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It is well known that farm business tenancies granted for a term of more than 3 years have to be drawn as Deeds. But what about other documents? We explain the rules and consider how deeds have to be executed.
When is a Deed required?
Section.52 Law of Property Act 1925 provides that, unless made by Deed, all conveyances of land and the creation of any interest in land will be void for the purposes of creating a legal estate in the land. The majority of transactional property documents therefore need to be made by Deed in order to be effective. This includes Transfers, Deeds of Easement and Legal Charges. There are certain exceptions to this rule, and these include:-
· Assents made by personal representatives
· Leases or tenancies not required by law to be made in writing. This includes leases or tenancies taking effect in possession for a term of not more than 3 years at the best rent reasonably obtainable and without a fine
· Certain relevant social housing tenancies.
In addition the grant of a “profit a prendre” such as sporting or fishing rights, has to be created by Deed, irrespective of how long the term is.
Under the Legal Services Act 2007 only certain authorised professionals are permitted to prepare Deeds and doing so without authorisation is a criminal offence. Surveyors are given specific authority to prepare Deeds which create or relate to FBTs under the Agricultural Tenancies Act 1995.
It should be noted, however, that this authorisation does not extend to fixed term tenancies granted for more than 3 years under the Agricultural Holdings Act 1986, the Landlord and Tenant Act 1954 or the Housing Act 1988.
Whilst some documents, such as contracts for the sale of land, do not need to be made by Deed, there may be circumstances in which it would be advantageous to do so. There are two real benefits to using a Deed instead of a contract:-
· the statutory limitation period for action to be brought under a simple contract is six years, whilst under a Deed it is generally twelve years.
· a Deed is enforceable without consideration (i.e. value passing between the parties).
So where a contract contains obligations on a party to do something, drafting it as a Deed ensures the obligations are effective and enforceable, particularly if they are obligations on the party not receiving consideration under the contract.
How to make sure a Deed is effective
For a Deed to be effective, it must clearly state that it is a Deed, and must be validly executed by the person making it or by one or more of the parties to it (s1(2)(b) Law of Property (Miscellaneous Provisions) Act 1989). It must also be delivered as a Deed – meaning that those signing it must expressly or impliedly acknowledge an intention to be bound by it.
Certain Deeds have to follow an H M Land Registry prescribed form, and these include transfers, assents of registered titles, legal charges, and documents by which mortgages and legal charges are released.
Execution Formalities
Execution formalities differ depending on the identity of the parties. The most common forms of execution are set out below –further details of execution requirements can be found in H M Land Registry Practice Guide 8.
Individual
For an individual to execute a Deed validly, they must sign the Deed in the presence of a witness, who must ‘attest’ the signature. The individual’s name must be clearly stated.. The witness’ details must be clearly recorded and this must include their signature, name and address. The witness must be independent – another party to the Deed cannot be the witness, and good practice is for the witness to be over 18 and not to be related to the individual signatory.
Company
In accordance with the Companies Act 2006, companies can execute deeds:-
· Under their common seal (if they have one), by affixing the seal to the document in the presence of the company secretary and a director, or two directors, who will need to sign the Deed. The signatures do not need to be witnessed; or
· By two company directors or one director and the company secretary, who need to sign the Deed. The signatures do not need to be witnessed; or
· By one director in the presence of a witness – in which case the director signs in their capacity as director, but otherwise as described for individual signatories above.
In each case, where a Deed is being executed by a company, the execution clause will read “Executed as a Deed by [Company name] acting by…”
Please note that there are specific requirements for overseas companies executing documents, and the relevant execution clause can be found in Land Registry Practice Guide 8.
Executor / Personal Representative
Someone who is signing a Deed as the executor or personal representative of a deceased person or as a trustee in bankruptcy must sign in their own name, and the signature must be witnessed, as above. The only difference is that where the signatory’s name is recorded on the Deed, the capacity in which they are signing must be made clear – i.e. “[Name] as Executor of [deceased]”. The executor or personal representative will be a party to the Deed, again with it being made clear that they are a party in their capacity as executor or personal representative.
Power of Attorney
Where a Deed is being signed on someone’s behalf by their attorney, for example if someone has lost capacity, the person who has lost capacity (the donor) will be the named party to the Deed (unlike with an executor or personal representative), but the execution clause will read: “Signed as a Deed by [attorney’s name] as attorney for [donor’s name].” The attorney will sign with their own name, and their signature will again need to be witnessed.
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