While verbal agreements are considered valid and binding contracts, it can be dangerous to rely on them without first having a written agreement in place.
The case of Pezaro v Bourne (2019) EWHC 1964 (Ch) highlights the risks of only relying on an informal verbal agreement.
At the time, Mr Pezaro owned 149 and 151 New Street, Andover. There was a right of way over a strip of land located at the back of both properties, which benefited Mr Ayers, the neighbour at number 147. This right of way was recorded on the Official Register of Title for all three properties.
When Mr Pezaro decided he wanted to build another property, he made a verbal agreement with Mr Ayers to terminate this right of way. Unfortunately, Mr Pezaro didn’t apply to the Land Registry to have it amended on the registered titles for the properties.
Some years later, Mr Pezaro secured planning permission for the building works but relied on the verbal agreement that he’d had with Mr Ayers. However, since this agreement was made, number 147 had changed hands. Mr Bourne, the new owner, was unaware of the verbal agreement that had existed between the two men and refused to remove this right of way.
In court, Mr Pezaro tried to argue that because he had reasonably relied on this verbal agreement, Mr Bourne shouldn’t be able to claim the right of way.
The High Court ruled in favour of Mr Bourne because he hadn’t been informed of the verbal agreement. Therefore, the estoppel didn’t bind Mr Bourne.
Under the Land Registration Act 2002, if you buy land that has been registered then you will not be bound by other people’s interests or rights over the land unless those rights have been registered at the Land Registry.
This was introduced to ensure that the process of buying land and registering it would be less risky. If Mr Pezaro had applied to the Land Registry to have the right of way amended, he wouldn’t have lost what had been agreed verbally once number 147 was sold to Mr Bourne.
One solution to this would be to show ‘actual occupation’ of the right of way that is being disputed. Mr Pezaro tried to argue that because he had obstructed the right of way, he was in ‘actual occupation’ of it; therefore, the court should allow his request to terminate the existing right of way. The court disagreed and stated the purpose of ‘actual occupation’ was to ensure that people who have such rights are protected. They held that actual occupation is more than a mere obstruction, and would need to have been obvious to a purchaser on inspection of the property.
- If you are buying a piece of land, ensure that you inspect the land. Therefore, anything that is not reflected on the Register of Title should be evident to you in person. This will ensure you do not have any nasty surprises when you buy the property.
- If you are considering removing a right of way, ensure the agreement is reflected in the Register of Title to avoid any issues that could occur if the property changes hands.
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