Covenants

Question 1

What is a restrictive covenant?

Answer 1

A enters into an agreement with B that they will not do something without their consent. If A promises not to build on their land, A has the burden of the covenant, B has the benefit

Question 2

What is the problem that will typically arise concerning covenants?

Answer 2

-Where land is conveyed to another, issue is showing that the benefit and the burden held by A and B will pass to new owners
-If A’s land was sold, B would have to prove that the burden from A passes
-If B’s land was sold, the new purchaser would have to show the benefit passes with B’s land
-If the covenant is mutual however, it is hard to say what title passes to new owners

Question 3

What is the difference between being the successor in title and a person deriving title?

Answer 3

SUCCESSOR: acquiring full freehold title
DERIVING: Lease or mortgage from original owner

Question 4

How does the burden of a covenant run? (i.e. who can be sued?)

Answer 4

-Burden does not run at law, Rhone v Stephens, therefore we must turn to equitable principles

Question 5

What does the case of Hulk v Moxhay tell us about the passing of a burden?

Answer 5

-A purchaser who has notice is subject to the burden. Three main principles derive from this:
1. Burden must not be personal but must relate and be intended to run with the land
2. There must be dominant land capable of benefiting from the covenant
3. Covenant must be negative in nature

Question 6

What is meant by the covenant being related to land?

Answer 6

-Must not be some personal obligation
-s79 Law of Property Act 1925, covenant should affect them as owners of land (word saving device for the covenant)

Question 7

What does the case of Rhone v Stephens tell us?

Answer 7

-Burden can never pass where the covenant is positive
-Enforcement of a positive covenant lies in contract since it compels an owner to exercise his rights

Question 8

When is it possible for the burden of a positive covenant to run?

Answer 8

Ives v High
-If there is a positive covenant which also carries a benefit, i.e. there is a mutual benefit and burden, the covenant can run even if it has a positive aspect

Question 9

What does the case of Re Nisbet & Potts Contract tell us?

Answer 9

-Restrictive covenant, as an equitable proprietary interest, is binding on all except a good faith purchaser for value without notice

Question 10

How can the benefit of a covenant pass? (i.e. who can sue?)

Answer 10

-Assignment, both in law and equity
-Annexation of the benefit of the covenant, either by express words, implication or s78 LPA 1925
-Under a scheme of development

Question 11

What is assignment of the benefit in law?

Answer 11

-Original covenantee transfer the benefit to the purchaser of the land
-Limited as the only person who can be sued is the original covenantor can be sued because the burden does not run at law

Question 12

What are the requirements for assignment of the benefit in equity?

Answer 12

1. The land of the assignor must be capable of being benefited by the covenant
2. This land must be ascertainable or certain from the deed of conveyance
3. The covenant cannot be enforced by the covenantee against an assign of the purchaser after the covenantee has parted with the whole of his land

Question 13

What is annexation and what must be done for this to be satisfied?

Answer 13

-Process by which the benefit of the covenant is glued to the land so it passes automatically
1. There must be intention that the benefit should become part of the land
2. It is necessary to determine the physical limits of the land to which the covenant is annexed

Question 14

What case shows express annexation (i.e. one done by words)?

Answer 14

Rogers v Hosegood

Question 15

What is the effect of s78 Law of Property Act 1925?

Answer 15

(1) A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title […] and shall have effect as if such successors and other persons were expressed

Question 16

How was the effect of s78 expanded in case law?

Answer 16

Federated Homes v Mill Lodge
-s78 LPA 1925 has the effect of annexing the benefit of a covenant to the land it benefits, it is more than a word saving provision
-If the condition precedent of s78 – that the covenant touches and concerns the covenantee’s land – is met, the benefit runs with the land

Question 17

How can s78 LPA 1925 be stopped?

Answer 17

-A contrary intention can exclude certain purchasers such that s78 will not apply
Crest Nicholson v McAllister

Question 18

What is a building scheme and what effect does this have on covenants?

Answer 18

-Multiple different parties making different promises to one another
-There is a common vendor that sets out a scheme with plots sold to different people
-Equity will support the enforcement of common covenants between all owners

Question 19

What are the four necessary requirements for a scheme of development and where do these come from?

Answer 19

Elliston v Reacher, confirmed in Re Dolphins Conveyance
1. Owners derive title under a common vendor
2. Vendor laid out a defined portion of land subject to restrictions intended to be imposed on all lots
3. Mutual restrictions were intended by the vendor to be for the mutual benefit of all plots
4. Purchaser must have bought the plots with the knowledge that the restrictions were for the benefit of other lots in the scheme

Question 20

What is the effect of s56 Law of Property Act 1925?

Answer 20

(1) A person may take an immediate or other interest in land, or the benefit of any condition, right of entry, covenantor agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument
(GIVES THIRD PARTY CHANCE TO HAVE A RIGHT AGAINST COVENANTOR, BESWICK V BESWICK)

Question 21

What is the effect of the Contract (Rights of Third Parties) Act 1999?

Answer 21

-S1 provides when a third party may enforce term of a contract (i.e. when they are named or it exists to give them a benefit)