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Chapter 2 Key facts checklists
The distinction between legal and equitable interests
- The intervention of equity in land law can be seen in two key areas: the development of new equitable interests in land, and the availability of equitable remedies to enforce interests in land.
- Following the intervention of equity, interests in land may now have either legal or equitable status.
- To be legal, the interest must be one listed under s 1(2) Law of Property Act 1925 (LPA 1925) and certain formalities must be met in its creation, notably being granted by deed (s 52 LPA 1925). Where these formalities are not met, the interest may have equitable status instead, but only where equity can find a specifically enforceable valid contract to create the interest.
- All other interests in land can only ever be equitable (s 1(3) LPA 1925). To achieve equitable status, formalities in creation of the interest must be met and these formalities will differ depending upon the type of interest.
- The status of an interest in land as either legal or equitable traditionally determined the rules of enforcement of that interest against third parties: legal interests bound all third parties, whereas equitable interests would only bind third parties who were not bona fide purchasers for value of a legal estate without notice.
- Today enforcement of interests in land against third parties is determined less by its status as legal or equitable, and more upon concepts of registration.
- However, traditional rules of enforcement still play a minor role in unregistered land.