgage; registration of encumbrances). See also priority of mortgages.
notice - n.1. Knowledge of a fact. A person is said to have actual notice of anything that he actually knows; constructive notice of anything that he ought reasonably to know (for example, any fact that he would have discovered if he had made any inquiry that a reasonable man would have made); and imputed notice of anything of which any agent of his has actual or constructive notice.
2. (in employment law) Formal notification, given by either of the parties to a contract of employment, that the contract is to be terminated after a specified period. The period of notice to which each party is entitled is governed by the contract, subject to statutory minimum periods if the employee has been continuously employed in the business (see continuous employment) for more than four weeks. An employee who has been so employed for up to two years is entitled to a week's notice; one employed for a longer period is entitled to one week's notice for each year's continuous employment up to 12 years. Thus an employee who has been employed for 20 years must be given a statutory minimum of 12 weeks' notice, although his employment contract may entitle him to a longer period, which takes priority. An employee with four weeks' continuous employment must give at least one week's notice of his resignation. An employee whose conduct justifies immediate dismissal is treated as waiving his right to notice, as is an employer whose conduct amounts to constructive dismissal. A fixed-term contract cannot be terminated by notice unless the contract expressly provides for this.
3. (in land law) An entry against a registered title that may be lodged by a person with a right or interest in the land comprised in the title. The rights and interests that may be protected by a notice are listed in the Land Registration Act 1925, and a notice must always specify the right or interest it seeks to protect. A notice differs from a caution or an inhibition in that dealings with the land affected may still take place, but they will have effect subject to the right or interest protected by the notice.
4. (in Community legislation) A nonbinding document. Notices are often issued by the European Commission to explain further details of a competition regulation, for example in relation to exclusive distribution and purchasing agreements, cooperation agreements, subcontracting agreements, agency agreements, and the distinction between cooperative and concentrative joint ventures. Notices are not binding on the Commission, whereas regulations are; however, in practice it would be very rare for the Commission to depart from policies set out in a notice.
overriding interests Certain rights and interests in registered land, listed in the Land Registration Act 1925, that cannot be protected by registration but, unless overreached, will bind the registered proprietor and any third party acquiring the land or any interest in it. The list includes legal easements and profits à prendre, rights of persons in actual occupation, rights acquired under the Limitation Acts (see limitation of actions), and leases granted for terms of up to 21 years.
prescription - n.1. (in land law) The acquisition for the benefit of one's own land (the dominant tenement) of an easement or profit à prendre over another's land (the servient tenement) by uninterrupted use over a long period. A person claiming a right by prescription must show that his use did not have the servient owner's permission and was not kept secret or exercised by force. Under the Prescription Act 1832 most easements may be acquired by prescription over 20 years, the period being extended when the servient owner is under a disability (e.g. a child or person of unsound mind), although 40 years' use establishes an absolute and indefeasible right. The periods are 30 and 60 years in the case of profits. An absolute easement of light is acquired after 20 years' use. Rights can also be acquired at common law under the doctrine of lost modern grant, or by proof of continuous use since time immemorial, i.e. since 1189.
2. (in international law) The acquisition of title to territory through an uncontested exercise of sovereignty over an extended period of time. Prescription presupposes a prior sovereign authority whose control and administration over the territory in question has lapsed through (1) failure to occupy, (2) failure to administer, (3) abandonment or neglect, (4) a wrongful original claim, or (5) failure to contest a new claim.
profit à prendre - The right to take soil, minerals, or produce (such as wood, turf, or fish) from another's land (the servient tenement) or to graze animals on it. It may exist as a legal or equitable interest. The right may be enjoyed exclusively by one person (a several profit) or by one person in common with others (a common). A profit may exist in gross (i.e. existing independently of any ownership of land by the person entitled) and may be exercisable without any limit on the amount of produce taken. It may be sold, bequeathed, or otherwise dealt with. Profits existing for the benefit of the owner's land (the dominant tenement) are generally exercisable only to the extent to which the dominant tenement can benefit. They may be appurtenant, when the nature of the right depends on the terms of the grant; or pur cause de vicinage (Norman French: because of vicinity), in respect of cattle grazing the dominant tenement and straying onto the unfenced adjacent servient tenement. Profits may be created by express or implied grant or by statute; profits appurtenant may also arise by prescription (or presumed grant). They may be extinguished (1) by an express release; (2) by the owner occupying the servient tenement; or (3) by implied release (e.g. through abandonment, which may be presumed through long non-user, through changes to the dominant tenement that make enjoyment of the right unnecessary or impossible, or through an irreversible alteration of the servient tenement).
puisne mortgage A legal mortgage of unregistered land in which the mortgagee does not keep the title deeds of the land as security. Usually a first mortgagee retains the deeds; thus subsequent mortgages will be puisne and should be protected by registration (see registration of encumbrances).
restriction - n.(in land law) A limitation of the right of a registered proprietor to deal with the land or charge in a registered title. For instance, a beneficiary may enter a restriction against his trustees if the trust provides that the land may not be sold without the beneficiary's consent. A restriction may also be entered by, or with the concurrence of, the registered proprietor, and there are cases in which the Chief Land Registrar is obliged to enter a restriction (for example, when persons are registered as joint proprietors, and the survivor will not have power to give a valid receipt for capital money arising on a disposition of the land).
restrictive covenant - An obligation created by deed that curtails the rights of an owner of land; for example, a covenant not to use the land for the purposes of any business. A covenant imposing a positive obligation on the landowner (the covenantor), for example to repair fences, is not a restrictive covenant. Third parties who acquire freehold land affected by a restrictive covenant will be bound by it if it is registered (see registration of encumbrances) or, in the case of covenants created before 1926, if they are aware or ought to be aware of it (see constructive notice). The covenant may also be enforceable by successors of the original beneficiary (the covenantee) if it was annexed to (i.e. expressly taken for the benefit of) the covenantee's land or if the benefit of it was expressly assigned. Section 78(1) of the Law of Property Act 1925 has been interpreted as providing a form of statutory annexation. Thus, unless there is an express stipulation to the contrary, all covenants shall be deemed binding on successors to the original covenantee. The benefit of a covenant will not be annexed, however, if the covenantee's land is not actually capable of benefiting from the covenant; for example, if it is too far away to be affected. Restrictive covenants contained in leases are not registrable but are nevertheless generally enforceable between third parties (see covenant running with the land). See also building scheme.
settlor - n. A person who creates a settlement. In a broad sense the term includes testators; in a more restricted sense it signifies one who settles property during his life.
term of years absolute - A leasehold estate in land: a term of years that may or may not be brought to an end by notice, forfeiture, or any other event except the death of any person. Thus a lease "to X for 25 years if Y shall so long live" is not a valid term of years absolute. Under the Law of Property Act 1925 a term of years absolute can exist as a legal estate provided it is created in the required manner, i.e. by deed in the case of a term of three years or more.
title - n.1. A person's right of ownership of property. Someone with a good title has adequate evidence to establish his right. See absolute title; qualified title; title deeds.
2. The heading of an Act of Parliament, which may be a long title or a short title.
3. The name of a particular court action, which is derived from the heading of the originating process that initiated it.
trust - n.1. An arrangement in which a settlor transfers property to one or more trustees, who will hold it for the benefit of one or more persons (the beneficiaries or cestuis que trust, who may include the trustee(s) or the settlor) who are entitled to enforce the trust, if necessary by action in court. The trust, recognized originally in Chancery, is based on confidence and developed from the use; it has been described as the most important contribution of English equity to jurisprudence. The beneficiary has rights against the trustee and may also have rights over the property in the hands of others (see tracing trust property). When a sole beneficiary is 18 or over, sane, and entitled to all the trust property, he may require the trustees to transfer that property to him; this applies equally when all the beneficiaries are 18 or over, sane, and likewise entitled. For a trust to exist, the three certainties must be present: certainty of intention (i.e. to create a trust), certainty of subject matter (the property in the trust), and certainty of objects (those who will or may benefit under the trust).
There are few formal technical requirements necessary for the creation of a trust, except where land is concerned, though express trusts are usually found in professionally drafted documents. Trusts are also commonly used to protect an individual's (or company's) ownership of property, when it is feared that the possessor of the property may become insolvent. See active trust; charitable trust; discretionary trust; executed trust; express trust; implied trust; protective trust; secret trust; statutory trust.
2. (in the National Health Service) See NHS Trust; Primary Care Trust.
trustee - n. A person having a nominal title to property that he holds for the benefit of one or more others, the beneficiaries (see trust). Trustees may be individuals or corporate bodies (see trust corporation) and can include such specialists as judicial trustees, custodian trustees, and the Public Trustee. A trustee must show a high standard of care towards his beneficiaries, must not allow his interests to conflict with those of his beneficiaries, and must not profit from his trust. He is not usually entitled to remuneration although he may recover expenses necessarily incurred (see charging clause). Trustees may refuse their office, retire, or resign, but they remain liable for acts carried out during their trusteeship. The power to appoint replacement trustees is usually given either to the beneficiaries or to the remaining trustees; in default the court will appoint replacement trustees. Trustees have a wide range of powers and duties, including a duty to act equally between the beneficiaries and a power to advance money to them (see advancement). In the exercise of their duties they are answerable to the court.
Source: A Dictionary of Law. Ed. Elizabeth A. Martin. Oxford University Press, 2002. Oxford Reference Online. Oxford University Press. 26 January 2005 www.oxfordreference.com