Conveyance Acts 1925

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CONVEYANCING AND THE PROPERTYACTS O F 925

THE group of statutes dealing with the law of property which cameinto force on January 1, 1926, commonly referred to as theProperty Acts of 1925 though they include the unrepealed parts ofth e Law of Property Act, 1922, have now been in operation forover a generation. The majority of present-day practitioners inboth branches of the profession have had no practical experience ofthe law obtaining before they took effect. During that period onlycomparatively minor amendments have been made to them, andthose principally by the Law of Property (Amendment) Act, 1926,which mas made retrospective to the coming into force of theprincipal Acts. Later amendments have for the most part beenthe result of changes in various branches of the law and not byreason of any shortcomings in these Acts themselves. Furthermore,save for a few topics, the number of reported cases in which thesestatutory provisions have had to be construed and applied has beenfew. This is particularly so as regards conveyancing, with whichthis article is concerned. There were a number of such cases in theyears following the coming into force of the Acts but since 1939they have been few indeed. Actions concerning the existence,construction and enforceability of contracts for the sale of land arefrequently before the courts, but ordinarily they raise no questionunder the Property Acts, save perhaps tha t of compliance withsection 40 of the Law of Property Act, 1925.

It would however be wrong to infer from the infrequ ,ncy todaythere are no difficult and unresolved questions upon the conveyanc-ing provisions of the Property Acts. Arguments do frequentlyarise between the advisers of vendors and purchasers as to suchmatters as whether the vendor has deduced a good title, whetherthe purchaser is entitled to insist upon a particular objection orrequisition and as to the parties to and form of the conveyance.But there are several reasons why such disputes are rarely carriedas far as litigation. One is that today most contracts of sale ofland inccirporate one of the standard sets of general conditions, suchas The L a w Soc ie ty s C ondi t ions of Sale or The National Condit ionso f Sale , and these conditions normally confer upon the vendor awide power of rescission should the purchaser insist upon anyobjection or requisition with which the vendor is unable or unwill-ing to comply. While there are limits upon the vendors exerciseof such a power it does mean in many cases that a purchaseranxious to get the property must accept such title as the vendor

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in the Chancery.Division of vendor and purchaser sum nses that


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124 THE MODERN LAW REVIEW VOL. 21has. On the other hand if it is the vendor who is anxious to see thematter completed he will do his best to satisfy his purchasersrequirements.Another factor is that most conveyancing solicitors are busy andpressed for time and therefore reluctant to engage in litigation if itcan be avoided, and most difficulties are therefore overcome by thegoodwill of both parties. Frequently there is more than one wayof making title to a property. Coupled with this last point is thefact that there are few really bad titles in existence-bad in thesense that there is a real possibility of the purchaser, if he acceptsit, being subsequently evicted by some third person or having todischarge an undischarged incumbrance. The emphasis is now lesson the investigation of title and more on the pre-contract inquiries,and generally speaking a purchasers solicitors time is more profit-ably spent in making a careful inspection of the property with aview to the precise ascertainment of boundaries and of possibleeasements and other third-party rights and in making local landsearches and careful inquiries as to planning and other matters ofthe local authorities than in investigating the vendors title aftercontracts have been exchanged, important as that investigationstill is.

These factors require to be borne in mind when consideringwhat, if any, changes in the conveyancing provisions of theProperty Acts are now desirable. It may be said that no changesare necessary, because the present system, though not perfect, isworking reasonably well, and as the aim is in time to make regis-tration of title compulsory for the whole country any alterationswill only be effective for a limited period. The spread of compul-sory registration is however very slow, and solicitors are stillreluctant to register titles voluntarily in areas where registration isnot compulsory. Moreover most of the possible alterations in thelaw considered in this article would still be effective under auniversal system of registration of title.The most fundamental contribution made by the Property Actsto the simplification of conveyancing was undoubtedly the reduc-tion in the number of legal estates to two, coupled with theprovisions which ensure that save in the simplest cases the legalestate is vested in not more than four persons who upon a sale,lease or mortgage can overreach many equitable interests, whichare transferred to the proceeds of sale, so that the purchaser mayignore these interests even if he has notice of them. There can belittle doubt that this has had a considerable effect in simplifyingconveyancing, the increase in technicality being more than com-.pensated for by the shortening of the documents which. have to beinvestigated by a purchasers solicitor, a matter of great importancenow that so much land, especially in or near the larger centres ofpopulation, has been didded up into quite small parcels, each withits separate and distinct title. Furthermore these small parcels of


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JAN.1961 CONVEYANCING AND THE PROPERTY ACTS 125land change hands far more frequently than did the older largerestates.Has, hovever, the time not now come for considering whethera further major simplification cannot be effected by substituting asingle form of settlement for the two forms now obtaining, theso-called strict settlement under the Settled Land Act, 1925, andth e trust for sa le? As the result partly of the extended definitionof settlement contained in section 1 1) of the Settled LandAct, 1925, endering land settled land not only where it is limitedin trust for persons in succession but also where it is subject to thefamily charges mentioned in paragraph (v) of the subsection or isheld in trust for an infant in fee simple or for a term of years, .andpartly of the imposition of a trust for sale in the form of thestatutory trusts in such cases as beneficial co-ownership, there. arefew cases today, save where the fee simple or term of years is vestedbeneficially in a single person of full age or in a personal represent-ative, in which the land is neither settled land nor subject to atrus t for sale. The principal cases where a simple trust may stillexist are where the legal estate is vested in one person of full ageas a trustee or nominee for another such person, and where theland is held upon charitable trusts, it having been held in Re B o o t hand Southend-on-Sea Es ta te Companys Contract that section29 1) of the Settled Land Act, 1925, does not make charity landsettled land further than is required to confer upon the trusteesthe Settled Land Act powers. Thus any simplification in the formof settlemcnts would have far-reaching results.

It was natural for the framers of the 1925 legislation to retainthe two principal forms of settlement then in use. The traditionalform of settlement was long established and well known to land-owners and their advisers, and there would have been considerableopposition to any radical changes in its form. Now however thenumber of great. settled estates is, as .the result of sales broughtabout by taxation and other economic forces and of the formationof family companies, far less than it was, and moreover thetraditional limitations of such a settlement are no longer popular,leading as they do in the case of large estates to the maximumincidence of both surtax and estate duty. The popular modernlong term discretionary trust does not provide a tenant for life, andthe usual persons to exercise the Settled Land Act powers in such acase are the trustees. On the other hand the use made by the 1925Scts of the trust for sale has completely divorced that conceptionfrom its original roots. In most cases where a trust for sale iscreated the parties contemplate that the land will be retainedindefinitely, and a solicitor often has difficulty in explaining to hisclient why a trus t for sale is created. The Acts of 1925 byproviding, e.g. in section 205 1) (xxix) of the Law of PropertyAct, 1925, hat a trust for sale is not the less immediate for being1 [1927] 1 Ch. 579.


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126 THE MODERN LAW REVIEW VOL. 4exercisable only at the request or with the consent of any personand for there being a power at discretion to postpone the salemake it clear that the procuring of an early sale is no necessaryfunction of such a trust. Where however the proceeds af sale areheld in trust for persons in possession absolutely, so that from thevery creation of the trust there is no future period of distribution,it follows from the decision in Re Ball that there is never anypower to postpone the sale, and any one beneficiary can enforce asale at any time.The substantial diilerence between the strict settlement and thetrust for sale is that in the former the legal estate and the powersof dealing with it are vested in the tenant for life, i there be one,while in the latter they are vested in the trustees; more importantis the fact that in the former the initiative, the decision whether ornot and how to exercise the powers, lies with the tenant for lifeand in the latter with the trustees. But the distinction is not clearcut. In many cases as %heresult of sections 28 and 26 of theSettled Land Act, 1925, the settled land and attendant powers arevested in the trustees of the settlement because there is no tenantfor life, e.g. because the iqmediate trust is a discretionary one orfor accumulation, or because the tenant for life is an infant.Similarly in the case of the trust for sale, a considerable measure ofcontrol and initiative can be conferred upon the person for the timebeing beneficially entitled to the income by making the trust forsale, and therefore the additional powers conferred upon thetrustees by section 28 1) of the Law of Property Act, 1925, exer-cisable only at his request or with his consent, while under section29 1) the powers of leasing and management may be delegated bythe trustees to the person entitled in possession to the net rents andprofits. Provision for consulting with and giving effect to thewishes of beneficiaries is made by section 26 8) but as amended bythe 1926 Act this applies only to statutory trusts and to expresstrusts where the trust instrument so provides. Another differencebetween the strict settlement and the trust for sale, that under theformer the interests of the beneficiaries are in the land and underthe latter in the proceeds of sale, is now, in view of the substantialdegree of assimilation between the law of realty and the law ofpersonalty effected by the Property Acts, of little practical signifi-cance, though a trust for sale can cause the loss of agriculturalrelief in connection with estate duty.It is the general view of practitioners tha t the trust for saleworks better than the strict settlement, at least in the case of thesmaller property. The vesting of the legal estate in the life tenantrequires a vesting deed or vesting assent both a t the commencementof the settlement and at every change of life tenant during thecurrency of the settlement, while even more important is the factthat upon the life tenants death a special grant of probate or letters2 [1930] W.N. 111.


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J A N . 1961 CONVEYANCING AND THE PROPERTY ACTS 127of administration limited to the settled land is necessary unless thesettlement comes to an end on his death. The decision inR e Bridge t t 4 Hayes Contract that no such grant is requiredwhere the settlement comes to an end on the death has been ofgreat benefit, though the other and principal ground of th atdecision, that if a general grant has been made, without any savingor exception of settled land, a purchaser from the general personalrepresentative is protected whether or not a special grant ought tohave been made, has proved equally useful. Then again, becauseowing to the provisions of section 30 of the Settled Land Act, 1925,the trustees of the trust instrument are not always trustees for thepurposes of the Act, it is sometimes necessary to apply to the courtfor the appointment of such trustees, while upon every appointmcritof new trustees one requires not only the deed of appointment butalso a deed of declaration pursuant to section 35 (1). While theexpense of these matters may not be significant in the case of Rlarge estate it is otherwise with a small one. On the other hand themachinery of the trus t for sale is very simple; the legal estate is inthe trustees throughout, new appointments are made by deedpursuant to the power conferred by section 36 1 ) of the TrusteeAct, 1925, whereupon the legal estate vests in the new trusteespursuant to the vesting declaration implied under section 40 I),while separate appointments of the same persons as trustees of thelegal esta te and of the settlement of the proceeds of sale are (i t iscommonly assumed by practitioners) only required by section 35 1)of the Trustee Act, 1925, if the trust for sale was in the first placzcreated by two instruments.

Could not a single and simpler scheme be substituted for thepresent dual one, adopting the best features of each, by providingthat wherever land is held in trust for persons in succession orsubject to family charges or for the benefit of an infant or of twoor more persons beneficially as joint tenants or tenants in commonit shall be called settled land, and the legal estate shall be conveyeclt o or vested in not more than four persons jointly as trustees, suchpersons to have all the powers which are now described as theSettled Land Act powers? This would a t one blow do away withthe whole machinery of special grants limited t o settled land, wit iits at tendan t body of rules of probate practice, and would renderthe devolution of the legal estate a simple matter save in a very fewcases, e.g. , where a last surviving trustee disappears, or dies with-out a grant being taken to his estate, and there is no personnominated to appoint new trustees who is able and willing to act.Even these difficulties might be met in part by giving power to thebeneficiaries or a proportion of them in such cases to appoint newtrustees. It would also do away with the difference betweenordinary trustees and Settled Land Act trustees ; there seems littlereason to continue this distinction.8 [1928] Ch. 163.


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2s THE MODERN LAW REVIEW VOL. 4As to the form of the instrument vesting the legal estate in thetrustees, it should it is suggested have to contain similar statementsand particulars to those now required in a vesting deed and set outin section 5 1) of the Settled Land, Act, 1925 (a description of theland, a statement that it is vested in the grantees upon the trustsfrom time to time affectingit, the names of the trustees, any addi-

tional or larger powers, and the name of the person entitled toappoint new trustees). There seems no valid reason for requiringthat the trusts shall be declared by a separate trust instrument.The requirement of section 4 1) of the Settled Land Act, 1925, thata settlement shall be effected by two deeds is not found in themachinery of the trust for sale and its absence has not given rise toany difficulty. No doubt in practice where the trusts are complexand likely to be of some duration they would be declared in aseparate instrument, since it would be inconvenient upon the saleof the land during the subsistence of the trusts to have to hand overthe document declaring them. A provision to the effect of sections72 (2) and 110 2) of the Settled Land Act, 1925, would enable apurchaser to ignore the trusts even if set out in the conveyance ofthe legal estate.

The present substantial difference between the strict settlementand the trust for sale could be retained by permitting the convey-ance to'provide either that the statutory powers may only beexercised with the consent of a named person or persons, or as analternative that they shall be exercised in accordance with thedirections of some person or persons, equivalent to the presenttenant for life. In this way where so desired the initiative could bereserved to the tenant for life of the land for the time being, thetrustees being bound to comply with his proper directions. Toavoid the necessity of a purchaser having to investigate the equit-able interests it would be necessary to provide that the names ofthe persons from time to time entitled to give such directions, oralternatively whose consent is made necessary to the exercise of thepowers, shall be stated in the conveyance or in endorsementsthereon signed by the trustees, with a right for the tenant for lifeto compel the trustees to make the appropriate endorsement. Theless important distinction between the strict settlement and thetrust for sale, that under the former the equitable interests are inthe land and under the latter in the proceeds of sale, could ifthought desirable be preserved by permitting the conveyance tocontain a declaration that the equitable interests shall for allpurposes be transmissible and devolve as personal property, thereverse of section 75 5 ) of the Settled Land Act, 1925.To adopt a single form of settlement in this way would at oncedispose of what has proved a considerable source of difficulty underthe 192ii legislation, the precise line of demarcation between thestrict settlement and the trust for sale. This difficulty arose fromthe varying constructions placed upon the word binding n the


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J A S . lYGl C O N V E Y A N C IN G A N D THE PROPERTY A C T S 129expression mmediate binding trust for sale which is, generallyspeaking, the only kind of trust for sale recognised by the Acts.A change in the law rendering unnecessary the further considerationof the decisions in R e Le igh s Se t t led Es ta t e s 4 ; Re Leighs Se t t l edEs ta t e s N o . 2) andR e S h ar pe s D e e d of Release would be as welcome to the practi-tioner as to the student. A single section, defining the over-reaching powers of the trustees, could replace the present complexprovisions governing the overreaching powers of an estate ownerunder th e Settled Land Act and of trustees for sale, the lat ter some-times depending upon whether the trust for sale is an express or astatutory one. I n this connection consideration might well be givento the decision in W e s t o n v. E I e n ~ h a w , ~here a mortgagee took alegal mortgage from a borrower who had the legal fee simple vestedin him. The borrower in fact held the legal estate as tenant for lifeunder the Settled Land Act, but the mortgagee had no notice ofthis , there being produced t o him a set of genuine title deeds con-cluding with a conveyance to the borrower in fee simple beneficially.The later deeds were concealed. It was held that as the land hadbeen the subject of a vesting inst rument and as the mortgage moneywas paid t o the borrower and not to the trustees of the settlementthe mortgage was by virtue of section 18 1) of the Settled LandAct, 1925, void except as a mortgage of the borrowers own equit-able life interest. Had the borrower been instead of a tenant for lifethe las t survivor of trustees for sale it would seem tha t the mortga-gee would have acquired a good tit le as a bona fide purchaser of thelegal estate without notice of the relevant equitable interests. Forthe protection of purchasers i t seems desirable that the law shouldbe altered. Section 13, n avoiding dispositions of settled land madeprior to the execution of a vcsting instrument, expressly excludesdispositions made in favour of a purchaser of a legal estate withoutnotice of any settlement.Set tlements of this nature would still be either simple orcompound and it would therefore be necessary to retain section 31of the Settled Land Act, 1925, or some similar provision for thepurpose of defining the trustees of a compound settlement. I twould also be desirable to reta in some such provision as that. nowcontained in section oE the Law of Property (Amendment) Act,1926, though in its present form that provision is perhaps notaltogether satisfactory. The object of the section is to ensure th ata person beneficially entitled to the fee simple or a term of yearssubject to amily charges of the kind defined in section 1 1 )(v) of the Settled Land Act, 1925, may, instead of operating the

R e Parker s Se t t l ed Es ta t e s B; R e N o rt on

4 119261 C h . 853.5 119271 2 Ch. 13.0 [1928] Ch. 247.[ 929] 1 Ch . 84.8 r1939] Ch. 51.9 [1950]Ch. 510.

\OL l4 5


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130 THE MODERN LAW REVIEW V O L . 24full machinery of the Settled Land Act and overreaching thefamily charges, convey or create a legal estate subject to t h v .This is particularly useful where a small part of an estate has beenpurchased subject to, but with an indemnity against, a jointure orportions charge. The section however does no more than enablethe estate owner to convey or create a legal estate subject to thecharge, and should he die while the charge is still subsisting, strictlya special grant should be taken in respect of this land as settledland. Unfortunately the proper persons to take the grant are thetrustees of the original settlement, with which the deceased willhave had no real connection. This difficulty would howeverdisappear if special grants were abolished.

One other matter for consideration would be the method ofbringing a settlement to an end. The Settled Land Act, 192.5,contains two provisions on this subject. If on the termination ofthe settlement the legal estate is vested in the person who hasbecome solely and beneficially entitled, the trustees are pursuantto section 17 to execute a deed of discharge; if it is vested in someother person that person can pursuant to section 110 5) convey itto, or assent to i t vest ingjn, the peTson beneficially entitled, thcconveyance or assent not naming any trustees of the settlement.I n either case a purchaser is entitled to assume that the person inquestion is so entitled and need not, and indeed is not entitled to,investigate the equitable interests. Such a provision is clearlydesirable but unfortunately there is no corresponding machineryapplicable where a trust for sale is terminated, unless it be by wagof partition pursuant to section 28 3)of the Law of Property Act,1925.

These reforms would it is thought simplify the present forms o fsettlement and much facilitate the devolution of the legal estate andthe making of title. They would also go some way to shorten theActs. A new Act would be required to replace the present SettledLand Act, 1928, and also those parts of the Law of Property Act,1925, which deal with trusts for sale and co-ownership. Much ofthe present Settled Land Act is concerned with defining the statu-tory powers of the tenant for life, with the investment and applica-tion of capital moneys and the like, and these provisions wouldhave to be retained. Some new transitional provisions would alsobe required, The transitional provisions of the Acts of 1925, andparticularly those contained in part IV of the first schedule to theLaw of Property Act, 1925, and applicable where land was at. theend of 1925 held in undivided shares in possession, have given riset o more difficulties and a greater number of reported decisions thanany other part of the Acts, and difficulties still occur quitefrequently today, especially where the land has not been com-mercially dealt with since the coming into force of the Acts. Whileit seems too late to embark on any general revision of these


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132 THE MODERN LAW REVIEW Voc. 24office to be approved by the latter, such consent not to be unreason-ably withheld, to pay all necessary premiums and other moneyswithin a prescribed number of days of their becoming due, and toproduce the policy and receipts on demand, with power for themortgagee on default to insure and pay the premiums, all moneysso expended being repayable on demand with interest at the ratepayable on the principal moneys and until repayment beingcharged on the mortgaged property.

Generally speaking the provisions of the Property Acts in regardto the priority of mortgages, and in particular the provisions as totacking contained in section 94 of the Law of Property Act, 1925,seem to have worked satisfactorily, bu t there is one ambiguitywhich is well known though it has not yet had to be considered inany reported case. Section 97 of the Law of Property Act, 1925,provides that every mortgage affecting a legal estate in landwhether legal or equitable, not being a mortgage protected by adeposit of title deeds, shall rank according to the date of registra-tion as a land charge. But section 18 2) of the Land Charges Act,1925, makes any such mortgage void as against a purchaser,including a mortgagee, of the land ugless it is registered as a landcharge before the completion of the later transaction. Thus ifmortgage A is completed on the 1st of a month and mortgage B onthe 2nd, And mortgage A is registered on the 8rd and mortgage Bon the 4th, section 97 gives the priority to mortgage A whilesection 13 2)gives it to mortgage B. Various attempts have beenmade to reconcile this conflict l1 but none seem completely satis-factory. There are other difficulties under the Land Charges Act,1925,but it is not proposed to go into them here as they have beenconsidered by the Roxburgh Committee.l*

There has been little difficulty with and few decisions upon theAdministrat,ion of Estates Act, 1925, and in particular the newprovisions as to assents contained in section 86. The decision inR r Duce a n d Boots Con t r a c t l3 that in section 86 7) he expressionsufficient evidence is not the equivalent of conclusive evi-dence,', so that if upon a proper investigation of title it appearsthat an assent has been made in favour of the wrong person Rpurchaser is not protected, caused a little alarm at first, there beingsome doubt as to what would constitute a proper investigation oftitle for this purpose. There seems no reason why the assent shouldnot in favour of a purchaser be made conclusive, as is a vestingassent already by virtue of section 110 2)of the Settled Land Act,192.5. Another question under section 86 which has not beenresolved is whether the provisions of subsection 4) require writingin the case of an assent by a representative in his own favour,11 See Me g a r r y Wa d e on Real Proper ty , 2nd ed., p. 922 e t seq . a n d Cheshire2 See t he Repor t of the Committee on L a nd Charges (1956) Cmd. 9826.

18 [1937] Ch. 642.on Real Property . 8 t h ed., p. 605


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JAN. 96 CONVEYANCING AND THE PROPERTY A C T S 133whether beneficially or as a trustee for sale. The better opinionseems to be that, having regard t o the use of the expressions66 vesting, vest and pass a legal estate n the subsection,writing is not required in such a case. It also seems permissiblet o doubt whether the change in the character of the person holdingth e legal estate which occurs in such a case is the result of an assentat all, since in Re Ponder l such a change took place, from thecharacter of an administrator to that of a trustee, a t a time whenan administrator had no power to assent.Whether a purchaser is invariably protected in the event of itlater appearing that a grant of probate or letters of administrationhas been made to the wrong person is not altogether clear. Thedifficulty arises from the fact tha t upon the death of a testatorleaving a will appointing an executor the property vests in thatexecutor, subject to disclaimer, notwithstanding the making of agrant to some third party. It was held in H e w s o n v. Shelley l5that in such a case a purchaser from the personal representativegets a good title. The effect of this decision is now embodied insection 37 of the Administration of Estates Act, 1925, but thatsection only protEcts a purchaser who takes his conveyance directlyfrom the person to whom the grant has been made. The provisionsof section 27 are similarly limited. If therefore a grant is made tothe wrong person, who in due course assents to certain propertyvesting in someone who is thought beneficially entitled thereto, butlater proves not to be, and that person later sells the property to apurchaser, it is by no means clear that upon the subsequentrevocation of the grant the purchaser would have a good defence toan action by an executor who had obtained a new grant of probate.The provisions of section 204 of the Law of Property Act, 192.5.alone seem insufficient to afford a defence. This difficulty could beovercome by providing that a grant of probate or letters ofadministration shall vest all the deceaseds property in the granteeif and so far as the same is not already vested in him. A t the sametime some alteration might be made in the scope of section 9 of theAdministration of Estates Act, 1925, which provides that where aperson dies intestate his estate pending a grant shall vest in theProbate judge. Thus the section does not apply where a testatorleaves a will but has made no effective appointment of an executor,or where a sole administrator dies without having fully adminis-tered the estate. It might be more satisfactory to provide that thepropertyof a deceased shall in all cases vest in the Probate judgeunless and until it vests in an executor or administrator. Thiswould simplify the service of notices to quit or of dissolution ofpartnership which often have to be served prior to the making ofa grant, in which case it may be a matter of great difficulty toascertain the person to serve.1 4 211 2 Ch. 69.1 5 [1914] 2 Ch. 13.


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Conveyance Acts 1925

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Transcript of Conveyance Acts 1925