Estates & interests in land (legal vs equitable)

LL.01 — Estates & Interests in Land (Legal vs Equitable)

The two legal estates. Since LPA 1925 s.1(1), only two estates can exist at law: the freehold (fee simple absolute in possession) and the leasehold (term of years absolute). Everything else is either a legal interest (if within s.1(2)) or takes effect in equity (s.1(3)).

The five legal interests (s.1(2)). Capable of existing at law: an easement/profit for a fee-simple or term-of-years equivalent; a rentcharge in possession; a legal charge by way of legal mortgage; certain statutory charges; and rights of entry. An easement granted for an uncertain period (e.g. "for life") can only be equitable.

Legal requires the right formality + the right duration. Even a s.1(2) interest is only legal if correctly created. The general rule (LPA 1925 s.52) is that a deed is needed to create or transfer a legal estate/interest; a deed must comply with LP(MP)A 1989 s.1 (clear it's a deed, signed, witnessed, delivered). Registrable dispositions of registered land must also be completed by registration (LRA 2002 s.27) — until registered, the right is only equitable.

How equitable interests arise.

• A contract to grant/transfer a legal estate, if it satisfies LP(MP)A 1989 s.2 (in writing, all terms, signed by both), creates an equitable interest — Walsh v Lonsdale (equity treats an enforceable specific-performance contract as already done).
• Failed legal formality but a valid s.2 contract → equitable lease/easement.
• Trust interests (beneficial interests behind a trust of land) are equitable by definition (s.1(3)).
• Estoppel, resulting/constructive trusts generate equitable rights.

Why the distinction matters — enforceability against a buyer.

• Registered land: legal interests created by registrable disposition need substantive registration; equitable interests bind a purchaser only if protected by a notice on the register or they override (Sch.3 — most importantly an interest of a person in actual occupation, para 2).
• Unregistered land: most equitable interests are land charges registrable under LCA 1972 (void against a buyer if not registered); legal rights generally bind the world.

Common traps.

• "Legal" needs both a permitted estate/interest type and correct formality/registration — getting one right is not enough.
• A "lease for life" is not a term of years absolute (LPA 1925 s.149(6) converts it to a 90-year term).
• Equitable easements in unregistered land are registrable land charges; don't assume they bind automatically.
• Short legal leases (3 years or less, taking effect in possession, best rent, no premium) are an exception to the deed rule (LPA 1925 s.54(2)) — valid legal leases created orally.