When a lease becomes vested in the owner of the immediate reversion, the lease merges with the reversion unless it is encumbered (for example, by a mortgage) or the owner intends to keep the lease alive. Consequently, lawyers commonly insert declarations in deeds confirming the owner’s intentions and, if there is nothing to prevent the merger of a lease and a deed includes an express declaration that that is what is intended, the courts will normally give effect to that intention, even though this results in the loss of an interest benefiting the leasehold estate. Indeed, current Land Registry Practice Guidance states that, on the merger of a lease any beneficial easements granted by the lease come to an end. Consequently, the Land Registry advises applicants to check whether the reversionary estate has the benefit of an equivalent beneficial easement and, if not, to decide whether the two estates should continue to be held separately (because the Land Registry do not check the lease for beneficial easements when a lease is being determined). The litigation concerned rights of way over a passageway granted on an assignment that sub-divided premises comprised in a 999-year lease. Many years later, the freehold and leasehold interests in the property with the benefit of the right of way became vested in the same owner, and the interests merged. The owner of the passageway asserted that the right of way was extinguished when the lease disappeared. However, the Court of Appeal ruled that, although an easement must be attached to land, it need not be attached to any particular interest in land. Consequently, the merger of a lease into a larger interest in dominant land was not, of itself, fatal to the continued existence of an easement for the period for which it was granted. The dominant land remained unchanged and there was no legal impediment to the continuation of the easement during the period that would have been left to run under the lease, had it survived. It is understood that the Land Registry is currently reviewing its practice in the light of this decision. It will be interesting to see how the Land Registry approaches another tricky issue arising out of this case. Namely, can its rationale be applied to the benefit of restrictive covenants attached to a leasehold interest in land? The Court of Appeal expressed different opinions. Lord Justice Carnwarth thought that easements and restrictive covenants have “different legal pedigrees”, but Lord Justice Hooper thought that it would be disastrous if the merger of a lease were to extinguish any easements or covenants attached to the leasehold interest. Allyson Colby, Property Law Consultant However, the Court of Appeal’s decision in Wall v Collins [2007] EWCA Civ 444; [2007] PLSCS 104 demonstrates a surprising new willingness to adopt a broad approach in such cases to overcome legal technicalities to ensure that titles “reflect the reality”.
When a lease becomes vested in the owner of the immediate reversion, the lease merges with the reversion unless it is encumbered (for example, by a mortgage) or the owner intends to keep the lease alive. Consequently, lawyers commonly insert declarations in deeds confirming the owner’s intentions and, if there is nothing to prevent the merger of a lease and a deed includes an express declaration that that is what is intended, the courts will normally give effect to that intention, even though this results in the loss of an interest benefiting the leasehold estate. Indeed, current Land Registry Practice Guidance states that, on the merger of a lease any beneficial easements granted by the lease come to an end. Consequently, the Land Registry advises applicants to check whether the reversionary estate has the benefit of an equivalent beneficial easement and, if not, to decide whether the two estates should continue to be held separately (because the Land Registry do not check the lease for beneficial easements when a lease is being determined). However, the Court of Appeal’s decision in Wall v Collins [2007] EWCA Civ 444; [2007] PLSCS 104 demonstrates a surprising new willingness to adopt a broad approach in such cases to overcome legal technicalities to ensure that titles “reflect the reality”. The litigation concerned rights of way over a passageway granted on an assignment that sub-divided premises comprised in a 999-year lease. Many years later, the freehold and leasehold interests in the property with the benefit of the right of way became vested in the same owner, and the interests merged. The owner of the passageway asserted that the right of way was extinguished when the lease disappeared. However, the Court of Appeal ruled that, although an easement must be attached to land, it need not be attached to any particular interest in land. Consequently, the merger of a lease into a larger interest in dominant land was not, of itself, fatal to the continued existence of an easement for the period for which it was granted. The dominant land remained unchanged and there was no legal impediment to the continuation of the easement during the period that would have been left to run under the lease, had it survived. It is understood that the Land Registry is currently reviewing its practice in the light of this decision. It will be interesting to see how the Land Registry approaches another tricky issue arising out of this case. Namely, can its rationale be applied to the benefit of restrictive covenants attached to a leasehold interest in land? The Court of Appeal expressed different opinions. Lord Justice Carnwarth thought that easements and restrictive covenants have “different legal pedigrees”, but Lord Justice Hooper thought that it would be disastrous if the merger of a lease were to extinguish any easements or covenants attached to the leasehold interest. Allyson Colby, Property Law Consultant
