This section is from the book "Real Property, An Introductory Explanation Of The Law Relating To Land", by Alfred F Topham. Also available from Amazon: The New Law Of Property.
Long terms, usually for 300, 500, or 1000 years are most frequently found in marriage settlements.
As we have seen, the land is usually settled on the father for life, with remainder to his eldest son in tail; this leaves nothing for the other sons and daughters, and therefore it is usual to provide that sums of money shall be paid to them out of the land. It is best for the son to have the legal estate in tail, and if this is desired the land cannot be mortgaged to the other children in the usual manner (see p. 222); consequently the land is leased to trustees for a term which shall be more than sufficient to cover the lives of all possible children of the husband, and the trustees hold this lease or term for the purpose of raising and paying the money to the younger children.
Terms created in this way are called "portions terms."
On the marriage of A and B, land is conveyed to X and Y and their heirs to the use of A and his heirs until the marriage.
Then to the use of A for life.
Remainder to the use of C and D (two other trustees) for 1000 years upon trust to secure the payment of £5000 to younger children of A.
Remainder subject to the term to the use of the first son of A in tail, etc. (see the form of a settlement on p. 332).
Nominally the eldest son gets only a fee tail in reversion after the termination of the 1000 years; but really he is seised immediately on the death of the father, and holds the land subject only to the payment of the £'5000.
The object of the term therefore is to secure provision for the younger children without impairing the continuance of an estate in the head of the family.
Satisfied Terms. - When the purpose for which such a term was created has been satisfied (e.g. when the £5000 has been paid) the term ceases.
This was enacted by a statute of 1845 (r).
Before the Act the settlement sometimes provided that the term should cease when the money was paid; this was called a "proviso for cesser"; but if not, the term of 1000 years continued to exist until the trustees (C and D) conveyed it back to the tenant in tail.
This led to a complicated and inconvenient conveyancing practice called the assignment of a satisfied term on trust to attend the inheritance.
Suppose in the last example that A dies and his son, S thereupon becomes entitled to an estate tail; S bars the entail and becomes tenant in fee simple subject to the term of 1000 years to provide portions of £5000 for his brothers and sisters.
S now agrees to sell the land to a purchaser for £20,000, of which £5000 is to be paid to C and D to clear off the charge.
The simplest course would be for S to convey the fee simple to the purchaser, and for C and D to assign the 1000 years' term to the purchaser. The term would then merge and cease to exist. This, however, was not usually done, for the following reason: -
A cautious purchaser of land subject to a term wished the term to be kept alive for the purpose of protecting him from possible charges or incumbrances created since the commencement of the term.
Thus, suppose S, after barring the entail, had raised £500 by mortgage of the land, without the knowledge of the purchaser.
(r) 8 & 9 Vict. c. 112.
As S had then in law only a reversion, expectant on the termination of the lease for 1000 years, he could not bind anything but the reversion. That is to say, the lender of the £500 would have a charge on the land after the termination of the term of 1000 years.
If then the purchaser could keep the term on foot, the £500 mortgage would be postponed for 1000 years (rr).
Therefore the purchaser had the fee simple conveyed to himself, and had the lease assigned to trustees for him, so that the term of years and the fee simple were not held "in the same right," and the term did not therefore merge in the fee simple: thus the purchaser escaped liability for any incumbrances created since the beginning of the term of which he had no notice.
This term was held by the new trustees upon trust for the persons who should from time to time be entitled to the fee simple; hence it was said to be "on trust to attend the inheritance."
Similarly, if S had paid off the £5000 himself, the trustees would hold the term on trust for him and his heirs and assigns.
By the Satisfied Terms Act, 1845.
(1) Any term becoming satisfied after the Act immediately ceases (whether it was expressly made to attend the inheritance or only became so attendant by operation of law, as where S paid off the charge).
It was thought, however, that a purchaser who had taken this precaution before the Act should not be deprived of the protection which the term afforded him, consequently it was enacted that -
(2) Any term which became satisfied before the Act should also cease; but if it was made
(rr) The mortgage for £500 would no doubt be an equitable charge on the whole interest of S: but it would not bind the legal estate except subject to the term: and a purchaser for value is not bound by an equitable charge of which he has no notice.
attendant on the inheritance by express words (as in the example above) it should be deemed to be still on foot for the purpose of protecting the purchaser from any incumbrances which were then postponed by the existence of the term. Hence the law at the present day is that a term created for the purposes of a mortgage ceases when the mortgage is paid off or extinguished; but if it was created before 1845 it may still exist for certain purposes (s).
It is still sometimes useful as a protection against the possibility of the widow of some owner being entitled to dower.
Enlargement of a long term.
A person who holds land for 1000 years and pays no rent, or the rent of, say, one peppercorn each year, has practically a fee simple; and he can now turn his estate into a fee simple.