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Review Your SQE 1 Practice Records

Examination Timing: 00H00M56S

Emily has always believed she owns the fee simple absolute in possession of 12 Baker Street. However, her title deeds state that she must make regular payments to her neighbour for the use of a shared driveway, and this obligation lasts forever. Emily is entitled to enjoy 12 Baker Street indefinitely without any limitations on the length of her occupation. Which of the following statements best describes the legal position?

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Emily owns the fee simple of 12 Baker Street but this is subject to a legal rentcharge owned by her neighbour. The fact that Emily is entitled to use 12 Baker Street indefinitely indicates that she holds a fee simple. An obligation to make regular payments to a third party, particularly when it continues indefinitely, is known as a rentcharge. Such an obligation is a legal rentcharge if it issues out of a fee simple estate and is expressed to continue perpetually. 

Key Point: Understanding the nature of rentcharges is essential in property law. A rentcharge is a periodic payment that the owner of a property must make to a third party, which can be created in perpetuity or for a fixed term. It can either be legal (if created by deed and issued out of a fee simple) or equitable (in other cases). This concept reflects the complexities involved in the ownership and obligations attached to freehold estates.

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