Estates and Interests in Land
Types of Rights in Land
Rights in Rem versus Rights in Personam
Property is not a ‘thing’ so much as a ‘bundle’ of legal power relations and rights over an object. These include the rights to control, possess or use the object (generally or in a particular way). Property in land is sometimes referred to as a ‘right in rem‘ or ‘real property’.
A right in rem has four characteristics: 1) it is alienable (can be transferred, sold, licensed and so on); 2) it ends if the subject matter it is attached to is destroyed; 3) it is capable of being asserted against the world; and 4) it grants special security if the person holding the subject matter goes bankrupt.
This can be contrasted with rights in personam. A right in personam can only be asserted against a specific identified person or persons and gives no security against bankruptcy. It is a right which attaches to a person, not a thing. For example, a ‘license’ is an in personam right which commonly comes up in land disputes.
Legal Estates and Interests in Land
A ‘legal estate’ is a type of property right in land. There are two types of legal estate: Law of Property Act 1925, s.1(1).
An estate in fee simple absolute in possession (also known as a freehold). This grants indefinite ownership rights over the land.
A term of years absolute (also known as a leasehold). This grants time-limited and restricted ownership rights over the land.
Legal estates are sometimes treated as distinct from other legal property interests in land because only they grant ‘ownership’ rights, particularly the right to exclusive possession. However, statutes sometimes use the term ‘estate’ to refer to legal interests more generally.
The other legal interests a person can have in land are: Law of Property Act 1925, s.1(2)
- Easements and profits a prendre (s.1(2)(a))
- Rentcharges (s.1(2)(b))
- Legal mortgages (s.1(2)(c))
- Rights of entry (s.1(2)(e))
These are all rights in rem. The classes of legal estates and interests are closed. The courts will not create new types: Hill v Tupper (1863) 2 H&C 122. Any other estate, interest or charge takes effect in equity.
Equitable Interests in Land
Legal interests exist as a result of statute and the common law. Equity is a distinct area of law, based on fairness and informality.
A piece of land can have simultaneously be burdened by legal and equitable interests. It is even possible for two different people to ‘own’ the land in law and equity. Where that happens, the legal owner is said to be a ‘trustee’ and hold the land ‘on trust’ for the equitable interest-holder. This means that, while the legal owner has all the ownership rights over the land, they are required to use those rights for the benefit of the equitable interest holder.
It is not normally possible to create or transfer a equitable right in land expect by writing signed by the disponee or his agent (Law of Property Act 1925, s.53(1)). There are some exceptions to this, however, such as constructive trusts, resulting trusts, and proprietary estoppel.
There is a greater range of possible equitable interests than there are legal interests. Not any interest can be an equitable interest in land. Like legal interests, no new equitable interests in land may be created (Law of Property Act 1925, s.4(1)). Additionally, an interest is not an equitable property right unless it is at least: National Provincial Bank v Ainsworth [1965] AC 1175
- Related to the land
- Definable
- Capable of being identified by third parties
- Capable of being assumed by third parties
- Relatively permanent and stable.
Different forms of equitable interest will have their own, additional and specific requirements to establish.
Legal Rights Versus Equitable Rights
The following are key differences between legal and equitable interests.
Equitable interests can be more flexible. For example, it is impossible to grant B a freehold lasting the duration of their life, transferring afterwards to C. By contrast, it is possible to grant C a legal freehold subject to B having an equitable right to live on and use the land until they die.
Any attempt to create a legal estate or interest is void unless done by deed (Law of Property Act 1925, s.52(1)) or some forms of prescription. By contrast, equitable interests can be conveyed in a variety of ways, and are subject to varying formalities.
Only conveyances of legal freeholds, leaseholds (s.2(1)) and charges (s.87) are capable of overreaching. Only equitable interests can be overreached: Baker v Craggs [2018] EWCA Civ 1126.
