Law of Property (Miscellaneous Provisions) Act 1989
|Long title||An Act to make new provision with respect to deeds and their execution and contracts for the sale or other disposition of interests in land; and to abolish the rule of law known as the rule in Bain v. Fothergill.|
|Citation||1989 c. 34|
|Territorial extent||England and Wales|
|Royal assent||27 July 1989|
|Commencement||27 September 1989 (in part)
31 July 1990 (remainder)
|Text of statute as originally enacted|
|Text of the Law of Property (Miscellaneous Provisions) Act 1989 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk|
Nature of reforms
The Act introduced several distinct reforms:
- The common law rules governing the form and delivery of a deed were abolished, and were replaced by requirements that:
- Contracts for the sale or other disposition of an interest in land must be made in writing, and they must incorporate all agreed terms in one document.
Validity of execution under Mercury
S. 1(3) of the Act provides that:
An instrument is validly executed as a deed by an individual if, and only if—
In 2008, the High Court of England and Wales expressed in obiter that the recycling of signature pages from earlier drafts rendered the agreements in question invalid as deeds under the Act. Taken together with previous jurisprudence on the execution of documents in the Court of Appeal for England and Wales, the Law Society of England and Wales has issued guidance as to what steps are necessary in order to validly execute deeds and other documents executed in counterpart in electronic or virtual closings:
|Type of Document||Option 1- Return entire PDF/Word document plus signature page||Option 2 - Return signature page only||Option 3 - Advance pre-signed signature pages|
|Real estate contracts||Yes||No||No|
|Guarantees (stand-alone or contained in simple contracts)||Yes||Yes||Yes|
|Simple contracts (not incorporating any of the above)||Yes||Yes||Yes|
Land contracts covered by the Act
Section 2 deals with contracts for the creation or sale of legal estates or interests in land, and not with documents that transfer such estates or interests. The required scope for such contracts is defined in s. 2:
The Court of Appeal has noted which types of agreements fall either within the Act or outside of it:
... Section 2 is concerned with contracts for the creation or sale of legal estates or interests in land, not with documents which actually create or transfer such estates or interests. So a contract to transfer a freehold or a lease in the future, a contract to grant a lease in the future, or a contract for a mortgage in the future, are all within the reach of the section, provided of course the ultimate subject matter is land. However, an actual transfer, conveyance or assignment, an actual lease, or an actual mortgage are not within the scope of section 2 at all.
The "single document" requirement is strictly applied:
... Its effect is merciless. An appropriately signed document purporting to amount to a contract for the sale or other disposition of an interest in land will not in fact create a valid contract unless it includes all the expressly agreed terms of the sale or other disposition. If it fails do so it will be void...
The Court has given guidance on circumstances where a land contract can be avoided under s. 2:
- A party seeking to avoid must identify a term which the parties have expressly agreed, which is not to be found in the single, or exchanged, signed document.
- It is not sufficient merely to show that the land contract formed part of a larger transaction which was subject to other expressly agreed terms which are absent from the land contract.
- The expressly agreed term must, if it is required by section 2 to be included in the single document, be a term of the sale of the land, rather than a term of some simultaneous contract (whether for the sale of a chattel or the provision of a service) which happens to take place at the same time as the land contract, and to form part of one commercial transaction.
- S. 2(1) does not prohibit parties from structuring a transaction, for example, for the sale of the whole of a company's assets, in such a way that the land sale is dealt with in a different document from the sale of stock, work in progress or goodwill, unless the sale of the land is conditional upon the sale of the other assets.
S. 2 of the Act repealed s. 40 of the Law of Property Act 1925, thus abolishing the equitable doctrine of part performance with respect to dispositions of interests in land, which had been recommended by the Law Commission of England and Wales. Although the Commission believed that the equitable doctrines of promissory estoppel and proprietary estoppel would still be available to provide relief, the House of Lords has subsequently held that such relief was not available. As Lord Scott of Foscote stated in his speech:
29.... proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void. The proposition that an owner of land can be estopped from asserting that an agreement is void for want of compliance with the requirements of section 2 is, in my opinion, unacceptable. The assertion is no more than the statute provides. Equity can surely not contradict the statute....
This mirrors the observation that "The doctrine of estoppel may not be invoked to render valid a transaction which the legislature has, on grounds of general public policy, enacted is to be invalid," which has been cited in other cases in the matter by the Court of Appeal. The constructive trust remedy that is available under s. 2(5) of the Act, however, operates under principles distinct from those of estoppel, which can lead to problems in application and enforcement. Academic discussion suggests that estoppel may still be available in situations outside of s. 2 on its own terms.
- Deeds and Escrows (Law Com. No. 163) (PDF). The Law Commission. 1987. ISBN 0-10-200188-X.
- Formalities for Contracts for Sale etc of Land (Law Com. No. 164) (PDF). The Law Commission. 1987. ISBN 0-10-200288-6.
- Transfer of Land - The Rule in Bain v. Fothergill (Working Paper No 98) (PDF). The Law Commission. 1986. ISBN 0-11-730179-5.
- Charlotte Groom (2011). "Straight through Certainty and Out the Other Side: Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and Proprietary Estoppel" (PDF). Southampton Student Law Review. University of Southampton. 1 (1): 105–110.
- UK Parliament. The Law of Property (Miscellaneous Provisions) Act 1989 (Commencement) Order 1990 as made, from legislation.gov.uk.
- s. 1
- s. 2
- Bain v. Fothergill, (1874) LR 7 HL 158
- s. 3
- Mercury Tax Group Ltd & Anor, R (on the application of) v HM Commissioners of Revenue & Customs & Ors  EWHC 2721 (Admin) at para. 40
- Koenigsblatt v. Sweet,  2 Ch 314
- "Execution of documents by virtual means". Law Society of England and Wales. 16 February 2010.
- Jeremy Levy. "Practical Implications of the Mercury Decision (on the Execution of Documents at Virtual Signings/Closings)". Baker & Mackenzie.
- John de Waal QC. "When is a Land Contract not a Land Contract? s2 LPMPA 1989 in practice". Hardwicke.
- Helden v Strathmore Ltd  EWCA Civ 542 at para. 27 (11 May 2011)
- Keay & Anor v Morris Homes (West Midlands) Ltd  EWCA Civ 900 at para. 9 (11 July 2012)
- North Eastern Properties Ltd v Coleman & Anor  EWCA Civ 277 at para. 46 (19 March 2010)
- Law Commission LC 164 1987, par. 4.13.
- Law Commission LC 164 1987, par. 5.1–5.5.
- Yeoman's Row Management Ltd & Anor v Cobbe  UKHL 55 (30 July 2008)
- Halsbury's Laws of England (4th ed, vol 16, paragraph 962)
- Yaxley v Gotts & Anor  EWCA Civ 3006,  Ch 162 (24 June 1999), Kinane v Mackie-Conteh  EWCA Civ 45 (1 February 2005)
- Groom 2011, p. 107.
- Groom 2011, p. 108.
- Groom 2011, p. 109.