Escheat

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Escheat is a common law doctrine that operates to ensure that property is not left in limbo and ownerless. It originally referred to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.

Most common-law jurisdictions have abolished the concept of feudal tenure of property, and so the concept of escheat has lost something of its meaning. Even in England and Wales, where escheat still operates as a doctrine of land law, there are unlikely to be any feudal lords to take property on an escheat, so that in practice the recipient of an escheated property is the Crown.

The term is often now applied to the transfer of the title to a person's property to the state when the person dies intestate without any other person capable of taking the property as heir. For example, a common-law jurisdiction's intestacy statute might provide that when someone dies without a will, and is not survived by a spouse, descendants, parents, grandparents, descendants of parents, children or grandchildren of grandparents, or great-grandchildren of grandparents, then the person's estate will escheat to the state.

Escheat is also relevant to the international law concept of a "limbo cession", where territory is ceded by one nation, for example in a peace treaty, without the specification of a "receiving country". In such a situation, the ceded territory "escheats" to (i.e. remains under the authority of) the military government of the "principal occupying power" as an interim status condition, until a new government for the ceded territory emerges.

In some jurisdictions, escheat can also occur when an entity (such as a bank) holds money or property (such as an account in that bank) and the property goes unclaimed. In many jurisdictions, if the owner cannot be located, such property can be revocably escheated to the government.

1 Origins in feudalism
2 English common law
3 Escheat of limbo cessions
4 References

[edit] Origins in feudalism

In feudal England, escheat referred to the situation where the tenant of a fief died without an heir or committed a felony. The fief reverted back to ownership of the King for one year and one day (by right of primer seisin, since all property belonged to the King in a Feudal system), after which it reverted back to the original lord who had granted it. From the time of Henry III, the monarchy took particular interest in escheat as a source of revenue.

From the 12th century onward, the Crown appointed escheators to manage escheats and report to the Exchequer, with one escheator per county established by the middle of the 14th century. Upon learning the death of a tenant, the escheator would hold an "inquisition" to learn if the king had any rights to the land. If there was any doubt, the escheator would seize the land and refer the case to Westminster where it would be settled, ensuring that not one day's revenue would be lost. This would be a source of concern with land owners when there were delays from Westminster.

[edit] English common law

Thus, under English common law, there were two main ways an escheat could happen:

A person's property escheated if they were convicted of a felony (other than treason, when the property was forfeited to the Crown). If the person was executed for the crime, their heirs were ineligible to inherit. (In most common-law jurisdictions, this type of escheat has been abolished outright. For example, the rule has been abolished in the United States under Article 3 § 3 of the United States Constitution states that attainders for treason do not give rise to forfeiture or "corruption of blood".)
If a person had no heirs to receive their property under a will or under the laws of intestacy, then any property that they owned at death would escheat. (Again, this rule has been replaced in most common-law jurisdictions by bona vacantia or a similar concept.)

Escheat can still occur in England and Wales, if a person is made bankrupt or a corporation is liquidated. Usually this means that all the property held by that person is 'vested in' (transferred to) the Official Receiver or Trustee in Bankruptcy. However, it is open to the Receiver or Trustee to refuse to accept that property by disclaiming it. It is relatively common for a trustee in bankruptcy to disclaim property where freehold property (such as the common parts of a block of flats) that would ordinarily pass to the trustee to be realised in order to pay the bankrupt's debt, but the property is, for example, split into leased flats which give the landlord an obligation to spend money. The bankruptcy of the original owner means that it the freehold no longer the bankrupt's property, but the disclaimer destroys the freehold estate, so that the land ceases to be owned by anyone and becomes land held by the Crown in demesne. This situation affects a few hundred properties each year.

Although such escheated property is owned by the Crown, it is not part of the Crown Estate, unless the Crown (through the Crown Estate Commissioners) 'completes' the escheat, by taking steps to exert rights as owner.

However, usually, in the example given above, the tenants of the flats, or their mortgagees would exercise their rights given by the Insolvency Act 1986 to have the freehold property transferred to them. This is the main difference between escheat and bona vacantia, as in the latter, a grant takes place automatically, with no need to 'complete' the transaction.

One consequence of the Land Registration Act 1925 was that only estates in land (freehold or leasehold) could be registered. Land held directly by the crown, known as property in the "Royal Demesne" is not held under any feudal tenure and there is therefore no estate to register. This has had the consequence that freeholds that escheated to the Crown ceased to be registrable. This created a slow leak of property out of registration, amounting to some hundreds of freehold titles in each year.

The problem was noted by the Law Commission in their report "Land Registration for the Twenty-First Century". The Land Registration Act 2002 was passed in response to that report. It provides that land held in demesne by the Crown may be registered.

[edit] Escheat of limbo cessions

A "limbo cession" is territory which has been ceded without the specification of a "receiving country". This type of arrangement is often seen in peace treaties following the Second World War. For example, in Article 2 of the Treaty of San Francisco, Japan renounced all right, title and claim to numerous island groups, without specifying a "receiving country".

Under international treaty law, and within the framework of military occupation, the concept of escheat is helpful in understanding the disposition of limbo cessions. Fundamentally, "escheat" can be defined as "reversion of the title of property to the state in the absence of legal heirs or claimants". How does this apply to occupied territory? The answer is that the title to a limbo cession reverts to the "conqueror", which in the post-Napoleonic period will be "the (principal) occupying power". This is not ownership, but more of a "quasi-trusteeship".

The form of administration by which an occupying power exercises government authority over occupied territory is called "military government". For a limbo cession, with no designation of a "receiving country" in the peace treaty, the ceded territory escheats to (i.e. remains under the authority of) the military government of the "principal occupying power" as an interim status condition.

Such an explanation is in full compliance with the international legal stipulations that:

military occupation does not transfer sovereignty;
military occupation is, at the most basic level, a transitional period, or a period of "interim (political) status"; and
for a territorial cession, the military government of the principal occupying power does not end with the coming into force of the peace treaty, but continues until legally supplanted.