TEMPLATE: 3rd Party Interests & Formalities
STEP 1: Identify the estate or interest - Determine the type of estate
or interest in land you're dealing with.
In this case, [Name] has an [easement, mortgage, restrictive covenant, positive covenant,
trust interest, estate contract, option to purchase, statutory home right].
Step 2: Assess if it's capable of being legal - Check if the estate or
interest is listed in s 1(1) or s 1(2) of the LPA 1925
Only two estates in land can be legal: the freehold and the leasehold. 1 Third-party rights may
be legal or equitable or may arise under legislation (statutory rights). This distinction is
important because it affects the rules that govern whether successors to the property are
bound by the burdens or benefits of these rights. There are five interests capable of being
legal, provided certain formalities are met. 2
An easement is a right that is attached to one piece of land and imposes a corresponding
burden on another piece of land, for example, a right of way. However, it must be for a time
equivalent to a freehold or a lease if it is to be legal; an easement for an uncertain duration is
not capable of being legal. 3 In this case, [it is a right of way forever, so it is equivalent to a
fee simple in possession, a freehold, as there is no end date] / [it is a right of way for X years,
so is equivalent to a term of year absolute, [name] has the right of way for a certain number
of years, like a leasehold].
As [Name’s] interest is not listed under Section 1(1) or 1(2) of the LPA, the [name of 3 rd
party interest, e.g. equitable easement] can only take effect in equity; 4 it is an ‘equitable
interest’ in the [name’s] property.
A mortgage is an interest in land given as security for a loan.
Step 3: Examine the formalities
Determine if the correct formalities were used to create the estate or
interest:
Creation by deed (general rule for legal estates and interests)
Creation in a contract (for equitable interests)
Creation by signed writing (for certain equitable interests)
No formalities (for specific cases like parol lease exception, certain
easements, implied trusts, and statutory rights)
Step 4: Determine if it's legal, equitable, or statutory
Legal: If capable of being legal and created by deed or satisfying
exceptions
1
Law of Property Act 1925, Section 1(1)
2
Law of Property Act 1925, Section 1(2)
3
Law of Property Act 1925, Section 1(2)
4
Law of Property Act 1925, Section 1(3)
STEP 1: Identify the estate or interest - Determine the type of estate
or interest in land you're dealing with.
In this case, [Name] has an [easement, mortgage, restrictive covenant, positive covenant,
trust interest, estate contract, option to purchase, statutory home right].
Step 2: Assess if it's capable of being legal - Check if the estate or
interest is listed in s 1(1) or s 1(2) of the LPA 1925
Only two estates in land can be legal: the freehold and the leasehold. 1 Third-party rights may
be legal or equitable or may arise under legislation (statutory rights). This distinction is
important because it affects the rules that govern whether successors to the property are
bound by the burdens or benefits of these rights. There are five interests capable of being
legal, provided certain formalities are met. 2
An easement is a right that is attached to one piece of land and imposes a corresponding
burden on another piece of land, for example, a right of way. However, it must be for a time
equivalent to a freehold or a lease if it is to be legal; an easement for an uncertain duration is
not capable of being legal. 3 In this case, [it is a right of way forever, so it is equivalent to a
fee simple in possession, a freehold, as there is no end date] / [it is a right of way for X years,
so is equivalent to a term of year absolute, [name] has the right of way for a certain number
of years, like a leasehold].
As [Name’s] interest is not listed under Section 1(1) or 1(2) of the LPA, the [name of 3 rd
party interest, e.g. equitable easement] can only take effect in equity; 4 it is an ‘equitable
interest’ in the [name’s] property.
A mortgage is an interest in land given as security for a loan.
Step 3: Examine the formalities
Determine if the correct formalities were used to create the estate or
interest:
Creation by deed (general rule for legal estates and interests)
Creation in a contract (for equitable interests)
Creation by signed writing (for certain equitable interests)
No formalities (for specific cases like parol lease exception, certain
easements, implied trusts, and statutory rights)
Step 4: Determine if it's legal, equitable, or statutory
Legal: If capable of being legal and created by deed or satisfying
exceptions
1
Law of Property Act 1925, Section 1(1)
2
Law of Property Act 1925, Section 1(2)
3
Law of Property Act 1925, Section 1(2)
4
Law of Property Act 1925, Section 1(3)
