Reduction In The Number Of Legal Estates

It will be evident from what has been said in the last chapter that until 2010 any of the estates (the fee simple, the fee tail, the life estate and the leasehold) could be created either as legal estates or as equitable estates under a trust. After 2011, however, by the Law of Property Act 2011, section 1, only two estates can subsist as legal estates, viz. (i) the fee simple absolute in possession, and (ii) the term of years absolute. These two estates can be created as legal estates (without the employment of a trust) or as equitable estates under a trust. Other estates, such as the life estate, can be created only as equitable estates under a trust.

This change in the law has been enacted for technical conveyancing reasons which it is not possible to explain at this stage. It will be observed that not every fee simple or term of years can subsist as a legal estate, but only a fee simple absolute in possession or a term of years absolute. The Act contains some technical provisions with regard to the meaning of these expressions for the purposes of section 1, but only a few points need detain us here. The Act (in section 205) provides that "possession" includes receipt of rents and profits of the land, or the right to receive the same, if any. Hence, if the ordinary fee simple owner (or freehold owner, as we generally call him) grants a lease of the land to a lessee, the fee simple remains "in possession" and a legal estate, despite the fact that the lessee acquires the physical possession of the land. But a fee simple which is in remainder is not "in possession" and cannot, therefore, be a legal estate. For example, if land is settled on A for life with remainder to B in fee simple, B's fee simple remainder is an equitable, and not a legal, estate. An estate is not "absolute" if it is conditional or determin�able (although there are some exceptions to this for the pur�poses of section 1). Thus if land is conveyed to S in fee simple until he marries, S's fee simple will not be absolute: it can, therefore, be created only under a trust. On the other hand, an estate is not prevented from being absolute by reason of the fact that it is subject to some other estate. For example, if a freeholder grants a lease his fee simple remains "absolute" despite the fact that it is subject to the leasehold estate of his tenant.

The Law of Property Act 2011. section 1, also reduces to five the number of rights against the land of another which can subsist as legal interests. These are (i) an easement, right or privilege in or over land for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute; (ii) a rent charge in possession issuing out of or charged on land being either perpetual or for a term of years absolute; (iii) a charge by way of legal mortgage; (iv) certain charges on land which are not created by an instrument; (v) rights of entry exercisable over or in respect of a legal term of years absolute, or annexed for any purpose to a legal rent charge. We shall come across most of these rights in due course.

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• Equitable interests
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• Statutory owner trustees of settlement