transfer of property uk law

Transfers and assignments

Section 52(1) of the Law of Property Act 1925 ( LPA 1925 ) requires that a transfer of land is made by deed.

The fundamental objective of Land Registration Act 2002 ( LRA 2002 ) is 'total registration', where the register of title provides a complete and accurate reflection of the state of the title to the land at any given time. LRA 2002, s 4 requires the buyer of an unregistered freehold or lease with more than seven years unexpired (ie a qualifying estate) to apply for first registration

The Land Registration Rules 2003, SI 2003/1417 (Land Registration Rules) deal with the background technical detail of registration and HMLR has issued a number of Practice Guides.

The Land Registration Rules prescribe the form of transfer that should be used to transfer a qualifying estate. These are:

TR1—Transfer of whole

TP1—Transfer of part of registered title(s)

TR2—Transfer of whole of registered title under power of sale

TP2—Transfer of part of registered title under power of sale

TR5—Transfer of portfolio of titles (whole or part)

AS1—Assent of whole of registered title

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Law of Property Act 1925

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• UK Public General Acts
• 1925 c. 20 (Regnal. 15_and_16_Geo_5)
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Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the affected provisions when you open the content using the Table of Contents below.

Changes and effects yet to be applied to :

• s. 52(3) word substituted by 2016 c. 22 Sch. 7 para. 1(3)(a)
• s. 52(3) words inserted by 2016 c. 22 Sch. 7 para. 1(3)(b)
• s. 84 excluded by 2023 asc 3 s. 51(10)

Changes and effects yet to be applied to the whole Act associated Parts and Chapters:

• Act applied by 2023 asc 3 s. 146(5)

Whole provisions yet to be inserted into this Act (including any effects on those provisions):

• s. 52(2)(dc) (dd) inserted by 2016 c. 22 Sch. 7 para. 1(2)

Introductory Text

Part I General Principles as to Legal Estates, Equitable Interests and Powers

1. Legal estates and equitable interests.

2. Conveyances overreaching certain equitable interests and powers.

3. Manner of giving effect to equitable interests and powers.

4. Creation and disposition of equitable interests.

5. Satisfied terms, whether created out of freehold or leasehold land to cease.

6. Saving of lessors’ and lessees’ covenants.

7. Saving of certain legal estates and statutory powers.

8. Saving of certain legal powers to lease.

9. Vesting orders and dispositions of legal estates operating as conveyances by an estate owner.

10. Title to be shown to legal estates.

11. Registration in Middlesex and Yorkshire as respects legal estates.

12. Limitation and Prescription Acts.

13. Effect of possession of documents.

14. Interests of persons in possession.

15. Presumption that parties are of full age.

Death Duties

16–18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Infants and Lunatics

19. Effect of conveyances of legal estates to infants.

20. Infants not to be appointed trustees.

21. Receipts by married infants.

22. Conveyances on behalf of persons suffering from mental disorder and as to land held by them in trust.

Dispositions on Trust for Sale

23. Duration of trusts for sale.

Trusts of land

24. Appointment of trustees of land.

25. Power to postpone sale.

26. Consents to the execution of a trust for sale.

27. Purchaser not to be concerned with the trusts of the proceeds of sale which are to be paid to two or more trustees or to a trust corporation.

28. Powers of management, &c. conferred on trustees for sale.

29. Delegation of powers of management by trustees for sale.

30. Powers of court where trustees for sale refuse to exercise powers.

31. Trust of mortgaged property where right of redemption is barred.

32. Implied trust for sale in personalty settlements.

33. Application of Pt. I. to personal representatives.

Undivided Shares and Joint Ownership

34. Effect of future dispositions to tenants in common.

35. Meaning of the statutory trusts.

36. Joint tenancies.

37. Rights of husband and wife.

38. Party structures.

Transitional Provisions

39. Transitional provisions in First Schedule.

Part II Contracts, Conveyances and other Instruments

40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41. Stipulations not of the essence of a contract.

42. Provisions as to contracts.

43. Rights protected by registration.

44. Statutory commencements of title.

45. Other statutory conditions of sale.

46. Forms of contracts and conditions of sale.

47. Application of insurance money on completion of a sale or exchange.

48. Stipulations preventing a purchaser, lessee, or underlessee from employing his own solicitor to be void.

49. Applications to the court by vendor and purchaser.

50. Discharge of incumbrances by the court on sales or exchanges.

Conveyances and other Instruments

51. Lands lie in grant only.

52. Conveyances to be by deed.

53. Instruments required to be in writing.

54. Creation of interests in land by parol.

55. Savings in regard to last two sections.

56. Persons taking who are not parties and as to indentures.

57. Description of deeds.

58. Provisions as to supplemental instruments.

59. Conditions and certain covenants not implied.

60. Abolition of technicalities in regard to conveyances and deeds.

61. Construction of expressions used in deeds and other instruments.

62. General words implied in conveyances.

63. All estate clause implied.

64. Production and safe custody of documents.

65. Reservation of legal estates.

66. Confirmation of past transactions.

67. Receipt in deed sufficient.

68. Receipt in deed or indorsed evidence.

69. Receipt in deed or indorsed authority for payment to solicitor.

70. Partial release of security from rentcharge.

71. Release of part of land affected from a judgment.

72. Conveyances by a person to himself, &c.

73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

74. Execution of instruments by or on behalf of corporations.

74A. Execution of instrument as a deed

75. Rights of purchaser as to execution.

76. Covenants for title.

77. Implied covenants in conveyances subject to rents.

78. Benefit of covenants relating to land.

79. Burden of covenants relating to land.

80. Covenants binding land.

81. Effect of covenant with two or more jointly.

82. Covenants and agreements entered into by a person with himself and another or others.

83. Construction of implied covenants.

84. Power to discharge or modify restrictive covenants affecting land.

Part III Mortgages, Rentcharges, and Powers of Attorney

85. Mode of mortgaging freeholds.

86. Mode of mortgaging leaseholds.

87. Charges by way of legal mortgage.

88. Realisation of freehold mortgages.

89. Realisation of leasehold mortgages.

90. Realisation of equitable charges by the court.

91. Sale of mortgaged property in action for redemption or foreclosure.

92. Power to authorise land and minerals to be dealt with separately.

93. Restriction on consolidation of mortgages.

94. Tacking and further advances.

95. Obligation to transfer instead of re-conveying, and as to right to take possession.

96. Regulations respecting inspection, production and delivery of documents, and priorities.

97. Priorities as between puisne mortgages.

98. Actions for possession by mortgagors.

99. Leasing powers of mortgagor and mortgagee in possession.

100. Powers of mortgagor and mortgagee in possession to accept surrenders of leases.

101. Powers incident to estate or interest of mortgagee.

102. Provision as to mortgages of undivided shares in land.

103. Regulation of exercise of power of sale.

104. Conveyance on sale.

105. Application of proceeds of sale.

106. Provisions as to exercise of power of sale.

107. Mortgagee’s receipts, discharges, &c.

108. Amount and application of insurance money.

109. Appointment, powers, remuneration and duties of receiver.

110. Effect of bankruptcy of the mortgagor on the power to sell or appoint a receiver.

111. Effect of advance on joint account.

112. Notice of trusts on transfer of mortgage.

113. Notice of trusts affecting mortgage debts.

114. Transfers of mortgages.

115. Reconveyances of mortgages by endorsed receipts.

116. Cesser of mortgage terms.

117. Forms of statutory legal charges.

118. Forms of statutory transfers of legal charges.

119. Implied covenants, joint and several.

120. Form of discharge of statutory mortgage or charge.

Rentcharges

121. Remedies for the recovery of annual sums charged on land.

122. Creation of rentcharges charged on another rentcharge and remedies for recovery thereof.

Powers of Attorney

123. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

124. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

125. †Powers of attorney relating to land to be filed.

126–129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IV Equitable Interests and things in Action

130. Creation of entailed interests in real and personal property.

131. Abolition of the rule in Shelley’s case.

132. As to heirs taking by purchase.

133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

134. Restriction on executory limitations.

135. Equitable waste.

136. Legal assignments of things in action.

137. Dealings with life interests, reversions and other equitable interests.

138. Power to nominate a trust corporation to receive notices.

Part V Leases and Tenancies

139. Effect of extinguishment of reversion.

140. Apportionment of conditions on severance.

141. Rent and benefit of lessee’s covenants to run with the reversion.

142. Obligation of lessor’s covenants to run with reversion.

143. Effect of licences granted to lessees.

144. No fine to be exacted for licence to assign.

145. Lessee to give notice of ejectment to lessor.

146. Restrictions on and relief against forfeiture of leases and underleases.

147. Relief against notice to effect decorative repairs.

148. Waiver of a covenant in a lease.

149. Abolition of interesse termini, and as to reversionary leases and leases for lives.

150. Surrender of a lease, without prejudice to underleases with a view to the grant of a new lease.

151. Provision as to attornments by tenants.

152. Leases invalidated by reason of non-compliance with terms of powers under which they are granted.

153. Enlargement of residue of long terms into fee simple estates.

154. Application of Part V. to existing leases.

Part VI Powers

155. Release of powers simply collateral.

156. Disclaimer of power.

157. Protection of purchasers claiming under certain void appointments.

158. Validation of appointments where objects are excluded or take illusory shares.

159. Execution of powers not testamentary.

160. Application of Part VI. to existing powers.

Part VII Perpetuities and Accumulations

Perpetuities

161. Abolition of the double possibility rule.

162. Restrictions on the perpetuity rule.

163. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulations

164. General restrictions on accumulation of income.

165. Qualification of restrictions on accumulation.

166. Restriction on accumulation for the purchase of land.

Part VIII Married Women and Lunatics

167–170. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

171. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IX Voidable Dispositions

172. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

173. Voluntary disposition of land how far voidable as against purchasers.

174. Acquisitions of reversions at an under value.

Part X Wills

175. Contingent and future testamentary gifts to carry the intermediate income.

176. Power for tenant in tail in possession to dispose of property by specific devise or bequest.

177. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

178. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179. Prescribed forms for reference in wills.

Part XI Miscellaneous

Miscellaneous

180. Provisions as to corporations.

181. Dissolution of a corporation.

182. Protection of solicitor and trustees adopting Act.

183. Fraudulent concealment of documents and falsification of pedigrees.

184. Presumption of survivorship in regard to claims to property.

185. Merger.

186. Rights of pre-emption capable of release.

187. Legal easements.

188. Power to direct division of chattels.

189. Indemnities against rents.

Redemption and Apportionment of Rents, &c.

190. Equitable apportionment of rents and remedies for non-payment or breach of covenant.

191. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

192. Apportionment of charges payable for redemption of tithe rentcharge.

Commons and Waste Lands

193. Rights of the public over commons and waste lands.

194. Restrictions on inclosure of commons.

Judgments, &c. affecting Land

195. Equitable charges in right of judgment debt, &c.

196. Regulations respecting notices.

197. Notice of memorials registered in Middlesex and Yorkshire.

198. Registration under the Land Charges Act, 1925, to be notice.

199. Restrictions on constructive notice.

200. Notice of restrictive covenants and easements.

Part XII Construction, Jurisdiction, and General Provisions

201. Provisions of Act to apply to incorporeal hereditaments.

202. Provisions as to enfranchisement of copyholds, &c.

203. Payment into court, jurisdiction and procedure.

204. Orders of court conclusive.

205. General definitions.

206. Forms of instruments and examples of abstracts.

207. Repeals as respects England and Wales.

208. Application to the Crown.

209. Short title, commencement, and extent.

FIRST SCHEDULE

Part I Conversion of certain existing Legal Estates into Equitable Interests

Part II Vesting of Legal Estates

1. Where the purposes of a term of years, created or...

2. Where immediately after the commencement of this Act any owner...

3. Where immediately after the commencement of this Act any person...

4. Any person who, immediately after the commencement of this Act,...

5. For the purposes of this Part of this Schedule, a...

6. Under the provisions of this Part of this Schedule, the...

7. Nothing in this Part of this Schedule shall operate—

8. Any legal estate acquired by virtue of this Part of...

9. No stamp duty shall become payable by reason only of...

Part III Provisions as to Legal Estate vested in Infant

1. Where immediately before the commencement of this Act a legal...

2. Where immediately before the commencement of this Act a legal...

3. Where, immediately before the commencement of this Act, a legal...

3A. The county court has jurisdiction under proviso (iii) to paragraph...

4. Where, immediately before the commencement of this Act, a legal...

5. This Part of this Schedule does not affect the estate...

Part IV Provisions subjecting Land held in Undivided Shares to a Trust for Sale

1. Where, immediately before the commencement of this Act, land is...

2. Where undivided shares in land, created before the commencement of...

3. This Part of this Schedule shall not save as hereinafter...

4. Where, immediately before the commencement of this Act, there are...

Part V Provisions as to Party Structures and Open Spaces

1. Where, immediately before the commencement of this Act, a party...

2. Where, immediately before the commencement of this Act, an open...

3. Any person interested may apply to the court for an...

Part VI Conversion of Tenancies by entireties into Joint Tenancies

Part VII Conversion of existing Freehold Mortgages into Mortgages by Demise

1. All land, which immediately before the commencement of this Act,...

2. All land, which immediately before the commencement of this Act,...

3. The estate in fee simple which, immediately before the commencement...

4. If a sub-mortgage by conveyance of the fee simple is...

5. This Part of this Schedule applies to land enfranchised by...

6. A mortgage affecting a legal estate made before the commencement...

7. Nothing in this Part of this Schedule shall affect priorities...

8. This Part of this Schedule does not apply unless a...

Part VIII Conversion of existing Leasehold Mortgages into Mortgages by subdemise

1. All leasehold land, which immediately before the commencement of this...

2. All leasehold land, which immediately before the commencement of this...

3. The term of years absolute which was assigned by any...

4. If a sub-mortgage by assignment of a term is subsisting...

5. A mortgage affecting a legal estate made before the commencement...

6. This Part of this Schedule applies to perpetually renewable leaseholds,...

7. This Part of this Schedule applies (save where expressly excepted)...

8. Nothing in this Part of this Schedule shall affect priorities...

SECOND SCHEDULE

Implied Covenants

Part VII Covenant implied in a Conveyance for valuable consideration, other than a Mortgage, of the Entirety of Land affected by a Rentcharge

Part VIII Covenants implied in a Conveyance for valuable Consideration, other than a Mortgage, or Part of Land affected by a Rentcharge, subject to a Part (not legally apportioned) of that Rentcharge

Part IX Covenant in a Conveyance for valuable Consideration, other than a Mortgage, of the Entirety of the Land comprised in a Lease for the Residue of the Term or Interest created by the Lease

Part X Covenants implied in a Conveyance for valuable Consideration, other than a Mortgage, or Part of the Land comprised in a Lease, for the Residue of the Term or Interest created by the Lease, subject to a Part (not legally apportioned) of that Rent

THIRD SCHEDULE

Forms of Transfer and Discharge of Mortgages

FOURTH SCHEDULE

Forms relating to Statutory Charges or Mortgages of Freehold or Leasehold Land

FIFTH SCHEDULE

Forms of Instruments

SIXTH SCHEDULE

Epitomes of Abstracts of Title

SEVENTH SCHEDULE

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Property Law plays a vital role in the UK legal system , regulating various aspects of property ownership , transfer and dispute resolution. This article offers an overview of the intricate world of property law, covering its meaning, importance, key principles, and applicability in real-life situations. Additionally, it delves into notable UK property law cases, shedding light on groundbreaking legal decisions that have shaped the current legal landscape. Furthermore, the article explores the provisions and implications of the Property Law Act, highlighting the rights and responsibilities of property owners under the law. To conclude, an examination of studying property law as a prospective legal professional, discussing essential concepts, theories and study methodologies, making this article a comprehensive guide to understanding UK property law.

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Understanding Property Law in the UK Legal System

Property law meaning and importance.

In essence, property law refers to a set of rules governing the ownership, possession , transfer, and use of tangible and intangible property, including land, buildings, and intellectual property. It ensures a legal framework that promotes transparency, stability, and fairness in various property-related matters.

Key Principles of Basic Property Laws

• Ownership rights: The right to possess, control, use, and transfer property, subject to certain legal and equitable restrictions.
• Entitlement: A legal right or interest in property, which can be transferred or assigned to another individual or entity.
• Contractual agreements: The basis for most property transactions, ensuring that parties enter into legally binding agreements to buy, sell, or lease property.
• Property disputes: The resolution of conflicting claims over property, either through negotiation or legal proceedings.
• Statutory provisions: State and federal laws that regulate property ownership, possession , use, and disposal, including planning, environmental, and building regulations .

Real Property vs Personal Property

Property law examples and applications.

Buying or selling a property: Property law governs the entire process of property transactions, from drafting sale contracts to registering changes in ownership at the Land Registry. It ensures both parties' interests are protected and that the legal requirements for transferring the property are met.

Landlord and tenant disputes: Residential and commercial lease agreements are subject to specific property law regulations, which govern aspects such as rent increases, maintenance obligations, and termination of tenancy. In the event of a dispute, property law provides mechanisms for resolution, either through negotiation or legal proceedings.

Intellectual property rights: Intellectual property laws protect creators from having their inventions, creative works, and brand names used without permission. These laws ensure that property rights exist for intangible property such as patents, trademarks, and copyrights , allowing innovators and businesses to benefit from their creations.

Prominent Property Law Cases in the UK

Pioneering property law cases and their outcomes.

• Street v Mountford (1985) : This case dealt with the characteristics of a lease. The court held that a lease must have exclusive possession, a specific term, and rent. The decision clarified the distinction between leases and licenses, providing a definitive test for determining the nature of a tenant's occupancy.
• Stack v Dowden (2007) : In this case, the UK Supreme Court set out guidelines for determining the beneficial interests of cohabiting couples in property disputes. The judgment made it clear that the division of assets depends on the couple's intentions, which must have a solid factual basis and cannot be merely inferred from their financial contributions.
• Regina (Cotswold District Council) v Secretary of State for Communities and Local Government (2013) : This case concerned planning law and explored the meaning of "economic development." The court clarified that development must positively contribute to the economy, which consequently shaped how different types of property development are approached under planning law.
• Efobi v Royal Mail Group Limited (2019) : This case analyzed the limits of a landlord's statutory repairing obligations. The court ruled that landlords are not required to regularly inspect or maintain, without prior notice from the tenant, parts of the property that might potentially deteriorate during the lease term.

Property Law Cases that Shaped the Legal Landscape

• Tulk v Moxhay (1848) : This case established the principle of restrictive covenants running with the land. The decision ensured that successors in title are bound by any negative covenants that burden the land if they have notice of the covenant when purchasing the property.
• Ladd v Marshall (1954) : This case established a test for admitting fresh evidence in appeals, based on property valuation evidence that was not presented in the initial trial . This test has since been applied in numerous property valuation disputes.
• Lloyds Bank Plc v Rosset (1991) : This case set out the criteria for determining whether a spouse has an interest in a property owned by the other spouse, which can affect third-party creditors such as banks. The ruling clarified the distinction between financial contribution and equitable interest in property ownership.

Landmark Decisions in Property Disputes

Property disputes can be complex, involving various legal principles and factual circumstances. Certain landmark decisions have had a lasting impact on the resolution of property disputes, including:

• River Douglass Catchment Board v Wigan Corporation (1949) : The court recognized a "right to a proper flow" as an easement. This decision clarified the legal principles surrounding riparian rights in property law and the reasonable use of water resources.
• Clarke (Valuation Officer) v Johnson (1969) : In this case, the court addressed the validity of the "profits method" used for non-domestic property rating assessment. The decision provided a significant interpretation of how to evaluate rental valuations and assess property rates.
• Bell v Lever Brothers Ltd (1932) : The court ruled that a mistake about the value of a property was not a sufficient reason to set aside a contract . This decision underlined the principle of "caveat emptor" or "buyer beware" in property transactions, asserting that the buyer bears the risk of purchasing a less-valuable property than anticipated.

The Property Law Act and Its Provisions

Understanding the property law act.

• Lease creation and termination
• Restrictions on the disposal of property
• Creation and modification of easements
• Adverse possession of land
• Property interests and their transmission

Key Sections and Implications of the Property Law Act

• Section 1: This section defines essential terms used throughout the act, such as "land," "lease," "tenant," and "mortgagee."
• Section 2: This section stipulates that certain types of contracts for the sale or disposition of land must be in writing. It also outlines the requirements for a legally binding written agreement in the context of property transactions.
• Section 3: This section deals with the conveyance of property and the formalities required for a valid transfer of ownership.
• Section 4: This section outlines the rights and obligations of parties involved in the lease and sublease of commercial and residential properties. It also specifies the rules governing the termination of leases.
• Section 5: This section establishes certain statutory rights regarding easements and the process for creating, modifying, or extinguishing them.
• Section 6: This section provides guidance on the concept of adverse possession, including the necessary conditions for a claimant to obtain legal ownership of the land.

Rights and Responsibilities under the Property Law Act

The Property Law Act prescribes various rights and responsibilities for different property parties, facilitating the resolution of issues and disputes in a consistent and coherent manner. Some examples of rights and responsibilities under the Property Law Act include:

• Landlords: Landlords must adhere to numerous regulations regarding lease agreements, property maintenance, and rent collection. The act outlines specific obligations for landlords, ensuring the protection of tenants' rights and the equitable treatment of both parties.
• Tenants: Tenants have specific rights under the Property Law Act regarding their occupancy, use of the property, and terms of the lease. Tenants must fulfill their responsibilities, such as paying rent and abiding by the terms of their lease agreement, to enjoy uninterrupted tenancy.
• Property buyers: Property buyers are subject to certain legal requirements, such as the formalities involved in conveying property, as specified in the Property Law Act. They must also adhere to financial and procedural obligations during property transactions.
• Property sellers: Sellers are responsible for providing accurate information about the property through disclosure requirements, ensuring that the buyer is aware of any encumbrances or potential issues before completing the transaction.

Studying Property Law for Future Legal Professionals

Essential concepts and theories in property law.

• Property rights: The fundamental principles of ownership, possession, and transfer of property, encompassing real property and personal property.
• Land registration: The legal framework regulating the registration of land ownership and interests, including the role of the land registry and registered land and unregistered land distinctions.
• Leases and tenancies: An in-depth study of commercial and residential leases, including lease creation, duration, termination, and the rights and obligations of landlords and tenants.
• Easements and restrictive covenants: Understanding the creation, modification, and enforcement of rights over land, including rights of way, rights to light, and other easements, as well as the implications of restrictive covenants.
• Property dispute resolution: Exploring the various mechanisms available for resolving property disputes, such as negotiation, alternative dispute resolution (ADR), and litigation.
• Planning law and development: Studying the principles surrounding property development and land use, including planning permission, zoning, and statutory requirements.
• Mortgages and secured lending: An examination of the legal aspects of property financing, including the creation, enforcement, and priority of mortgages and other forms of secured lending.

A Guide to Mastering Property Law for Students

Property law study techniques and resources.

• Textbooks and study guides: Rely on authoritative and up-to-date textbooks, study guides, and property law primers to acquire in-depth knowledge of essential theories, concepts, and case law .
• Law school lectures and tutorials: Participate actively in lectures and tutorials, asking questions and engaging in discussions to obtain a nuanced understanding of complex property law principles.
• Legal journals and publications: Regularly read articles and publications relating to property law from reputable journals to stay current on developments in the field and gain insight into emerging legal trends.
• Online resources: Utilize reputable online databases, such as Westlaw, LexisNexis, and HeinOnline, as well as government and regulatory websites, to access case law , statutes, and other legal materials required for property law research.
• Practical case analysis: Practice analyzing property law cases and disputes factually and legally, identifying key legal principles, and applying them to different scenarios.
• Legal drafting: Develop legal drafting skills by undertaking exercises to prepare generic property contracts, leases, and other related documents, ensuring compliance with current legislation and best practice.
• Peer discussions and study groups: Engage in discussions with fellow students to share knowledge, insights, and perspectives on property law concepts and practice, enhancing comprehension through collaboration.
• Mock trials and moot courts: Participate in mock trials and moot court competitions, honing advocacy skills and ability to formulate and articulate persuasive arguments based on property law principles.

Property Law - Key takeaways

Property law meaning: Set of rules governing ownership, possession, transfer, and use of tangible and intangible property.

Key principles of basic property laws: Ownership rights, entitlement, contractual agreements, property disputes, and statutory provisions.

Real property vs personal property: Real property refers to land and permanent structures while personal property focuses on movable items and intangible property.

Prominent property law cases: Street v Mountford, Stack v Dowden, and Lloyds Bank Plc v Rosset, among others.

Property Law Act: Comprehensive guide to legal principles governing property transactions, rights, and responsibilities in the UK legal system.

Frequently Asked Questions about Property Law

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Property law governs ownership, possession, transfer, and use of tangible and intangible property, providing a legal framework for transparency, stability, and fairness in property-related matters.

Real property refers to land and permanent structures, while personal property refers to movable items and non-physical assets like intellectual property. Real property laws are more complex, while personal property laws focus on the ownership and use of movable items.

Key principles include ownership rights, entitlement, contractual agreements, property disputes, and statutory provisions relating to property ownership, possession, use, and disposal.

In what situations might property laws be applicable in the UK?

Property laws apply in situations such as buying or selling property, landlord and tenant disputes, and intellectual property rights protection for inventions, creative works, and brand names.

Which case provided a definitive test for determining the nature of a tenant's occupancy by clarifying the distinction between leases and licenses?

Street v Mountford (1985)

Which case established the principle of restrictive covenants running with the land, ensuring successors in title are bound by negative covenants if they have notice when purchasing the property?

Tulk v Moxhay (1848)

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Transfer of ownership of goods – modernising the rules

Sarah Green Commissioner, Law Commission of England and Wales

Matthew Barry Research Assistant, Law Commission of England and Wales

Time to read

The Law Commission has recently launched a consultation on a draft Bill to reform the rules that apply to the transfer of ownership of goods. In this post we explain the proposed reforms and the issues raised in the consultation paper .

In our July 2016 report , Consumer Prepayments on Retailer Insolvency, the Law Commission made a range of recommendations to enhance the protection of consumers who had paid retailers in advance for goods but had not received the goods at the point of the retailer’s insolvency. One of our recommendations was to reform the rules governing transfer of ownership. The Government asked us to draft legislation to implement this recommendation, leading to the draft Bill on which we are now consulting.

The current transfer of ownership rules are contained in the Sale of Goods Act 1979, and have remained largely unamended since 1893. These rules distinguish between “specific goods” and “unascertained goods”. Specific goods are goods which are identified and agreed upon at the time the contract of sale is made. Under the Act , the default position is that ownership of specific goods transfers when the contract is made, provided that the goods are in a “deliverable state”. What does “deliverable state” mean? The Act says that goods are in a deliverable state when the buyer is “bound to take delivery of them”. This can give rise to difficult questions of contractual construction which an insolvency practitioner (who, in practice, is the person who determines who owns what on an insolvency) may not be well placed to answer. For example, if a consumer selects a diamond ring in a shop and leaves the ring with the retailer to be inscribed, but the retailer goes insolvent before the inscription is completed, is the ring in a deliverable state?  Is the consumer bound to take delivery only when the inscription is completed, or is the inscription the subject of a separate contract to the contract of sale?  Insolvency practitioners might give different answers to these questions, creating uncertainty for consumers about their ownership of specific goods in insolvency situations.

Unascertained goods are goods which are not identified and agreed upon when the contract is made. Under the Act , the default position is that ownership of unascertained goods transfers when the goods are in a deliverable state and are “unconditionally appropriated” to the contract. What does “unconditionally appropriated” mean? Again, the answer is not entirely clear. The term is not defined in the Act. It is generally thought that unconditional appropriation means delivery, but in some cases the mere setting aside of goods has been found sufficient (compare Carlos Federspiel (1957) Lloyd’s Rep 240 with Aldridge v Johnson (1857) 119 ER 1476). Much like the “deliverable state” requirement, the requirement that unascertained goods must be “unconditionally appropriated” to the contract creates uncertainty for consumers about whether they can claim goods in an insolvency situation. 

In the consultation leading to the July 2016 report, the Law Commission was told that the current rules are difficult for consumers to understand and can lead to results which are inconsistent with consumers’ reasonable expectations of when they will acquire ownership of goods. Many aspects of the contractual relationship between consumers and retailers are now set out in the Consumer Rights Act 2015, but the rules on transfer of ownership conspicuously are not. We think consumers deserve a clear, modern statement in the Consumer Rights Act 2015 about when they will acquire ownership of goods.  With consumers increasingly paying for goods in advance online (online shopping currently accounts for nearly a third of all retail sales) and with retailer insolvencies at a five year high , the need for a clear set of transfer of ownership rules for consumers might be thought especially pressing.

The Law Commission’s draft Consumer Rights (Transfer of Ownership under Sales Contracts) Bill would insert transfer of ownership rules into the Consumer Rights Act 2015. These rules would apply to “sales contracts”, defined in the Act as contracts where the trader agrees to transfer ownership of goods to the consumer in exchange for a price. To the extent that the transfer of ownership rules in the Sale of Goods Act 1979 would also apply to these contracts, those provisions are disapplied by the draft Bill.

Like the Sale of Goods Act 1979, the draft Bill distinguishes between two types of goods: “goods which are identified and agreed on when the contract is made” and “goods which are not identified and agreed on when the contract is made”.  For goods of the former type, the draft Bill provides that the sales contract is to be treated as including a term that “ownership of the goods transfers to the consumer when the contract is made”. There is no requirement that the goods must be in a “deliverable state”. Thus, under the draft Bill, the consumer who chooses a diamond ring in a shop would obtain ownership of the ring at the moment the contract is made, even if the ring is left with the retailer to be inscribed.  This rule provides clarity for consumers about ownership of goods identified at the time of contracting, and can be easily applied by an insolvency practitioner.

For goods not identified when the contract is made, the draft Bill provides that the contract is to be treated as including a term that ownership transfers when the “goods that are to be used to fulfil the contract are identified by the trader”. There is no requirement that the goods must be “unconditionally appropriated” to the contract. The draft Bill sets out a non-exhaustive list of events and circumstances of identification, the occurrence of any of which will cause ownership to transfer to the consumer. These include: labelling the goods with the consumer’s name; setting aside the goods for the consumer; altering the goods to a specification agreed between the trader and the consumer; the trader telling the consumer that goods bearing a unique identifier will be used to fulfil the contract; the consumer examining the goods and agreeing that they are to be used to fulfil the contract; delivery of the goods to a carrier for delivery to the consumer; and delivery of the goods to the consumer. This list provides clarity for consumers as to when they will acquire ownership of goods they have contracted to buy and enables insolvency practitioners more easily to determine whether a transfer of ownership has occurred between the entry into the contract and the retailer’s insolvency.

The rules in the draft Bill would be mandatory, in contrast to those in the Sale of Goods Act 1979 which can be displaced by a contrary intention of the parties. Where a term of a sales contract provides that ownership is to transfer at a later time than under the draft Bill, the term would be to that extent of no effect. This means that a sales contract could not impose conditions upon the transfer of ownership in addition to those in the draft Bill: for example, that the consumer has paid for the goods. Section 39 of the Sale of Goods Act 1979 would, however, continue to apply, so that a trader would be able to exercise a lien over the goods in the event of non-payment by the consumer.

The draft Bill would not alter the position on the passing of risk, which is governed by separate rules in the Consumer Rights Act 2015 which would continue to apply. Under section 29 of the Act, risk passes only when the goods come into the physical possession of the consumer or a carrier commissioned by the consumer to deliver the goods. This is in contrast to the Sale of Goods Act 1979, where, unless otherwise agreed by the parties, risk passes upon the transfer of ownership.   

In the consultation paper, we ask a number of questions about the draft Bill.

One set of questions asks about whether the rules are drafted sufficiently clearly and comprehensively. We ask whether there are other events and circumstances which should result in a transfer of ownership to the consumer, whether the rules should apply beyond sales contracts (for example, to conditional sales contracts and contracts for the transfer of goods) and whether rules should also be drafted for goods forming part of a bulk.

A second set of questions asks about how our proposed rules would interact with the proprietary claims of other creditors on an insolvency: for example, third party warehouses asserting a lien over the goods as security for their unpaid fees, and suppliers claiming that the goods are subject to retention of title.  

A third set of questions asks about the formation of the sales contract. The transfer of ownership is of course reliant on a contract being in place between the consumer and the trader.  However, traders often state in their terms and conditions that they will not accept the consumer’s offer to purchase the goods (and so the contract will not form) until the goods are “dispatched” to the consumer. This may have significant implications for the transfer of ownership, for if the contract does not form until dispatch, then ownership cannot transfer, even if one of the events and circumstances in the draft Bill has occurred. We ask questions about these terms and conditions, including why they are used, by whom, and their potential impact.

The Law Commission’s consultation is open until 31 October 2020.

Responses can be made by completing an online form or by email to [email protected] .

More information, including the draft Bill, consultation paper and a summary, is available at https://www.lawcom.gov.uk/project/consumer-sales-contracts-transfer-of-ownership/ .      

How to cite this blog post (Harvard style) 

Barry, M, Green, S. (2020). Transfer of ownership of goods – modernising the rules. Available at: https://www.law.ox.ac.uk/research-and-subject-groups/property-law/blog/2020/08/transfer-ownership-goods-modernising-rules (Accessed [date]).

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Home » Law and Ethics » TRANSFER OF PROPERTY BY WILL

TRANSFER OF PROPERTY BY WILL

Real, Personal and Intangible Property

A person’s property, or assets, can be divided into two broad categories: real property and personal property (sometimes referred to as immovable and movable property[1]). A property’s classification affects the way its title is transferred, the cost and type of insurance that can protect it, how it passes through an estate (and, sometimes, to whom it may be transferred), how it is taxed and more.

Real property includes land and any fixtures to land, such as ponds, canals, and roads. It also includes formerly movable objects that have been permanently affixed to the land, such as homes, other buildings, and machinery.[2] Any property not considered real property is personal property. Personal property is generally movable and may be tangible or intangible. Tangible personal property includes all personal property that can be held or felt, such as cars, furniture, clothing, and jewelry. Intangible personal property includes items of value that confer rights, but have no physical substance, such as patents, inventions, copyrights, negotiable instruments, money orders, bonds and shares of stock.[3]

All types of property may be disposed of by will. Real property disposed of by will may also require a new deed or other documentation to clear the title after transfer. Intangible property transferred by will, such as stock or bank accounts, may need new account or asset titles as well.

Tangible property may be disposed of by a general statement in the will giving all or certain classes of property to a specific person or persons. It is also possible to dispose of individual items of tangible property through a list in the will.

Most states have authorized the creation of personal property lists or memoranda for the transfer of items of tangible personal property which is incorporated by reference into the will. This memorandum may be created by the testator without the formalities for creating or amending a will and may be changed as necessary or desired.[4] The will should reference the memorandum and perhaps even identify its place of storage or something else that leaves no doubt as to its role and the testator’s intent.

Probate and Non-Probate Property

A will is only effective to transfer property that becomes part of the probate estate. This includes most property held solely by the testator, such as real estate whose deed names the testator as sole owner, her tangible and intangible personal property (such as clothing, cars, jewelry, furniture, boats, and other personal items), along with her bank accounts, stocks, cash, and other assets. It also includes real property held by the testator as “tenants in common” with another. A tenancy in common is created when property is transferred to two or more owners, or co-tenants, and no intent is shown to provide a “right of survivorship” to either at death. Because neither party has a right of survivorship, each can sell, gift or otherwise dispose of her share. When one co-tenant dies, her share becomes part of her probate estate, which means that it can be transferred by will.[5]

However, many other forms of ownership or co-ownership cause property to pass by “operation of law” to another at death. In these cases, the property does not become part of the probate estate and so is unaffected by a will. These include:

Joint tenancies

In a joint tenancy, multiple people share property with rights of survivorship. Upon the death of one joint tenant, the remaining tenants automatically “inherit” the deceased tenant’s share.[6] Therefore, an ownership interest in real or personal property as joint tenant with right of survivorship transfers to the survivor outside of probate. A will provision that purports to dispose of a share of a joint tenancy is ineffective.

Tenancy by the entirety

In many states, a conveyance of real property jointly to a married couple creates a presumptive third form of concurrent ownership, the tenancy by the entirety.[7] This presumption can only be rebutted by evidence that there was agreement between the spouses to hold the property in another way.[8] Like a joint tenancy, a tenancy by the entirety grants the surviving spouse a right of survivorship. Thus, an ownership interest as tenant by the entirety is a non-probate asset that transfers at death to the surviving spouse by operation of law.

Community property

In community property states (which include mainly western and southwestern states),[9] spouses can hold real and personal property as community property. While spouses who hold community property may give their one-half interests in community property to whomever they choose, if a married testator holding community property doesn’t name a beneficiary, the property passes to the surviving spouse by operation of law.[10]

Some community property states[11] allow spouses to choose to hold property as community property with right of survivorship.[12] In these states, when the first spouse dies, the survivor receives automatic ownership of the property.

Assets in Trust

If a testator created a living trust, any of the testator’s property which has been transferred to the trust prior to death is not included in the probate estate.[13] States may require that the trust assets be disclosed to the probate, typically to facilitate taxation or protect the rights of creditors. For example, in Florida, “the trustee must file a notice of trust with the court of the county of the settlor’s domicile and the court having jurisdiction of the settlor’s estate.” However, the property is not subject to distribution through probate and is unaffected by the provisions of the testator’s will.[14]

Beneficiary Designations

Any asset or property owned by a person in her individual name, but which passes by contract at death, is also a non-probate asset.[15] This includes life insurance and qualified retirement plans, such as 401(k) or 403(b) plans, and Individual Retirement Accounts that contain beneficiary designations. These assets may still become part of the estate if the testator names her estate as beneficiary, where the named beneficiaries are dead or where the beneficiary designation fails for whatever reason.

Totten Trusts, Transfer on Death and Pay on Death Accounts

A bank account owned by a testator in her name, but which is designated as “in trust for” a beneficiary does not become part of the probate estate. Though not technically trusts, these are sometimes called “Totten trusts” after the New York case,  Matter of Totten ,[16] that discussed them. They pass by operation of law outside of probate unless the designated beneficiary is deceased at the time of the testator’s death.

Similarly, designations on accounts such as “pay on death” or “transfer on death” are often used to transfer bank and investment accounts to a beneficiary at death without the need for probate. A transfer on death deed may also be executed and recorded for real property, allowing its transfer to a beneficiary at death without the need for a joint deed or probate.[17]

Types of Property Transfers

The primary purpose of a will is to gift property at the testator’s death. Note that gifts of real property are sometimes called “devises” and gifts of personal property or money are sometimes called “bequests,” but both are included in the term “gift.” There are four main types of gifts that can be made through a will:

• Specific Gift: A specific gift is “a gift of a particular thing or of a specified part of the testator’s estate so described as to be distinguishable from all others of the same kind.”[18] It may be a unique painting or piece of jewelry, or land that is specifically described in the will. Only delivery of the particular item described satisfies the gift.

An example of a specific gift would be “100 shares of IBM Class B Stock” or “the painting The Persistence of Memory by Salvador Dali.” In each case, it is clear what item is to be gifted.

• General Gift: A general gift “is not limited to any particular fund or thing, [and] does not direct the delivery of any particular property…”[19] It may be satisfied out of the general assets of the testator’s estate, and it does not consist of a particular thing subject to precise identification. It does, however, specify a quantity or amount to be paid, of money or other personal property.[20]  An example of a general gift would be “$10,000 dollars.” The gift is of a certain value, presumably payable from any source.
• Demonstrative Gift: A demonstrative gift lies between a specific and general gift in terms of particularity. Like a general gift, a demonstrative gift is a certain sum of money, stock, or other property, but unlike a general gift, it is payable out of an identified fund, property, or security. An example of a demonstrative gift might be “$5,000 payable from my Bank A checking account” or “$50,000 worth of stock from my Investment account number 0100000.” While there is no specific item to be delivered, there is a specific amount or value to be delivered from a source.
• Residuary Gift: A residuary gift is made of all or part of the balance of the estate, after all other gifts have been satisfied and all charges, debts, and costs have been paid.[21] An example of a residuary gift would be “all of the rest, residue, and remainder of my estate to my son” or “50% of the balance of my estate to Keene Hospital.”

All four types of gifts are valid, and any given will may contain one, some or all of them. The practical distinctions among them manifest themselves where the estate cannot satisfy all of them or they fail for whatever reason, and priorities must be allocated. This brings us to the discussion of when gifts fail – the rules of ademption, abatement and lapse.

Ademption  occurs when a testator lists a specific gift in the will, but at the time of death the testator does not own the item, or the item is no longer part of the estate. In this situation the gift is said to be “addeemed.”  Ademption only applies to specific gifts.

Ademption comes in two general categories: ademption by extinction and ademption by satisfaction.

Ademption by extinction  occurs when an item to be devised is no longer a part of the testator’s estate at death. For example, where a testator sold her home prior to death, a gift of the home through the will was addeemed by extinction.[22]

Ademption by satisfaction  occurs when an item to be devised is given by the testator to the beneficiary during life, in satisfaction of the devise. The doctrine is designed to prevent a beneficiary, who has received the intended gift, from receiving an additional gift at the testator’s death where that was not the testator’s intention.[23] Imagine, for example, that a testator leaves “my house” to her daughter in her will. Years later, the testator gives her current house to the daughter and buys a new house. When she dies, the provision will be subject to ademption by satisfaction because she gave her house to her daughter. Although she had another house when she died, the intent of the gift appears to have been satisfied by the lifetime house gift.

Because ademption by extinction is viewed as a harsh outcome, in that the testator’s intended gift is thwarted, some states have enacted anti-ademption statues. These statutes provide that the estate administrator can or must substitute equivalent property for specific gifts no longer in the estate, particularly where an agent or someone acting under power of attorney disposed of the specific property prior to death. State law may also require proceeds from the sale of specifically gifted property or insurance proceeds from the destruction of the specifically gifted property to be given to the intended recipient of the gift.

In Oregon, for example, devises do not fail as a result of “the encumbrance, destruction, damage, sale, condemnation or change in form of the property specifically devised” unless the intent under the will is that the devise fail, or if the testator during her lifetime gave “property to the specific devisee with the intent of satisfying the specific devise.”[24] In Alabama, the anti-ademption statute has been interpreted to give the specific devisee of real property the outstanding balance on the mortgage after sale.[25]

It should be noted that general gifts do not adeem. If a testator makes a will giving a general gift of $10,000 to a nephew upon death, and the estate cannot cover it with cash, the gift will not necessarily fail. Instead, other assets from the estate may be sold so that the gift of $10,000 can still be made to the nephew.

Demonstrative gifts likewise do not adeem. If the purported source of the demonstrative gift is not in the estate, the demonstrative gift is still filled as a general gift from the rest of the estate. So, if a will provides a gift “of $10,000 to Joe, from my bank account at First Bank,” and at the time of death, the account at First Bank had been closed, Joe is still entitled to $10,000 from the estate as though it were a general gift.

Abatement  occurs when a testator’s estate is insufficient to satisfy all debts and testamentary gifts. In such cases, gifts to be paid under the will may be reduced or eliminated, including a gift to a beneficiary which the estate is insufficient to pay.[26] In the absence of a statute addressing abatement, when the estate is insufficient to satisfy estate debts and bequests, the residuary gift abates first since, if there are insufficient assets to cover debts and gifts, there is nothing left for the residuary estate.

The general gift abates before the demonstrative gift, assuming the purported source of the gift is still in the estate. If the source is not in the estate, the gift had the same status as the general gifts. Within the same category of gifts, each beneficiary bears a pro rata burden of the abatement, unless the testator clearly expresses an intent to prefer one bequest over another.[27]

So, for example, where a will gifts “$20,000 to Jane, $30,000 to Phil and $50,000 to Debbie,” but the estate has only $50,000 after debts, each would receive only half the gift. Jane would receive $10,000, Phil would receive $15,000 and Debbie the remaining $25,000.[28]

Specific gifts are not subject to abatement. Either the specifically referenced gift is in the estate, and it is given to the beneficiary, or it is not, and it adeems.

Lapse and Anti-Lapse

The final concept affecting gifts of property at death is the concept of lapse. Lapse occurs when a beneficiary dies before the testator or before the time of the property distribution under the will. The general rule in such a case is that the gift lapses and becomes part of the residuary estate. The gift does not necessarily go to the heirs of the gift beneficiary.

However, where the recipient is closely related to the testator, there is a presumption that the testator would have wanted the property distributed to the beneficiary’s surviving heirs (since they are also heirs of the testator). Therefore, states have enacted “anti-lapse” rules which apply when the pre-deceased beneficiary was closely related to the testator.[29] In such cases, the lapsed gifts go to the beneficiary’s heirs instead of back into the residuary estate.

All states have passed anti-lapse statutes, although they differ in the relationship between the testator and beneficiary that they require. While some states apply anti-lapse only when the beneficiary is a child or grandchild of the testator, some provide for anti-lapse even when they are less closely related.

Note that bequests to spouses are not subject to anti-lapse statutes. If the spouse predeceases the testator, then the gift to the spouse fails and the gift goes to the testator’s heirs (who are often the heirs of the beneficiary spouse as well, in any case).

[1]South Central Bell v. Barthelemy, 643 So.2d 1240 (LA 1994).

[2] For example, see People v. Church, 57 Cal. App. 2d Supp 1035 (Sup Ct 1943).

[3] See, for example, 41 CFR 102-36.40 “Disposition of Excess Personal Property.”

[4] See, Alaska Statutes section 513; Nevada Revised Statutes section 133.045; Code of Virginia 64.2-400.

[5] United States v. Craft, 535 U.S. 274, 279-80, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002) (citing to 7 R. Powell & P. Rohan, Real Property § 50.01[1] (M. Wolf ed.2001).

[6]Taylor v. Canterbury, 92 P.3d 961 (Colo. 2004).

[7] In Re Kelly, 316 B.R. 629 (D. Del. 2004).

[8] Capital Bank v. Barnes, 277 SW3d 781, (Ct. App. Mo. 2009).

[9] Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. Alaska allows spouses to designate real estate as community property.

[10] See, for example,Estate of Murphy, 15 Cal.3d 907 (S.Ct.Cal. 1976).

[11] Arizona, California, Nevada, and Wisconsin.

[12] See Texas Estates Code Chapter 112, sections 112.001-112.052, which allows the creation of a “survivorship agreement” between spouses.

[13] See, e.g., “Living Trust,” The Superior Court of California, County of Santa Clara, retrieved from http://www.scscourt.org/self_help/probate/medical/living_trust.shtml#exempt

[14] Florida Statutes section 736.05055(1).

[15] See, for example, Probate for Inheritances, Fidelity Investments, retrieved from https://www.fidelity.com/life-events/inheritance/inheritance-basics/probate.

[16] See, Matter of Totten, 179 N.Y. 112 (NY App. Ct. 1904).

[17] See, Wisconsin Statutes section 705.15(1).

[18] 57 Am.Jur., Wills, section 1401, p. 935.

[19]Friedman v. Sabot, 205 Va. 318 (1964).

[20]Park Lake Presbyterian Church v. Estate of Henry, 106 So. 2d 215, 217 (Fla. 2d DCA 1958).

[21] Redfearn, Wills and Administration of Estates in Florida, 3rd Edition, Volume 1, Ch. 12, section 146, p. 233.

[22] See, Shriner’s Hospital, et al. v. Stahl, 610 S.W.2d 147 (1980).

[23] See, for example, Estate of Mikkelson, 211 NW 254 (Iowa 1926).

[24]Oregon Revised Statutes section 112.385.

[25]Bolte v. Robertson, 941 So. 2d 920 (Ala. 2006), interpreting Alabama Code §§43-8-225 et seq.

[26] Gionfriddo v. Palatrone 196 N.E.2d 162. (Ohio 1964).

[27] In Re Estate of Oberstar, 126 Ohio App. 3d 17. (1998).

[28] See Estate of Jenanya, 31 Cal.3d 703. (1982), interpreting California Probate Code section 752.

[29] Uniform Probate Code §2-605.

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Law Notes Personal Property Law Notes

Transfer Of Property Rights Outside Sale Notes

Updated transfer of property rights outside sale notes.

Personal Property Law

A collection of the best Personal Property Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through forty-eight LLB samples from outstanding law students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor". This set of notes earned its author a prize in exams. Although this set of notes did not earn its author a 1st in exams, the notes are at a high st...

The following is a more accessible plain text extract of the PDF sample above, taken from our Personal Property Law Notes . Due to the challenges of extracting text from PDFs, it will have odd formatting:

There are essentially 4 questions to consider in this topic:

Is a manifestation of intent alone enough to transfer rights?

If not, how do you transfer rights?

Is there a requirement of acceptance?

What is the effect on the transfer of vitiating factors (e.g. mistake, duress)?

In Land Law…

At common law, there is a requirement of a deed or registration (e.g. Pascoe v Turner ).

In Trusts Law…

Explicit words are enough. S53(1)(c) is not an issue because it is not a transfer of an existing right, it is the creation of a new right.

Personal Property

In personal property, a manifestation of intent alone is not enough to effect a transfer. A delivery or deed is also needed ( Cochrane v Moore ).

The court’s self-declaration of trust reasoning is problematic in the case:

The facts of the case would seem to fall foul of Richards v Delbridge

Another issue is how exactly delivery of share of a horse can practically take place

If we are talking about co-ownership, there can only be 1 title to the horse- are we really transferring?

Only explanation might be that the donee is transferring to himself as trustee- is was trust analysis necessary for the strange facts of the case?

But this raises problems of transferring to yourself and the other co-owner

What are the requirements for transferring rights?

A transfer must take place by deed or delivery .

There are 2 elements to delivery: (i) A change of possession, and (ii) an intention.

Issues of Timing

It is important to sufficiently define delivery for the purposes of clarity:

Why do we need intention?

Intention is necessary since the act of delivery alone can be an equivocal act . Words effecting delivery can mean very different things. Also, possession is not often clear- it could amount to mere bailment, or a transfer of property rights.

E.g. Glaister-Carlisle : purported transferor said ‘she is your responsibility now’. This could mean merely looking after the dog (bailment) or a transfer of title.

There must be an intention to make an immediate present transfer of the title. It cannot be an intention to make a transfer in the future.

A more problematic case is Re Cole . The words in this case, ‘it’s all yours’ were held to be equivocal- they could mean that she could own it or simply use it as his wife. However, it is unclear what, on those facts, would have constituted an unequivocal act. Does there need to be something more ‘symbolic’?

Could it be said that the court was operating on a dated presumption against the husband transferring property to his wife?

The court also overlooks the possibility that there might be joint possession in some circumstances. Would his act be sufficient to confer joint possession?

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Transfer Of Property Rights Outside Sale

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Gifting property: what are the tax implications.

Updated March 26, 2024

In this guide

Gifting property to children or family members is not only extremely generous but it can help reduce inheritance tax. We explain how it works and how to avoid certain pitfalls.

It can reduce inheritance tax for your loved ones when you die and it could cut your tax bill while you’re alive too. We explain the complicated tax rules around gifting property so you can decide if it works for you.

In this article, we outline:

Can I gift my property to my children or a family member?

Should i transfer my home to my children.

• How to avoid capital gains tax on property
• Whether you have to pay stamp duty on gifted property
• What are some of the tax implications of gifting property in different scenarios?

Read more: What is the inheritance tax threshold?

Yes, you can gift a property to a loved one, whether that’s a partner, a child or someone else. But you need to be aware of the complicated tax rules around this.

Whether you incur a tax bill will largely depend on:

• Who you have gifted the property to
• Whether the property is your main home

Gifts are usually exempt from inheritance tax (IHT) if:

• They are below the nil rate band of £325,000
• The giver survives for more than seven years (more on this later in the article)

However, if you gift a house to a family member but continue to benefit from it in some way, it would remain as part of your estate when you die.

This means HMRC could tax your loved ones at a rate of 40% for anything over the tax-free threshold.

Since 2017, the tax office has clawed back £608 million from families because of misunderstandings about the rules.

One of the big reasons people decide to gift property is to reduce their inheritance tax bill .

Your estate (a catch-all term for property, savings and possessions) can be charged at a maximum rate of 40% when you die.

But it is only charged if your estate is valued above a certain threshold:

• This threshold known as the nil-rate band is set at £325,000 until 2028
• If your children or grandchildren inherit the property when you die, you get an extra £175,000 (this includes adopted, foster and stepchildren)
• This means your tax-free threshold could be £500,000, provided the value of your estate is under £2 million

It’s different if you pass your estate to a spouse, civil partner or charity, as no IHT is due.

If you give away parts of your estate, such as your home or a buy-to-let flat, before you die, you can reduce the value of your estate and lower the inheritance tax bill. 

Or you could be tax savvy (and generous) by giving your son or daughter the cash you generate from a house you rent out. 

Do I pay tax if I am gifted a property?

It depends. If your husband, wife or civil partner has gifted you property then you won’t have to pay inheritance tax.

But if you have been gifted a property from a parent, you might have to pay stamp duty if there is a mortgage on the property.

There’s also a risk that if they died within seven years of transferring ownership of that property to you and their estate exceeds their inheritance tax threshold then there might be an extra bill to pay there too.

When it comes to capital gains tax , it’s the person selling or gifting the property who would be liable to pay this and not the receiver of the gift.

This only applies if the property the person is gifting isn’t their main home.

For example, if a parent has given you a buy-to-let property they might have to pay capital gains tax on it, but you won’t have to worry about paying it.

How do I avoid capital gains tax on gifted property?

When gifting a second home or buy-to-let property, you might have to think about capital gains tax.

But there are some exemptions.

1. Transferring property to a spouse or civil partner

You can transfer a property to a husband, wife or civil partner without incurring a tax bill, even if you already own a home.

This only applies if:

• You aren’t separated
• Have lived together during all of that tax year

If you are a higher rate taxpayer and your partner is a low earner, it might make financial sense to transfer a second home or investment property to them.

If your lower earning partner later sells the house, they might have to pay tax on any gain they have made. The tax-free allowance for CGT fell to £6,000 in April 2023. Our guide on the CGT thresholds and rates explains more.

The tax is calculated based on the difference in value between when you first bought the house and when your partner sold it. But if they are a low earner and there is capital gains tax due on the property they will pay a lower rate of tax.

Or as a married couple, you could make sure the property is in both your names. This would allow you to use both of your tax-free allowances when it comes to selling it. This means your tax-free allowance doubles to £24,600.

2. Transferring your main home to children

Another way of gifting property without paying capital gains tax is to pass property that is your main home to one of your children. This means you can get what’s known as private residence relief.

You must have used the house as your main residence for the entire time you owned it.

However, the rules are different if you are gifting a property that isn’t your main residence such as a second home or buy-to-let .

You will be liable to pay capital gains tax if the property is worth more than when you bought it and that increase is beyond the CGT threshold.

Gifting your main home to your children while you’re alive could reduce your inheritance tax bill when you die too.

However, bear in mind that if you give the property to your child and continue living in the property, you have to pay market rent to your child if you want it to sit outside of your estate for inheritance tax purposes. 

If you pay a small amount of rent or none at all then the house will remain as part of your estate, meaning your loved ones could still be hit with a hefty IHT bill when you die.

Gifting your family home to your child means you are no longer the homeowner and have no rights to the property, so it’s not a decision that should be taken lightly.

Do you have to pay stamp duty on gifted property?

It depends on whether there is a mortgage on the house:

• Your child won’t have to pay stamp duty if there is no mortgage
• If there is, they will have to pay stamp duty on the value of the outstanding loan

Your bank or building society will need to agree to the transfer of equity before you can give it away. This is to check whether your loved one will be able to afford the mortgage repayments. Use our tool to calculate your mortgage repayments.

If your child is earning a lot less than you and can’t afford the mortgage, a lender might not agree to you transferring the loan into their name. But you could think about acting as a guarantor on the mortgage.

For tips here are some ways to avoid stamp duty.

Tax implications of gifting property in different scenarios

Below we run through some scenarios where you may be looking to gift property.

1. “I want to downsize and give my house to my son and his family”

There could be some serious tax savings here. Gifting your home while you are alive means there will be no inheritance tax payable as long as you:

• Move out or pay market rent to your children
• Live for seven years after the handover (you only need to worry about the seven year rule if you give away more than £325,000 in gifts in the seven years before you die).

This gift would be known as a “potentially exempt transfer”. If you pass away within seven years it becomes a “chargeable transfer” and is added to the value of your estate for IHT purposes.

The full 40% inheritance tax rate will apply if you die during the first three years after the transfer of equity, but it then drops year by year.

We explain how the seven year rule works here.

So it makes sense from a tax point of view to gift the property sooner rather than later.

Bear in mind that you can’t continue living in the property rent-free. Doing so would make IHT still payable on the house, even if you live for seven years. 

You can stay in the property and avoid inheritance tax if you pay market rent. However, your son may be liable for income tax on the income.

Gifting part of the property

Another option is that you live in the house together and gift just part of it to your son. His portion would be disregarded in the valuation of your estate, subject to the seven-year rule. 

Be aware though that if you outlive your son, the house or his part of it could then be inherited by his beneficiaries.

There are a few other matters to consider:

• Gift your house to your son now and he won’t have to pay s tamp duty , provided you have no mortgage on the property
• No CGT to pay as long as the house was your main residence for the whole time you owned it
• If you are thinking of gifting your property to avoid paying for care when you’re older, be careful: your local authority might regard such a move as a “deliberate deprivation of assets”
• Another risk is that the transaction could be voided if you go bankrupt within five years of making it, which could leave your son and his family members homeless
• Alternatively, if your son were to go bankrupt after you’d gifted the property, he could risk losing the house

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2. “I’ve bought a buy-to-let and want to give it to my daughter for her 18th birthday”

If you transfer a buy-to-let property to someone other than a spouse or civil partner, you have to pay capital gains tax on the profit you make just as if you’d sold it.

The first £12,300 of gains will be tax-free (this falls to £6,000 in April 2023). Profits higher than that are taxed at different rates:

• Basic-rate taxpayers pay CGT at a rate of 18% for gains on rental property
• Higher-rate taxpayers pay 28%

Depending on the value of your estate when you die, paying CGT now could still be cheaper than the potential inheritance tax bill. 

As with any gift of this type, you will need to live for another seven years to escape inheritance tax on it altogether.

Giving your daughter this generous present, rather than renting the property out, would also reduce the amount you pay in income tax . This could be beneficial if you are a higher-rate taxpayer.

Tax-free earnings for your daughter

The gift could also bring favourable tax treatment for your daughter if she chooses to let out the property.

This is because the first £12,570 of rental income will be tax-free because it is below the personal allowance. Many students don’t claim their full tax-free personal allowance because they don’t earn enough.

If there is no mortgage on the property, your daughter does not have to pay stamp duty . If there is a mortgage, stamp duty will be due on the value of the outstanding loan.

Your lender will need to approve the transfer of equity before you can give it away. It will check whether your daughter will be able to afford the mortgage repayments. 

“Getting a lender to greenlight a buy-to-let mortgage transfer to such a young person will be very difficult, but not impossible,” says property tax expert Jackie Hall from the accountants RSM.

The bank might ask the parents to guarantee their daughter’s mortgage repayments.

3. “Can I save tax by passing my holiday cottage into my husband’s name as he earns less than me?”

Transferring ownership of a property to a lower-earning spouse or civil partner can be a good idea for higher-rate taxpayers.

If there is no mortgage on your holiday cottage and you transfer the property to your husband, he would not have to pay stamp duty on the transfer. If you do have a mortgage on this house, your husband would have to pay stamp duty.

Your bank would also have to agree to the transfer of the mortgage to him, which could be tricky if he is earning considerably less than you.

It might take some negotiation, but you could offer to guarantee the mortgage. 

The good news is that because you are married, there are no capital gains tax implications. Another advantage would materialise if your civil partner sold the cottage eventually.

If he is a lower-rate taxpayer at the time, he may pay a lower rate of CGT. This is only if the cottage was given to him in a proper transfer. It would only be the case if you don’t retain any interest in the property.

4. “I have a buy-to-let and want the rent to be paid straight to my step-son to give him some spending money at university”

You could use the rental income from your buy-to-let property to support your step-son financially, but that would not lower your own tax bill.

You would still pay income tax on all income you draw from this property, even if you don’t personally receive it. 

A way around this could be to transfer an interest in the property to your step-son.

You would have to pay capital gains tax as though you had sold the share of your property at market value. But paying tax on a small slice of your buy-to-let is obviously cheaper than paying it on the whole property. 

The taxman sometimes allows an uneven division of income between shareholders of a property. For instance, if one party receives a gifted interest of say only 10%, they might be entitled to a share of say 50% of the rental income.

But it will be difficult to justify this kind of agreement to the taxman, so it’s best to take specialist advice . This is especially true if you are only looking to support your step-son financially on a temporary basis while he studies.

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What happens in a Fraudulent Property Transfer?

Written by Evveline Loh.

The case Victus Estates (2) Ltd and others v Munroe; Benjamin v Victus Estates (1) Ltd and another [2021] EWHC 2411 (Ch) is concerned with two appeals involving two separate property transfers where fraud was involved.

The two- property transferred raised same issues:

• Where property is owned legally and beneficially by A and B, B forged the signature of A and the transferee (C) knew about the forgery, will that nullify the transfer or was it an effective transfer to transfer B’s equitable interest to C?
• If the transfer would not be a sham and C then charges the property to the bank, should the court as a matter of public policy, apply the law of illegality, so that B still holds the equitable interest and C does not acquire any interest and is incapable of charging any interest to the bank?

Property A was legally and beneficially owned by Mr Charles and Ms Muroe, Property B was similarly, owned by Mr Charles and Ms Benjamin.  Mr Charles was then made bankrupt. He then proceeded to design a scheme with Mr Agrawal to transfer the above two properties into Mr Agrawal’s companies named V1 and V2. Mr Agrawal was aware that neither Ms Munroe nor Ms Benjamin had consented to the transfer of their respective properties and that their signatures were forged.

The company then borrowed money from Shawbrook Bank (“Shawbrook”) and OneSavings Bank plc (“OneSavings”) and charged the properties in the respective bank’s favour. Both the banks’ charges were successfully registered at HM Land Registry.

The issue here is not the legal ownership as both Ms Munroe and Ms Benjamin did not sign the TR1. The question that required clarification is whether the beneficial interest had been transferred.

The banks argued that, applying Ahmed v Kendrick [1988] 2 FLR 22 , the effect of Section 63 of the Law of Property Act 1925 (“LPA 1925”) was that Mr Charles’ beneficial interest had rightfully been transferred to V1 and V2, thus although the legal charges were of no effect, the banks should have acquired the equitable charge over V1/V2’s share.

The County Court following Penn v Bristol and West Building Society [1995] 2 FLR 938 concluded that beneficial interest did not pass because this was a sham and signatures were forged.

The Banks proceeded to appeal the finding that Mr Charles’ beneficial interest did not pass to V1/V2.

Effect of Sham, Fraud, Illegality and Equitable Interest

In Penn v Bristol and West Building Society [1995] 2 FLR 938 , the husband had forged his wife’s signature on the contract documents and the purchaser was also part of the fraudulent conveyance. It was held that the transfer of equity had no effect on the wife’s equitable interest in the property but the forger’s own equitable interest has been passed to the purchaser. The interest was then charged to the lender. The judge further referred to the case Grondona v Stoffel & Co [2020] UKSC 42 and Patel v Mirza [2016] UKSC 42 , property rights such as equitable interest can be passed despite it being an illegal contract.

Therefore, by applying those principles, the judge concluded that the intended victim of illegality were the Banks and Ms Munroe and Ms Benjamin. Hence, the judge concluded that the Banks equitable interest were protected and that it was conferred by V1 and V2 who were fraudsters.

As the fraudster’s plan to deprive Ms Munroe and Ms Benjamin of their own equitable interest, this had not been succeeded. The court held that Ms Munroe and Ms Benjamin retained their half shares in their respective properties as explained further below.

Were the TR1 and Charges Effective?

The court held that even though the legal title had not been transferred, the beneficial interest of the property had been transferred to the purchaser pursuant to Section 63 of the LPA 1925. Doctrine of illegality was prevented since there was consideration. Therefore, the TR1s were effective and a half share in the equity of the relevant properties was transferred to V1 and V2. The banks have therefore been granted the equitable charges over the properties.

It was further concluded that Ms Munroe and Ms Benjamin’s equitable interest remains held by themselves respectively even if the transfers were with valuable consideration. Ms Munroe and Ms Benjamin were in actual occupation. The Court held that Ms Munroe and Ms Benjamin had the right to rectify the register under Schedule 4 of the Land Registration Act 2002.

The Result in Summary  

To spare you the time of reading the above, to sum up, the court held under paragraph 104 of the judgment as shown below:

“104. The result of the above reasoning is:

i) The TR1s did not give the transferee the right to be registered in relation to the legal title to the respective properties;

ii) Ms Munroe and Ms Benjamin are entitled to rectification of the registered titles to the respective properties to remove V2 and V1, as the case may be, as registered proprietors;

iii) Ms Munroe and Ms Benjamin are entitled to rectification of the registered titles to the respective properties to remove the charges in favour of Shawbrook and OneSavings in relation to the registered titles to those properties;

iv) Ms Munroe’s and Ms Benjamin’s equitable interests in the respective properties were not affected by the TR1s;

v) The TR1s were effective to transfer Mr Charles’ equitable interests in the respective properties to V2, and V1 as the case may be;

vi) The equitable interests transferred to V2, and V1 as the case may be, were charged to Shawbrook, and OneSavings as the case may be.”

This is a great example of potential effect in a fraudulent transaction when the legal owner’s signature is forged. This is what we would usually call a ‘text book’ law problem which is commonly seen in law exams.

It is interesting to see how the judge had approached the case by analysing the effect of sham, fraud, illegality and equitable interest.

This serves as a reminder that illegality is not a sufficient defence in mortgage fraud cases. The reason being, this will only benefit the fraudster and allow their scheme to succeed which is not of public’s best interest. The victim, the banks and Ms Munroe and Ms Benjamin would have been left with no equitable interest or charge if principle of illegality was upheld.

Therefore, for conveyancers, please be mindful to carry out identity checks. For property transactions where it is jointly owned, always ensure that you have taken clear instructions by both parties prior to proceeding with the sale.

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Transfer or assignment of intellectual property rights

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• Housing, local and community
• Housing and communities
• Council housing and housing association

Guidance Note 23: Transfer of Property

This note applies from 1 April 2024

Applies to England

Guidance note 23: section 167-169 of the housing and regeneration act 2008 (as amended) (‘the act’) - transfer of property, type of power: general power.

1 - This power enables property of not-for-profit private registered providers which are registered societies or registered companies and have been dissolved or wound up to be transferred to the regulator or another not-for-profit private registered provider as directed by the regulator.

2 - It can only be exercised in relation to registered charities which are registered companies, unless regulations are made by the Secretary of State to extend these powers to charities which are not registered companies under section 169 of the Act.

When the Regulator use this power

3 - Section 167(1)-(2) provides that where a not-for-profit private registered provider is dissolved or wound-up, any surplus property that is available after satisfying their liabilities shall be transferred either to:

• the regulator; or
• a specified not-for-profit private registered provider (as directed by the regulator).

4 - The regulator envisages that this power will be used in the following circumstances:

• where there is a serious, financial risk to social housing assets and the surplus property will help to facilitate strategies for the resolution of such cases; or
• where there is a serious risk to tenants such as where there are health and safety issues which are not capable of being rectified by the provider.

This list is not exhaustive.

5 - The regulator may decide to utilise surplus property by offering direct financial assistance.

Process for using the power

6 - Where a not-for-profit registered provider (‘transferring provider’) is dissolved or wound -up as set out in section 167(1), the regulator can:

• require any surplus property that is available after satisfying the transferring provider’s liabilities be transferred to the regulator, or a specified not for profit registered provider as directed by the regulator (‘receiving provider’); or
• discharge the transferring provider’s liabilities, where it has any, so that any land retained by it does not need to be sold and can be transferred to the regulator, or a receiving provider.

7 - If the transferring provider is a registered charity, their property must be transferred to a charity whose objects the regulator thinks are similar to those of the transferring provider (sections 167(4) and 168(3) of the Act).

8 - If the surplus property which is being transferred to a receiving provider includes land which is subject to a mortgage or charge, the regulator may dispose (as defined in section 273 of the Act) of the land:

a) subject to that mortgage or charge; or b) subject to a new mortgage or charge in favour of the regulator.

9 - Any surplus property transferred to and held by the regulator may only be disposed of to a not-for-profit private registered provider (section 168(2) of the Act).

10 - The Act does not impose any consultation or notification duties on the regulator, but the regulator will consider if there are any relevant stakeholders and take steps to do so.

Appeal process

11 - There is no statutory right of appeal or appeals’ process in accordance with the regulator’s appeals scheme.

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