Foundation in Property Law - Assignment Example

Property Law Q1. In the first instance, since this property is owned as joint beneficial tenants, it means that the entire property and proceeds of its sale will belong to all three owners – Anna, Beth and Carrie. None of them has a separate share in the property which can be sold or left to someone else in a will. When one person dies, the other joint owners take possession and this continues so that the last survivor takes the entire property solely. At the time of purchase of Berrybank Cottage, no mortgage was drawn up but the purchase deed reflected a purchase by all three sisters as joint beneficial tenants. Applying the precedent established in the case of Goodman v Gallang1 that the declaration of beneficial interests in the purchase deed is conclusive unless and until the deed is set aside or rectified, the ownership principle that will apply is that of joint beneficial tenants. Hence, from a legal standpoint, the property belongs to Carrie solely and the disposition of the property will be in accordance with her wishes. Any trust deeds left by Anna and Beth will not be effective because the three sisters are joint beneficial tenants rather than tenants in common. At the outset, this means that where the question of signing over transfer to the buyer is concerned, it may be only Charles and Christopher Crawford who would have any rights in this context, while Alan and Benny’s rights may be limited. However, in the case of City of London Building Society v Flegg and Another2 which also involved a case of joint beneficial tenants, the Court held that "because of their contribution to the purchase price the Fleggs have had since the purchase an interest in the property."3 On this basis, Alan and Benny may be entitled to claim some beneficial share in the proceeds of any sale of the property. But their chances of succeeding are slim applying the precedent of Goodman v Gallang4 where the Court of Appeal was not concerned with the parties’ intentions at the time of purchase of the property, but with the declaration in the purchase deed5. Based on this, Carrie will be the sole owner of the property as the last survivor who has made a will in which she has named the executors of the estate and specifically stipulated that the property is to be held in trust for the Vegetarian society of the United Kingdom. As a result, if the provisions of the will are strictly applied, the entire proceeds of the sale, i.e, 240,000 pounds, will pass to the Vegetarian Society. . It is important to note in this context that any funds relating to the trust, i.e, in this instance arising out of the sale of Berrybank Cottage, do not belong to the trustees personally, they are holding the proceeds of the trust for the beneficiaries of the trust. Under the Trustee Act of 2000, the paramount duty of a trustee is to protect the beneficiaries of the trust and ensure that their interests are protected. The sale that is proposed amounts to a kind of investment derived from the property, but such a sale is permissible, because a trustee “may make any kind of investment that he could make if he were absolutely entitled to the assets of the trust.”6 Since as trustees, Charles and Christopher are obliged to act in the interests of the beneficiaries, the strict application of the provisions of the will means that the amount of 240,000 pounds would have to be set aside in its entirety for the beneficiaries of the trust, i.e, the Vegetarian Society of the United Kingdom. But Christopher, Alan, Arthur, Benny and Bobby may be entitled to make a claim for part of the proceeds by questioning Carrie’s testamentary intent. They will be responsible for providing the required standard of proof to rebut the existing legal presumption that a testator who has executed a formal will in writing has provided a solid affirmation of testamentary intent7. In the case of Re Krubert (Deceased)8 it was held that the Court should question whether reasonable financial provision has been made for an applicant who would be entitled by relationship. The Courts may hold that on grounds of equity, a portion of the sale proceeds, for example half, should be distributed among the five cousins with the rest, i.e, 50% or 120,000 pounds held in trust for the Vegan Society. In the event such a decision is reached, it appears very likely that Christopher will receive the largest share, i.e, 25% of 240,000 pounds or 60,000 pounds. The balance may be further subdivided into three parts, i.e, 8.3% or 19,920 pounds each for Benny and Bobby since they are to receive proceeds of the property trust in equal shares and the balance of 20,160 pounds will be divided between Alan and Arthur because their entitlement would be the least since Anna died the earliest. Ans 2: The forfeiture of Jackson’s lease would bring about serious consequences for Barr Building Company because it would essentially mean that their security for the amount they have loaned would be lost. A forfeiture implies a defaulting tenant and by extension, a defaulting mortgager. Since Jackson King however, has been paying his mortgage payments regularly, it is in the interest of the Barr Building Company to step in to prevent the forfeiture of the lease. In general, the danger to lenders and their security is even higher, because they are often not intimated about any legal proceedings that are instituted against the lease, such as forfeiture. Furthermore, once a landlord is allowed to regain possession, the Court will set aside such a judgment only in exceptional circumstances.9 This would mean that Barr Building Company would not be able to rely on the security to ensure continued payments from Jackson King and will not be able to enforce the payments in the future and collect the amount due from King, because he is not in a position to repay such a large sum of money. In respect to the lessee’s covenants, which is a part of the original agreement, since Jackson King is a sub tenant, he will be liable on restrictive covenants.10 But the alleged breaches of covenant do not pertain to non payment of rent. As a result, it would be necessary for the landlords to serve a notice on Barr Building Society under Section 146 of the law of Property Act of 1925. In the case of Target Home Loans Ltd v Iza Ltd11 it was held that when a mortgagee has actually occupied the premises, then a Section 146 notice by the landlord was required, to ensure that the tenant had an opportunity to repair the breach in order to avoid forfeiture. This would also apply in the case of Barr Building Society. The notice under Section 146 must specify the breach of covenant that is being complained about and provide a warning that the lease will be forfeited if the breach is not remedied within a reasonable period of time. Since North Birmingham Reversions has not issued a notice under Section 146, this could be grounds for the mortgagee to challenge the claim in court and also claim benefits under Section 1 of the 1983 Act requiring the landlords to seek the permission of the Court to bring action for forfeiture because more than three years of the lease term remain. But where Barr Building Society is concerned, the precedent established in this case may be questionable, because in the recent case of Smith v Spaul12 at the Court of Appeal, Arden LJ pointed out that the tenant and landlord are bound irrespective of any mortgage that exists and irrespective of whether or not the tenant is a mortgagee. The net impact of this decision is that the mortgagee must accept the risk of forfeiture. But there is one source of relief that Barr Building Society can utilize. In this instance, the question of forfeiture is arising in respect to a service charge of 3000 pounds, i.e., a charge that is not treated as rent. The Housing Act states that a in reference to residential dwellings as in Jackson King’s case, a landlord “may not….exercise a right of re-entry or forfeiture for failure to pay a service charge unless the amount of the service charge…..is agreed or admitted by the tenant.”13 Applying this provision, Birmingham Reversions will not have the right to forfeiture in this instance, because they involve grounds other than rent. This provision has been further enhanced by the Commonhold and Leasehold reform Act of 2002. This Act allows clearly sets out that no forfeiture can take place on grounds other than non-payment of rent, until the matter has been examined by the Leasehold Valuation Tribunal. The CLRA 2002 gives a Leasehold Valuation tribunal the jurisdiction to hear any disputes related to service charges and the reasonableness of those charges.14 Moreover, forfeiture action cannot be instituted on any grounds other than non payment of rent unless and until the validity of those grounds has been established by the Valuation Tribunal15. In the case of Billson v Residential Apartments16 it was held that an attempt to forfeit the lease in violation of the provisions of Section 146 in the case of charges other than non payment of rent would be void. A valid Section 146 notice must first be served and it must first be determined whether the breach in question is capable of remedy and if it is, then a reasonable amount of time must be provided to the tenant to bring about such a remedy and forfeiture cannot be attempted during this period. Barr Builders may be able to rely on this provision. Ans 3: Deepak has been using the garage since 1982 and since 1984 without paying rent but facing no challenge about it from the owner and with no demand for the rent of 30 pounds since 1994. This present a very good case for Deepak to make a claim on the property on the basis of adverse possession, because an awareness that the property belongs to another does not bar Deepak from the intent to possess, unless he acknowledges it belongs to another.17 The precedent established in the case of Pye v Graham18 is similar to Deepak’s case where rent was initially paid and then stopped and the Court held in favor of the defendants because they demonstrated the intent to possess and would have paid for it if required to. This would also apply in the case of Deepak, who has demonstrated intent to possess the garage but would have also been willing to pay rent if asked to do so. The Land Registration Act of 200219 also allows a person who has been in adverse possession of a property for a period of ten years to put in an application to be registered as proprietor of the property20. In Deepak’s case, he has been in possession of the property for many years, but this is not for a continuous period of ten years preceding the application because there will be a gap of about right months in between when he has not been in possession of the property, since Terry has been using it instead. Had Deepak been evicted from the property, he could have still been eligible21 but since he has left voluntarily, the gap may pose a problem in ensuring Deepak’s rights to adverse possession. Deepak could rely upon the provisions of the Land registration Act of 2002 which allows an application for registration if on the day before his eviction, he was entitled to make an application.22 Since he could have clearly filed a successful case of adverse possession before having left the garage, he may be able to successfully recover possession of the garage from Terry, who has no grounds to file a claim for title of the property because he has not been in adverse possession of the property for the required ten year period. In the original deed to the property, Shelley has entered into a covenant to (a) not allow the garage to fall into disrepair and (b) not use the garage for storing petroleum spirits. This is in the nature of a restrictive covenant and restrictive covenants are fully enforceable, even against an adverse possessor23. This was the rule laid out in the case of Tulk v Moxhay24 where it was held that a restrictive covenant that prevents certain kinds of actions can be enforced against any person who possesses the land. Another important aspect to note is that Shelley registered her property at the HM Land Registry. Where registered lands are concerned, the restrictive covenant will automatically be binding.25 Therefore, there appears to be little doubt that if Deepak gains possession of the garage, the provisions of the restrictive covenant will be binding upon him and the Courts can require him to repair the garage roof. The other restrictive covenant states that petroleum products are not to be stored in the garage. If Deepak chooses to ignore this and store a five gallon can of petrol in the garage, he will be in breach of a restrictive covenant. In this case, an injunction may be granted, or in accordance with the principle laid out in the case of Jaggard v Sawyer26 an injunction may be refused and damages could be awarded, especially if the damage caused by breach of the covenant is small and can be compensated through a small money payment. Since Deepak’s application at the Land registry for the grant of title on the basis of adverse possession will also mean that the actual owner, Terry and the current lessee Leonard will be informed, either of these parties could initiate action against Deepak for violation of either of the restrictive covenants. 4. The extent to which the easement in this case, i.e, the path across no: 6’s back garden can be enforced even after the sale of the property to Mr. and Mrs. Benjamin depends upon (a) whether the use of the easement provides a purely personal advantage to the owner27 or whether the dominant tenement cannot be accessed without the use of the easement (b) whether an agreement between Mr. Haverstock and Mr O’Kelly which was executed on deed but not registered with the HM registry will be enforceable. In the case of Laurie v Winch28 the Court also took into account verbal and circumstantial evidence in allowing an easement to stand. Furthermore, it must be noted that under the provisions of the Land Registration Act of 2002, it is only an easement granted after 13 October 2003 which must mandatorily be registered. Since the easement in this instance was created in 1999, it may constitute an overriding interest. The Act states that “only legal easements will override a registered disposition.”29 In this instance, the servient tenement is a property that was registered at the time of grant of the easement, and thus the legal easement took effect as overriding interests under the LRA 192530 and they will continue to also remain overriding under the LRA 200231. On this basis, it appears that the easement may continue to exist and Mr. and Mrs. Benjamin may need to allow the use of the easement through their back garden. An easement that is enforceable would have to constitute a right of way32 or be required for some other purpose which cannot be served but for the easement, such as parking,33 right to drainage34 or some similar reason. In this case, if the path across the back of Mr. Haverstock’s house is the only means of access available to Mr. Kelley to access his backyard, there is an even greater chance that the courts may enforce it. The easement cannot be denied because the common intent of the two owners is evident. It is also important to note that there is already a Deed in existence between Mr. Haverstock and Mr. O’Kelley, which grants rights to use the easement to heirs and assignees. The only deficiency is that the Deed has not been registered, but since in this instance it is an easement that was created before 13 October 2003, and it has also been granted out of registered land, it constitutes a registrable disposition. An application can be filed by Mr. O’Kelley to register the easement by submitting the Deed together with Form D1 (Disclosable Overriding interests) and this would serve to establish the existing easement as a legal one. As a result, Mr. O’Kelley would continue to have the right to use the easement because it is a legal one, evidenced by deed which can be duly registered. Since the Deed also assigns rights to future owners, the rights of Mr. Kelley’s successors to use the easement are also likely to be upheld by the Courts. In the event that Mr. and Mrs Benjamin choose to buy the property at No: 6, Mr. Kelley will still be entitled to use the easement. It may be possible to ensure privacy for the couple if they come to some private arrangement with Mr. Kelley, but it does not appear likely that Mr. Kelley’s rights to use the easement can be taken away after the Benjamins buy the property. BIBLIOGRAPHY Books/Journals: Dixon, Martin, 2005. “Modern land Law”, Routledge Cavendish Lewis, Howel, 1986. “Joint Ownership Clauses”, New Law Journal, 136 (6254): 458 Legislation cited: Commonhold and Leasehold Reform Act of 2002 Housing Act of 1996 Trustee Act of 2000 Land Registration Act of 2002 LRA 1925 Section 81 of the Housing Act of 1996. http://www.legislation.gov.uk/acts/acts1996/ukpga_19960052_en_8, The Commonhold and leasehold reform Act of 2002, http://www.letlink.co.uk/letting-factsheets/factsheets/factsheet-35----the-commonhold-and-leasehold-reform-act-2002.html; Cases cited: Atwood v Bovis Homes Ltd [2000] 3 WLR 1842 343 Billson v Residential Apartments (1992) 1 AC 494 Borman v Griffith [1930] 1 Ch 493 BRB (Residuary) v Cully (2001) All ER (D) (02) City of London Building Society v Flegg and Another [1987] 2 WLR 1266 Goodman v Gallang (1986) 1 All ER 311 CA Hall v Ewin (1888) 37 Ch D 74 Hill v Tupper (1863) 159 ER 51 Jaggard v Sawyer [1995] 1 WLR 269 Laurie v Winch (1953) Supreme Court Reports 49 London and Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1992] 1 W.L.R. 1278 In Re Segelman (deceased) 1996 Ch 171 Pye v Graham (2002) 2 WLR 221 (HL) Re Krubert (Deceased) Elsie Krubert v Michael Hugh Rutherford Davis Vladislav Krubert Anna Vaskova (1997) Ch 97 Rexhaven Ltd v Nurse (1995) 28 HLR 241 Smith v Spaul (2003) 17 EG 148 CA Target Home Loans Ltd v Iza Ltd (2000) 02 EG 117 Tulk v Moxhay (1848) 41 ER 1143 Read More