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PROPERTY LAW
Types of ownership
Freehold
Freehold absolute
• Non-time limited interest which effectively represents
absolute ownership of the land itself, the subsoil below it, the
airspace above it and any buildings constructed on it.
• Transfer of a freehold interest operates as a statutory trigger
event requiring registration at the Irish Land Registry.
Freehold Fee Farm Grant
• An alternative form of freehold land ownership (a freehold
with the characteristics of a leasehold) used to impose
covenants on the owner and requiring payment of a nominal
rent – sometimes contains forfeiture provisions but doubts
exist as to enforceability of forfeiture. In 2009, the ability to
create new fee farm grants was abolished but many such
interests still remain.
• Transfer of a freehold fee farm grant interest operates as a
statutory trigger event requiring registration at the Irish Land
Registry.
Leasehold
Long leasehold
• Used by freehold landowners to maintain the integrity of
their estates whilst generating a capital return; from the
perspective of long leasehold tenants, long leases are valuable
assets and “owning” a long lease is often considered akin to
owning a “virtual freehold” in the relevant property.
• The term of a long lease can vary from 99 years to 999 years
and a price (“premium”) paid for its grant.
• Usually a negligible rent payable (as a “premium” will have
been paid) although in the commercial arena there may be
an element of gearing requiring the long leasehold tenant to
pay an agreed percentage of the annual income received from
occupiers to the freeholder.
• Generally transferable to third parties by assignment or
underletting although in some instances the consent of the
freeholder may be required.
• In the commercial sector alterations and change of use are
often permitted without the consent of the freeholder.
• Whilst the freeholder will have a right to terminate (“forfeit”)
the lease if the long leasehold tenant breaches its obligations
in the lease in practice there are a number of statutory
protections to relief from forfeiture to provide the tenant with
protection.
• Capable of being used as security.
• Subject to mandatory registration at Land Registry.
Occupational leases (commercial)
• Used by freehold or long leasehold owners to generate an
income stream.
• Historically leases tended to be granted for 25 to 35 years
however recent market conditions have driven the average
lease term down to 10 years or 15 years with a break at
ten years.
• Usually an open market rent is payable (quarterly in advance)
In leases granted before 1 March 2010 there will be provision
for an upwards only rent review to the market rent every
five years. Leases granted from 1 March 2010 have open
market reviews every five years as upwards only reviews are
prohibited by statute in those leases. Fixed rent and index-
linked increases (which are not prohibited in post 1 March
2010 leases) are also found but not yet very common.
• In addition to paying the rent the tenant will generally be
responsible for covering the full costs of repair, reinstatement,
maintenance and insurance of the property.
• The lease will restrict the tenant’s right to assign, underlet,
use and alter the property, often requiring the owner’s
consent before such actions can be undertaken. By law
landlord’s consent to those matters cannot be unreasonably
withheld or delayed.
• Tenants occupying property for the purposes of their business
for a continuous period of five years have an automatic
statutory right to renew their lease (at market rent) on expiry
unless that right has been renounced by the tenant (excluded)
– the right can be renounced either before or during the term
of the lease . If the lease has not been “contracted out” of the
security of tenure regime the owner can only resist the grant
of the renewal lease on a limited number of grounds.
• Leases granted for more than 21 years are registrable at Land
Registry and must contain certain prescribed clauses.
• A statutory Commercial Leases database operated by
the Property Services Regulatory Authority was set up in
2012 requiring the registration of details of all commercial
leases granted since 3 April 2012. The details required to be
registered include matters such as rent free periods, capital
inducements, service charge payment amounts and the onus
is on the tenant to register. Failure to do so is an offence liable
to a significant fine.
Rights affecting ownership
Easement
• A right which benefits one piece of (dominant) land and
burdens another (servient) piece of land, note in this context
“land” includes buildings. The two pieces of land affected
must be in different ownership.
• In general a legal easement must either take effect as a
right “in fee simple” or be granted for a fixed term and if it
concerns registered land must be registered at Land Registry.
Easements acquired by prescription (long usage rather than
formal grant) will need to be registered in Land Registry by
2021 if they are to continue to have effect after that.
• Interference with an easement gives rise to an action for
private nuisance.
Mortgage
• A type of security.
• Whilst any charge granted since 1 December 2009 (by way
of legal mortgage) over property does not operate to transfer
title to the property to the lender, it creates a legal interest in
the property and affords the lender certain rights including a
statutory power of sale in the event of borrower default (as
the statutory powers are fairly limited the lender will look to
extend them under the terms of the security documentation).
Charges granted prior to 1 December 2009 (of which many
still remain) did operate to transfer legal title to the lender.
• Must be created by “deed” and, in the case of registered land,
registered at Land Registry.
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Investors Guide to Europe 2015