LAWS3112 Lecture 5

Types of Interests in Land

  1. Doctrine of Estates
  2. Future Interests
  3. Legal and Equitable Interests in Land.

Doctrine of Estates

Estates

  • This doctrine defines the nature of interests in land.
  • Estates have two essential characteristics:
    • (i) They are of defined duration, and
    • (ii) They confer a right to possession of land either at once or in the future.

Types of Estates

  • Estates Of Freehold
    • Fee Simple
    • Fee Tail
    • Life Estate
  • Estates Less Than Freehold
    • Leasehold

Estates of Freehold

  • Estate In Fee Simple
    • A freehold estate that lasts as long as the grantee has heirs.
  • Creation
    • s 19 PLA.
  • Right To Alienate
    • Grant Intervivos; Or
    • By Will.

Estate in Fee Tail

  • A freehold estate that lasted as long as the holder had direct heirs (descendants).
  • Creation – no longer
    • The fee tail is abolished in Queensland.
    • The fee tail is converted to a fee simple.

s 22 PLA:

22 Abolition of estates tail
(1) In any instrument coming into operation after the commencement of this Act a limitation which, if this section had not been enacted, would have created an estate tail (legal or equitable) in any land in favour of any person shall be deemed to create an estate in fee simple (legal or equitable as the case may be) in that land in favour of that person to the exclusion of all estates or interests limited to take effect after the determination or in defeasance of any such estate tail and to the exclusion of all estates or interests in reversion on any such estate tail.

(2) Where at or after the commencement of this Act any person is entitled, or would, but for subsection (1), be entitled, to an estate tail (legal or equitable) and whether in possession, reversion, or remainder, in any land, that person, subject to subsection (2A), shall be deemed to be entitled to an estate in fee simple (legal or equitable, as the case may be) in that land, to the exclusion of all estates or interests limited to take effect after the determination or in defeasance of the estate tail and to the exclusion of all estates or interests in reversion on the estate tail.

(2A) Where any such person is an infant and such land for any estate or interest would pass to any other person in the event of the death of the infant before attaining full age and without issue, then in such case, the infant shall be deemed to take an estate in fee simple with an executory limitation over of such estate or interest on the happening of such event in favour of such other person.

(2) In this section—
estate tail includes that estate in fee into which an estate tail is converted where the issue in tail are barred, but persons claiming estates by way of remainder or otherwise are not barred, also an estate in fee voidable or determinable by the entry of the issue in tail, but does not include the estate of a tenant in tail after possibility of issue extinct.

(3) The registrar is authorised, on a request in the approved form, to make the recordings in the register necessary to give effect to this section.

Life Estate

  • A freehold estate for as long as:
    • the holder lives, or
    • Another person lives (an estate pur autre vie).
  • Creation
    • s 19 PLA.
      • 19 Freehold estates capable of creation

After the commencement of this Act the following estates of freehold shall be capable of being created and, subject to this Act, of subsisting in land—

(a) estate in fee simple;
(b) estate for life or lives.

  • Subject to the doctrine of waste

ss 24 & 25 PLA.

24 Liability of life tenant for voluntary waste

(1) A tenant for life or lives shall not commit voluntary waste.

(2) Nothing in subsection (1) applies to any estate or tenancy without impeachment of waste, or affects any licence or other right to commit waste.

(3) A tenant who infringes subsection (1) is liable in damages to the tenant’s person in remainder or reversioner, but this section imposes no criminal liability.

25 Equitable waste

An estate for life without impeachment of waste shall not confer, or be deemed to have conferred, upon the tenant for life any legal right to commit waste of the description known as equitable waste, unless an intention to confer such right expressly appears by the instrument creating such estate.

Estates Less Then Freehold

  • Leasehold Estates
  • Covered in detail in Topic 3.

Features of Freehold Estates

  • Consider:
    • Seisin
    • Duration

Creation of Freehold Estates

  • Conveyance of Estates in Old System Title
  • Fee Simple
    • “To A and his heirs”.
  • Fee Tail
    • “To A and the heirs of his body”.
  • Life Estate
    • “To A for life”.
  • See s 29 PLA.

29 Words of limitation

(1) A disposition of freehold land to any person without words of limitation, or any equivalent expression, shall pass to the disponee the whole interest which the disponor had power to dispose of in such land, unless a contrary intention appears in the disposition.

(2) A disposition of freehold land to a corporation sole by the disponor’s corporate designation without the word ‘successors’ shall pass to the corporation the whole interest which the disponor had power to dispose of in such land, unless a contrary intention appears in the disposition.

(3) This section applies to dispositions effected after the commencement of this Act.

Modifications to The Fee Simple

  • Determinable Fee Simple
  • Conditional Fee Simple

Determinable Fee Simple

  • Examples:
    • Conveyance “To A in fee simple, until the land ceases to be used for farming”.
    • Conveyance “To B in fee simple, so long as she continues to live in Brisbane”.

Conditional Fee Simple

  • Examples:
    • Conveyance “To A in fee simple, provided that the land continues to be used for farming”.
    • Conveyance “To B in fee simple, but if B ceases to live in Brisbane, then to C”.
  • Words used:
    • Provided that
    • But if
    • If it happens that
    • On condition that
      • Grantor has a right of re-entry via a court order or by obtaining possession of the land
      • The grantor can only exercise this right within 12 years – s13 Limitation of Actions Act
      • If the grantor chooses not to exercise the right, then the fee simple becomes absolute.

Remainders and Reversions

  • Estates can be held in one of three forms:

1. An estate in possession
2. An estate in reversion
3. An estate in remainder

  • An estate granted to a person to follow the completion of a grant of a prior estate to someone else. The second state will be the estate in remainder.
  • The holder of an estate has the present right to occupation and enjoyment of the land.

Future Interests in Land

What Is A Future Interest?

  • A future interest is an interest which confers a right to the enjoyment of the land at a future time.
  • Reversions
    • Are future interests
  • Remainders
    • Equitable Future Interests
    • (Legal Executory Interests)

Future Interests under the PLA

  • Future Interests are effectively converted into equitable future interests. See ss 30 and 31 PLA.
  • Remember: Equitable future interests do not have to satisfy strict common law rules.
  • s 30 PLA (1) A future interest in land validly created after the commencement of this Act shall take effect as an equitable and not a legal interest.
  • s 30 PLA (4)“Future interest” is defined to mean:
    • a legal contingent remainder; or
    • a legal executory interest.

Legal and Equitable Interests in Land

Overview of Legal and Equitable Interests in Land

1. The nature of legal and equitable interests in land.
2. Types of legal and equitable interests in land.
3. Formalities for the creation of legal and equitable interests in land.
4. Exceptions to the formal requirements to create legal and equitable interests in land e.g. the doctrine of part performance.
5. Equitable remedies re land e.g. specific performance.

1. The nature of legal and equitable interests in land
  • Consider: how/why legal and equitable interests exist in the one piece of land?
    • Through the administration of trusts attaching to land and also through the administration of special remedies like specific performance, Equity developed the doctrine that there was not just one estate in land there were two estates, one legal and one equitable.

Therefore, it is possible for the legal and equitable estates in land to be vested in different people.

It is this which allows the rules of Equity to affect land law.

Consider: how do legal and equitable interests in land differ?

  • Legal estates
    • Legal title to property.
  • Equitable estates
    • Beneficial use and enjoyment of property.

2. Consider various types of legal and equitable interests in land.

  • The trust
  • The equitable fee simple
  • The equitable lease

Examples of Legal and Equitable Interests

(i) The Trust (use)

  • X (the owner of the fee simple) grants:
    • “TO A IN FEE SIMPLE ON TRUST FOR B IN FEE SIMPLE”
    • A, the trustee, holds the legal estate.
    • B, the beneficiary, holds the equitable estate.

(ii) The Equitable Fee Simple

  • An equitable fee simple arises when a binding contract of sale for land, which can be enforced by an order for specific performance, is signed.
  • Lysaght v Edwards (1876) 2 Ch D 449 @506
    • “The moment you have a valid contract of sale the vendor becomes in equity a trustee for the purchaser of the estate sold and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase money and a right to retain possession of the estate until the purchase money is paid…”
    • Example: The Equitable Fee Simple
      • July 1, 2010: a contract for the sale of land (Utopia) is signed.
      • Vendor – legal interest
      • Purchaser – equitable fee simple.
      • July 28, 2010: settlement of contract of sale of Utopia.
      • Purchaser acquires legal title to the property on settlement.

(iii) The Equitable Lease

  • An equitable lease arises out of a binding contract/agreement for a lease which can be enforced by an order for specific performance.
  • See Walsh v Lonsdale (1882) 21 ChD 9.
    • Facts: Lonsdale (landlord) agrees in writing to grant Walsh (tenant) a lease of a mill for seven years. A term of the lease is that the rent is to be payable one year in advance if demanded. No formal legal lease has been signed. The tenant occupies the land and pays some rent, but is in arrears. Landlord exercises an old remedy – distress (sells tenant’s property to satisfy rent in arrears). Walsh argues that distress is a legal, not equitable remedy. No formal legal lease is signed and therefore distress can’t be used. Court finds that equity will treat the parties as if a formal legal lease has been granted – this is because of the availability of specific performance.
  • Jessel MR Walsh v Lonsdale
    • “Where the tenant holds under an agreement for a lease of which specific performance will be ordered, then he holds under the same terms in equity as if a formal lease had been granted”.
  • Consider the following: “An equitable lease, in the nature of a contract to grant a lease, is as good as a legal lease”.

3. Statutory requirements to create legal and equitable interests in land.

  • s 10 PLA – Legal interests in old system land
  • s 11 PLA – Equitable interests in land
  • s 59 PLA - Enforceability of contracts for the transfer of land
  • ss 181, 182 LTA - Legal interests in Torrens Title land
  • Legal interests in Land
    • (a) Old system/general law land:
      • s 10 PLA – legal interests in land should be in a deed or in writing and signed.
      • s 10 PLA Assurances of land to be in writing
        • (1) No assurance of land shall be valid to pass an interest at law unless made by deed or in writing signed by the person making such assurance.
      • Statutory requirements to create legal interests in Torrens land
    • (b) Legal interests in Torrens land
      • Legal interests are not created until registration.
      • s 181 LTA.
        • An instrument does not create or transfer an interest in a lot at law until it is registered.
      • See also s182 LTA.
  • Statutory requirements to create equitable interests in land
    • Equitable interests in land:
      • s 11 PLA – equitable interests in land should be in writing and signed.
      • s 11 PLA: Instruments required to be in writing
        • (1) Subject to this Act with respect to the creation of interests in land by parol:
        • (a) No interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, of by the person’s agent lawfully authorised in writing, or by will, or by operation of law.
        • See also ss 11 (1)(b) and 11(2) re trusts.
    • Equitable interests in Torrens land:
      • Unregistered interests take effect as equitable interests.
  • Statutory requirements re land contracts
    • Enforceability of contracts for the transfer of an interest in land
      • s 59 PLA –contracts concerning land will be unenforceable unless there is in existence:
        • A memorandum or note of the contract,
          • In writing, and
          • Signed by the party who is to be charged.
      • S 59 PLA – Contracts for sale of land etc. to be in writing:
        • No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised.
  • Statutory requirements to create equitable interests in land
    • Note re PLA and LTA
      • s 5 (1) (b) PLA:
        • The PLA applies to any land under the LTA, including a lease of that land, but subject to the provisions of the LTA.

4. Exceptions to the statutory requirements for the creation of legal and equitable interests in land.

(i) The Equitable Doctrine of Part Performance.
(ii) The Doctrine of Proprietary Estoppel

The Equitable Doctrine of Part Performance

  • What is the Doctrine of Part Performance?
    • The acts of a person, ostensibly done in performance of an agreement can, if certain principles are satisfied, be used as a substitute for any actual documentation of the agreement.
  • The doctrine of Part Performance applies in Queensland.
    • s 6(d) PLA provides that nothing in sections 10, 11, 12 or 59 affects the law relating to part performance.
  • Illustration of Doctrine of Part Performance
    • See:
      • Regent v Millet (1976) 50 ALJR 799.
        • Plaintiffs entered into oral agreement with the defendants (parents of the wife). Defendants agreed to transfer house to the plaintiffs if the plaintiffs pay the mortgage. Plaintiffs start possession and make mortgage repayments. The parties then make an additional agreement. The plaintiffs agree to borrow additional funds from a bank for repairs and renovations, on the basis that the defendants transfer the house to them immediately. Defendants then refuse to transfer the house.
        • Issue for the court: is there part performance of the oral agreement? Do the mortgage repayment, possession and doing of renovations constitute part performance?
        • HCA: there are sufficient acts of part performance to overcome the fact that the agreement was not in writing. The giving and taking of possession was a sufficient act of part performance. Agreement is enforceable and plaintiffs able to get specific performance of the contract.
      • Steadman v Steadman [1976] AC 536.
  • The following are required to establish part performance:
    • 1. The plaintiff must establish that it would be fraud for the defendant to shelter behind the Statute of Fraud provisions.
    • 2. The plaintiff must establish that the acts of part performance must be explicable only by reference to a contract generally of the type alleged to exist.
      • “The acts relied on as part performance must be unequivocally, and in their own nature, referable to some such agreement as that alleged. ”

Maddison v Alderson (1888) App Cas 467 @487-479.
* 3. There must be clear evidence of a concluded agreement.
* 4. Proof of the terms of the agreement by oral evidence must be possible.
* 5. The contract must be capable of specific performance.
* Then the defendant is “charged” upon the equities resulting from the acts done in the execution of the contract.

  • See also:
    • Kingswood Estate v Anderson
    • South Coast Oils v Look Enterprises
    • McBride v Sandland

5. The Doctrine of Proprietary Estoppel

  • Not studied in Property B.
  • See Learning Guide.
  • See Riches v Hogben.

Equitable Remedies

a) Injunction
b) Specific Performance

  • A valid and binding contract:
  • Damages must not be an adequate remedy.
  • The plaintiff must be ready, willing and able to perform his/her obligations under the contract.

Next week: Co-Ownership

See Learning Guide pp 51-61.