Covenants Flashcards
What is a covenant, and why is it typically imposed when land is sold?
A covenant is a legally binding promise to do or refrain from doing something, such as a promise not to build on land. Covenants are usually imposed when a person sells part of their land to maintain or enhance the value or amenity of the land retained by the seller, ensuring that the retained land’s quality is preserved or improved.
Are covenants capable of being legal interests in land according to the Law of Property Act 1925?
No, covenants are not capable of being legal interests in land. Section 1(2) of the Law of Property Act (LPA) 1925 does not list covenants as legal interests, meaning they can only exist as equitable interests, governed by section 1(3) LPA 1925. As a result, covenants cannot be legal but are enforceable as equitable rights.
What formalities are required for the creation of a covenant, and how is it typically documented?
Since covenants are equitable by nature, they must comply with the formalities outlined in section 53(1) LPA 1925, which require the covenant to be in writing and signed by the parties. Although a covenant can be created by contract, it is typically created by deed, particularly in the case of land sales where covenants are included in the transfer of the land.
How do positive and restrictive covenants differ in terms of obligations imposed on the covenantor?
A positive covenant requires the covenantor to take some action or incur some expense (e.g., maintaining a fence), while a restrictive covenant requires no active effort or expenditure and simply limits what the covenantor can do (e.g., prohibiting construction on land). The distinction is based on the substance of the obligation, rather than its wording.
Can the burden of a covenant be passed to a successor at common law? What case law supports this?
No, the burden of a covenant cannot pass at common law. This principle was established in Austerberry v Corporation of Oldham (1885) and reaffirmed by the House of Lords in Rhone v Stephens (1994). The common law rule states that only the benefit of a contract can be assigned, but not the burden, as enforcing a covenant against a successor would impose a personal obligation on someone who did not covenant.
Under what conditions can the burden of a restrictive covenant pass in equity according to Tulk v Moxhay (1848), and what is the importance of each condition?
The burden of a restrictive covenant can pass in equity under the doctrine established in Tulk v Moxhay (1848) if the following conditions are met:
- The covenant must be negative (restrictive) in substance:
The Tulk v Moxhay rule only applies to restrictive covenants, meaning the covenant must impose a restriction on the use of the land rather than requiring action or expenditure. A restrictive covenant typically prevents certain actions, such as building on the land, making it a negative obligation. This is crucial because the rule does not apply to positive covenants, which require active performance. - The covenant must have been made to benefit dominant land retained by the covenantee at the time of creation:
For the burden of the covenant to pass, the covenantee must retain identifiable dominant land that benefits from the covenant. This means that at the time the covenant is created, the covenantee must still own land that the covenant is intended to benefit. The case of London County Council v Allen (1914) illustrates that if the covenantee does not retain any dominant land, the covenant cannot be enforced against successors. - The covenant must touch and concern the dominant land:
The covenant must directly affect the nature, quality, or value of the dominant land, providing a benefit to it. The test for whether a covenant touches and concerns the land, as established in P & A Swift Investments v Combined English Stores Group plc (1989), requires that the covenant benefits only the dominant owner, and if separated from the land, it would cease to be advantageous. Additionally, the covenant must affect how the land is used or its value, and it must not be purely personal to the original covenantee. - The covenant must be made with the intent to burden the servient land:
There must be a clear intention, either expressly stated in the document creating the covenant or implied, that the servient land will be burdened by the covenant for the benefit of the dominant land. This intention can be implied through section 79(1) LPA 1925, which assumes the covenantor intends to bind themselves and their successors unless the covenant states otherwise. An example of express intention would be a statement in the deed that the buyer and their successors covenant to use the property only as a private dwelling house. - The owner of the servient land must have notice of the covenant for it to bind them:
The final condition is that the owner of the servient land must have notice of the restrictive covenant for it to be enforceable against them. The method of giving notice depends on whether the land is registered or unregistered, as covenants are recorded differently in these systems. If the servient landowner is unaware of the covenant, they cannot be bound by it. The notice requirement ensures fairness in the enforcement of covenants by preventing new owners from being subjected to obligations they were unaware of when acquiring the land.
Each of these conditions is essential for the burden of a restrictive covenant to pass in equity. If any one condition is not met, the burden cannot pass, and the covenant will not bind successors to the servient land.
How is the benefit of a covenant passed at common law, and what conditions must be met for this to happen?
The benefit of a covenant can pass at common law to a successor in title through two sets of rules: annexation and assignment. For the benefit to pass, specific conditions under each rule must be satisfied.
- Annexation
Annexation involves the attachment of the benefit of the covenant to the land, making it a permanent benefit that runs with the land, not just with the original covenantee. This means that future owners of the dominant land (the land that benefits from the covenant) can enforce the covenant, provided certain conditions are met. The conditions for annexation at common law are:
- (a) The covenant must touch and concern the land:
The covenant must benefit the land itself rather than just the individual owner. The test for whether a covenant “touches and concerns” the land was established in P & A Swift Investments v Combined English Stores Group plc (1989), and requires that the covenant enhances the use, value, or mode of occupation of the dominant land. If the covenant is purely personal, benefiting the individual but not the land, it cannot pass to successors. - (b) There must be an intention that the benefit should run with the estate owned by the covenantee:
For the benefit of the covenant to pass to successors in title, there must be a clear intention that the benefit is to be enjoyed by future owners of the dominant land. This intention can either be expressed in the covenant itself (e.g., “The Buyer and their successors in title covenant with the Seller and their successors in title…”) or implied by statute. Section 78 of the Law of Property Act (LPA) 1925 implies that the benefit of a covenant will automatically run with the dominant land unless expressly excluded by the parties. - (c) The covenantee must have a legal estate in the benefited land:
The original covenantee, who holds the benefit of the covenant, must have a legal estate in the land that is benefited by the covenant. If the covenantee only holds an equitable interest in the land, the benefit cannot pass at common law. The requirement of a legal estate ensures that the covenant is tied to the land and can be passed along with it to future owners. - (d) The buyer of the benefited land must also take a legal title in the benefited land:
The successor in title to the dominant land, who wishes to enforce the covenant, must also hold a legal estate in the land. This condition was clarified in Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board (1949), where the court held that the benefit of a covenant could pass even to a tenant under a legal lease, provided the tenant holds a legal estate in the land. The legal estate of the successor need not be identical to that of the original covenantee, but it must be a legal interest.
- Assignment
Assignment is another method by which the benefit of a covenant can pass at common law. Unlike annexation, which ties the benefit of the covenant to the land itself, assignment involves the transfer of the benefit of the covenant to a specific person at the time the land is transferred. The following conditions must be met for the benefit to pass by assignment:
- The assignment must occur at the same time as the transfer of the land:
The benefit of the covenant must be expressly assigned to the new owner of the dominant land at the time of the land transfer. If the assignment is not made at the point of transfer, the benefit will not pass to the successor in title. - The assignment must be in writing and signed by the assignor:
Section 136 of the LPA 1925 requires that the assignment of the benefit of a covenant be in writing and signed by the assignor, who is the original covenantee or their successor. This formal requirement ensures that there is clear evidence of the intention to assign the benefit of the covenant to the new owner of the land. - Written notice of the assignment must be given to the person with the burden of the covenant:
The person who is subject to the burden of the covenant (the owner of the servient land) must be given written notice of the assignment. This ensures that the person burdened by the covenant is aware of the change in ownership and knows who is entitled to enforce the covenant in the future.
Additional Notes on Assignment and Annexation:
- Annexation is considered the more common and simpler method of passing the benefit of a covenant because it automatically ties the benefit to the land itself, allowing successive owners to enforce the covenant without needing to take any additional legal steps.
- Assignment, on the other hand, requires formal legal action every time the land is transferred, which can complicate the process but may be necessary in some cases where annexation is not possible or has not been clearly established.
What is the doctrine of mutual benefit and burden, and how does it apply to positive covenants?
The doctrine of mutual benefit and burden, as set out in Halsall v Brizell (1957), dictates that if a landowner takes advantage of a benefit (such as a shared facility or service), they must also accept the corresponding burden, such as contributing to the cost of maintaining that facility. This doctrine allows for the indirect enforcement of positive covenants, as it requires compliance with the burden in exchange for enjoying the benefit. The conditions for applying this doctrine are:
- There must be a correlation between the benefit and the burden.
- Successors in title must have the choice to accept or reject the benefit (and related burden).
How does an indemnity covenant function in relation to positive covenants, and what are its limitations?
An indemnity covenant allows an original covenantor, who remains liable for positive covenants due to privity of contract, to seek indemnification from their successor in title. When the servient land is sold, the buyer typically agrees to an indemnity covenant, promising to observe the positive covenants and to indemnify the seller for any loss resulting from breaches. However, the limitation is that this creates a chain of indemnity, which is only effective if every link in the chain is solvent and can be found. If a party in the chain is insolvent or cannot be located, the chain breaks, making enforcement difficult.
It does not enable the original covenantor to sue the current owner who is in breach, as there is no privity of contract between them. It is therefore an indirect method of enforcement.
What are the three main methods of annexation that allow the benefit of a covenant to pass in equity?
- Express annexation: This occurs when the covenant explicitly states that it is intended to benefit a defined piece of land, Making it enforceable by future owners of the dominant land. For express annexation to be valid, the covenant must identify both the land intended to benefit from the covenant and the intention that the covenant is to run with the land. A common practice is to include a clause that states the covenant benefits “each and every part” of the dominant land. This ensures that the benefit of the covenant remains attached to all parts of the land if it is later subdivided.
- Implied annexation occurs when the intention to benefit the dominant land is not explicitly stated in the covenant but can be inferred from the circumstances surrounding the covenant’s creation. Courts may infer the intention to annex the benefit if the wording of the covenant, when viewed in context, suggests that it was intended to benefit the land. Implied annexation has been rendered less significant by the broad application of statutory annexation under section 78 LPA 1925. Since statutory annexation automatically applies unless expressly excluded, courts are less likely to rely on implied annexation, especially for covenants created after 1925. As a result, implied annexation cases are now relatively rare.
- Statutory Annexation (Section 78 LPA 1925)- Statutory annexation is the most common and straightforward method of annexation for covenants created after 1925. Under section 78 LPA 1925, a freehold covenant is automatically annexed to the dominant land unless the parties have expressly excluded the operation of section 78 in the covenant.
- Automatic attachment to land: Statutory annexation means that the benefit of the covenant automatically runs with the dominant land without requiring any specific wording or intention in the deed. This eliminates the need for express or implied annexation, simplifying the enforcement of covenants by future owners of the dominant land.
Criteria for statutory annexation: For statutory annexation to apply, the covenant must satisfy two main criteria:
1. Post-1925 creation: The covenant must have been created after the implementation of the LPA 1925.
- Touching and concerning the land: The covenant must touch and concern the land, meaning it must benefit the land itself and not just the individual covenantee. The test in P & A Swift Investments v Combined English Stores Group plc can be used to determine whether this requirement is satisfied.
What remedies are available for the breach of a positive covenant, and what are the limitations on specific performance?
The primary remedy for the breach of a positive covenant is damages, which may include compensation for future loss. Specific performance, which orders the original covenantor to fulfill the obligation, may also be available.
However, specific performance is limited, as it can only be enforced against the original covenantor, who may no longer have control over the land, meaning they can pay damages but not necessarily perform the obligation
What conditions must be met for an injunction to be granted in the case of a breach of a restrictive covenant?
An injunction, which restrains the breach of a restrictive covenant, may be granted if the breach significantly impacts the rights of the claimant. However, under the principles established in Shelfer v City of London Electric Lighting Co (1895), damages may be awarded instead of an injunction if:
- The injury to the claimant’s rights is small.
- The injury can be estimated in monetary terms.
- Money provides an adequate remedy.
- Granting an injunction would be oppressive to the respondent. Courts may also deny an injunction if the claimant has delayed action or acted inequitably.
How can a restrictive covenant be discharged or modified under section 84 LPA 1925?
A restrictive covenant may be discharged or modified under section 84 LPA 1925 by applying to the Lands Chamber of the Upper Tribunal if one of the following conditions is met:
- The covenant has become obsolete.
- The covenant impedes reasonable use of the land without providing practical benefit or value.
- The covenant is contrary to public interest.
- The parties entitled to benefit from the covenant have agreed to its discharge or modification.
How are restrictive covenants created before 1926 treated in terms of enforceability?
Restrictive covenants created before 1926 are subject to the doctrine of notice, meaning they bind all parties except a bona fide purchaser for value of the legal estate without notice (also known as “Equity’s Darling”).
What protection must be applied to a restrictive covenant created after 1926 to ensure it binds future purchasers in unregistered land?
For restrictive covenants created post-1926, protection is achieved by registering a D(ii) Land Charge. This registration is done against the name of the estate owner as it appears in the deeds, making the covenant binding on future purchasers through actual notice from the date of registration.
