Land law Essay Essays

Land law Essay Essays Land law Essay Essay Land law Essay Essay Essay Topic: Law Tasnim claims that she has an option to buy the freehold in both cottages for the current market price. She wants to exercise the option now and has produced a document, signed by Romesh and herself, dated 7 April 2006. When Salman spoke to Tasnim prior to his purchase of The Franklins she said nothing about this option. Salman is unhappy at the prospect of selling the cottages. He does not need the money and might well want them for his children when they get older. Advise Salman whether he can be forced to sell the cottages to Tasnim? Covenants in leases created post 1996 are governed by the Landlord and Tenants (covenants) Act 1995, the principal changes introduced by the Act relate to the continuing liability of the landlord and the tenant through covenants, which will run with the lease. While the Act operates to release the tenant of liability under the covenants in the lease after it has been assigned, it does not work in the same way insofar as the landlord is concerned upon an assignment of the reversion. He will remain liable for the covenants unless he is released from them.1 From this we can deduce that the obligations of the old landlord transfer to the new landlord after he has purchased the land. S2 (1) states that the Act applies to a landlord covenant or a tenant covenant of a tenancy, and whether the covenant is express, implied or imposed by law.2 From this we can see that it is likely that the agreement between Tasnim and Romesh giving her an option to buy the freehold may suffice in being a covenant. Section 6 of the Act allows landlords to be released from the covenants of the previous landlord. To obtain a release, he must within 4 weeks of the assignment, serve a notice on the tenant informing him of the assignment and seeking a release form the covenants. If the tenant does not respond within 4 weeks of the service of the notice, the landlord will be released from the covenants.3 If Salman had exercised this option when he purchased the land then he would not be in his current predicament. The tenant can refuse to release the landlord from the covenants; however in this case the matter can be referred to the Courts to determine if such a refusal is reasonable. It is likely that if this had happened that the Courts would have found in Salmans favour and said that it would not be reasonable for him to be bound by the covenant to sell the freehold at its market value to Tasnim. If however the covenant between Romesh and Tasnim was expressed to be personal one then the burden of these covenants will not pass onto Salman. S3 (3) states that the new landlord will not be bound by a covenant, which was personal to the previous landlord. The issue of how to distinguish whether a covenant was personal or not was tackled in the case of BHP Petroleum Great Britain V Chesterfield Properties Ltd 2002, the question arose whether a landlord was entitled to be relieved of his liability for covenants which were expressed in the lease to be personal obligations of the land lord, in holding that he was not, Jonathan Parker LJ said the crux as we see it is the definition of landlord as being the person for time being entitled to the reversion expectant on the term of the tenancy. We find it impossible to find that definition meaning only the original landlord'4 From the above case we can see that if in the agreement the covenant between Tasnim and Romesh was expressed, as being a personal one then the burden will not pass to Salman. If, however, Romesh made the covenant in his capacity as landlord then the burden will pass to Salman. The above seems very unfair; one may ask the question why a new landlord should be bound by the promises of the previous landlord. However, caveat emptor or buyer beware is a long established principle in English land law. It is the buyers prerogative to ensure that the land he is buying is free of covenants, or at least that he is aware of the covenants that affect the land. It is the duty of the buyers solicitor that he carries out all relevant searches and enquiries to make sure he makes the buyer aware of his rights and his obligations contained in the covenants. If Salmans solicitor failed to look into relevant matters then he can make a claim of negligence against him. It is stated that Tasnim did not tell Salman of the agreement she had with Romesh before he purchased the property. Tasnim was not under a legal obligation to supply Salman with information because she was not a party to the contract. Despite the principle of caveat emptor the seller is obliged to supply the buyer with all the relevant information regarding the land. If it is found that Romesh deliberately hid his covenant with Tasnim from Salman, then he could be guilty of fraudulent misrepresentation under contract law. It seems apparent that Salman can be forced to sell the cottages to Tasnim because covenants made by previous landlords bind subsequent landlords. If he was aware of the covenant he could have been released from it, the method of doing this has been highlighted above. If, however, the covenant was personal i.e. it only applied to Romesh then Salman cannot be forced to sell. If Salman feels that his solicitor was negligent he can bring a claim against him. If he believes that Romesh deliberately mislead him then he can then he can make a claim against him under the principles of contract law. The remedies available to a tenant for a landlords breach of covenant are damages and specific performance amongst others. So the Court can order Salman to sell the cottages to Tasnim, however I fell the most likely outcome is damages if he refuses to sell the cottages to Tasnim, this seems equitable under the circumstances. Our case can also be seen as overriding interest where Salman brought a legal Estate in Land which has Registered Title, he will not be bound by any third-party interests in that land, unless they are noted on the register, or are deemed to be overriding. Some interests are overriding because it would be unreasonable to expect their owners to register them, particularly where they are obvious. Others were made overriding to relieve the administrative burden on the Land Registry, which is a less creditable reason in these days of computerisation. Under the Land Registration Act (1925) the list of accepted overriding interests was defined in s.70 (1). This provision has now been repealed, and replaced with Schedules 1 and 3 of the Land Registration Act 2002. Schedule 1 applies to interests that are overriding when the land is registered for the first time, while schedule 3 applies when the land is subsequently sold. Overriding interests in Sch. 3 are narrower in scope than those in Sch . 1, and both are narrower in scope than the 1925 legislation. In our case Tasnim is in Actual occupation where a person is in actual occupation of land that she does not own serves to make her rights stronger against a person to whom the owner wishes to sell the land. Her occupation does not, in itself create rights where none existed before, it merely makes whatever rights she has overriding, that is, enforceable against the new owner, even if they are not registered. This article compares the actual occupation rights under the Land Registration Act 1925 with those under the LRA2002. Section.70(1)(g) of the 1925 Act states that the interests of persons in actual occupation of land, or in receipt of the rents or profits thereof, are overriding, unless enquiries are made of the right-holder, and the rights are not disclosed5. That is, these interests are capable of being enforced whether or not they are noted on the Register. The 1925 Act does not distinguish between interests that are capable of overriding first registration of the land, and those that override subsequent registered dispositions. As a result, it must be assumed that s.70 (1)(g) rights are enforceable, to the extent that they enforceable at all, against the first registered owner of an estate in land, as well as later owners which would be Salman in our case. If Tasnim seeks to rely on paragraph (g) she must show not only that the interest she claims is within its scope, but that she is in `actual occupation or `in receipt of rents or profits of the cottages for the purposes of that paragraph. She will lose the overriding status of his interests if she fails to disclose those interests when requested by a purchaser, but is otherwise under no obligation to make disclosure6. Where we can see in our case she has lost the status of overriding interest as she did not mentioned to Salman before he purchased the Franklins, she also had the time to tell him when he spoke to her directly before making the purchase person can lose his rights under paragraph (g) if he fails to disclose his rights when inquiries are made7. This is ruling was developed from the case of Hunt v Luck. The LRA 2002 provides that the person claiming an interest should have a right in the land. A right in the sense of a legal right and also has actual occupation8. It is already established that Tasnim has a legal right and actual occupation but however Tasnims claim could fail instantly according to LRA 2002 schedule 3 (2)(b) which states that a persons interest will not be enforceable if enquiry of that person was made before disposition and that person failed to disclose the right when he could reasonably be expected to have done so. If she had told Salman about her option to buy before he purchased the estate it would have then been enforceable as an overriding interest where she has actual occupation. In Ferrishurst v Wallcite 1998 the Court of Appeal decided that the capacity in which a person occupied land was distinct from the rights he held in that land. In that case, the tenant of an office building had an option to purchase his landlords title to the office, and also to an adjacent garage. The Court decided that the option was enforceable against the purchaser of the garage, even though the claimant had never physically occupied it. As of the ruling in Hunt v Luck and statutory implementation I feel Tasnim cannot use her overriding interest by actual occupation of the cottages to buy them as she did not make her option to buy known to Salman the new owner of the estate.