Basics of Land Law
With regard to basic land law, there are a few key areas to understand:
- Tenure and land
- The two legal estates in land: freehold and leasehold
- Legal and equitable interests in land: easements and freehold covenants
Tenure & Land
The law of tenure deals with the way in which land is held. Land includes anything which is built on the land as well as any right attaching to the land e.g. a right of way.
Freehold & Leasehold
Rights of ownership to land can be held in two ways:
- Freehold (also known as fee simple absolute in possession). Freeholders can in theory do anything they wish with their land. In practice, this right is limited. Freehold has no true limit and may go on indefinitely.
- Leasehold (also know as a term of years absolute). A leasehold is derived from a freehold interest (or another leasehold interest) and has two key elements:
- A fixed duration: this can be for whatever term is agreed between the freeholder and the leaseholder. The term or length of a lease is infinitely flexible. A short term lease might include a residential Assured Shorthold Tenancy (AST) with a typical minimum length of six months. Longer leases of five or 15 years may be used on business premises or residential property, although the latter is more likely to be 99, 125 or 999 years in length.
- Exclusive possession: given under the lease, it allows the leaseholder to exclude all others from the premises, including the freeholder, for the duration of the lease, as long as they comply with the terms of the lease.
It’s important to be aware of commonhold; a system which allows a number of units to share a freehold e.g. a development of flats. Previously such units needed to have leasehold units.
Easements & Freehold Covenants
While owning a property, it is possible that others may have certain rights over it, called ‘interests’, and these can be legal or equitable.
An easement, a legal interest, is a right over land e.g. the right to use the land of another, and requires two pieces of land in different ownership. It gives the owner of the land benefiting from the easement the right do something on or over the land of someone else. Examples include:
- Rights of way i.e. a right to have access over adjacent land
- Rights of lights i.e. a right that a property will not obstruct the natural passage of light to a neighbour’s home.
Easements can be expressly granted in a written document or may arise because someone has used the land of another over an extended period of time. Easements are passed from one owner to the other and may have valuation consequences.
A freehold covenant, an equitable interest, can be restrictive (negative) thus stopping the owner of other land from using that land in some way e.g. restricting residential property from business use. A restrictive covenant is passed from one owner to the next, like an easement. A positive covenant commits the owner of land to do something e.g. to fence boundaries, but will not automatically pass with land when sold. Freehold covenants may therefore have a bearing on market appraisals.
