Acquiring Property Rights from Uncompleted Sales of Lane
| Date | 01 July 1998 |
| DOI | http://doi.org/10.1111/1468-2230.00158 |
| Author | Nicholas Hopkins |
| Published date | 01 July 1998 |
Acquiring Property Rights from Uncompleted Sales of
Land
Nicholas Hopkins*
This article is concerned with the use of uncompleted sales of land as the source for
the acquisition of proprietary rights. Until a sale of land is completed by deed the
sale is generally ineffective to convey or create a legal right.1However, it is well
established that through the application of equity’s maxim ‘equity regards as done
that which ought to be done’ a specifically enforceable contract for sale of land
vests in the purchaser an equitable interest in the land. The availability of specific
performance satisfies equity that the contract ‘ought’ to be executed and equity
will therefore treat the parties as though it has already been executed. This article
first considers the nature of the proprietary right acquired and its relationship to the
contract. It will be shown that there is an inconsistency in the approach of the
courts to the relationship between the right and the contract in the different types of
sale to which the principle applies. Further, it will be shown that this inconsistency
gives rise to a conflict with the overreaching provisions of the Law of Property Act
1925 as recently amended by the Trusts of Land and Appointment of Trustees Act
1996. Secondly, it will be submitted that there is a different type of case to which
equity’s maxim should apply; these are cases in which a contract ‘ought’ to be
performed because the purchaser has paid the consideration in full. The application
of such a principle will be considered in light of section 2(1) of the Law of
Property (Miscellaneous Provisions) Act 1989.
The types of contract for sale to which equity’s maxim applies
The following discussion of the application of equity’s maxim draws a distinction
between the sale of different types of proprietary right in land. The primary
distinction is that between the sale of ‘legal rights’ and ‘equitable interests’. Legal
rights are divided into legal estates and legal interests. The distinction between
these is that legal estates (freehold and leasehold) confer a right to possession of
land, while legal interests, such as easements, are rights exercised over land which
is possessed by someone else. Equitable interests is a generic term used to describe
all proprietary rights which are classified as equitable, including, for example,
beneficial interests under a trust and equitable easements.
Contracts for sale of legal rights in land
A sale of land may involve the transfer of an existing right (for example, the
transfer of an existing freehold or leasehold estate) or the creation of a new
proprietary right (for example, the creation of a lease, easement or mortgage in
The Modern Law Review Limited 1998 (MLR 61:4, July). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA.
486
* Law Department, University of Durham.
1 Law of Property Act 1925, s 52(1).
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