A Critical Analysis of the Law of Property (Miscellaneous Provisions) Act 1989

02 Pages
Published On: 24-11-2023

The formality requirements for a transfer of freehold title are contained in Law of Property (Miscellaneous Provisions) Act 1989, Section 2, which provides that a contract for the sale of land is required to be made in writing. Furthermore, Section 2 requires that all the terms of the contract should be incorporated in one document or if the contracts are being exchanged, in each document. Importantly, Section 2 does not merely require the contract to be evidenced in writing, but to be made in writing. Reading this with Section 52 of the Law of Property Act 1925, which requires that the transfer of land should only be in deed, it can be seen clearly that the formality requirements of the law are very stringent on the point of freehold land being transferable only under a written contract.

The history of the formality provisions, particularly in context of the Section 2 requirement that all the terms of the contract must be included in the written document, has seen considerable litigation. The point of conflict is that unless formality requirements are met, contract to sale does not exist so that the agreement for sale of freehold is a nullity if it is not in compliance with Section 2. The rigid application of these formality rules has led to some confusing consequences particularly in context of proprietary estoppel.

The formality requirements where rigidly applied have also led to some consequences for equitable principles involved in cases; a good example of this is the case of Cobbe v Yeoman’s Row Management Ltd, where the owner of the land orally promised to sell the freehold to the property developer if the latter was able to procure planning permission. Later, the owner refused to abide by the oral agreement, and the case of the property developer on the basis of proprietary estoppel failed on the ground that the doctrine of proprietary estoppel cannot enforce an agreement that is statutorily void. As the formality requirements for transfer of freehold were not followed as per Section 2, the court refused to apply the doctrine of proprietary estoppel. This decision also was contrary to the prior position of the court where it was held that assurance given to the claimant by the landowner being clear and unequivocal, and the claimant acting on the assurance to his detriment, is adequate to make a case for proprietary estoppel.

This background makes the application of formality requirements interpretation by the court in Cobbe, appear contrary to the principles of equity. The effect of rigid application of the formality requirements was noted in Keay where the court noted that “Its effect is merciless” and even where appropriately signed and intended to be a contract, the document does not create a valid contract unless all expressly agreed terms are included. At the same time, in Record v Bell, missing terms were treated as a separate ‘collateral’ contract and the court held that these need not be in writing. In Keay v Morris Homes (West Midlands) Ltd, sale of land was part of a wider transaction and the parties were involved in a composite agreement; the court observed that separate contract interpretation for the land contract was required only if it was genuinely separated from the rest of that transaction.

To conclude, while the formality requirements serve the purpose of evidentiary, cautionary, and labelling, they also lead to some conflict with equity principles particularly in the context of proprietary estoppel.

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