Estate Rentcharges
| Author | Christopher Jessel |
| Pages | 35-46 |
Chapter 4
Estate Rentcharges
4.1 PRELIMINARY
Estate rentcharges are a widespread means of attaching positive obligations to land. They have ancient origins and since the Rentcharges Act 1977 they have been widely recognised by practitioners. They are mainly used for service charges although they can be used for covenants to do work.
A rentcharge is a form of incorporeal property which can subsist for the equivalent of an estate in fee simple under the LPA 1925, s 1(2)(b). Under the LRA 2002, s 3(1)(b) it can be registered with its own title. As such it is capable of having rights attached to it. Estate rentcharges are principally used to secure service charges although in principle they can include the right to enforce positive covenants.
Rentcharges are sometimes called fee farm rents,
It is called a rent charge because the land for payment therefor is charged with a distresse. If it be to the whole value of the land or to the fourth part of the value, then the rent is called a fee farme.
12.
36 Positive Covenants and Freehold Land
In his notes to Coke’s work Charles Butler
The traditional use of rentcharges was to provide a small regular income for the rentcharge owner. They are sometimes confused with ground rents under long leases which they resemble but the way they work is different. In the nineteenth century many landowners who had property suitable for development wished to sell building plots not for a single sum but instead for an annual payment equal to the interest they might have earned by investing the proceeds of sale. The advantage was that instead of depositing the money with a bank or buying government stock, which they did not understand or distrusted, the annual sum was secured on land. Sometimes this was done by granting a lease for say 999 years at a small ground rent but an alternative was to convey the freehold in return for a rentcharge. The rentcharge owner had various remedies, now consolidated in the LPA 1925, s 121.
4.2 SECTION 121
The rentcharge creates a debt and can be recovered as such.
(1) Where a person is entitled to receive out of any land, or out of the income of any land, any annual sum, payable half-yearly or otherwise, whether charged on the land or on the income of the land, and whether by way of rentcharge or otherwise not being rent incident to a reversion, then, subject and without prejudice to all estates, interests, and rights having priority to the annual sum, the person entitled to receive the annual sum shall have such remedies for recovering and compelling payment thereof as are described in this section, as far as those remedies might have been conferred by the instrument under which the annual sum arises, but not further.
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(3) If at any time the annual sum or any part thereof is unpaid for forty days next after the time appointed for any payment in respect thereof, then, although no legal demand has been made for payment thereof, the person entitled to receive the annual sum may enter into possession of and hold the land charged or any part thereof, and take the income thereof, until thereby or otherwise the annual sum and all arrears thereof due at the time of his entry, or afterwards becoming due during his continuance in possession, and all costs and expenses occasioned by nonpayment of the annual sum, are fully paid; and such possession when taken shall be without impeachment of waste.
(4) In the like case the person entitled to the annual sum, whether taking possession or not, may also by deed demise the land charged, or any part thereof, to a trustee for a term of years, with or without impeachment of waste, on trust, by all or any of the means hereinafter mentioned, or by any other reasonable means, to raise and pay the annual sum and all arrears thereof due or to become due, and all costs and expenses occasioned by nonpayment of the annual sum, or incurred in compelling or obtaining payment thereof, or otherwise relating thereto, including the costs of the preparation and execution of the deed of demise, and the costs of the execution of the trusts of that deed:
Provided that this subsection shall not authorise the creation of a legal term of years absolute after the commencement of this Act, save where the annual sum is a rentcharge held for a legal estate.
The surplus, if any, of the money raised, or of the income received, under the trusts of the deed shall be paid to the person for the time being entitled to the land therein comprised in reversion immediately expectant on the term thereby created.
The means by which such annual sum, arrears, costs, and expenses may be raised includes—
(a) the creation of a legal mortgage or a sale (effected by assignment or subdemise) of the term created in the land charged or any part thereof,
(b) the receipt of the income of the land comprised in the term.
(5) This section applies only if and as far as a contrary intention is not expressed in the instrument under which the annual sum arises, and has effect subject...
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