Most of these property rights will be instantly recognisable, such as tenancies and leases but there are other, archaic rights which continue to exist although the reason for their existence expired long ago, such as chancel repair liability.
Leases and tenancies
When buying farmland, one of the first things a buyer needs to do is establish if the land is occupied and if so, by whom, and whether such occupation is exclusive. The seller may be in exclusive occupation of all the land or only a proportion of it as the remainder of which may be let as tenancies or leases, occupied exclusively by the tenants / leaseholders. Buyers do need to differentiate between those individuals who are in occupation and those with a right to be on the land or to have access to it. For instance, the owner of any sporting rights on the land may have an agreement to access those rights but is not considered ‘in occupation’. The same applies to contractors, with whom the buyer will need to draw up a new agreement if they wish to retain their services. Employees of the landowner will not count as occupants of the land although the sale agreement may require transfer of their employment (which is a separate issue).
Whether or not the buyer has to honour the existing occupational rights will depend on their legal status and whether or not they have been registered at the Land Registry. If the tenant has security of tenure under legislation such as the Agricultural Holdings Act 1986 or the Agricultural Tenancies Act 1995, then the buyer is bound to accept their tenancy rights. Buyers can agree to take on rights which have no security of tenure, such as grazing agreements, but there is no requirement to do so.
Can a buyer terminate occupational rights?
Yes, if a buyer wants exclusive occupation, there are means by which he can terminate occupational rights before the completion of the transaction. However, they need to be carefully executed if they are to be enforceable:
- Notice to Quit: this can only be served if a legal right exists to enable the landlord to do so. Such a method is time sensitive and can be challenged.
- Agreement to Surrender: this will only work if it can be proved that the agreement is not an attempt to contract out of statutory security of tenure.
- Deed of Surrender: this documents the Agreement to Surrender and makes it legally binding from the date of the deed.
- Surrender by operation of law: this applies if the tenant’s action implies that he is surrendering the tenancy (for instance by relinquishing it) and the landlord accepts the surrender. The surrender of a tenancy is usually accompanied by a surrender payment to the tenant by the landlord (the buyer in this case as a deed of surrender will be signed after exchange but prior to completion). Such a payment will attract both SDLT and CGT and possibly VAT depending on the tenant’s arrangement with HMRC with regard to their lease.
Restrictive covenants are treated as property rights, unlike an ordinary covenant (or contractual promise) which is treated as a personal right as it is enforceable against the original person who made the promise. Restrictive covenants bind the land, not the owner. An example of a restrictive covenant could be the prevention of development on part of the land which, if it was sold, would continue to apply regardless of who bought it. There are ways of paying for the release of a covenant but that relies on being able to find out who is able to enforce the covenant. This can be particularly difficult where various parcels of land have been sold off from the main estate; in this scenario, the individual landowners can all enforce the covenant against the person trying to lift it on their plot.
An easement is a property right which grants a right of way or a right of access to a third party. Examples include an easement granting a right of way across a neighbour’s land, or from a public highway, to reach the farmhouse or farm buildings, or where a utility company needs to gain access the land in order to lay and maintain a pipeline or electricity pylon.
If responsibility for repairs and maintenance is not documented in a deed, then the benefiting parties will have the right to repair and maintain the easement – but will have no obligation to do so. If the easement cannot be accessed due to a physical impediment such as overgrown vegetation, the party benefiting from the easement (such as a utility company) has the right to remove the impediment. If the parties cannot agree or come to some accommodation, their only option may be to seek a court order – but this is an expensive solution and shouldn’t be necessary in the majority of cases.
Sporting rights and profits à prendre
Sporting rights are defined as the right of a landowner to shoot or fish wild animals (including birds raised in captivity and then released) across their own land (subject to the law governing such activities). Profits à prendre allows someone to take something from another person’s land – this could be part of the land (minerals for instance) or something growing on the land (for instance, grass).
These rights are automatically passed to the buyer of the land unless they have been specifically excluded (reserved) from a sale or granted as permanent rights to a third party (usually in return for payment). Both reserved and granted rights should be on the title deeds held at the Land Registry. If the land is tenanted, the landowner has to reserve the right to shoot or fish out of the grant of the lease. Sporting and profit a prendre rights can also be acquired through uncontested use over 20 years or more, or they can be leased to an individual or club (such as an angling club).
An option agreement between a landowner and a potential purchaser of the land (or part of the land) gives the latter a legally binding agreement to buy the land either by a certain date or once a particular event (commonly the granting of planning permission) has occurred. Such an agreement is accompanied by a non-refundable deposit (which may be set against the final purchase price), essentially committing the would-be buyer to actually go ahead with the purchase. As a property right, an option to purchase must be registered at the Land Registry against the relevant land as it is binding not only on the owner who granted the option but also on future owners. Time limits relating to option agreements have changed – on those drawn up before 6 April 2010, there is a 21 year limit on an option; since 6 April 2010 there is no time limit (although it is good practice to insert one in the agreement).
A pre-emption agreement is a property right which essentially gives someone the right of first refusal if and when the landowner decides to sell land (usually because it has development potential). If that right is exercised, the next stage would be to draw up an option agreement committing both parties to the arrangement.
A pre-emption agreement does not have to be writing (although it makes sense to do so) and has to be registered at the Land Registry meaning that it will be binding on future owners of the land. However, a pre-emption does not oblige a landowner to sell the land – it just means that should he decide to do so, he has a purchaser in hand. However, he will need to take care that he does not inadvertently trigger the pre-emption by, for instance, making enquiries about the potential market value of the land. Conversely, if the land comes onto the market and the holder of the pre-emption right decides not to buy it, then he loses that right for good.
Ancient rights (or overriding interests) have, historically, been difficult to discover on an inspection of the land and most of them are, in fact, rather esoteric, historic relics that should have little bearing on modern property ownership. Many are connected with the old feudal titles associated with Lordships of the Manor. However, although seemingly archaic, a landmark case, Wallbank v Aston Cantlow, concerning an overriding interest in the form of chancel repairs brought an old right sharply into modern focus and led to the House of Lords recommending that the ‘archaic and capricious’ law was changed. Since 13 October 2013, any ancient rights (including chancel repair and manorial rights not registered with the Land Registry) will have been lost for good meaning that, unless the rights are registered, any prospective purchaser can safely ignore them should they appear at a later date (although they remain binding on the existing owner until the property is sold).