Update: property

Three recent cases on easements give us pause for thought on how we draft easements and advise our clients.

In Davill v Pull [2009] EWCA Civ 1309, the Court of Appeal considered the meaning of a right of way over a track that had been granted 'for all reasonable and usual purposes' where the land having the benefit of the right was described in the conveyance granting the right as 'garden' land. This garden land was now to be used for residential development and the question before the court was whether the right of way was limited to all reasonable and usual purposes for a track leading to garden land. The court concluded that the limitation on use was intended to prohibit unreasonable and unusual purposes and that the use of the land for the construction and occupation of a house was a 'reasonable and usual' use and the right of way could therefore lawfully be used for these purposes.

Careful thought must be given in drafting an easement to any possible changes in the use of the benefitted land. If a limitation is to be imposed on the scope of an easement, it should be done so expressly by reference to its use for specified purposes and prohibiting the exercise of the right of way for any other purpose. It is important, however, to carefully distinguish between this and a restrictive covenant on the benefitted land prohibiting a change of use. Davill highlights the need to fully explain to buyers the scope of any right of way over a property they are proposing to purchase. In this case, a buyer might have assumed that the track could only be used in connection with the use of the land as garden land and might have been surprised and dismayed that a change of use of the garden land is possible while still retaining the right to use the track.

The second case involves a right that was acquired by prescription rather than by grant. In Property Point Ltd v Kirri [2009] EWHC 2958 (Ch), Mrs Kirri claimed a right by virtue of long use over an area of land near to her garage, which enabled her to turn her car and park in her garage. She had used this area of land for 24 years, but for part of the time had accessed it over some adjoining land when her usual route was blocked. The court found that she could still establish 20 years' uninterrupted use even though she had accessed the land via different routes during that time. It even made no difference that for part of the time she was accessing it over land she had no right to cross. As a last resort, the landowner claimed that the right to turn or manoeuvre vehicles was not of the type or intensity required to establish an easement. The court concluded that it could see no reason why a right of way should not be established for the defined purpose of turning vehicles using a garage. Further, use whenever circumstances require it is normally sufficient frequency, provided that the intervals are not excessive. The landowner could build on the land so long as sufficient space was available to permit the turning of vehicles using the garage.

The troublesome area of English law relating to whether a right to park a car is capable of being an easement provided the backdrop for the case of Safestore v RSN Property Ltd [2009] PLSCS 292. A number of adjoining occupiers had a right of way over a private road, together with a right to load and unload, but were prohibited from parking on the road. This prohibition was regularly breached over a number of years and the adjoining owners eventually claimed a right to park by virtue of long use. The court found in their favour and held that a prescriptive right to park could be obtained by long use even in the presence of a covenant not to park. In this case, the covenant prohibiting parking and the grant of the right of way were in separate clauses. The judge did not find that compliance with the covenant was a condition of exercising the right of way. The court did not consider whether the finding would have been the same if the right of way had been made subject to a condition not to park. This case does, however, highlight that land owners should not sit back and allow the breach of covenants prohibiting parking to go unchallenged if they are to ensure that a right to park does not arise by long use.

Contracts subject to planning permission

Two recent cases on contracts conditional on planning sound notes of caution for those acting for both buyer and seller.

Your clients are in a hurry to exchange and the sellers are threatening to withdraw the papers. A grant of planning permission is awaited, so your clients agree to exchange contracts subject to planning. Is the grant of planning permission alone a safe trigger for completion?

In Stoll & Others v Wacks Caller [2009] EWHC 2299 (Ch), the buyers exchanged contracts conditional on the buyers obtaining planning permission to develop the property. Planning permission was granted and the purchase completed. Three weeks after completion, two neighbours applied for judicial review. As a result, the planning permission was quashed and without the ability to develop the property the buyers sold it a year later at a loss. The aggrieved buyers brought a claim against their solicitors for negligence in failing to negotiate a 'call-in' clause in the contract. The court agreed that the solicitors were under a duty to alert their clients to the risks they might not otherwise have appreciated and acted upon. They should have alerted the buyers to the possibility of a third-party challenge and considered proposing the inclusion of a 'call-in' clause in the contract, even though in this case it was unlikely that a 'call-in' clause would have been agreed by the seller in a rising market.

The messages here are clear. Conveyancers must ensure that they advise on all risks, so that any decision a client makes in relation to a transaction is not made in ignorance. Also, in a conditional contract, it is not sufficient simply to ensure that a buyer is not committed to complete unless and until the condition is satisfied; the duty is wider and requires the adviser to foresee and advise on other factors that might render the satisfaction of the condition alone insufficient to satisfy the client's requirements.

The other case of Gregory Projects (Halifax) Ltd v Tenpin (Halifax) Ltd [2009] EWHC 2639 (Ch) simply illustrates the importance of sticking rigidly to the procedure set out in a conditional contract in a climate where buyers may seek to exploit seemingly unimportant breaches to escape the obligation to complete.

In this case, notification of the grant of planning permission was to be given to the other party as soon as it was known and a copy of it was to be supplied immediately on receipt. Both parties then had ten working days to notify the other whether the planning permission was acceptable. Notification of the grant was given, but no copy was supplied in a timely fashion. A dispute ensued as to whether the contract had become unconditional before the long stop date, given the failure to supply a copy of the planning permission. The court decided that the contract had become unconditional before the long stop date, so the failure to supply a copy of the planning permission was not fatal in this case. Litigation could have been avoided, however, if the procedural requirements of the contract had been followed with greater care.

New standard mortgage instructions

Last month, the Building Societies Association (BSA) brought out a new set of standard mortgage instructions. The BSA Mortgage Instructions are being introduced on a voluntary basis, but their stated aim is to provide a full set of instructions for those acting on behalf of BSA members in relation to residential properties, which are streamlined and easier to follow. BSA members who are also members of the Council of Mortgage Lenders (CML) can continue to use the CML Lenders' Handbook. The BSA Mortgage Instructions can be found at www.bsa.org.uk.

The move to introduce another set of standard mortgage instructions has met with some criticism from practitioners as being unnecessary and likely to cause confusion. The Law Society provided recommendations on the instructions to the BSA, although not all were adopted and the Law Society continues to work with the BSA to refine the new instructions. It is currently estimated that approximately 25 building societies intend to adopt the new BSA Mortgage Instructions, which they will use alongside their own specific lending requirements.

SDLT '“ new disclosure regime

As part of the 2009 Budget, HMRC published a document in December 2009 indicating the government's intention to introduce regulations extending the SDLT disclosure regime to SDLT schemes in residential property transactions with a value of at least £1m. Since August 2005, promoters of certain schemes aimed at avoiding SDLT in commercial property transactions with a value of not less than £5m have been required to disclose their schemes to HMRC.

HMRC has confirmed that the regulations to extend the regime to residential properties will be laid before Parliament early this year and will come into effect no later than 1 April 2010. HMRC has indicated that the regulations will apply so that there will be no obligation to disclose any schemes made available for use before the new regime comes into effect. It is thought that this rule will also apply to schemes that are 'substantially the same' as earlier schemes.

HMRC has confirmed that further information and guidance will be published on their website (www.hmrc.gov.uk) before the extension of the regime to residential property transactions comes into force. Currently guidance is expected to be released in early March.