Law for surveyors - Estates in Land Part 1 - Freehold and Leasehold

In the last post. we looked at some of the historical context around how land is treated under English law. This post follows from that and examines in more detail the legal mechanisms used to confer ownership over land, the limitations inherent in them and how they differ from one another.

In doing this, we immediately encounter an anomaly in English law, manifested in the word “ownership”. This subject is often raised by the popular pub quiz question of: “who is the greatest landowner in England?”, the answer to which is not any of the major house builders or commercial landlords, it is in fact the crown, which technically owns it all.

This has been the case since the Norman conquest of 1066, after which William I formalised land control in England by means of the introduction of the feudal system. William achieved this by distributing parcels of land to his barons, enabling not only a very effective form of devolved government, but also an equally effective framework for the collection of taxes.

Surprisingly, this system of land control remained largely unchanged until the introduction of the Law of Property Act in 1925, which modernised many aspects of property law. However it still failed to change the fact that to this day nobody in England actually owns property in the form of land, rather they own an interest in it, in the form of an“estate in land”.

These estates take two main forms; freehold and leasehold. More recently the government has unsuccessfully attempted to introduce a third, known as commonhold. The lack of take up on this is arguably due to a lack of real commitment by the state and resistance from institutions to its introduction, but we’ll look at that in a separate post.

Freehold Estate in Land

Without being crowned monarch (a prerequisite for which appears to be that you are in fact not English), this is the closest a person will get to outright ownership of land in England.

The technical term for a modern freehold interest is a “fee simple absolute in possession”. What this actually means is that the right of occupation of the property  is held until its owner dies or sells it, or fails to pay their mortgage and suffers repossession.

In the event that its owner dies, the interest will pass onto their heir(s) as stated in their will. If an heir is not specified, the courts will look to the rules of intestacy to determine to whom the freehold will pass. In the extremely rare circumstance that no suitable heir can be found, the estate will technically revert to the crown.

Leasehold Estate in Land

If a freeholder of a piece of land or a building wants to retain ownership or control over it, they have the option to sell a leasehold interest in all or more commonly several parts of it. This mechanism is particularly effective for controlling properties with communal element so is most often found when dealing with blocks of flats; although sometimes you might encounter a leasehold house.

Effectively a leasehold interest is simply a right to exclusive occupation of the property for a specified period of time, technically know as a term of years absolute. The similarity between this and a traditional “lease” or a tenancy should not be underplayed, as in legal terms the only real distinction between the three is colloquial and is due to the length of the term. So, in effect, by purchasing a leasehold interest you are in fact buying little more than a long term tenancy, paid up front and subject to interest.

Modern leases on properties for sale are typically 999 years in length.However in the early years of the twentieth century, many were set up to last as little as 99 years. Recently, this has become a major issue for owners, valuers and mortgage lenders, particularly in larger cities. So much so in fact, that the RICS have recently published draft guidance around a formula designed to account for the diminishing value of these shorter leases.

The mortgage industry’s response has of course been rather more determined, with the majority of lenders now refusing to lend on any leasehold property where the remaining lease is 85 years or less (unless, of course, they are in London where the underwriters are predictably more lenient).

Leaseholds, as with any type of tenancy will contain a number of terms and conditions. Some will restrict the way in which a property can be used, others set out the responsibilities of the freeholder. It is important that neither party fails to recognise their obligations in this respect; although anyone who has lived in a leasehold property, or worked in property management will tell you that both often do.

They will in addition usually include an annual ground rent and a monthly charge ostensibly designed to contribute to communal repairs, facilities provision and buildings insurance.

An obvious question arises here: “what happens when a lease comes to an end does the leaseholder get thrown out on the street”? Well, technically yes, but this risk that has fortunately been considered by the courts and parliament, albeit only recently, resulting in the formation of the Leasehold Reform Act 1967 and Leasehold Reform and Urban Development act 1993.

Within the provisions of this act, leaseholders of residential leases that were greater than 21 years in length at outset are entitled to engage with their landlord by means of legal notice and renegotiate their lease. If the landlord engages, a new lease can be formed by mutual legal agreement much like any other lease. However, if a landlord refuses to grant the extension, the leaseholder can exercise their statutory right under the act to have the lease extended at a peppercorn ground rent for a period of 90 years.

It should be noted that the extension is not automatic, and a landlord can contend this by serving counter-notice. This can be done on two grounds; either; that the landlord can give “acceptable” reasons to the county court or, where leases have less than five years remaining, by exercise of a right to redevelop the property, on the provision that it will be demolished and rebuilt.

You can see that I have used the term “landlord” when referring to this area. This is important because the person with whom a leaseholder should engage is not necessarily the freeholder of the building. It is may be what the courts term a “competent landlord”. This may be a company or other individual who has by some authority come to hold sufficient legal control over the freehold as to have the capacity to enter into negotiations. Alternatively it may be a superior leaseholder whose holds a lease of sufficient length themselves to enable the grant of an extension.  

There may be circumstances where a freeholder cannot be found, or is not in a financial position to grant an extension of the lease. As this is not uncommon, the act makes provision for this. If the freeholder or competent landlord cannot be found, the courts are empowered to grant a new lease under the terms of the act as described above. This is known as a vesting order. In the event that the competent landlord has gone into receivership or is bankrupt, notice can be served on the receiver or trustee.

A leaseholder can also agree to purchase the freehold. This is a potentially complex legal process which is outside the scope of this post and is not one that is covered by the 1993 Act.  valuing surveyor is likely to be instructed in these cases to establish the value of the freehold.

More information about this process can be found at this excellent resource from the Leasehold Advisory Service

www.lease-advice.org/publications/documents/document.asp?item=17

Stockdale, M. (2011). Galbraith's building and land management law for students. Oxford: Butterworth-Heinemann.

http://www.lease-advice.org/publications/documents/document.asp?item=17

Law for surveyors - Topic Briefing - Land Law - Defining Land - Part 1

We talk about land a great deal; "land and new homes"..."how much land does this have with it?" and of course, here in the west country, we're often telling others to get off it, or so they say.

But what is land in a legal sense and why is the law around it so deeply embedded, rightly or wrongly in our history, culture and political landscape? .

My next series of posts will explore the basic technical aspects of land law, some of its anachronisms and how it underpins our prevailing political philosophy.

Within a legal context, land is a type of property. Property refers to anything which is capable of being owned. But land is unique within this definition in that unlike a pint of milk or a bar of gold, it cannot be physically handed from one person to another.

Land is also unusual in that it can be owned by one person, yet others may have a interests or rights over it which can be legally enforced. Let us take for example a sprawling country estate: The Lord of the Manor is the owner of all the land within the its boundaries. However there are also several cottages on the estate which are rented, meaning their occupants have a legal right of exclusive occupation in the form of a tenancy. In addition, there are several public rights of way which cross the surrounding farmland. Furthermore, a neighboring farmer has a private right of way over a corner of the land, agreed historically because it is the only way she can access two of her fields.

We can see from this simple example, that ownership of land does not always confer upon its owner unfettered control of it. In terms of social progress, this has largely been beneficial to society although statutory disputes like Right to Roam prove that this is not maintained without friction.

The distinction between other types of property and land is particularly interesting not in the enforcement of disputes. In "other" European countries there is a clear distinction between property that is "moveable" and that which is "immovable". This leads to the law being largely distinct in its treatment of the two categories. But this is not so clear cut in England and it is here that the English taste for legal historicism begins to emerge.

English law has traditionally taken a more hierarchical approach to property, with the freehold ownership of land seated very much at the top of the legal tree. In fact until codification of Habeas Corpus in 1679 and the rather tardy abolition of slavery in 1833 it even sat above the ownership of another human being.

But it is not the actual definition of land as property that reinforces that hierarchy, rather the remedies available in the event of dispute. In cases of freehold land being taken (i.e. occupied) unlawfully, the law allows the freeholder, or landlord to take "real" action. Historically this may have taken the form of mandated violence. Today, there are statutory controls over how this power is exercised. But despite this, the current allowance for eviction and repossession are still themselves an act of violence.

In contrast, the rights of the owner of other types of property are more obliquely enforced. To this day, property other than freehold land that is taken unlawfully can only be restored by the actions of the courts, sometimes in conjunction with the award of damages. This includes leasehold property (the distinctions between freehold and leasehold are discussed in the next post). So there is an intrinsic imbalance between the rights of a freeholder and those of a leaseholder, despite the provisions of the Assured Shorthold Tenancy Acts of 1988 and 1996.

This imbalance is far less stark in most western and central European countries, where the freehold ownership of land is not held in as high regard, economically or culturally as it is in England. This is no coincidence and is one of the reasons why the English courts are unlikely to move away from the status quo any time soon. We can assume that, for now at least, an Englishmans house will continue to be his castle.

References: 
Stockdale, M. (2011). Galbraith's building and land management law for students. Oxford: Butterworth-Heinemann.

Law for Surveyors- Rylands v. Fletcher

The rule established under Rylands v. Fletcher in 1868 is a special example of a tort of nuisance. It is often used a study case due to its clear evolution and specificity.

What were the facts of the original case?

The defendants owned a mill with some surrounding land, upon which they undertook to build a reservoir. The reservoir was to store water to use in their industrial processes.

Once the reservoir had been constructed and filled, it was found that water had leaked into a disused mineshaft below. The water had then penetrated into the tunnels of a neighbouring mine that was still very much in use by its owners.

The claimants brought a case for damages, which was held on the basis that:

“If a person brings, or accumulates, on his land anything which, if it should escape, may cause damage to his neighbour, he does so at his peril. If it does escape, and cause damage, he is responsible, however careful he may have been, and whatever precautions he may have taken to prevent the damage.” Cranworth, LJ ([1868] UKHL 1 House of Lords

What is the significance of the rule?

The main significance of this rule lies in that it established a precedent where, under such circumstances, the defendant will be held strictly liable for resulting damages.

What requisites must be met for a case to be successfully brought under this rule?

The defendant must have either brought onto, or accumulated on their land the thing which causes the damage. A defendant cannot be held responsible for something that is already there. For example in Giles v Walker (1890) 24 QBD 656 the defendant was not held liable for thistles that had propagated onto neighbouring land, damaging crops.

The thing itself need not be dangerous, but the act of it escaping must be likely to cause a mischief. For example, in Shiffman v The Grand Priory of St John [1936] 1 All ER 557, a flagpole (not in itself a dangerous thing) fell and injured the claimant and the claim was held.

There must be an escape from the boundaries of the defendant's land. If injury is sustained within those boundaries, there may be a claim under tort, but it is most likely to be one of occupiers liability or other negligence. In Read v Lyons [1947] AC 156 House of Lords, a munitions worker was injured by an explosion at the factory. As there was no escape, there was no liability under the rule.

There must be damage caused and, it is widely accepted, that damage must be to land. However there continues to be some academic discourse as to whether personal injury claims can still be brought under Rylands v Fletcher, primarily because it is a variety of nuisance.

Finally, and often most contentiously, by bringing the “thing” upon it, the defendant must be making “non-natural” use of the land.

What is contentious about the requisite of “non-natural use”?

The main contention is that the definition of “non-natural use” is bound up with the social, historic and perhaps even moral context of the time and particular case.

For example, the installation of an industrial reservoir was, at the time, considered non-natural. Now, however, it is commonplace on many industrial sites, so could a similar case now be brought? It seems unlikely.

However, there have been more recent developments that have evolved this requisite. One was the ruling in Rickards v Lothian [1913] AC 263 Privy Council. Here, the courts found that there had been no liability for a services flood in a building both because a) it had been caused by a third party and b) because there was no non-natural use of the land when measured against:

“some special use bringing with it increased danger to others, and not merely the ordinary use of the land, or such a use as is proper for the benefit of the community”

So, it can be seen here that there has been a departure from what use the land has been put to and greater emphasis on the danger and nature of the activity itself.

This was further developed in Transco plc v Stockport Metropolitan Borough Council [2004] 2 AC 1  House of Lords where Lord Bingham stated that “the rule in Rylands v Fletcher is engaged only where the defendant's use is shown to be extraordinary and unusual. This is not a test to be inflexibly applied: a use may be extraordinary and unusual at one time or in one place but not so at another time or in another place.”

What are the defences available under this rule?

There is defence where it can be proven that, either expressly or impliedly, the claimant has consented to the presence of the thing and/or the risk. For example, by living in a high-rise block of flats, one might be seen to have given implied consent for water to be stored in your neighbours water storage tank.

Another defence is where the claimant can be proven to have been at fault for the escape. In addition there is a defence where the escape is proven to be as a result of the wrongful act of a third party, as proven in Rickards v. Lothian above.

A further defence is where there has been an act of god, which could not have been reasonably foreseen, as in heavy rainfall in Nichols v Marsland (1876) 2 ExD 1. It should be noted though, that this case holds less water since a decision to the contrary in Greenock Corporation v Caledonian Railway [1917] AC 556.

Finally, there may also be defense where a person is performing a statutory duty and that statute excludes liability under Rylands and Fletcher.

What remedies are available under Rylands v. Fletcher?

It is clear that the claimant may be awarded damages for the damage to the land. It is still not clear whether damages for personal injury will be awarded since the remarks of Hoffman LJ in Transco plc v Stockport Metropolitan Borough Council [2004] 2 AC 1  House of Lords. There is no provision for pure economic loss under this rule.

http://www.e-lawresources.co.uk/

http://www.lawteacher.net/PDF/Rylands%20v%20Fletcher.pdf

http://caselawquotes.net/R/Rylands_v_Fletcher_Rule.html

http://www.publications.parliament.uk/pa/ld200203/ldjudgmt/jd031119/trans-3.htm

http://www.bailii.org/uk/cases/UKHL/1917/1917_SC_HL_56.html

CEM, (2012). All Papers. MSc - Law for Surveyors. [online] Reading: CEM. Available at: http://learn.cem.ac.uk/mod/folder/view.php?id=98458 [Accessed 1 Mar. 2015].

Stockdale, M. (2011). Galbraith's building and land management law for students. Oxford: Butterworth-Heinemann.

Occupiers Liability - Law for Surveyors

The law of Occupiers Liability sets out the duty of care owed to visitors or trespassers by the occupiers of premises. It is a distinct area of the law of tort, specifically the tort of negligence.

Precedent initially developed through common law, but by the early part of the twentieth century, claims under this area of law became increasingly common. This ultimately led to the creation of two statutes which are applied in a modern context; the Occupiers Liability Act 1957 (OLA 1957) and the Occupiers Liability Act 1984 (OLA 1984). 

  

The two acts share much in common, but whereas the OLA 1957 act sets out the occupier’s duty of care to visitors, the OLA 1984 set out the duty of care to non-visitors (trespassers). The second act has its foundations laid in the first, so it’s appropriate to begin with some of the main elements of the OLA 1957.

What is an “occupier” under the act?

Interestingly, the act does not explicitly define what an occupier actually is. However, case law suggests that an occupier is a person, or persons who has or have occupational control of the premises. It follows from this that they do not actually have to be its physical inhabitant to owe a duty of care under the act. Nor does a person need to be the owner of a property to be considered its occupier

There does not need to be exclusive control over the premises for a person to be determined its occupier. Indeed, the complex structure of modern property arrangements would mean that there would often be two or more occupiers who may owe a duty of care under the act. For example, a commercial building would have an owner, perhaps several tenants, one or more facilities management organisations and so on, all of whom might be considered occupiers according to the definition above.

The important message here is that an absentee owner or  landlord cannot necessarily avoid a duty of care by laying liability at its tenants or other occupiers doorstep. Conversely, neither can an occupier rely on the duty of care owed by the owner or landlord. The incidence of liability will very much turn on the facts of the case.

This was illustrated in AMF International Ltd v Magnet Bowling Ltd (1968). In this case, Magent Bowling were contracted by AMF International to install specialises ten-pin bowling facilities. A severe rainstorm damaged a large amount of timber on the site needed for the building work. The courts determined that both AMF and Magnet were to be considered occupiers under the OLA 1957.

What are “premises” under the act?

The definition of premises not limited to built real estate, it includes; land, vehicles, vessels, aircraft etc. Essentially any physical environment over which a person or persons might exert control.

What is a “visitor” under the act?

Clearly, someone who has been expressly invited to enter the premises will be considered a visitor. Less obvious is the concept of those on the premises in accordance with implied permission.

Implied permission is where the occupier, by word, action or lack of objection could be reasonably seen to grant a person the right to visit the premises. Postal workers and meter readers might fall into this class, but the existence of implied permission will often be determined by the facts of the case.

It is important to note that once permission has been granted, it can also be withdrawn and once this has been clearly communicated to the visitor, they will become a trespasser should they refuse to leave.

Those who have been granted contractual permission to enter will be considered visitors, for example a cinema goer with a valid ticket or a hotel guest. Such persons will also be subject to the withdrawal of permission mentioned above and also be affected by any time constraint that is expressly or implied in the contract. Taking again the example of a cinema goer, their permission to remain in the cinema may expire after a reasonable time after the end of the film, or before the closure of the premises due to normal hours of operation.

Those who are entitled by law to enter the premises will be considered visitors under the act. Examples might include police officers with a warrant or customs and excise officers. It is not a given that the an occupier will have the right to withdraw permission in theses cases.

Those who enter by means of a public or private right of way are not considered visitors under the act.

What is the extent of the occupiers liability?

The occupiers liability is one of a common duty of care to visitors to the premises. Section (1). of the act sets out that this duty of care is owed in respect of dangers; 

• due to the state of the premises
• due to things done or omitted to be done on the premises 

To illustrate this, imagine that a leaking roof in a cinema has caused water to pool on a marble floor, causing a visitor to slip. The state of the premises has allowed the ingress of the water and the occupiers have omitted to effect a repair. Furthermore they have omitted to clear the water or erect a suitable warning sign. this illustrates a case where the state of the property and an omission to act have led to a breach of duty of care.

If the pooling of water had been caused by a door that had been inappropriately propped open during a spell of bad weather, this might illustrate a case of where a thing had been done, leading to a breach.

 Section (2). of the act states that an occupier:

• should take such care as is reasonable in the circumstances of the case to see that the visitor will be reasonably safe in using the premises for the purposes for which he or she has been invited or permitted to enter.

We can see here that there is a contextual approach to the duty of care and the way in which it should be discharged. In the example of the cinema above, it can be argued that had the area been cordoned off, enabling cinema goers to safely enter and watch a film, that would have been sufficient. However, if the ingress of water had been at a velodrome, above the track, cordoning off the area would not be acceptable. The visitor could not be expected to safely use that track, even with only a small slippery area excluded.

What  will the courts consider when establishing the existence and extent of a breach of duty of care?

The courts will consider the vulnerability of the class of visitor when assessing whether the occupier has discharged its duty of care. A common example is that the occupier must be prepared to accept that children are likely to be less careful than adults.

They will also consider whether the claimant was visiting the premises to undertake works as a part of their profession. This is particularly relevant to building and maintenance contractors.

For example, a professional engineer visits the cinema to service a projector and cuts her hand on its mechanism. As this is a direct result of the work itself, the occupier of the premises is unlikely to be held liable. However, if the same engineer suffers some indirect damage, for example had slipped on the pool of water mentioned above, the occupier is likely to be held liable.

The existence of warning notices may be sufficient. to discharge the occupier’s duty of care if they can be proven to enable a visitor to be reasonably safe. However this is not automatic and cannot be relied upon as the devil will very much be in the detail.

Where the damage has been caused by the action or inaction of an independent contractor engaged by the occupier, the duty of care will be discharged so long as;

• the appointment of the contractor was a reasonable one,
• the occupier had taken necessary steps to check the competence of the contractor;
• the occupier had checked the work or where necessary appointed a qualified professional to do so. 

The courts will also accept a contractual agreement to waive the occupiers liability to the visitor. However the terms must not contravene the Unfair Contract Terms Act 1977 (UCTA).Nor should it diminish liability to any level less than that owed to a trespasser (below). Such terms can be express or implied.

If a claim is successful, what can a claimant expect to sue for?

A successful claim under the OLA 1957 enables claims for personal injury, damage to property or both.

What are the defences available to the occupier?

Where risks were willingly taken by the visitor there is a defence under volenti non fit injuria (to one who volunteers, no harm is done). This is an absolute defence where proven.

Where there can be proven to be contributory negligence, that is, where the claimant has failed to take reasonable care to protect themselves from harm, there may be a whole or partial defence.

Trespassers and the OLA 1984

The OLA 1984 defines an occupier and premises in the same way as the OLA 1954, but extends the duty of care to Non-visitors so long as; 

• The occupier is aware of the danger or has reasonable grounds to believe it exists.
• The occupier knows or should reasonably know that the non-visitor is in the vicinity of the risk; or is likely to enter the vicinity
• The risk is one that’ given the circumstances, the occupier could reasonably be expected to offer protection.

What will the courts consider when establishing the existence and extent of a breach of duty of care to non-visitors?

The courts will consider a number of factors such as; the age of the non-visitor, the method of entry, the nature of the occupiers business and the extent of the risk.

The erection of signs may again discharge the occupier's duty of care. But particular caution must be taken. The very nature of trespass means that the location of the sign might not coincide with the entry point. In addition, a sign simply declaring “keep out” is not sufficient, partly because it is by no means risk-specific. A further consideration, linked to the paragraph above, is that signs are often not effective against children.

In previous case law, there was a consideration of “common humanity”. In practical terms, this means that the courts will consider how burdensome it may have been for the occupier to affect sufficient precautions given their own circumstances. This is no longer the case, although in reality the courts will often take this into account.

What are the defences available to the occupier?

Both Volenti (consent) and contributory negligence are available. Contractual exclusion of liability is a grey area, as whilst the 1957 act expressly refers to this right subject to UCTA 1977, the 1984 act does not. This seems to be a legislative oversight that has yet to be addressed, although such provision might enable occupiers to diminish liability to the point of rendering the act irrelevant.

If a claim is successful, what can a claimant expect to sue for?

The OLA 1984 only allows for claims for personal injury, excluding claims for property.

Bermingham, V. (2002). Tort. London: Sweet & Maxwell.

CEM, (2012). All Papers. MSc - Law for Surveyors. [online] Reading: CEM. Available at: http://learn.cem.ac.uk/mod/folder/view.php?id=98458 [Accessed 1 Mar. 2015].

 http://e-lawresources.co.uk/

 Stockdale, M. (2011). Galbraith's building and land management law for students. Oxford: Butterworth-Heinemann.

Aycliffe and Peterlee New Towns!

Can't wait to get stuck into this classic discourse on post-war urban planning! #architecture #surveying #builtenvironment #conservation #rics #research #urbanism #newtowns #aycliffe #peterlee #townplanning #postwar #modernism #bravenewworld