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TOPIC 5. REAL PROPERTY
Real property Propiedad Inmobiliaria Bundle of rights Conjunto de derechos Estate Derecho legal Lease Arrendamiento Knight Caballero Heir Heredero Intestacy Reglas de la sucesión intestada To hold Poseer (owe) Evict Deshauciar Easement Servidumbre Ownership Propiedad
Real property refers to rights in land so it refers in rights placed on:
• Buildings on the land.
• Things attached to land. (E.g.: Greenhouse, Garage…)
• Incorporeal rights (E.g.: Easements...):
• In common law property includes sky and underground so there are
rights on Ground, underground and airspace :
▲ Bocardo SA v. Star Energy UK ([2009] EWCA Civ 579): The
claimant is entitled to damages by the extraction of oil below his land without his permission. An oil company extracted oil in the property of plaintiff without its consent and the court considered that the plaintiff had property on the oil.
▲ Bernstein of Leigh (Baron) v Skyviews & General Limited
[(1978) QB 479]: Aerial photographs were taken of Bernstein’s property without plaintiff’s consent. The owner has a right of control over his property and its airspace, but this right only extends to a height necessary for the ordinary use and enjoyment of the land; the right is not unlimited.
The real property consists of a bundle of rights a group of rights:
• Possession : The right holder can hold the property.
• Control : The right holder can control the use of the property.
• Exclusion : The right holder can deny or forbid individuals the
entrance to the property.
• Enjoyment : The right holder can use the land and the property
according to any legal manner.
• Transfer : The right holder can dispose the property (sell or lease).
1) REAL PROPERTY: ESTATES IN LAND
Individuals do not own land but only estates (rights) in land and this is the doctrine of estates. F eudal system of landholding introduced in England in the Middle Ages this doctrine. Emphasis was placed on the right of possession.
Types of estates in land:
PRESENT ESTATES: Are legal rights that entitle the rightholder to the immediate possession of the property. Depending on the duration of present estates, they can be freehold estates or non-freehold estates:
• Freehold estates : The owner can hold the real property for an
indefinite or uncertain period of time. An example could be ownership of a house.
• Basic categories: The owner is only one person.
■ Fee simple
■ Fee tail
■ Life estate and life estate pur autre vie
• Concurrent estates: Several individuals have rights for the
same estate ( comunidad ).
■ Joint tenancy
• Fee simple subject to a condition subsequent (condición
resolutoria): If the event occurs, the estate does not automatically end but only when the grantor brings a claim against the grantee.
■ “I grant the property to A in fee simple on condition that
it is used as a park”. If this use terminates, it is necessary to bring a claim against A in order to terminate A’s estate.
• Fee simple subject to a condition precedent (condición
suspensiva): If a specific event occurs, a new estate begins in favor of another person.
■ “I grant the property to A in fee simple on condition that
it is used as a park, but if it is not used as a park, then to B”. If this use terminates, the A’s estate terminates and a new estate arises in favor of B (thirdparty).
Fee tail (“to A and the heirs of his body”): If this expression is used it must be inferred that a fee tail arises. It lasts as long as the grantee or his lineal descendents (children, grandchildren, etc.) are alive. The difference between the fail tail and the fee simple is that in the fee simple the right of possession extends to any heirs and in the fee tail the possession extends only to descendants. This type of estate was abolished un UK and US.
Life estate (“to A for A’s life”) and life estate pur autre vie (“to A for B’s life”). The right is granted for the life of one or more specified persons and, when these persons die, the possession returns to the grantor.
Concurrent estates : Land is owned by two or more persons simultaneously (“I grant the property to A, B and C”). There are several owners. Types :
• Joint tenancy (mancomunidad):
• Estate in land is acquired by two or more persons at the same
time and by the same instrument.
• Joint tenants have identical rights and they cannot dispose of
them; rights cannot be transferred.
• Joint tenants are regarded a single legal entity.
• There is a right of survivorship ( ius accrecendi ): If one joint
tenant dies his part is divided equally for survivor joint tenants until only one survives.
• Tenancy by the entirety (abolished in the UK and many US
States):
• Works in the same way as joined tenancy but in this case an
additional requirement is necessary because individuals must be married.
• Tenancy in common (comunidad de bienes) :
• Tenants in common have individual shares in the land and they
can dispose of them.
• There is no right of survivorship (the provisions of the will or
the rules on intestacy apply). When a tenant dies his part will pass according to provision of the will or it will pass according on the rules of intestancy.
PRESENT NON FREEHOLD ESTATES: They arise in landlord-tenant relationships (tenancies or leases). Basic categories:
• Term of years tenancy : The duration of the lease is fixed in
advance by the parties: “I grant the property to A for a 3 years- period”.
• Periodic tenancy : Definite term that extends for additional equal
periods automatically until one of the parties (the landlord or the tenant) gives advance notice: “I grant the property to A for a 3 years- to-year period”
• Tenancy at will : No fixed duration since the landlord may terminate
the relationship at any time.
• A person owned the land under the common law (legal title): The
owner is the close relative or friend.
• Other person had a right to use the land according to equity
(equitable or beneficial title): The family was the person entitled to get benefit from land. Families had an equitable remedy to force knight’s friends or relative to act in favor of knight’s interests.
In 16 th^ century, whilst the use was created very much with equity, or fairness, in mind, a very different application had been found for the concept which was not nearly so noble. This was as a method of tax avoidance. In order to avoid this practice, the Statute of Uses 1535 was enacted. However, it was not successful.
In 17th^ century modern trust doctrine is developed. And in 20 th^ and 21 st
centuries statutory regulation of trusts1 0 F C 0 0was developed:
• US: Uniform Trust Code (2000)...1 0 F C 0 0
• UK: Trustee Act (2000)...
DEFINITION
In a trust, a person ( settlor ) transfers the legal ownership of a property to another ( trustee ) to hold it on trust for the benefit of a third party ( beneficiary ). When talking bout the trust there are 3 parties: In the example the settlor is A, the trustee is B and the beneficiary is C. A transferring property to B to hold on trust for C. The effect of this ‘trust’ is that, in legal terms, B becomes the owner of the property: we might say that B holds the ‘legal title’ to the property. In the eyes of the law, B has the right to use that property or dispose of it as anyone with absolute ownership of property could do. However, because in giving the property to B to hold for
the benefit of C, A has created a trust, whilst B is technically the legal owner it is C who is actually entitled to the benefit of that property: she is the beneficial, or equitable, owner and has the benefit in equity. It is this separation of the legal or formal ‘paper’ ownership of property, and the beneficial or equitable ownership of the same which is fundamental to the anatomy of any trust; without it, trusts could not exist.
The concept of the trust as an instrument of equity remains the same. Its function is to allow a person to give their property over to another for the benefit of a third party and yet still to protect that third party, the beneficiary of the trust, from abuse by the legal owner. It is a simple method of protection and control, enabling the person creating the trust to hand property over for someone else’s benefit, whilst still retaining control of that property through the medium of the trustees.
PARTIES
Settlor (testator or testatrix when trusts are created by will): Person that creates the trust by transferring their property ( id est , the trust property or trust fund) for the benefit of a third party.
Trustee (executor or executrix where trusts are created by will): Holds the legal title to the property and can use and dispose of it as the settlor can do so. He is the person to whom the settlor entrusts their property. He can be one or more individuals or legal persons. He is appointed by the settlor in a trust instrument (or trust deed) or will. He has a fiduciary relationship : it must act in the best interests of the beneficiaries.
Beneficiary / class of beneficiaries : Holds the equitable title to the property since he is entitled to the benefit of that property. The beneficiary can be an individual who will be identified by name or by description. Alternatively the beneficiary can be a specified group of persons, such as ‘children’, ‘nephews’ or ‘relatives’. It might also include the settlor’s ‘heirs’, meaning anyone who is entitled to inherit on the settlor’s death, or ‘issue’, meaning any descendants of the settlor. These groups of persons are often referred to as a ‘class of beneficiaries’. The beneficiary (or class of beneficiaries) is commonly described as the ‘object’ of the trust because he
• I give 10.000 € to my trustees to divide between those of my children
they consider most deserving in their absolute discretion.
• Lifetime trusts : Trusts created to benefit one person during
that person’s lifetime, and another person after his/her death.
• A husband states in his will that he leaves his house on trust for
the benefit of his wife and, after the wife’s death, to the benefit of his son.
Implied trusts : Trusts are not created by a deliberate act of the settlor, but they are implied or imposed by law. So the trust is inferred from the behavior or intention of the parties.
• Resulting trusts :
• Trusts are implied by law.
• The intention of the parties is implied.
• Constructive trusts :
• Trusts are imposed by law (E.g.: statutory trusts, which are
created under the provisions of a statute in certain circumstances)
• The intention of the parties is irrelevant
DIFFERENCES WITH OTHER CONCEPTS
Contract :
• No consideration is given to the settlor.
• The settlor has no power to enforce the trust, but the beneficiary.
• Equitable remedies for breach of trust: Return of the trust property to
the trust (no damages).
Agency:
• Trustees do not act on behalf of the settlor, but the beneficiaries.
• Trustees have the legal title to the property.
Bailment: Bailment is an agreement under which the legal owner of the property (the ‘bailor’), usually under contract and for the payment of a fee, places property under the physical control (and usually possession) of another, in return for which the holder of the property (‘bailee’) assumes responsibility for the property’s safe keeping and return.
• Trustees have the legal title to the property.
MODERN USES
• Trusts for the protection of the family (lifetime trusts, trusts to
provide for the needs of the children, trusts to prevent an irresponsible child from dissipating the fund, trust to save inheritance taxes...).
• Trusts for the protection of creditors (trustee in bankruptcy).
• Trusts for keeping property safe from those who have not the
required capacity to hold property by themselves (minors or disabled individuals).
• Trusts to carry out a purpose (to look after the familiar pet, to
provide scholarships, etc.).
• Pension and investment trusts (trusts where money is invested to
achieve an increase in value that is to be paid to the beneficiaries in the future).
TRUST IN THE DCFR (Draft Common Frame of Reference):
In the Spanish legal system there is fideicomiso but it is not a specific regulation of trust. For this reason, in the European level it has been developed a regulation on trust. The regulation of the DCFR is similar to common law regulation.
• More formal requirements for constitution (X. – 2:101 and
• In common law, no requirements are foreseen as to the form of
trust.
SAMPLE MULTIPLE-CHOICE QUESTIONS OF PRIVATE LAW
1. A law that imposes a time limit for suing on a claim is referred
to as:
1.a. Grace period
1.b. Statute of limitation
1.c. Limitation period
1.d. Expiry period
2. The rule of law or legal principle that comes from the
decision, which has binding authority is referred to as:
1.e. Holding
1.f. Dicta
1.g. Judgment
1.h. Precedent
3. In England the Court of Chancery was:
1.i. A court of equity under the lord high chancellor that
began to develop in the 14 th^ century to provide remedies not obtainable in the courts of common law
1.j. A common-law court that became firmly established as
the principal organ of royal justice by the 14th^ century
1.k. The Supreme Court of Judicature until the House of Lords
was created
1.l. The Court of Chancery did not exist in England but only
in some US States such as Delaware.
4. Courts which have limited powers and whose work is subject
to judicial review are:
1.aa. Advertisements may be considered offers restricted to
those who act according to their terms regardless of whether acceptance is notified
1.bb. None of the above
8. The traditional view that punitive or exemplary damages are
exceptional in contract law cases is stated by:
1.cc. Rookes v. Barnard
1.dd. Dunlop v. New Garage and Motor Company
1.ee. Hughes v. Metropolitan Railway Co
1.ff. Chappell & Co Ltd v. Nestlé Co Ltd
9. The convention on Contracts for the International Sales of
Goods (CISG):
1.gg. Consists of a way to achieve the unification of legal
systems by using both supranational legislation and institutions
1.hh. Consists of a way to achieve the unification of legal
systems by means of a transplantation of legal institutions
1.ii. Consists of a way to achieve the unification of legal
systems by means of natural convergence
1.jj. Cannot be considered an instrument for the unification of
legal systems since Contracting Parties can exclude the application of some of its provisions
10. According to the doctrine of estates:
1.kk. Individuals are not the owners of land but only the
owners of rights in land
1.ll. Multiple individuals may have interest in one piece of
land for different times
1.mm. The duration of individuals’ right of possession is made
dependent on the character of the estate which they have in land
1.nn. All of the above are correct
11. If Peter grants his property to John in fee simple on condition
that it is used as a school, but if is not used as a school, then to Maria, Peter is granting:
1.oo. A fee simple subject to a condition subsequent
1.pp. A fee simple subject to a condition precedent
1.qq. A life state
1.rr. A reminder
12. A silent telephone call may give rise to:
1.ss. A tort of negligence
1.tt. A tort of assault
1.uu. A tort of battery
1.vv. A tort of defamation
