Estates and interests in land

English land law does not recognise absolute ownership. Instead, all land is held of the Crown through estates—temporal slices of title. Since 1926, only two estates can exist at law: the fee simple absolute in possession (freehold) and the term of years absolute (leasehold). All other estates and interests take effect only in equity behind a trust. This reduction from the complex medieval system of estates serves a single policy: simplifying conveyancing by ensuring purchasers need investigate only two possible legal estates. The corollary is that family property arrangements—life interests, remainders, settlements—operate exclusively through the trust mechanism, where equitable interests can be overreached (shifted from land to purchase money) when trustees sell to a purchaser who pays at least two trustees.

City of London Building Society v Flegg [1988] AC 54: Overreaching operates mechanically—if purchase money is paid to two trustees, beneficiaries' equitable interests detach from the land and bind only the proceeds, even if beneficiaries are in actual occupation. Establishes that overreaching defeats even overriding interests.

Williams & Glyn's Bank Ltd v Boland [1981] AC 487: A beneficiary in actual occupation has an overriding interest binding a mortgagee where there is only one trustee (so no overreaching occurs). The spouse's occupation is not merely the 'shadow' of the legal owner's. Critical for establishing occupiers' protection in registered land.

National Provincial Bank v Ainsworth [1965] AC 1175: Not every right affecting land is proprietary. To qualify, a right must be definable, identifiable by third parties, capable of assumption, and possess permanence. Personal rights cannot bind purchasers.

Walsh v Lonsdale (1882) 21 Ch D 9: A specifically enforceable contract for a lease creates an equitable lease as good as a legal lease in equity. Foundation of the estate contract doctrine: equity treats as done what ought to be done.

Tulk v Moxhay (1848) 2 Ph 774: Restrictive covenants bind in equity against purchasers with notice. Created the modern law of freehold covenants, later systematised as land charges in unregistered land.

Courts apply a three-step analysis. First, identify whether the interest is capable of being legal (s 1 LPA 1925: only fee simple/term of years for estates, plus five listed interests). If not listed, it's equitable. Second, check formality: legal estates require a deed (s 52 LPA) plus, in registered land, substantive registration. Without proper formality, even a capable interest remains equitable. Third, determine priority: in registered land, apply s 29 LRA 2002—registrable dispositions for value take free of unprotected interests except overriding interests (Sch 3); in unregistered land, legal interests bind the world, equitable interests bind unless registered as land charges or defeated by bona fide purchaser without notice. Always check for overreaching: if trustees (two or more) received purchase money, equitable interests under the trust cannot bind the land, only the proceeds. Actual occupation matters only if overreaching hasn't occurred.

Students routinely confuse Boland and Flegg: occupation protects only when there's a sole trustee (no overreaching); with two trustees, overreaching defeats occupation. Another error: assuming oral agreements or mere writing creates legal interests—s 52 requires a deed for legal estates. The registered/unregistered divide trips many: in registered land, notice is irrelevant (only registration or overriding status matters); in unregistered land, the doctrine of notice governs unregistered equitable interests. Finally, students forget the numerus clausus—novel rights cannot be proprietary just because parties intended them to bind purchasers.