Commonhold—A Prospect of Promise

DOIhttp://doi.org/10.1111/j.1468-2230.1995.tb02026.x
AuthorD.N. Clarke
Publication Date01 Jul 1995
Commonhold
-
A
Prospect
of
Promise
D.
N.
Clarke
*
The introduction of a statutory form of commonhold title will permit the freehold
ownership of flats and offer an alternative form of land ownership in a wide variety
of commercial and business situations. Following the Aldridge Report of
1987l
and the drafting of a Commonhold Bill in the Lord Chancellor’s Department
Working Paper? the progress of commonhold to the statute book appeared far
more promising than many other property reform proposals in recent times. The
scheme had (and still has) all party support and there appeared to be few issues of
principle which might cause legislative difficulties.
A
commitment was made in
the Conservative Party’s manifesto prior to the
1992
election; with the return of a
Conservative Government with that commitment, the prospects for early
legislation seemed good. Three years have since passed and the most recent
Queen’s Speech in the autumn of
1994
did not include a Commonhold Bill in the
Government’s legislative programme; indeed, prospects for legislation during the
lifetime of this Parliament do not appear to be rosy.
This article examines some of the reasons behind the lack of progress and then
suggests that a simplification and streamlining of the proposed legislation might
be
one way forward. The article divides into four sections. First, it is argued that the
defects of the present law and the potential benefits of commonhold tenure need to
be more widely appreciated to secure the necessary Parliamentary commitment to
legislation. In section two, an assessment of the relationship of the commonhold
proposals to other proposed or recently enacted reforms is made. The proposed
commonhold rules, which would be applicable to residential, commercial or mixed
developments, are analysed in the next section which offers a critique of some
aspects of the proposals as they currently exist in the light of experience of
jurisdictions overseas which have legislated for similar forms of land holding.
Finally, the prospects for widespread utilisation of commonhold tenure if and
when it appears on the statute book are evaluated.
The necessity for statutory intervention
Freehold flat ownership cannot be established except by primary statutory
provision. This truth is one that still needs to be explained to n~n-lawyers.~ There
*Solicitor and Reader in Law, University
of
Bristol.
The author would like to thank the Society of Public Teachers of Law, Osborne Clarke,Solicitors, Bristol,
and the British Academy, all
of
whom generously made available research and travel grants in connection
with the author’s research on this topic.
1
Law Commission,
Commonhold, Freehold Flats,
Report
of
a Working Group, Chairman Mr T.M.
Aldridge, July 1987, Cm 179 (hereafter ‘Aldridge’
or
‘the Aldridge Report’).
2
Lord Chancellor’s Department,
Commonhold:
A
Consultation Paper (with drafi
Bill
annexed),
November
1990,
Cm 1345 (hereafter ‘the
1990
Paper’).
3 The author became acutely aware
of
this when in discussion with an MP who had a long-standing
interest in these matters. He still apparently believed that a top
fm
of
solicitors could draft the
necessary documentation and then make it available to the profession as a whole
-
an approach
apparently found in some jurisdictions such as California.
0
The Modem Law Review Limited 1995 (MLR 58:4, July). Published by Blackwell Publishers,
108
Cowley Road, Oxford OX4 1JF and
238
Main Street, Cambridge, MA 02142, USA.
486
July
19951
Commnhold
-
A
Prospect
of
Promise
is no satisfactory way where properties are horizontally divided to enforce the
essential reciprocal positive obligations of repair and maintenance, and
interdependent services which each such owner requires. The inability of English
law to permit, for all practical purposes, the freehold horizontal division of
property is recognised to be a gap that needs to be filled. Although there are
examples of ‘flying freeholds’ both in the old common law4 and in flat
development^,^
these examples have been the subject of interest for legal
historians and stand as a warning
of
the resultant legal and practical difficulties6
rather than being the basis for any modern development of the concept. Any
horizontal division leads inevitably to mutual interdependence. The legal
arrangements for such horizontally divided property must guarantee that the owner
for the time being of each property within a block can enforce those mutual
obligations on which the enjoyment and marketability of each property depends.
Over the years, lawyers have suggested a number of possible solutions to try and
achieve this satisfactory mutual interdependence in freehold tenure. The rock on
which all such attempts have been found wanting is
Austerberry
v
Oldham
C~rporution,~
where it was held that the burden of positive obligations does not
pass from the original owner
of
the land who entered into them to successors in
title of the same property. Any hopes that the common law could be flexible
enough to overturn that decision have been dashed by the House of Lords in
Rhone
v
Stephens.*
Some of the attempts to circumvent the rule have had limited
success. The doctrine of mutual benefit and burden9 may provide a remedy in
some basic situations, but it is hedged around with limitations.10 Some believe that
the use of an estate rent charge could have been developed as an answer to some of
the difficulties,
l1
but there is little evidence of practitioners having sufficient
confidence in the device to adopt it very widely. In practice, the widely adopted
solution to horizontally divided property is to use leasehold tenure.
l2
4 ‘Flying Freehold’ titles do exist, the most well known being those in Lincoln’s
Inn.
See also Tolson,
“‘Land” Without
Earth
-
Freehold Flats in English Law’ (1950) 14 Conv
(NS)
350.
5
The Nugee Committee, using the 1981 census figures, suggested that freehold owner-occupiers in
purpose-built blocks of flats were more numerous than might
be
imagined. Both Aldridge,
Law
of
Flats
(London: Longman, 3rd ed, 1994), at p 215, precedent B2, and George and George,
me
Sale
of
Flats
(London: Sweet
&
Maxwell, 5th ed, 1984), include precedents for the sale on freehold title of
flats or maisonettes.
6 The freehold flat or maisonette is not attractive to many lending institutions; their reluctance to accept
freehold properties ‘in the air’ as security ensures that few exist.
7 (1885) 29 Ch
D
750, 781.
8
[1994] AC 310. Lord Templeman gave four reasons for refusing to overrule
Austerberry:
it would
destroy the distinction between law and equitable rules relating to covenants; it would create
difficulties, anomalies and uncertainties and affect rights in land already created on the basis of the
rule; Parliament has not acted upon recommendations for reform; and a change by legislation is
preferable since it enables assessment of, and provision for, the consequences of change.
9
Halsall
v
Brizell
[1957] Ch 169.
10
See
7ito
v
Waddell
[1977] Ch 106,289ff and the limits to the doctrine which have been made clear in
Rhone
v
Stephens
[1994] AC 310 (HL).
11
See
Bright, ‘Estate Rent Charges and the Enforcement of Positive Covenants’ [1988] Conv 99; and
Aldridge,
op
cit
n 5, ch 12, pp 103- 104 and precedent B3, p 223.
12 The full list of the suggestions to get round the rule in
Austerberry
v
Oldham
Corporation
is well
known and need not
be
repeated here. A summary of the devices can be found in Cheshire and Bum,
Modern
Law
of
Real
Property
(London: Butterwortlls, 15th ed, 1994) pp612-613. The most
practical solution, for registered land only, is to covenant with the first proprietor and insist upon
protection by land registry entries prohibiting registration of transfers without first obtaining a direct
covenant from the transferor.
In
a flat situation, this could require direct covenants with other flat
owners. It is inconvenient and still not guaranteed to achieve the objective.
487
0
The Modem Law Review Limited
1995

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