Introduction to land law - Different ways in which land can be held

Learning Outcomes

After studying this article, you will be able to identify and explain the main ways in which land can be held in England and Wales. You will understand the distinction between freehold and leasehold estates, the difference between legal and equitable interests, and the principles of co-ownership. You will also be able to apply these concepts to SQE1-style questions.

SQE1 Syllabus

For SQE1, you are required to understand the different ways in which land can be held and the legal implications of each. As you revise, focus on:

• the distinction between freehold and leasehold estates in land
• the difference between legal and equitable interests in land
• how co-ownership operates, including joint tenancy and tenancy in common
• the statutory framework for co-ownership, especially the Trusts of Land and Appointment of Trustees Act 1996 (TLATA)
• the impact of land registration on estates and interests

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the main difference between a freehold estate and a leasehold estate?
2. Which of the following is an example of a legal interest in land? a) a beneficial interest under a trust
   b) a right of way granted by deed
   c) a restrictive covenant
   d) an estate contract
3. What is the effect of holding land as joint tenants rather than tenants in common?
4. True or false? An equitable interest in land can bind a purchaser of registered land even if it is not protected on the register.

Introduction

Land law in England and Wales is based on the principle that land can be held in different ways, each with distinct legal consequences. Understanding these distinctions is essential for SQE1. This article explains the main types of estates in land, the difference between legal and equitable interests, and how land can be co-owned.

Estates in Land

The two principal estates in land are freehold and leasehold. These define the duration and nature of a person's right to possess and use land.

Freehold Estate

A freehold estate, also known as a "fee simple absolute in possession," is the closest form of outright ownership recognised by law. It lasts indefinitely and can be inherited or transferred.

Key Term: freehold estate The right to possess and use land for an unlimited period, subject only to statutory restrictions.

Leasehold Estate

A leasehold estate gives the right to possess and use land for a fixed period, as set out in a lease agreement. At the end of the term, the land reverts to the freeholder unless the lease is renewed.

Key Term: leasehold estate The right to possess and use land for a defined period, granted by a lease.

Legal and Equitable Interests

Not all rights over land amount to ownership. Some are lesser rights, known as interests. These can be legal or equitable.

Key Term: legal interest A right in land recognised by statute as capable of binding third parties, provided the correct formalities are met.

Key Term: equitable interest A right in land recognised by equity, often arising where legal formalities are not fully satisfied or where fairness requires recognition.

Legal interests include easements, mortgages, rentcharges, and profits à prendre, provided they are created by deed and, where required, registered. Equitable interests include beneficial interests under a trust, restrictive covenants, and equitable easements or mortgages.

Co-ownership of Land

Land can be owned by more than one person at the same time. This is known as co-ownership. The two main forms are joint tenancy and tenancy in common.

Key Term: joint tenancy A form of co-ownership where all owners have equal rights to the whole property and the right of survivorship applies.

Key Term: tenancy in common A form of co-ownership where each owner has a distinct share, which can be equal or unequal, and there is no right of survivorship.

Statutory Trusts and TLATA

Whenever land is co-owned, a statutory trust arises under the Trusts of Land and Appointment of Trustees Act 1996 (TLATA). The legal owners hold the land on trust for themselves and any other beneficiaries.

Key Term: statutory trust A trust imposed by law whenever land is co-owned, with the legal owners acting as trustees for the beneficiaries.

TLATA gives trustees all the powers of an absolute owner but requires them to consult beneficiaries and consider their wishes where practicable. Disputes can be resolved by court order under TLATA.

Worked Example 1.1

Scenario:
A and B buy a house together. The transfer states they hold the property as "joint tenants." A dies. Who owns the house?

Answer:
B becomes the sole owner automatically by the right of survivorship. The property does not pass under A's will.

Worked Example 1.2

Scenario:
C and D buy a flat as tenants in common, with C owning 60% and D 40%. D dies, leaving her share to E in her will. Who owns the flat?

Answer:
C continues to own 60%. E inherits D's 40% share. There is no right of survivorship in a tenancy in common.

Land Registration

The Land Registration Act 2002 requires most land in England and Wales to be registered. Registration provides a definitive record of ownership and interests affecting the land.

Key Term: registered title A title to land recorded at HM Land Registry, showing the legal owner and any registered interests.

Registered land is transferred by registration at the Land Registry. Unregistered land relies on title deeds and is being phased out.

Worked Example 1.3

Scenario:
F buys a house with unregistered title. The solicitor checks the deeds and finds a 30-year chain of ownership. What must happen when F completes the purchase?

Answer:
The purchase triggers compulsory first registration. F must apply to register the title at HM Land Registry.

Legal and Equitable Interests: Practical Consequences

Legal interests, if properly created and (where required) registered, bind everyone who acquires the land. Equitable interests may bind a purchaser, but only if protected by registration (in registered land) or if the purchaser has notice (in unregistered land).

Exam Warning

In registered land, an equitable interest will not bind a purchaser for value unless it is protected by a notice or restriction on the register, or qualifies as an overriding interest (such as a beneficial interest coupled with actual occupation).

Summary Table: Estates and Interests

Key Point Checklist

This article has covered the following key knowledge points:

• The two main estates in land are freehold (unlimited duration) and leasehold (fixed term).
• Legal interests must be created by deed and, if required, registered to bind third parties.
• Equitable interests arise where legal formalities are not fully satisfied or where fairness requires recognition.
• Land can be co-owned as joint tenants (with survivorship) or tenants in common (with distinct shares).
• Co-owned land is held on a statutory trust under TLATA, with legal owners acting as trustees.
• Registered land is recorded at HM Land Registry; unregistered land relies on title deeds.
• Legal interests bind all future owners; equitable interests must be protected on the register or may be lost on sale.

Key Terms and Concepts

• freehold estate
• leasehold estate
• legal interest
• equitable interest
• joint tenancy
• tenancy in common
• statutory trust
• registered title