Proprietary Estoppel

Proprietary Estoppel

Proprietary Estoppel relates to property law and it refers to the creation of a proprietary interest in a piece of land. The term can be used in a variety of situations such as the establishment of freehold over a piece of land or during the creation of a lease, easement or licence. This type of law operates under what is known as unconscionable behaviour. Unconscionability is a specific doctrine in contract law which specifies certain terms which are one sided or unjust in favour of a party with higher bargaining power that it overrides good conscience.

Proprietary Estoppel

Proprietary estoppel can be used as a remedy to award land when it would be unconscionable for the legal title holder to dismiss the claimant’s entitlement to the land. In order for a claim to be successful, the claimant must be able to establish what is known as an equity and it is at the discretion of the court to satisfy the equity through issuing a suitable remedy.

Proprietary Estoppel Equitable Interest

Proprietary Estoppel is quite a complex area of land law. An equitable proprietary interest can be established on an informal basis through a constructive or resulting trust. These trusts are usually applicable during periods of cohabitation which will automatically grant a proprietary right. Proprietary Estoppel legislation allows an informal creation of interests in land when an individual has acted to their detriment and relied on a verbal agreement that the interest did in fact exist. Verbal grants of interest on their own are therefore inadequate.

Initiating a Proprietary Estoppel Claim

Even if an individual decides to launch formal legal action through a proprietary estoppel claim, this, in itself will not be a remedy to the problem. Where a claimant can clearly demonstrate some form of entitlement using estoppel, the courts will award a suitable remedy. Estoppel is therefore deemed to be a cause of action which requires an appropriate remedial response. When establishing that you have a claim and you wish to pursue the proprietary estoppel route, you must complete two vital stages to claim a remedy. The first is to establish an estoppel equity and the second is to satisfy the equity through a suitable remedy.

Establishing an Equity

Once you have decided to embark on a proprietary estoppels claim the first step is to describe the situation which has arisen which entitles you to a remedy. This would involve showing that a proprietary estoppels has been raised as an issue. Today’s courts will recognise that there are three main factors that must be present in order to achieve this. The first is that there must have been some kind of assurance. The second is a reliance and the third is that the situation resulted in a change of your position or detriment. Estoppel equities can only arise if these three factors are proven.

Satisfying the Equity

After the Equity has been established, the second stage is to satisfy the equity. As a result, the claimant is entitled to claim remedial relief, but it must be understood that just because an equity exists, this does not automatically follow that a remedy will be awarded. It is up to the courts to determine what remedy is suitable looking at the circumstances of each case. The courts will then decide whether to ‘satisfy’ the equity which has been raised by the estoppel. If the court decides to satisfy the equity it is at their discretion as to what remedy they provide.

Scope of proprietary estoppel

The Proprietary Estoppel principle has been in operation for a number of years in order to establish certain interests and rights over land and on occasions certain types of property. It is believed that these principles cannot be applied in public matters such as granting planning permission.

Proprietary estoppel was created in three main situations:

  • When the owner of land provided another person with assurance that they would receive an interest in the land
  • When both parties acted in such a way which led the other to believe that rights in the land had been acquired
  • When a third party dealt with land knowing they were incorrectly exercising their legal rights and the land owner didn’t take any action to correct them

Over the years it has been extremely difficult to establish and prove a claim for proprietary estoppel and as a result the courts have relaxed the way in which they are dealt with. The regulations are not as strict and the burden of proof now rests with the defendant who must demonstrate that the claimant did not in any way rely on the assurances that they made. Consequently for a proprietary estoppels claim to succeed, several elements must be established including:

  • A representation or assurance must have been made
  • The claimant must have relied on this representation or assurance
  • This was to the detriment of the claimant
  • There was an element of unconscionability

Probate and Assurances

In some situations, land may be promised or an individual may be provided with an assurance that the land will transfer to them upon the land owner’s death. However there have been cases where assurances have been made in terms of inheriting land for the land owner to change their mind. In this instance, the assurance was given and the land owner conducted themselves in such a way that would indicate the individual promised the land would inherit and as a result could be classed as proprietary estoppel.

One of the main requirements for proprietary estoppels is unconscionability and when it reaches court, they will carefully review the circumstances surrounding the proprietary estoppels and determine whether it had been unconscionable for the promise to be dismissed taking into consideration the detriment that would be caused from the promise.

When it comes to making a claim under proprietary estoppel, the claimant can make an application for the ‘promised’ rights in the land. If successful, the land owner will not be able to uphold their strict legal rights and deny the individual rights to the property which have been assured or promised.

About the author:

This article was written by a member of the Expert Answers legal advice team and posted by Lloyd Barrett. Expert Answers provides online legal advice on all aspects of UK Law to users in the United Kingdom.