Identifying, Protecting and Enforcing Interests in Real Property Property Law Chapter 2 Identifying, Protecting and Enforcing Interests in Real Property

2.1 Introduction Property law regulates the relationships between people and property. The term ‘property’ refers to the physical things you can own, such as :- -land -furniture -computers -the rights you can exercise over physical and non-physical things Commercially (and personally) property right are valuable assets

Introduction Property is classified as: - 1. Real property - This means land or anything which is fixed or attached to the land ‘so that it has merged and become one’ with the land. For example houses, office buildings. Personal property - This means all other property which is not real property. Personal property may also be referred to as chattels.

Introduction Personal property are divided into: - Tangible personal property– property that is visible, moveable and touchable, such as cars, computers, furniture and any form of goods. Intangible personal property– property that cannot be physically touched but involves a legal right, such as copyright or trademark, ownership or shares or right to payment of debts.

2.2 Ownership and Possession The law draws a distinction between ownership of property and possession of property. OWNERSHIP - establishes that the owner has all the legal rights over that property or title over that property and that the owner may transfer ownership or possession of that property to another. POSSESSIONS - is the right to control something, they have physical control and an intention to assert exclusive control over the property possessed. The court has found that a person who has lawful possession of physical property is entitled to keep possession of it against everyone but the true owner.

2.3 Limits of Real Property In Australia, real property is governed on a State and Territory basis by legislation - the various acts are similar but not identical. An owner of land owns the surface area of the land and everything else which is attached to the land, such as buildings, plants, trees and anything else that has merged and become one with the land. QUESTION – Does about ownership rights which extend to the space above the surface as well as the soil below the surface?

Limits of Real Property

2.4 Fixtures and Fittings Fixtures are pieces of physical property that are sufficiently attached to the land to have merged and become part of the land. Examples include : - Houses Permanent fences Office buildings In-ground swimming pools. Fixtures are regarded as part of the land and are automatically acquired when someone buys the land.

Fixtures and Fittings Fittings on the other hand are those items of personal or physical property which are NOT permanently attached to the land. Examples of fittings include: - Paintings Curtains Light fittings

Fixtures and Fittings In the event of a dispute, in order to distinguish between a fixture and a fitting , the following basic rules have evolved: - For what purpose has the item been attached? If its use and expected life span indicate that the attachment is for more than the simple enjoyment of the item it is likely to be a fixture. In what manner is the item attached? What damage if any will be caused by the removal of the item? Would reasonable people normally consider the item to be part of the land or not?

2.5 Interests in land Doctrine of Tenure The doctrine of tenure arose from the feudal system of land holding imposed following the Norman Conquest of England in 1066. William the Conqueror, who claimed the English throne, seized all land and redistributed it to his followers if they would swear allegiance to him. The followers became holders or tenants of the land as the land was not granted by outright transfer but only granted from the Crown to the tenant on certain conditions. The doctrine of tenure continues to be a fundamental principle of our legal system, namely that no person can be the absolute owner of the land because all land is owned by the Crown. Instead, land owners have an estate in the land.

Interests in land Depending on the duration, estates in land are broadly divided into :- Freehold estates Leasehold estates In Mabo v Queensland (No2) (1992) 175 CLR 1, (the Mabo Case) the High Court recognised that a form of native title applies to land in Australia which can be claimed by the descendents of the original inhabitants of the land if a “continuing connection” with the land can be established. Legislation including the Native Title Act (1993) (Cth) now regulates claims for native title.

Interests in land Freehold Estates A freehold estate is an interest in land which is not for a fixed period of time. Freehold estates can be created during a person’s life or by will. Types of freehold estate include fee simple estates and life estates.

Interests in land Fee Simple Estate A fee simple estate is the most extensive interest in land and the most common form of land interest. There are no restrictions on transferring ownership of the land whether inter vivos (during the life of the owner) or by will. The word ‘fee’ means capable of being inherited. If there is no will the rules of intestacy will apply.

Interests in land Life Estate A life estate bestows upon the life tenant an interest in land that continues only for the life of the life tenant or some other specified person, or until a particular event happens. A life tenant is basically granted the use of the property by the grantor of the interest, and therefore they are not entitled to dispose of the land. They cannot sell it or will it to another upon their death.

Interests in land Leasehold Estates A leasehold interest is created by the formation of a lease between the lessor or land owner and the lessee or tenant. A lease gives the lessee exclusive possession of real property for a fixed period in exchange for rent. Types of leasehold estate include: - Lease for a fixed term Periodic tenancy Tenancy at will Tenancy at sufferance Tenancy by estoppel

2.6 Native Title Native Title describes the recognition by the Australian legal system of rights and interests of Aboriginal and Torres Strait Islander peoples to land and waters according to their traditional laws and customs. Native Title cannot be bought or sold. It can be transferred by traditional law or custom, or surrendered to government, which can then pau compensation to the native title holders in the same way as it does when acquiring rights to other property.

2.7 Title to Land Title to land describes a person’s right to ownership of land. In Australia, there are two systems for recording and regulating ownership of title to land: - Old System Title which is derived from common law Torrens Title which is a statutory system, guaranteed by the relevant government. Only about 3% of land in Australia is still owned under Old System Title There is a provision in each jurisdiction for Old System land to be converted into Torrens Title when the land changes hands.

Title to Land Old System Title Under this system inherited from British law, title to the land is proved by production of documents establishing a good chain or root of title. Registration of dealings under the old system is not compulsory; however it does have the following advantages: - It gives priority over unregistered documents. - It is secondary proof of the documents if they are lost.

Title to Land Torrens Title The Torrens System of Land Title was invented in South Australia by the premier Sir Robert Torrens in 1858 to overcome the complexities and unreliability of Old System title. Each State has legislation based on a similar system but with slight differences on a State by State basis.

Title to Land The characteristics of Torrens Title includes: Torrens Title is a statutory title gained by registration. The system uses a single publicly accessible and available register for each land holding. The land is given a unique number called a folio, which identifies the land by reference to a registered plan. Historically, an original and duplicate certificate of title was printed for each piece of land. Under State legislation, once an interest is registered, the holder of Torrens Title has indefeasibility of title. A person who purchases land can disregard any unregistered interests in respect of the land.

Title to Land Equitable Interests in Land and the Torrens System of Land Title There is a difference between common law interests in land which may be registered upon the certificate of title and equitable interests in land which cannot. ‘Legal’ interests - are those which fit one of the recognised categories of common law interests or estates and have been registered on the certificate of title. Equitable interest - is recognised and enforced by the equitable jurisdiction (equity, the law of fairness and good conscience will enforce proprietary interests).

Title to Land Equitable Interests in Land and the Torrens System of Land Title The crucial point here is that whilst the holder of the legal interest can enforce their proprietary right against any other person, the holder of the equitable interest cannot enforce their claim against an innocent third party who is purchasing the legal interest in the land if the purchaser provides consideration and has no knowledge of the equitable interest.

2.8 Torrens Title Mortgages A mortgage is a security given over interests in land for repayment of a loan. It is contractual and provides the mortgagee with legal rights against the mortgagor personally, and also against the property if the loan is not repaid according to the agreed terms. The lender is known as the mortgagee. The borrower as the mortgagor

Torrens Title Mortgages A mortgagor generally has the following rights under a Torrens Title mortgage: Possession of the land. Possession of the certificate of title of the property. The right to refinance (i.e. apply for another mortgage on the same property). The right to lease the mortgaged property. The right to pay the mortgage out in full.

Torrens Title Mortgages Mortgagee’s Remedies If a mortgagor defaults the remedies available to the mortgagee are based on the concept that the registered proprietor, the mortgagor, is the owner of the property from the outset. Default under a mortgage (i.e. a mortgagor fails to repay the loan) allows the mortgagee to: • Sue the mortgagor for breach of contract. • Enter into possession of the mortgaged premises. • Appoint a receiver to the income and rent generated by the property. • Exercises a power of sale after notice. • Foreclosure

Torrens Title Mortgages Equitable Mortgages In the Torrens title system, a legal mortgage is a mortgage that is registered on the certificate of title. If a Torrens title system mortgage is unregistered, it will be an equitable mortgage as only the law of equity will recognise it. As only registered interests will bind a subsequent purchaser, the protection for an unregistered mortgagor will be for the mortgagor to lodge a caveat notifying potential dealers of the land of their interest.

2.8 Adverse Possession Adverse Possession recognises that where an occupier who does not own the land remains in possession of a piece of land for an extended period of time (either 12 years of 15 years depending on the particular State) they may apply to the Land Titles Office for ownership of the land.