The risks associated with undocumented oral agreements

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Oral agreements in relation to land are likely to be unenforceable unless they're formally and promptly documented.

Mr and Mrs Pezaro owned properties at 149 and 151 New Street, Andover. At the time, the neighbouring property at number 147, which had the benefit of a right of way across land to the rear of the Pezaros’ property, was owned by Mr Ayers.

When Mr and Mrs Pezaro wished to build on land next to number 151, they approached Mr Ayers as they needed a bit of his garden and he agreed to sell it. The right of way wasn’t mentioned but it wasn’t in use and was fenced off. 

Incurring legal fees

Shortly afterwards, when it was discovered that the right of way was still noted on the title, the Pezaros called My Ayers and offered to pay his legal costs to remove it. Mr Ayers agreed to this orally but the Pezaros failed to act upon this agreement at that time.

When planning permission was secured for a new building on the land later on, the right of way was still showing on the title. The Pezaros therefore tried to contact Mr Ayers to progress its removal, but found that Mr Ayers was no longer the owner. Number 147 had been sold twice since he had owned it and the current owners, the Bournes, didn’t agree that the right of way should be removed.

The planning permission

The Pezaros couldn’t implement their planning permission with the right of way there, so they sought to rely on the doctrine of proprietary estoppel. They argued that, having raised the matter with Mr Ayers, they had gone on to apply for planning permission to build on the land concerned. They said that notices were displayed on the site advertising the planning application, which the new owners would have seen, and that it would now be unconscionable to allow the right of way to be enforced.

The new owners were unaware of the planning permission being granted and had not been to the property when the notices were on display. The question therefore became whether there was an “overriding interest”, being an interest to which registered land will still be subject, notwithstanding that there was no notice of it on the register when the land was sold to them.

In conclusion

In order to successfully claim an overriding interest, there has to be actual occupation and this would have to be obvious on an inspection. Here, the fencing off and grant of planning permission were not enough to constitute actual occupation of the right of way for there to be an overriding interest. The Court found that there would have to be a permanent feature there, such as a building. Accordingly, in this case, there was no basis for rectifying the title now and the opportunity to do so had been missed.

Points to consider

  1. Carefully and properly document any oral agreements in relation to land.
  2. Promptly register any agreements to remove or modify rights over land at the Land Registry.

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