Leasehold estates

The ‘Term of Years’ is the most important leasehold estate and is one for a fixed determinable period of time, which may be calculated in years or even in months. It includes the renewable yearly lease. The term of years can also be conditional or absolute and in possession or in expectancy. Other leasehold estates of little importance are the ‘Estate at Will’ which is a tenancy determinable at the will of either party. The ‘Estate by Sufferance’ arises when a person with an estate for a term of years continues in possession after the term.

Equitable estates

Equitable estates can arise under a trust and where some non-compliance with the legal formalities of the common law prevents the transfer or creation of a legal estate.

Equitable estates arising under a trust.

Under a trust, the owner of an estate would convey the land to a person for the ‘use’ of another. The transferee’s moral obligation was only enforced in equity, the common law treating the transferee as the full and unfettered owner. Initially the equitable obligation was only enforced against the trustee, and could not be enforced against a new owner on the sale of the land by the trustee. Ultimately, however, the beneficiaries’ rights became enforceable against a purchaser except in the case of bona fide purchaser of the legal estate for value without notice, actual or constructive, or the trust.

Equitable estates arising other than under a trust.

These arise where non-compliance with the legal formalities prevents the transfer of a legal estate: for example, an attempt to transfer a freehold estate without the use of a formal deed, or the creation of mortgage without a deed. In both cases the court can, at its discretion, order specific performance of the agreement but will in any event recognise the transferee or the mortgagee as holding an equitable title.

Legal and equitable estates compared

Legal estates bind subsequent purchasers of the land, even those without notice of their existence, whereas equitable estates are overreached and attach to the proceeds of the sale of the legal estate where it has been sold to a bona fide purchaser for value without notice of their existence.

Rights Over the Property of Another

A person may have legal or equitable rights over property owned by another person. These interests may enable him (i) to enjoy the benefits from the land of another in the form of easements or profits a prendre or (ii) to restrict the other owner’s rights to use his property through a restrictive covenant.

Easements and profits

Easements include rights of way, rights to abstract water and rights to the support of buildings (terraced houses). Profits include rights in connection with shooting, fishing, grazing, cutting turf and taking wood.

Restrictive covenants

A restrictive covenant in a contract to transfer title restricts the transferee’s right on the use of the land for the benefit of the transferor. Legally binding between the contracting parties it had no legal force against a subsequent transferee because of privity of contract.