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Rights in Land
In England and Wales, rights in land are the result of nearly a thousand years of piecemeal development. Principles laid down, often centuries ago, by the courts of common law and equity sit alongside a host of legislation, much of it passed during the twentieth century.
Below, you will find more information on some of the more common types of rights in land claims.
Contents
- Proprietary estoppel and equitable claims
- Commercial property co-ownership disputes
- Option agreement disputes
- Misrepresentation and other breaches of contract
- Trespassing on commercial property
- Adverse possession
Proprietary estoppel and equitable claims
Property law requires that agreements relating to land must be in writing, or else they will not be legally binding. This principle is enshrined in Section 2 Law of Property Miscellaneous Provisions Act 1989 (LPMPA). Often, people do not realise this and enter verbal agreements about land that they do not realise are not enforceable.
Proprietary estoppel is an equitable remedy of last resort whereby parties to an agreement not compliant with the LPMPA ask the court for a remedy. Proprietary estoppel is not usually available to parties acting in the course of a business. That is because the courts expect those parties to document their business property agreements in writing. However, situations can arise where it could apply, such as disputes between family members who are also in business together.
A typical example is when a property owner verbally agrees to grant rights or transfer property to another person, if that person:
- undertakes work such as building a property;
- carries out improvements; or
- obtains planning permission at their own cost.
The parties then fall out, and the property owner argues there is no binding agreement between them because their purported agreement does not comply with the LPMPA.
We can help you if you:
- are looking to enforce a broken promise (proprietary estoppel);
- are involved in a dispute concerning the true ownership of your property; or
- need to recover assets belonging to you.
Broken promise
Proprietary estoppel is a legal remedy to enforce a broken promise. It prevents someone from relying on facts or rights which differ from earlier ones. Proving proprietary estoppel requires the claimant to show:
- there was a promise made to them by another person, usually the property owner; and
- the promisee relied on that promise to their detriment (which usually means they spent money taking active steps to improve the land or its value); and
- the promisor broke that promise; and
- it would be unconscionable for the promisor to be allowed to go back on the promise to their benefit, leaving the promisee with nothing.
What constitutes each of these requirements depends very much on the individual circumstances of each case.
What is an equitable claim?
Equity means fairness. It arose as a concept in English law in response to the need to resolve cases where otherwise there was no legal remedy. Equity is said to operate on the defendant’s conscience. So, that person’s knowledge, motives, or state of mind may be relevant to whether the court should grant the remedy.
‘Legal’ remedies are available to a successful claimant as of right, whereas equitable remedies are at the court’s discretion. This means the court will not necessarily award the successful promisee all they expected from the original agreement.
What is a resulting trust?
A resulting trust refers to a legal relationship in which one person (the resulting trustee) is the legal owner of property or an asset but on behalf of somebody else. For example, when a person (Person A) advances to their partner money to buy a house but there is no written agreement between them, the partner holds the house (or a proportion of it) on resulting trust for Person A. If the partner refuses to give Person A their share on the sale of the property, Person A can bring a resulting trust claim.
What is a constructive trust?
A constructive trust is created when one or more people are wrongfully deprived of property or an asset. This can happen when another person has unfairly or wrongfully received property, referred to as ‘unjust enrichment’. So, for example, a property is in one person’s sole name, but another makes significant contributions to the property. Perhaps they share mortgage payments and devote time and money to renovation projects. Whilst their efforts are not reflected in the legal ownership, a constructive trust occurs where it was the parties’ common intention that those efforts should nevertheless result in shared ownership.
See: TOLATA claims
What are the time limits for equitable claims?
No strict time limit exists on proprietary estoppel and equitable claims. However, the other party can raise significant delay as a defence. So, it’s always advisable to seek advice promptly.
Mediation in proprietary estoppel and equitable claims
The court expects all parties to consider alternative ways of resolving their dispute rather than proceeding immediately to court. The most common form of alternative dispute resolution is mediation.
Mediation is where an independent person (a mediator) works with the parties to attempt settlement through negotiation. Mediation is on a ‘without prejudice’ basis. This means that the parties cannot disclose anything discussed during mediation to the court should mediation prove unsuccessful.
“Oliver’s breadth and depth of knowledge is exceptional, and I could not have wished for better service. I always felt assured that my matter was in the most capable of hands.”
Commercial property co-ownership disputes
An interest in business property will likely have involved you in a significant investment in time and money. We can provide specialist advice and help to protect your interest if you find yourself involved in a dispute with your co-owner or business partner over the sale of a jointly owned property.
Disagreements can arise over who is entitled to benefit from the sale proceeds of business assets or property or in what shares. If the property is in your business partner’s name but you have contributed towards costs – perhaps the deposit, mortgage, etc. – that may entitle you to a share of the property.
Option agreement disputes
What is an option agreement?
Although there are different types of option agreements, in simple terms, they are agreements between a landowner and a potential property purchaser (usually a developer). In return for a non-refundable sum of money, the potential purchaser has a legally binding option to buy the property on a specific date, within an agreed timescale, or following a particular event (e.g. obtaining planning permission).
When drafting an option agreement, it’s a matter for negotiation whether the purchaser will deduct the non-refundable sum from the final purchase price.
How long does an option agreement last?
It’s entirely a matter for the parties how long an option agreement lasts. However, most are for either five or ten years.
You must exercise option agreements entered into before the Perpetuities and Accumulations Act 2009 came into force on 6 April 2010 within twenty one years, otherwise they are unenforceable. However, there is no maximum period for later agreements, although lengthy agreements can prove a significant disadvantage to the landowner.
Option agreement disputes
Where option agreement disputes arise, it tends to be over the price to be paid on exercising the option. However, it can also be over issues such as overage, whereby the developer agrees to additional payments if and when certain events happen.
A well-drafted option agreement will contain a mechanism for determining the price, which is usually based on the land’s market value. But that can be problematic as assessing market value is often far from straightforward, particularly if there are site-specific constraints or factors to consider.
The agreement should also contain an agreed dispute resolution mechanism, possibly including a referral for arbitration if negotiations break down.
Avoiding disputes
The best way to minimise the risk of a dispute is to have a well-drafted option agreement, clearly defining the terms to avoid misunderstandings. Our commercial property transactional colleagues have considerable experience drafting option agreements for landowners and developers.
Misrepresentation and other breaches of contract
Once contracts are exchanged for the sale or purchase of property, the terms are binding on both parties. So, if either side fails to fulfil their part of the contract, they are in breach and responsible to the other for losses incurred.
Each party’s most obvious duties are:
- A purchaser must have funds available and ready for payment.
- A Seller must have a signed disposition and any other necessary documents ready to deliver. They must also be able to give the purchaser vacant possession on completion.
Non-material breaches of contract
‘Non-material’ breaches of contract are where, despite the breach, the transaction can still proceed. This might involve something connected to a practical problem, such as central heating, for which the seller remains liable after completion.
Material breaches of contract
A material breach of contract means the transaction does not proceed on the agreed date, and payment is not made. If completion is delayed, penaltiesin the contract apply.
The parties have further time to fulfil their obligations, but if they fail to do so within the specified timescale, either party can walk away from the Contract. For example, the seller can re-market the property.
If the purchaser cannot pay the purchase price, the seller may charge interest at a penalty rate or claim the actual losses incurred. Those might include re-marketing costs and even any shortfall if a future offer is less than before.
Misrepresentation
As a potential purchaser, it’s up to you to discover what you are getting for your money. So, if you fail to ask the seller the right questions, you have little recourse should your expectations prove unfounded. That’s why your solicitor focuses on gathering information about the property and the neighbourhood from both the seller and outside agencies (searches).
However, where the seller deliberately or recklessly misrepresents a particular fact or situation, you may have a claim for misrepresentation. For example, if you bought a property with undisclosed problems, you may have a misrepresentation claim against the seller if you can establish:
- that they answered an enquiry inaccurately, and
- you can prove it was more likely than not that they were aware of this issue before completion, and
- as a result, you have suffered provable loss.
The measure of damages is usually the difference between:
- the property’s current open market value with the known problem or defect, and
- the actual price you paid.
To establish this, you will need valuation evidence from a surveyor.
For more information, see our article: Property Misrepresentation Claims
Trespassing on commercial property
Although Section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 made trespassing on residential property an offence, trespassing on commercial property is not a criminal offence.
Trespass is a risk for landlords when commercial premises are untenanted and it’s crucial to take legal advice as soon as trespassers move in as it takes time to go through the court’s eviction procedure.
However, trespass may also involve leasehold tenants who refuse to leave the premises after a landlord has obtained a possession order. If this happens, the landlord may have to return to court to obtain possession.
Possession orders: commercial property
If squatters move into a commercial property, you must apply for a possession order to evict them. It can take several weeks for the court to schedule a hearing, and whilst frustrating, it’s vital to follow court procedures. Using threats or force to evict trespassers is illegal. A landlord taking matters into their own hands can incur criminal liability under the Criminal Law Act 1977.
However, an interim possession order may be another option for a landlord evicting trespassers.
Interim possession orders: commercial property
We can advise you on applying to the court for an interim possession order, which, if granted, will require the trespassers to vacate the premises within a given timescale, e.g. 24 hours, pending a full court hearing.
It’s crucial to remember that there are time limits on applying for and serving possession orders. An application for an interim possession order for commercial property must be made within 28 days of the trespass becoming evident to the landlord.
As a landlord, you must also prove that you would have been entitled to immediate possession of the premises at the time the squatters entered illegally.
Damages
Where a tenant has failed to vacate commercial premises once after a landlord has obtained a possession order, the landlord may be entitled to claim damages.
Adverse possession
Adverse possession allows a person who is not the legal owner of a piece of land to acquire ownership rights through continuous and uninterrupted possession. The law on adverse possession is notoriously complex, and whether you are the person claiming or defending adverse possession, taking early legal advice is crucial.
See our main adverse possession page.
