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Be careful what you give away

15 March 2016

A recent case has highlighted how developers need to be cautious when creating multi-use developments. In particular, they need to think very carefully about what rights each part of the development will have once it is complete.

This case concerned an estate where part of the land had been developed as timeshare units, and each owner had the exclusive right to occupy a particular unit at specified periods each year. The rest of the estate was adjacent to the timeshare land and had sporting and recreational facilities. These were open to members of the public who paid to use them.

When the timeshare land was transferred to separate ownership from the estate, it was given the benefit of a set of rights. These included usual rights of way and utilities. However, they also included a right to use the sporting and recreational facilities from time-to-time.

The owners of the estate argued that the rights to use the facilities were personal rights between the parties to the original transfer, and, as the land had now been sold on, the rights did not bind the land and therefore the current owners of the timeshare land should not use the recreational facilities. The original transfer did not contain any charging provisions in return for the facilities, so if the right to use them took effect as easements (rights capable of being used by subsequent owners of the land) they would be available free of charge.

Unfortunately for the owners of the estate the court decided that the right to use the facilities took effect as easements. The grant of the rights had been made by a developer for a number of timeshare owners, and did not concern neighbours in a purely domestic context.

There was no compelling evidence in this case to suggest that the rights to use the facilities were personal, and therefore they would continue to benefit the timeshare land. Indeed, the wording of the rights in the transfer indicated that it was a right for the transferee, its successors in title and occupiers of the timeshare land.

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