Lawbite: Maintaining boundaries – boundary agreement binds successors in title regardless of knowledge

Summary

Earlier this year the Court of Appeal (England and Wales) decided that a boundary demarcation agreement was binding on successors in title, regardless of whether or not those successors had knowledge of the agreement. In reaching its conclusions the Court provided helpful commentary on boundary agreements more generally.

The decision will be of particular interest to owners and developers of land in England and Wales.

The boundary agreement

Neighbours, Mr White and Professor and Mrs Alder, purchased their respective properties, “Willow Cottage” and “The Old Stores” in Chelmsford, in November 2005. 

Prior to these purchases, the former owners of the two properties had reached an agreement (initially verbally and then in writing) as to the location of the boundary between the respective properties (the “Boundary Agreement”).

The dispute

Fast forward to 2016, when Mr White began constructing an extension at Willow Cottage, and the location of the boundary between the two properties came into question. 

The Alders commenced proceedings in 2020 alleging various acts of trespass onto their land as a result of the works and resulting extension. They also sought declarations as to the position of the boundary between The Old Stores and Willow Cottage. The existence and effect of the Boundary Agreement was key to the outcome of the claim, and its existence and effect had to be determined as a preliminary issue.  

Court's findings

At both first instance and first appeal the Boundary Agreement was found to exist and to be binding on successors in title. The Court of Appeal upheld these findings, and in doing so provided helpful commentary on boundary agreements more generally.

Two types of boundary agreements

The court explained that there are two types of boundary agreements:

1. The first type creates a boundary. As this type necessitates the transfer of land from one neighbour to the other it is subject to the formalities necessary for the transfer of land in particular s.2 of the Law of Property (Miscellaneous Provisions) Act 1989 and registration formalities. If those formalities are not followed the agreement may not be valid and/or binding on third parties
2. The second type demarcates an existing boundary which might previously have been unclear or uncertain. Such agreements:

• do not include the transfer of land or, if they do, the presumption is that this would be of a trivial amount
• have a proprietary effect and, as a result, bind successors in title. These agreements define the extent of the parcels of land owned by the parties to them, as such ‘they must logically continue to define the extent of those parcels when they are transferred to successors in title’
• are binding on successors regardless of whether or not they knew of the agreement. These agreements are neither equitable interests for the purposes of unregistered conveyancing nor overriding interests for the purposes of registered land. Rather, they clarify the border or boundary between properties, which does not turn on knowledge
• can be implied, and there are no prescribed formalities to follow. There may be difficulties proving the existence of implied boundary demarcation agreements, however, and the parties’ actions are likely to be key in those cases - for example an agreement might (but will not always) be implied where one party erects a fence with no objection from the other party

Key takeaways

• The court’s findings are consistent with public policy which encourages boundary demarcation agreements as a relatively inexpensive means of preventing or resolving boundary disputes, and ultimately seeking to limit the risk of litigation
• Care should be taken when reviewing boundary agreements, however, as it may not always be clear which type of boundary agreement is in place: one that creates the boundary and therefore transfers land from one neighbour to the other; or one that demarcates an existing boundary. This is important as the former will need to comply with statutory requirements in order to be valid, and be registered at the Land Registry to be binding on third parties (including successors in title)
• The decision could cause concern to purchasers of land in England and Wales due to the uncertainty it creates. Pre-contract enquiries & their responses could provide some comfort, however, they do not offer a complete solution. If the existence of a boundary agreement isn’t disclosed at the pre-contract stage, the purchaser will most likely still find itself bound by the agreement, but may have recourse against the seller for misrepresentations made in the replies to enquiries
• Purchasers who discover a small boundary discrepancy in the pre-contract stage may wish to ask the seller to secure a boundary demarcation agreement in order to offer clarity
• Although implied boundary demarcation agreements are binding, it would be sensible for parties to such agreements to expressly record their agreement in writing, taking care when drafting the agreement and including a plan where appropriate. This could avoid future disputes as to the terms of the agreement reached