UK law recognises two legal ‘estates’ in land. These are the ‘fee simple’ which is the right to own and use it for an unlimited period of time and the right to dispose of it at will; and a lease – for a fixed period of time. These have been recognised in law since the Law of Property Act 1925 (LPA).
In addition to the two legal estates, there are also legal interests in land which bind all third parties in respect of the land. See here for beneficial interests in land.
What are legal ‘interests’ in land?
Legal interests in land are other interests in, or charges over land and which gives someone the right to legally enforce them. There are various legal interests in land under the LPA as follows.
Legal easements, rights and privileges
Legal easements are rights attached to one piece of land, entitling the occupy to do something over another’s property. For instance, a property owner may have the right to walk over neighbouring land, or the right to drive over a private road to access a piece of land. There are many types of easement, such as rights to storage or drainage, and the right to water.
Similar to easements are profits a prendre. These are rights to take something from land which belongs to another estate owner, for example, a right to cut wood on another’s property or the right to minerals.
A rentcharge is an arrangement where land is charged with the payment to someone of an annual or periodic sum. If money is not paid, the person with the benefit of the rentcharge is entitled to enter the land in order to enforce payment. This is not the same as rent paid in the context of a tenancy agreement.
It used to be rare for an estate in fee simple to be sold for a single payment of money as is commonplace today. Instead, the seller took a lump sum together with a rentcharge securing an annual payment. However, the Rentcharges Act 1977 prevented the creation of any new rentcharges and provided that any existing rentcharges are to end 60 years after the Act came into force. It also gave the estate owner of the charged land the right to redeem the rentcharge earlier on the payment of compensation.
The 1977 Act did not, however, abolish rentcharges altogether, and they may still be created for certain purposes. This means it is still possible to leave a property to a person, subject to a rentcharge obliging them to make a periodical payment to, for instance, the surviving spouse or a dependent for the purposes of maintenance.
It is also still possible to create ‘estate rentcharges’, used to ensure an estate owner of the charged land makes a payment towards the upkeep of facilities on other land. An example is the rentcharge obliging an estate owner to pay an annual sum towards the maintenance of a road on his neighbour’s property. These rentcharges are a means of providing for the enforcement of positive covenants in freehold land.
For a rent charge to be a legal interest in land, it must last for the same period as one of the two legal estates, ie. in perpetuity or for a fixed period.
Charge by way of legal mortgage
A mortgage is a legal charge secured on a legal estate in land, under which the mortgagor/property owner agrees to repay the mortgage debt. The mortgagee/lenderhas a legal interest in the mortgaged property, and if the borrower fails to repay the loan, the mortgagee may take possession of the mortgagor’s property and sell it to satisfy the debt owed.
Rights of entry
These include rights of entry within leases or annexed to rentcharges. It is usual to include in a lease a clause allowing the landlord to recover, or ‘re-enter’ the property should the tenant be in breach of any of his obligations under the lease. This right is a legal right under the LPA and is regarded as a legal interest in land.
A similar right is usually included in a rentcharge, so that the owner of the rentcharge may enter and recover the land should the owner of the charged estate fail to pay the sums due.