Estates Reform
In 2010, the Northern Ireland Law Reform Commission published a major report on land law, including a Land Law and Ground Rents Reform Bill. This chapter deals with the Law Reform Commission proposals that are likely to become law.
After the commencement of the legislation, the ownership of land will have an entirely different basis. The historical legislation will be largely repealed, and new legislation will create a full modern framework.
Notwithstanding the abolition of certain land ownership forms, landowners may create interests less than full ownership. Fee farm grants, long leases, and perpetually renewable ground leases have already been abolished.
The only interests capable of subsisting are those specified by the legislation. This is not an effective position regarding equitable interest and ownership arising in this way. For example, resulting trust, construct of trust proprietary will continue to subsist.
Once the legislation commences, certain persons will be deemed owners. In the case of unregistered title, it will be the person on whom the fee simple interest is vested.
Fee tails will be abolished and generally converted into ownership.
The simple interests subject to a life interest will be deemed to be held under a trust of land, similar to that in the Republic of Ireland. In the case of registered title, the owner will be the person registered as the full owner in the land registry.
For persons holding fee simple interest, conditional fees, or determinable fee simple interest, they are treated as owners, and the rights of those who might prospectively become owners on determination or fulfilment of the condition are deemed impediments in respect to which the land tribunal has powers to modify or extinguish. Other estates that formerly subsisted will be converted into interest only.
The new concept of ownership does not procure the creation of legal interests less than ownership in favour of others for limited periods of time. Leases may be created, but there are restrictions from 1997 legislation on the creation of fee farm grants and certain leases.
The types of legal interest that may be created by the owner are listed in legislation. Interests may also be acquired by possession or long use, e.g., squatters’ rights or easements.
A lease is to cover all landlords and tenant relationships. A tenancy will be an interest rather than an estate, i.e., a lesser class of right than “full ownership.”
The classes of interest that may be created are as follows:
- Leases
- Easement
- Profits such as mining, quarry, fishing, shooting, sporting rights
- Covenants over land
- Encumbrances such as mortgages, liens, and charges
- the interest retained by the person who grants a determinable fee simple or a conditional fee simple, p
- owners given by a third party over land such as power of attorney
- Interest created by law such as statutory charge
Pre-1997 fee farm grants so far as they continue to exist are preserved. Apart from the above estates and interest in land will be equitable interest only.
The above interest may be capable of being equitable interest e.g., in the case of an agreement for a mortgage or agreement for a lease.
Fee tails are abolished. Any attempt to create a fee tail after the commencement of the act will either render the recipient “owner” or create a trust of land.
Lands vested in minors are to be treated as subject to a trust of land. The legal owners will be the trustees of land, and the minor’s interest is an equitable interest under that trust.
Co-ownership.
A new principle is introduced whereby a joint tenancy may be severed by a notice to the other owner; a notice must be served, and the severance will not be effective until the copy is registered in the registry of deeds or land registry.
The existing mechanisms of severance are largely preserved.
Where persons die in circumstances where it is not possible to tell who died first. They are deemed to be tenants in common and mutually before their death.
There are new powers for courts to deal with disputes between co-owners. They are broadly modeled under a public while in provision. Interested parties are entitled to make an application to court for an order
The Law Reform Commission proposes the abolition of many of the old anomalous rules regarding future interests. Future interests are rights that are not fixed or ascertained until a future date. Under common law, there were rules limiting the time in which such interests could be fixed. Many of these rules were arbitrary and could have surprising effects, wholly contrary to the intentions of the parties.
As under the Republic of Ireland Law Reforms, most future interests are to operate as equitable interests only. Therefore, they must take effect as a trust of land. This will apply to life estates and also the remainder of future interests after the life estate.
The perpetuity rule is not abolished, as occurred in the Republic of Ireland.
The existing perpetuity rules are replaced with a single perpetuity period of 125 years, commencing with the date of the relevant deeds. There is an exception for benefits under a pension scheme.
The new provisions will apply to deeds signed after the commencement of the legislation. However, while executed before but taking effect after the date will be effective.
An option is given to the trustees of preexisting trusts where there is difficulty in measuring the trust period to opt for a fixed perpetuity period of 100 years. Trusts may only be created in writing.
The perpetuity rules requiring the identity of the beneficiary and the extent of the gift to be ascertained will apply within the perpetuity period. The rule does not apply to a right upon the determination of a fee simple subject to a condition or determinable fee simple interest. It would not apply to options and rights of preemption and to certain future easements.
The rule applies to successive rights or interests created under a deed. This successive interest maybe subject to a condition or contingency. Each condition must be satisfied, and the interest ascertained within the perpetuity period.
There are certain exceptions applied to allow properties to pass to charities after a remote date notwithstanding the rule. This is particularly relevant where property passes from one charity to another when, for example, when a charity rents up or its objectives have been fulfilled. There are also exceptions for pension trusts. Additional specifications – exceptions maybe specified by ministerial order.
Common law position. A benefit would only fail if it becomes certain it will not vest in the perpetuity period. In contrast, many of the traps at common law with the perpetuity rule arose because a benefit would fail if there was even a theoretical chance that it might infringe the rules. If an interest might breach the rules, the wait-and-see principle applies. The benefit will be valid unless and until, it must breach the rule.
Similarly, as at common law, if a gift was made to a group of people one of whom might infringe the rules, the entire gift was void. Under the modern rules, which reenact reforms made in 1966 in Northern Ireland, persons who fall outside the rules will simply be excluded, and the gift will be valid as to the other members of the class or group.