312Property Law

recognise that a property interest had been transferred or granted by one person to another. For example, if I want to grant you a ten-year lease of my house, I must do so by executing a deed: if I do not use a deed, you will not get a legal lease even if you move in and pay the agreed rent and we both act throughout the ten years as if you had the lease which I have purported to grant you. However, the Chancery courts were more flexible, and in certain circumstances they would regard you as having a lease even though all the requirements for creating a valid legal lease had not been observed. You would then have an equitable lease rather than a legal lease. This still applies today, and it applies to any type of property interest: all property interests that can be legal (fee simple interests in land, leases, mortgages, easements, choses in action such as the right to sue on a debt) can also be equitable, and the way to tell whether the interest is legal or equitable is to look at the way in which it was created or transferred to the present holder.

8.3.1.2. Novel interests

In addition, the Chancery courts created or recognised some proprietary interests which had no legal equivalent. As Neave et al., in Sackville and Neave explain, these were interests ‘developed by equity to mitigate the harshness of rigid common law rules and to satisfy a commercial need which the common law left unfulfilled’. The most obvious example is the one that arose out of equity’s creation of the institution of the trust, which split entitlement to benefit from a thing from management and control of it. This was done by requiring the legal owner of a thing to use it not for his own benefit but for the benefit of someone else. The proprietary interest of the beneficiary is equitable, and there is no legal counterpart. The equitable interest of a beneficiary under a trust is not the only novel property interest created by equity and which has no legal equivalent. Others include the restrictive covenant (considered in Chapter 6), estate contracts and options to purchase (considered in Chapter 12), and both the charge and the mortgagor’s equity of redemption (Chapter 18). Consequently, although there are equitable equivalents of all interests that can exist as legal interests, the reverse is not true: some equitable interests have no legal equivalent.

8.3.2. Legal and equitable interests now

Once the jurisdictions of the common law and Chancery courts were merged, all courts recognised both legal and equitable property interests, but continued to categorise them as legal or equitable, depending on the jurisdiction in which they originated and the way in which they were created or transferred. This distinction between legal and equitable status has been perpetuated, for reasons which will become apparent below, but some significant changes in the content of each category have been made by statute. First, there have been some additions: whenever a new property interest is now created by statute, it will be expressly stated whether the interest is to be legal or equitable. So, for example, the spouse’s statutory right of occupation in the matrimonial home created by the Matrimonial