Analysis of Property and Trust Cases - Case Study Example

SECTION A Adrian, Brian, Christine, Diana and Edwina who work in public relations and financial services in Sheffield, decided to buy a house by contributing one fifth of the purchase price each. While purchasing property it has to be considered, whether the property can be categorized as freehold property, leasehold property or commonhold property and in England and Wales, two or more people buying a property jointly become its joint legal owners. If the property has to be sold then all the legal owners have to accord their permission. In case of dispute a single owner can sue in the court regarding the sale proceedings. Another aspect to be considered is whether there is any beneficial ownership to be taken into consideration apart from the legal ownership. Beneficial ownership is of two types joint tenants and tenants in common. If they are joint tenants, then the property cannot be sold without the agreement of the joint tenants. If the property is owned as tenants in common, each of them will have a share in the property that they can dispose off as they wish and the discretionary powers vested with them are that they can decide how much each share will be. These people can will their share in case of their death. Transactions involving real estate whether buying or selling shall be recorded in writing. The important stages in this process are the agreement, the exchange of contracts and the completion. An agreement is defined as where the buyer inspects the property and agrees to pay the price to the seller. In the absence of an agreement the general rule is that everything attached to the property will automatically becomes the property of the buyer. The solicitors and conveyancers will carry out the legal procedure in regard to sale of property. In this process the seller's solicitor obtains the seller's title deeds prepares a contract and sends it to the buyer's solicitor. Solicitors do not make any enquiries as to the state of repair of the property. The solicitors of both the buyer and seller will exchange the signed contract. The deposit is paid at this stage and the contract becomes binding, subsequently, the completion date is fixed. The Buyer's Solicitors send the Stamp Duty Land Transaction Return to the Revenue with payment of any stamp duty. The Deeds have then to be registered at the Land Registry. Certain fees such as the Value Added Tax on the fees, money payable to the Local Authority and Water Authority, money payable to Land Charges Registry for searches and copies of the Deeds, Land Registry Dealings fees and Stamp Duty Land Tax are to be complied with1. In our present case the property is purchased by the five friends jointly and thus they became "Tenants in Common". In this context, the members can transfer their share of property to whomsoever they wish to through a will. Friends or relatives, who are buying together often, choose to be tenants in common. Thus in other words each of the members owns a specific share of property but does not necessarily have to have equal shares. The share in the property of any member, who dies, does not automatically devolve on to the other legal owners. It goes to the person who was nominated in the will or if there is no will it passes on to the next of kin. Tenancy in common refers to a form of shared ownership where two or more persons own land without the right of survivorship. Tenancy in common is often implemented in cases where property owners are engaged in an attempt to reduce inheritance taxes. If the property was owned as a tenancy in common, then the question of who inherits the deceased person's share is determined by the terms of their will or in the absence of a will by the laws of intestacy. In case the property was held under joined tenancy the surviving owner inherits automatically and this is not subject to the will or law of intestacy. When the property was owned solely by the deceased or jointly by owners who have died, the terms of their will determines who inherits however, if there is no will it is subject to the laws of intestacy2. Adrian loses his job and decides to go and work in a bar in Thailand but before his departure he tells the other members that he has sold his share in the house to Frederick. Diana dislikes Frederick intensely. What are the legal aspects to be taken into consideration According to the Land Law, the members of Tenants in common, can dispose off their share either while alive or through a will after death. This is more appropriate for people buying a property together where they do not intend to live for any reason. The legal agreement even sets out that in the event of one or more owners wishing to sell they must first offer their share to the remaining owners at the current market valuation. If the remaining owners do not wish to purchase these shares then the members may offer their share in the open market. Adrian being one of the legal tenants in common has all the powers to sell his share of ownership to any one. It is likely that the purchasers of a share in the property will be found among existing friends or colleagues of the current owners. Should a purchaser be proposed who is not acceptable to those remaining, they should make their objections known. First, it is unlikely that purchasers would want to share a home where they are unwelcome. Secondly, the remaining owner can always propose a more acceptable candidate. c) Brian dies from a disease he contracted while on holiday in Africa. He has made a will leaving all his property to his brother Martin. Martin writes to the others demanding either that they pay him his share or that the property be sold. What is the legal recourse available to the parties Tenancy in common refers to a form of shared ownership where two or more persons own land without the right of survivorship. Thus, when a tenant in common dies, the interest of the deceased tenant passes to the deceased tenant's heirs or named beneficiaries under the will3. So he can get back his share by selling his portion of the property. d) Christine decides she no longer wants to work in Sheffield and wants the property sold so that she can buy a flat in Cardiff. Advise Christine. Christine is one of the members of the tenants in common who had purchased a house at Sheffield. As per the provisions of the law she became a legitimate and legal owner of the house to the extent of her share and again under the provisions of the land law, she is entitled to dispose of her share as per her wishes. Since, she wishes to live in Cardiff; she is at the liberty to sell her share of the property to any one she pleases. At the very outset the percentage share of the property owned by each applicant is determined based on the deposit contributed by each one of them. They will get back their original deposit, together with their share of any growth in the value of the property. e) Diana and Edwina like the house and do not wish to sell. What is the legal position The other members of tenants in common, Diana and Edwina have equal share in the property. As such they can retain the ownership and live in the house forever. Selling their share of the house depends on their wish and will. If they want to sell, they can sell, and if they want to retain the house, they can retain the house. SECTION B a) The distinction between a legal and an equitable easement. Easement is a right of use over the property of another. Its uses are limited. The most important being rights of way and rights concerning flowing waters. Easement was normally for the benefit of adjoining lands, irrespective of the owner or what was termed as an easement appurtenant or for the benefit of a specific individual which is known as easement in gross. Easements frequently arise among owners of adjoining pieces of land. Common examples of easements include the right of a property owner who has no street front to use a particular segment of a neighbour's land to gain access to the road, as well as the right of a corporation to run a sewer line across a strip of an owner's land, this is frequently called a right of way. A right is recognised only in equity and not at law is of practical significance, since all equitable rights are enforceable at the discretion of the court. One has no absolute right to the protection by the courts of an equitable interest because remedies are at the discretion of the court. A court may refuse to grant remedy if an equitable interest in land is presented with a mala fide intention. Legal rights are enforceable as of right and once the existence of the right is established it is not open to the court to consider the merits of the situation before giving a remedy. Thus, if a person with a legal easement causes damage, the land owner can claim compensation but the easement will still be enforced by the courts. A major difference between legal and equitable rights used to be found in the rules governing the enforceability of those rights against a third party. Thus while a legal easement over a piece of land could be enforced against a purchaser of any estate in that land, an equitable easement over the same piece of land might not be enforceable against certain purchasers. This was a rule which had its origins in the separate evolution of law and equity. Legal rights were said to be rights in rem; which means rights in the land itself and could be enforced against any person who acquired an estate or interest in the land. This was expressed by saying that legal rights were good against the world. By contrast, equitable rights were only rights in personam; that is, rights which were enforceable against certain categories of person, because it was considered to be fair or equitable that they should take subject to them. The rule which applies to equitable interests is that they bind everyone who takes the legal estate except a bona fide purchaser for value of that legal estate without notice of the equitable interest. This rule is commonly referred to as the 'notice rule'4. Although it explains the doctrine of notice by reference to the trust, the courts applied it to all equitable interests. The purchaser must be bona fide i.e., must act in good faith. This part of the rule seems to be duplicated by the requirement that the purchaser should not have notice of the right. However, Lord Wilberforce in Midland Bank Trust Co. Ltd v Green considered that: "it would be a mistake to suppose that the requirement of good faith extended only to the matter of notice good faith is a separate test which may have to be passed even though absence of notice is proved. It is necessary for the person who acquires the estate to give value if he is to rely on the notice rule." 5 Easements can be conveyed from one individual to another by will, deed, or contract, which must comply with the Statute of Frauds and can be inherited pursuant to the laws of descent and distribution. An easement is an interest in another's land, which does not confer possession, which entitles the holder only to the right to use such land in the specified manner. It is distinguishable from a profit a prendre which is the right to enter another's land and remove the soil itself or a product thereof, such as crops or timber. An easement appurtenant attaches to the land permanently and benefits its owner. In order for it to exist, there must be two pieces of land owned by different individuals. One piece, the dominant estate or tenement, is the land that is benefited by the easement. The other piece, known as the servient estate or tenement, is the land that has the burden of the easement. An easement appurtenant is a covenant running with the land since it is incapable of a separate and independent existence from the land to which it is annexed. An easement in gross is not appurtenant to any estate in land. It arises when a servient piece of land exists without a dominant piece being affected. This type of easement is ordinarily personal to the holder and does not run with the land. At common law, an easement in gross could not be assigned; however, most courts currently allow certain types of easements in gross to be transferred. Easements are categorized as being either affirmative or negative. An affirmative easement entitles the holder to do something on another individual's land, whereas a negative easement divests an owner of the right to do something on the property. For example, the owner of land might enter into an agreement with the owner of an adjoining piece of land not to build a high structure that would obstruct the light and air that go onto the adjoining owner's land. This easement of light and air deprives the property owner who gives it up from enjoying ownership rights in the land to the fullest possible extent and is labelled a negative easement. There are various ways in which easements are created. An express easement is clearly stated in a contract, deed, or will. An easement by implication occurs when the owner of a piece of land divides such land into smaller pieces and sells a smaller piece to another person, retaining a right to enter such piece of land. For example, a seller divides his or her property and sells half to a purchaser. The piece that the purchaser buys has a sewer pipe beneath it that serves both pieces of property. The seller has an implied easement to use the sewer pipe that runs under the purchaser's land. An easement by prescription arises through an individual's use of land as opposed to the possession thereof. An easement of this nature will be recognized in these instances: (1) the easement is adverse or contrary to the interests, and absent the permission, of the landowner; (2) it is open and notorious; (3) it is continuous and uninterrupted; and (4) it exists for the period of time prescribed by state statute. If for a period of time beyond the prescribed statutory period A creates and openly uses a right of way across B's land without B's permission then an easement by prescription is created. An easement can either be terminated through the expiration of its term as determined upon its creation or by one of several events occurring subsequent to creation. Events that can extinguish an easement include these: (1) the same individual becoming the owner of the dominant as well as the servient estate when an appurtenant easement existed; (2) the owner of an easement in gross obtaining ownership of the servient estate; (3) the owner of the dominant tenement executing a deed or will releasing the easement in favour of the owner of the servient tenement; and (4) the abandonment of an easement. Easement, in law, the right to use the land of another for a specified purpose, as distinguished from the right to possess that land. If the easement benefits the holder personally and is not associated with any land he owns, it is an easement in gross. At common law an easement in gross could not be transferred, but today it may be transferable. If the easement is held incident to ownership of some land, it is an easement appurtenant. The lane subject to the easement appurtenant is the servient estate; the land benefited the dominant estate. If certain conditions are met, the easement passes with the land to the new owner after the sale of either estate. An easement may be created by express agreement of the parties, in which case it must usually be in writing or it maybe implied by a court from the actions of the parties in certain circumstances. b) Norman owns a large house which fronts onto Acacia Avenue. There is vehicular access to the property from Acacia Avenue and also from a lane at the rear. Norman has obtained planning permission to build a house in part of the garden at the rear. 1. Will he be able to continue to use the access to the lane at the rear which will go over the building plot Where the use of land changes in character through time, the court will infer some limit as to the extent of the right and the reasonableness of the increased use. Easements are generally for a very specific use and over a very specific area. Many dominant estates are divisible, and the courts are agreeable to infer some degree of "foresee ability" to this subdivision in the creation of an access easement to land. The possessor of burdened land is utterly free upon the non-servient portion of the land, and restricted to compatible use on the servient portion. The dominant estate is severely restricted upon the servient estate, but is also partially restricted upon the dominant estate with regards to how the uses of the dominant estate affect the use of the servient estate's easement. The use needs to be important to the enjoyment of the land. Would it be difficult, awkward to get along without it How difficult would it be to get an alternative It doesn't need to be impossible to get along without it; if so would have an easement by necessity situation again. Therefore, Norman cannot use the lane at the rear, since he has access via the Acacia Avenue. 2. Will a purchaser be able to use the drive (which will be on the land he retains) to get to Acacia Vehicular Access to the Northern Field Where a pre-existing use has been made of a tract of land that is conveyed, and the use is open and obvious enough to not give rise to unfair surprise, then the easement will be enforced. There are five usual elements to the easement. First, Common Ownership or where the land over which the easement is sought was originally owned by the grantor of the land from which the easement is sought. Second, Prior Use or when the use had been in existence prior to the conveyance of the land. That the previous owner had used one part of the land to benefit the other. Third, Use must be Apparent, Obvious and Permanent, the use must be so obvious or manifest as to show that it was meant to be permanent. The more apparent the use, the lower the necessity required. Fourth, Reasonable Necessity or the use needs to be important to the enjoyment of the land. The questions to be addressed are would it be difficult, awkward to get along without it How difficult would it be to get an alternative It doesn't need to be impossible to get along without it; if so would have an easement by necessity situation again. Based on the above he cannot use the drive to gain access to the Acacia Vehicular Access to the Northern Field. In this connection it can be stated that people who have been denied the right of access to their homes due to an anomaly in the law will now have security of access due to Government action. New procedures setting out how people can obtain a legal right to drive over common land to reach their homes are now in force. Hitherto fore, people who could only obtain access to their premises via common land had to negotiate with the owner of the common to obtain an "easement". Despite the fact that vehicular use had gone unchallenged for many years, owners of premises faced having to pay large sums of compensation in return for the grant of an easement. The new rules provide for the creation of a statutory easement to which the owners of commons cannot object provided the conditions are met and procedures complied with. In return, they will receive a reasonable sum of compensation. These regulations provide for the creation of a legal easement, giving a right of way for vehicles, in cases where the user would have given rise to a prescriptive easement had it not constituted an offence. The freehold owner, or a tenant under a long lease within the meaning of the Landlord and Tenant Act 1987 (which includes a lease for more than 21 years), of the land served by the way can apply for an easement under the regulations by serving a prescribed form of notice accompanied by prescribed information on the freehold owner of the burdened land. The notice will include details of the proposed compensation sum to be paid. The procedure thereafter depends on whether the freehold owner of the burdened land objects to the application. The easement is created once compensation is paid, either to the owner of the burdened land or into court, in accordance with the regulations6. Since, the purchase in our problem is having vehicular access on the rear side of his land, it is not inevitable to use the Acacia Avenue's vehicular access. Hence, he cannot use it. Bibliography. 1. Cant, Christopher and Wood, Lana. Property Development Handbook: Transaction Structures. ISBN: 1-903927-63-3. Legalease Ltd 2006. 2. Driscoll, James. Residential Leasehold Property Law. ISBN-10: 1-84-174132-9. 1st June 2006. Oxford University Press. 3. Underkuffler, Laura. The Idea of Property Its Meaning and Power. ISBN-10: 0-19-925418-4. 13th February 2003. Oxford University Press. 4. Waterworth, Michael and Bedworth, Georgia. Rossdale: Probate and Administration of Estates: A Practical Guide(3rd Edition). (January 2006). ISBN: 1-903927-66-8. Legalease Ltd 2006. 5. Watt, Gary. Trusts and Equity. ISBN-10: 0-19-928532-2. 2nd March 2006. Oxford University Press. Read More