17.2 Acquiring, Transferring and Protecting Interests in Land

Acquiring and transferring legal estates

A legal estate is commonly acquired by purchase, gift, assent by personal representatives, grant of a new lease, or, in outline, adverse possession under the Limitation Act 1980 or Land Registration Act 2002 (LRA 2002) Schedule 6. Transfer of an existing legal estate, and express creation of a new legal estate or legal interest, generally require a deed (LPA 1925 section 52(1)).

The Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989) section 1 modernised deeds. For an individual, a deed must make clear on its face that it is intended to be a deed, be signed by the maker, have that signature witnessed and attested, and be delivered. Sealing is no longer required for individuals. Companies execute under the Companies Act 2006.

Section 54(2) LPA 1925 is the important exception: a lease taking effect in possession, for a term not exceeding three years, at the best rent reasonably obtainable without a fine, can be created orally and still be legal. Periodic tenancies often rest on this subsection. A three-year term with a premium, or a reversionary lease that starts in the future, is outside the exception.

In registered land, even a perfect deed is not enough for many dispositions. LRA 2002 section 27 lists registrable dispositions (transfer of a registered estate, grant of a lease for more than seven years, express grant or reservation of a legal easement, grant of a legal charge, and others). Until the disposition is completed by registration, it does not operate at law. The transferee or grantee has only an equitable interest in the meantime.

Acquiring and disposing of equitable interests

Equity treats as done that which ought to be done (Walsh v Lonsdale). A contract that is specifically enforceable can create an equitable lease or other equitable interest even though legal title has not moved.

LP(MP)A 1989 section 2 governs contracts for the sale or other disposition of an interest in land. The contract must be in writing, incorporate all expressly agreed terms in one document (or in each of exchanged parts), and be signed by or on behalf of each party. An oral "deal" on a house is not a valid land contract. Side letters that contain extra terms can destroy section 2 compliance if those terms are omitted. Options to purchase are dispositions of interests in land and need section 2 formality.

LPA 1925 section 53(1)(a) requires creation of an interest in land to be in signed writing, subject to exceptions. Section 53(1)(b) requires a declaration of trust of land to be manifested and proved by signed writing. Section 53(1)(c) requires a disposition of an existing equitable interest to be in signed writing. Section 53(2) saves resulting, implied, and constructive trusts — the route for many family-home claims and for some failed-formality rescues. LP(MP)A 1989 section 2(5) likewise leaves those trusts untouched.

Proprietary estoppel (Thorner v Major; Guest v Guest) can generate an equity where a landowner's assurance, reliance, and detriment make it unconscionable to leave the claimant with nothing. LRA 2002 section 116 confirms that an equity by estoppel and a mere equity are capable of binding successors.

To dispose of an equitable interest, use section 53(1)(c) writing, overreach it by paying capital money to two trustees, or accept that it may be postponed under the registration or land charges rules.

Formalities at a glance

Protecting and enforcing third-party interests

Creating the right is only half the job. The solicitor must also make it bind purchasers.

In registered land, priority is organised by LRA 2002 sections 28–30. The basic rule (section 28) is first in time. The special rule (section 29) is that a registered disposition of a registered estate for valuable consideration postpones unprotected interests, except overriding interests in Schedule 3. Protection is by notice (sections 32–39) on the charges register, or by restriction (sections 40–47) on the proprietorship register. Beneficial interests under a trust cannot be noted (section 33(a)); they are protected by restriction and, if the beneficiary is in actual occupation, may override.

In unregistered land, legal interests generally bind the world. Most equitable interests created after 1925 must be registered as land charges against the name of the estate owner under the Land Charges Act 1972, or they are void against a purchaser of the legal estate for money or money's worth. Interests under a trust of land are not land charges; they are kept off the title by overreaching if capital money is paid to two trustees or a trust corporation (LPA 1925 sections 2 and 27). If overreaching fails, the residual doctrine of notice can still bind a purchaser.

Enforcement depends on the right: a mortgagee may possess and sell; a covenantee may seek an injunction or damages; an easement owner may sue in nuisance or seek an injunction; a beneficiary may apply under TOLATA 1996 section 14. Always ask: is the right proprietary, has it been protected by the correct machinery, and has it been overreached?

In practice

A buyer agrees heads of terms by email, pays a "holding deposit," and instructs you to lock in the house. There is no signed contract incorporating all terms. Under section 2 there is no valid land contract. The deposit is not a substitute for formality. Do not tell the client they already have an equitable estate. If they have already built an extension on the seller's oral promise of a transfer, consider proprietary estoppel — that is a different cause of action, not a hidden section 2 contract. On ethics, do not complete a transfer you know is a sham designed to defeat a disclosed beneficiary; the SRA Principles require honesty and integrity toward the court, the Land Registry, and third parties.