Land Law - Creation and Enforceability of Third Party Rights (Exam Plan)

Land Law - Creation and enforceability of third party rights

[STEP 1] Identify the third party right (DO NOT label as legal / equitable / statutory at
this stage)

INSERT NAME OF PARTY OR PROPERTY MENTIONED IN THE QU AS TITLE

[INSERT POTENTIAL THIRD PARTY RIGHT]

[INSERT PERSON CLAIMING RIGHT] may have / has a proprietary interest in
[INSERT PROPERTY] via a [INSERT THIRD PARTY INTEREST FROM BELOW]
([INSERT PROVISION]).

Legal estates (the right to enjoy a stake in land for a period of time) - s.1(1) LPA - lists
those capable of being legal:

s.1(1)(a) LPA 1925 - a freehold in fee simple absolute in possession
- I.e. equivalent to permanent ownership of land, only lost when owner dies with no
will and no heirs
-
s.1(1)(b) - [INSERT C] may have a lease that is capable of being legal if the leasehold is
in a term of years absolute (s.1(1)(b) LPA 1925).
- I.e. right to use the land (exclusive possession) for a specific period of time
(lease/tenancy)
- Equivalent rights to that of a freehold. E.g. you can leave it to someone in your
will…

Third party interests capable of being legal under s.1(2) LPA 1925, including:

s.1(2)(a) LPA - [INSERT PERSON CLAIMING RIGHT] may have an easement
equivalent in duration to an estate in fee simple absolute in possession or a term of
years absolute (s.1(2)(a) LPA 1925). It is for [EXPLAIN HOW LENGTH QUALIFIES].
- I.e. the easement must be equivalent in duration to a freehold (a right without
limitation, forever) or a leasehold (a right for a certain time period), NOT a right
for an uncertain period (e.g. ‘as long as I own it’)
- As the agreement is silent on the length of the easement, we can assume it
grants indefinite use. The easement is equivalent in duration to an estate in fee
simple absolute in possession (i.e. a freehold), and the easement is capable of
being legal (under s.1(2)(a) LPA 1925).

,s.1(2)(c) LPA - Mortgages gives rise to a proprietary claim held by the lender over the
land, which means they can rely on the property as insurance even if the freehold owner
doesn’t have the money to pay them back (under s.1(2)(c) LPA 1925).

s.1(2)(e) LPA - Rights of entry for a term of years absolute, or annexed to a legal
rentcharge give rise to a proprietary right (under s.1(2)(e) LPA 1925).

Third Party Equitable Interests - all estates, interests and charges in or over land
other than those in s.1(1-2) LPA are equitable - s.1(3) LPA 1925:

- A lease that is not in a term of years absolute (so is not capable of being legal
under s.1(1)(b) LPA 1925), OR the correct formalities for a legal lease are not
followed.
- There could be a periodic lease implied by a regular rent payment.
- N.B. an equitable lease is also an estate contract

- An easement that is not equivalent in duration to an estate in fee simple absolute
in possession or a term of years absolute (so it is not capable of being legal
under s.1(1)(b) LPA 1925), OR the correct formalities for a legal lease are not
followed.

- C may argue they have a beneficial interest under an implied trust (falls under
s.1(3) LPA 1925). [GO THROUGH BELOW]

Resulting trust?

[INSERT PARTY CLAIMING INTEREST] has a third-party interest as a beneficiary
under an implied resulting trust (under s.1(3) LPA 1925). A resulting trust arose when
the legal estate was transferred into [INSERT LEGAL OWNER’s] sole name and
[INSERT PARTY CLAIMING RIGHT] contributed [INSERT AMOUNT] to the purchase
price, providing it was not a gift or a loan (Bull v Bull). Here, it was / There is no
evidence it was a loan.

[ONLY IF UNCLEAR / OTHER PAYMENTS MENTIONED] Only payments made
directly towards the purchase at the time of purchase contribute towards a resulting
trust. Legal fees and other expenses (e.g. removal costs at the time of purchase) do not
give rise to a share under a resulting trust (Curley v Parkes).




Constructive trust?

, However, [INSERT C] may have an interest under an implied constructive trust. In
Lloyds Bank plc v Rosset, the court outlined that a constructive trust could be imposed
where there is actual or inferred common intention to share the equitable interest
between the parties.

[THIS ROUTE IF NO CONTRIBUTION TO PURCHASE PRICE] Actual common
intention

Here, there may be actual common intention with (Lloyds Bank plc v Rosset):

- An agreement, arrangement or understanding between the legal owners and the
non-legal owners to share the equitable interest; and
- The non-legal owners, relying on that agreement, arrangement or understanding,
acted to their detriment or altered their position.

Agreement?

It does not matter whether the statement is deceitful, or that the maker of the statement
did not mean what was said.

- The court established a constructive trust where the legal owner stated that the
house would have been put into their joint names had their partner been aged 21
(Eves v Eves).
- The court established a constructive trust where the legal owner stated that the
house had been put into his name only so as not to prejudice the other party’s
divorce proceedings (Grant v Edwards).

Detriment?

This exists if the non-legal owners would not have done what they did if the agreement
with the legal owner did not exist (Grant v Edwards).

APPLY

If both elements are present, [INSERT NON-LEGAL OWNER CLAIMING RIGHT] will
acquire an equitable interest in the land under an implied constructive trust.

Inferred common intention

If not, there may be inferred common intention where (Lloyds Bank plc v Rosset):