covenants Flashcards
An accountant is the freehold owner of two houses. He lives in one house (‘the Retained Land’). He sells the other house (‘the Property’) to a dentist. The transfer contains the following clause:
“For the benefit and protection of the Retained Land the Buyer and his successors in title covenant with the Seller and his successors in title to only use the Property as a private dwelling house”
The dentist sells the Property to a teacher. The accountant sells the Retained Land to a builder. The teacher sells the Property to a florist.
Which of the following answer best describes the parties to the various transactions?
Option a: The accountant is the original covenantor and the florist owns the land burdened by the covenant.
Option b: The dentist is the original covenantor and the builder owns the land which benefits from the covenant.
Option c: The dentist is the original covenantor and the accountant owns the land which benefits from the covenant.
Option d: The dentist is the original covenantee and the florist owns the land which benefits from the covenant.
Option e: The accountant is the original covenantee and the builder owns the land burdened by the covenant.
The correct option is B.
The dentist is the original covenantor. Option D is, therefore, wrong.
The florist now owns the land burdened by the covenant – the Property.
The original covenantee was the accountant. Option A is, therefore, wrong.
The builder now owns the land that benefits from the covenant. Option E is, therefore, wrong.
Option C is wrong as, although the dentist is the original covenantor, the accountant no longer owns the land benefitting from the covenant.
A solicitor is acting for a buyer of a house. The house has a registered freehold title and the seller is a sole registered proprietor. The seller’s solicitor tells the buyer’s solicitor that the house is subject to a covenant which states that it must only be used for residential purposes. The buyer also tells his solicitor that when the seller’s mother showed him around the house, she commented that the house had been a good investment for her and her son and she hoped it would be for the buyer too.
Which of the following statements best explains whether the buyer may be bound by the issues affecting the title to the house?
Option a: The buyer will only be bound by the positive covenant if it is noted in the Charges Register of the title, however he may be bound by any trust interest which the seller’s mother has in the house even if it is not protected by an entry on the title register.
Option b: The buyer will not be bound by the positive covenant even if it is noted in the Charges Register of the title and he will only be bound by any trust interest which the seller’s mother has in the house if there is a restriction in the Proprietorship Register to protect it.
Option c: The buyer will be bound by the restrictive covenant if it is noted in the Charges Register of the title and he will also be bound by any trust interest which the seller’s mother has in the house if it is protected by an entry on the title register.
Option d: The buyer will be bound by the restrictive covenant if it is noted in the Charges Register of the title and he may also be bound by any trust interest which the seller’s mother has in the house even if there is no entry on the register in respect of it.
Option e: The buyer will be bound by the restrictive covenant if it is noted in the Charges Register of the title, but he will only be bound by any trust interest which the seller’s mother has in the house if there is a restriction in the Proprietorship Register to protect it.
D is correct – despite being worded in a positive way, the substance of the covenant is restrictive, so A and B are wrong. In the registered system a restrictive covenant must be protected by a notice on the Charges Register in order to bind successors in title. As regards the seller’s mother, she may have a trust interest if she invested money in the house. This trust interest may be overriding if she is also in actual occupation of the house and the conditions of paragraph 2 of Schedule 3 of the Land Registration Act 2002 are satisfied. Overriding interests bind even though there is no mention of them on the registered title therefore, option C is wrong. Finally, whilst a beneficiary can register a restriction on the Proprietorship Register, this does not protect the trust interest, instead, it alerts a potential buyer of the need to overreach the trust interest. So option E is wrong.
