Celebrating a centenary

The landscape of property law underwent a fundamental change with the enactment of the Law of Property Act 1925 (LPA 1925). Receiving royal assent on 9 April 1925, the act has become a cornerstone of English and Welsh property law. As its centenary approaches, it is appropriate to stop and reflect on its current effect and legacy.

Continuing impact on practitioners

For many property law practitioners, the minutiae of the LPA 1925 are perhaps more academic than practical, with day-to-day tasks not requiring specific reference to exact sections of the act. Indeed, for many, the LPA 1925 brings back memories of university land law, some happy, some less so. Nevertheless, it is still worth revisiting the legislation to fully appreciate its value and legacy within modern-day property law.

The act begins with section 1(1) laying out the foundation of property law, namely that the only estates in land which are capable of subsisting or being conveyed or created at law are either:

(a) an estate in fee simple absolute in possession; or

(b) a term of years absolute.

Section 1(2) then outlines what the only legal interests or charges are. Many are immediately familiar, such as the reference to estate rent charges – which are commonly used by practitioners (whether successfully or not) to make positive covenants binding – as well as a charge by way of a legal mortgage or an easement, right or privilege in or over land equivalent to a fee simple absolute in possession or of terms of years absolute. These sections form the spine of conveyancing across the country, and although they are often not specifically cited, they are still relied upon daily by practitioners.

The principle of overreaching, a device used routinely by practitioners, also finds its roots in the act. Section 2(1)(ii) tells practitioners what can be overreached, and section 27 outlines the impact of when overreaching is successful. Here, the LPA 1925 provides a fairly complete foundational code but, like almost every piece of legislation, these sections have been subject to litigation. Indeed, there has been particularly interesting intervention by the common law as to what equitable interests fall under section 2(1)(ii) (see Express v Lambert [2017] Ch 93).

Property practitioners universally know that a conveyance of a legal estate / interest requires a deed, but the question is why? Section 52 provides this foundation, stating that if a legal estate / interest is not made or conveyed via a deed, it will only take equitable, but not legal, effect.

The five acts of 1925

While there is little doubt as to the practical importance of the act, many forget that the LPA 1925 was only one of five acts passed in parliament’s great endeavour to revolutionise property legislation.

The original five acts are:

• Law of Property Act 1925
• Land Registration Act 1925 (which was updated by the Land Registration Act 2002)
• Land Charges Act 1925 (which was repealed by the Land Charges Act 1972)
• Settled Land Act 1925, and
• Trustee Act 1925 (with both being reformed by the Trusts of Land and Appointment of Trustees Act 1996).

It was Lord Birkenhead who introduced the LPA, and following its passage through parliament, the act was intended to take effect on 1 January 1925. However, due to a delay in consolidation, the bill did not take effect until 1 January 1926.

Land law before and after 1925/26

In a letter to The Times on 15 December 1920, Lord Birkenhead stated that the act’s “… general principle is to assimilate the law of real and personal estate and to free the purchaser from the obligation to enquire into the title of him from whom he purchases, any more than he would have to do if he were buying a share or a parcel of stock”. It doesn’t appear that Lord Birkenhead’s lofty aspirations have been fully realised but alongside overreaching, the reduction of legal estates to two, and the distinction between estates and interests, there are some other interesting aspects of the act that perhaps work towards his objective. This includes the following:

• The act streamlined the mortgage process. It enabled a mortgage to be created either by the execution of a charge by way of a legal mortgage or by way of a 3,000–year lease. The latter method is now not possible if the title is registered, following section 23(1) of the Land Registration Act 2002. This ensures that the fee simply remains with the mortgagor, rather than – as was the situation under the old law – the security of the loan being given through the conveyance of the land to the mortgagee and the land being reconveyed upon loan repayment. Considering modern-day mortgage law, it seems unimaginable that this power balance in favour of the mortgagee was permitted.
• The act introduced legal co-ownership that was limited to four people, with these people holding the property on trust for any number of equitable co-owners (see section 34(2)). Couple this with overreaching, and Lord Birkenhead’s aim is somewhat fulfilled, as a purchaser need not concern themselves with those who hold a constructive trust (for example), as long as the purchaser deals with two or more trustees.

For those who enjoy legal history and know of the archaic rule in Shelley’s Case from 1581, this was abolished by section 131. Indeed, the rule has been described as “one of the most difficult and by far the most notorious of the rules of the old law of real property” (Stephen’s Commentaries on the Laws of England. Vol 1. London: Butterworths, 1950, at 166). Furthermore, the doctrine of interesse termini was abolished by section 149. The removal of interesse termini is potentially the reason for the LPA 1925 introducing into section 54(2) the need for a lease to take possession – as a reminder, section 54(2) grants the ability to create a valid legal lease without a deed if the estate is under three years in term. This was not a requirement in section 2 of the Statute of Frauds 1677, which was the act’s predecessor in this area (see ‘Short leases and formality’ [2023] Estates Gazette, pp38–39). Perhaps we should wonder how we have ever survived without these principles!

Political dimension

The LPA 1925 was forged following political strains and debates between market Liberalism, new Liberalism, Labour and one nation Conservatism. Many commentators still debate on which side of the political line the act falls. For instance, overreaching is an unquestionably useful device for practitioners, making it easier to convey land; something that market liberals would support. However, it is still given a somewhat restricted scope in sections 2(1) and 2(3).

Remaining problems

As mentioned previously, section 52 tells practitioners that a legal estate / interest must be made via a deed to be legal; however, the LPA 1925 fails to outline the actual requirements of a deed. It is the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989) that provides much-needed clarity as to what a valid deed looks like. It’s a shame that the LPA 1925 did not provide this clarity at the outset, considering that the act was intended to streamline conveyancing.

Before the Conveyancing and Law of Property Act 1881 (CLPA 1881), it was necessary to expressly include all rights belonging to the land when conveyancing such land. With the aim of shortening conveyances, the CLPA 1881, and then in turn, section 62 of the LPA 1925, made this express transfer unnecessary; subject to an expression of contrary intention within the conveyance, per section 62(4).

Accordingly, section 62 operates effectively as a word-saving device in that it implies certain words automatically into a conveyance of land. This ensures that, for example, all easements and similar rights are read into a deed as legal interests. The theory behind the section is, therefore, that all rights attaching to the conveyed land would pass without the need to provide for every interest expressly within the conveyance.

The broad difficulty with section 62 is that, due to common law interpretations, the section not only implies pre-existing easements into the legal conveyance, but it can also convert pre-existing rights without a proprietary nature (such as licences) into fully effective legal easements. This interpretation is one founded by judges, so criticism of the act is perhaps unjustified in this instance.

However, section 62, coupled with this judicial interpretation, now works to distort the fundamental difference between a proprietary and personal right, as through a conveyance, a personal right can be elevated to proprietary status. Indeed, the removal of this interpretation of section 62 has been strongly supported by academics and practitioners alike; however, no amendment has yet been made. Considering that the interpretation arose over 120 years ago in International Tea Stores Co Ltd v Hobbs [1903] 2 Ch 165 and also in Wright v Macadam [1949] 2 KB 744, it is doubtful that changes will be made anytime soon, especially as we have already had the LP(MP)A 1989. Additionally, the question arises as to why the LPA 1925 did not correct, or even make clearer, how section 62 functions if this interpretation was already being applied by the courts in 1903.

In addition, to date, no one is quite sure whether section 62 amounts to an express or implied way of creating an easement (or other applicable interest). In practice, this has little implication, but the question persists.

While the LPA 1925 has played a pivotal role in streamlining conveyancing, it is not perfect, and many of its shortcomings are now unlikely to be resolved.

Changes to the LPA 1925

It seems unlikely that the LPA 1925 will be reformed imminently, even if new forms of estates and interests, such as land obligations, are introduced. If these were implemented, it seems probable that they would be enacted by new legislation rather than amendments to the LPA 1925.

In addition, there has recently been a movement in support of commonhold arrangements. A commonhold is a binding statement between flat owners that governs the relationship between the owners. In contrast with a leasehold, there is no landlord or ground rent, as the flat owners hold their property outright and enjoy a say in how the wider building is managed. Commonholds are yet to gain any great popularity in England and Wales, despite being first introduced by the Commonhold and Leasehold Reform Act 2002. Indeed, it can be said with some conviction that due to a bespoke act being created for commonholds, it seems unlikely that the LPA 1925 will undergo any great reforms itself relating to this.

As mentioned previously, section 62 has not been amended by legislation and has been subject to an array of common law interpretations. Despite the problems that section 62 attracts, it seems that if parliament was going to amend this, it would have done so already.

Conclusion

The LPA 1925 still, 100 years on, has a real impact on property lawyers and will continue to do so for the foreseeable future. The act has shaped modern property law, and I wish it a very happy anniversary.