3.3.3 Impact of Law of Property Act 1925 - Hands on Example

The following questions are designed to test your knowledge about several of the most important provisions of the LPA. The answers to the questions can be found at the bottom of the page, however you are encouraged to attempt to answer the questions first based on your own recall or notes of the topic before looking at the answers.

Always think about the facts, the relevant statutory provision, the cases that interpret that provision, and what the outcome will be based on how those principles and cases apply to the question.

Unlike some of the other guides, this of course focuses heavily on the use of select provisions from the LPA to a variety of situations. This set of hands-on examples will rely on the application of the provisions listed above that are most often cited and/or are most likely to be applicable in an exam scenario.

Remember the advice given at the top of this guide: go through your statute book and highlight the relevant provisions. Although you would not be expected to give the full citations of cases you cite (just the names of the parties and the year is usually sufficient, the name of the judge giving the ratio is even better!), you will be expected to accurately cite the relevant sections and subsections of the LPA. Simply citing ‘Law of Property Act 1925’ in your exam without the corresponding section and subsection will not be sufficient!

Q1. Amalgamated Properties Ltd owns the freehold to Blackacre. It is contemplating the provision of a leasehold over the property to Brenda. Amalgamated are concerned because they are unsure for how long the leasehold could lawfully be for, and they are also unsure of the exact terminology that applies in this situation. They are also unclear of the key ingredients of a leasehold. They ask you for advice.

Q2. Charlie bought the leasehold to Whiteacre from Developers Ltd for £400,000. There were various restrictive covenants that were contained in the lease, one of which was a prohibition on the setting-up of any kind of gambling establishment. Charlie later started a poker game with several friends, playing for money. Charlie was reminded of the restrictive covenant, but he decided to expand the poker game into a small “poker den.” The head of Developers Ltd, upon hearing about this, was furious. The head sent a notice to the property, and on the same day decided to try and get into Whiteacre in order to remove Charlie. Charlie says he will close down the poker den if only to stop Developers Ltd from taking things further.

Advise Charlie.

Q3. Daria and Elmer are currently heavily indebted to their mortgage company, Fastbuck Loans Ltd for their mortgage over Greenacre. Daria and Elmer have said they want to sell Greenacre for £250,000. Fastbuck declines, reminding them the debt is currently £350,000. Fastbuck suggest a creation of several short-term leases, at the conclusion of which the property may be sold at a better price. Daria and Elmer are worried that their debt will be compounded and only increase in size if the property is not sold until after the short-term leases conclude, because they have been assured that the housing market is unlikely to improve soon.

Advise Daria and Elmer.

Q4. Graham is the sole registered proprietor of Redacre, and he is looking to sell Redacre quickly. He currently occupies it, and his estranged wife Helen visits from time to time to teach science to their children. She sleeps in a fold-down bed. Their science equipment is kept in a cupboard in the living room, though the contents are easily visible without needing to open the cupboard. Graham arranges for a new buyer, Independent Homes Ltd, to come inspect the property. Their agent, upon inspecting the property, asks about the science equipment and the bed. Graham says it’s something his wife uses when she visits from time to time. Independent don’t want to have to buy out Helen’s apparent share of the property.

Advise Independent.

A1. You will remember that this is a reference to the ‘terms of years’ which are said to subsist at law in s.1(4)of LPA. Further, s.1(1)(b) gives some indication of the status of this type of interest. What you want to be explaining is that the phrase ‘term of years’ is in some ways a misnomer because it can be for any period of time; lasting from a week to 10 million years (s.205(1)(xxvii). Given they are asking about the essential ingredients of a leasehold, you will want to reprise the key elements discussed by Lord Templeman in Street v Mountford.

A2. This is a question about forfeiture. There is a reference to a notice. This would of course be unders.146. You will therefore need to discuss the relevant parts of that section, including whether there is a breach, whether it is capable of remedy, and whether the actions of either the tenant or the landlord ought to make relief from forfeiture more or less likely. Governors of Rugby School v Tannahilldiscussed the ‘stigma’ of certain acts which, when a breach of covenant, are irremediable. Further, Charlie has had the opportunity to prevent the breach before when he was reminded of the covenant. This adds to his moral culpability. However, the landlord has opted for forcible re-entry, which may not be looked kindly upon by the court (Billson v Residential Apartments Ltd). This question is therefore a balancing exercise.

A3. This case is on all fours with Palk v Mortgage Services Funding plc. You will recall that in that case the court allowed the debtors to accelerate the sale procedure under s.91(2)in order to avoid the punitive consequences of a series of short-term leases over Greenacre. Point out the similarities between the case of Daria and Elmer and the case of Palk.

A4. The relevant section of LPA in this case is s.199, because it deals with when purchasers are fixed with notice of overriding interests. This is a case of actual notice or imputed notice, because the purchasers are made consciously aware of the relevant matters. They are therefore bound by Helen’s interest.

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