Covenants

Question 1

What is a freehold covenant?

Answer 1

A covenant is a promise which is usually contained in a deed, although a deed is not essential.

Question 2

How is a covenant validly created?

Answer 2

To validly create a covenant, it must be in writing and signed by the grantor (LPA 1925, s53(1)(a)).

Question 3

What is a positive and negative/restrictive covenant?

Answer 3

Positive covenant: a promise to do something e.g. to maintain a boundary fence.

Negative/restrictive covenant: a promise not to do something e.g. not to use the land for business purposes.

Question 4

Will positive covenants be enforced against a successor covenantor in equity?

Answer 4

No, they will not.

Question 5

What is the test for identifying whether a covenant is positive or restrictive?

Answer 5

Hand in pocket test.

If covenantors have to put their hands in their pockets to find money to spend to perform the covenant, it is positive-any covenant which requires expenditure of money, effort or time falls within this definition.

Question 6

What is a mixed covenant and provide an example?

Answer 6

A promise which has positive and restrictive elements.

E.g. a covenant not to build on the land without the consent of the owner of the dominant land.

Question 7

Outline how a mixed covenant can be interpreted as two separate covenants and provide an example.

Answer 7

This approach can be taken if the positive and restrictive aspects of the obligation can be separated to create two separate ‘stand-alone’ covenants; one positive and restrictive.

E.g. a covenant to pain the exterior of a building every two years (positive) and not to paint the front door red (restrictive).

Question 8

Outline how a mixed covenant can be interpreted as one obligation with a condition attached and provide an example.

Answer 8

This approach is taken if the covenant cannot be split into two separate obligations. It is interpreted as being overall positive or restrictive and the additional element is viewed as simply being a condition attached.

E.g. a covenant not to build on the servient land (restrictive covenant) without the consent of the dominant owner (not a standalone obligation-only operates as part of main obligation).

Question 9

What is the general rule on whether the burden of a covenant passes to a successor at common law?

Answer 9

As a general rule, the burden of a covenant does not pass to a successor at common law: Austerberry v Oldham Corp (1885).

This means that at common law the covenant is unenforceable against a successor in title to the covenantor.

Question 10

Outline the requirements of the rule in Tulk v Moxhay (1848) that enables the burden of certain covenants to pass to successor covenantors.

Answer 10

1. Covenant must be restrictive;
2. Covenant must accommodate the dominant tenement;

a) covenantee and successor covenantee must hold an interest in the land at the time of creation and enforcement;

b) covenant must accommodate the dominant tenement;

c) the dominant and servient land must be in proximity;

3. There must be intention for the burden to run (expressly or impliedly); &
4. There must be notice of the covenant (entry of notice in Charges Register or protected by a Class D(II) Land Charge).

Question 11

What two elements must be fulfilled to show the benefit of a covenant has passed in equity?

Answer 11

1. The covenant must touch and concern the dominant land
2. The benefit must pass by one of the methods in Renals v Cowlishaw (1878)

Question 12

Outline the methods in Renals v Cowlishaw (1878) that can be used to pass the benefit of a covenant.

Answer 12

-Annexation (either express or statutory under LPA 1925, S78(1)

-Assignment (the benefit must be assigned each time the land is transferred and be in writing and signed by the person transferring the benefit)

-Building scheme

Question 13

What conditions need to be met in order for the benefit of a restrictive covenant to pass to a new owner via building scheme?

Answer 13

1. All buyers buy from the same seller
2. The seller divided the estate into plots
3. The covenants were intended to benefit the plots

4.Each buyer buys on the understanding that the covenants are intended to benefit all plots

Question 14

If the benefit and burden can pass in equity, what remedies are available if the covenant is breached?

Answer 14

Equitable remedies are available at the discretion of the Court.

The most common remedy is an injunction.

Question 15

As a general rule, does the burden of a covenant pass to a successor at common law?

Answer 15

No, this principle was established in Rhone v Stephens (1994).

Question 16

Who does the burden of positive covenants remain with at common law?

Answer 16

It remains personal to the original covenantor which means they can be sued for both its own breaches and the breaches of its successors.

Question 17

What remedy is available against an original covenantor when their successors breach a positive covenant?

Answer 17

The only remedy available against the original covenantor is damages because they are no longer in possession or control of the land but this simply awards money to the covenantee and does not solve the essential problem.

Question 18

What is an indemnity covenant and when should one be sought?

Answer 18

The original covenantor should requires it successor to enter an indemnity covenant to comply with the covenant and to indemnify it for any loss incurred as a result of breach.

One should then be sought each time the burdened land is sold, which thereby creates a complete chain of indemnities to the current owner and is a method of indirect enforcement.

Question 19

As a general rule, does the burden of a covenant pass to a successor at common law?

Answer 19

No, the general is that it does not meaning it is unenforceable against a successor covenantor.

Question 20

What three conditions must be met for the doctrine of mutual benefit and burden to apply as set out in Halsall v Brizell (1957)?

Answer 20

1. There must be a clear link between the burden and benefit-Rhone v Stephens (1994)
2. There must be a genuine choice as to whether or not to take the benefit-Thamesmead Town v Allotey (1998)
3. The benefit and burden must have been conferred in the same transaction-Davies v Jones (2009)

Question 21

In what two ways can the benefit of a covenant pass at common law?

Answer 21

1. Express assignment-LPA 1925, s136 requires the assignment must be in writing and express notice must be given to the covenantor to ensure that the covenantor realises that a new person is able to enforce the covenant.
2. Implied assignment-provided the four conditions in P & A Swift Investments (2019) are met:
   -covenant must touch and concern the land

-must have been an intention that the benefit should run with the dominant land

-original covenantee must have a legal estate in the dominant land

-successor covenantee must hold a legal estate in the dominant land

Question 22

How may a dominant owner impliedly agree to discharge a covenant?

Answer 22

By doing nothing when it is being openly breached.

Question 23

How can a servient owner avoid being hold to ransom by the dominant owner to discharge a restrictive covenant?

Answer 23

The servient owner can apply to the Upper Tribunal (Lands Chamber) for discharge or modification of any covenant under LPA 1925, s84(1) (restrictive covenants only).

Question 24

What are the four grounds under which the Lands Chamber can discharge or modify a covenant under LPA 1925, S84(1)?

Answer 24

1. It has become obsolete due to changes in character
2. its continued existence impedes the reasonable use of the land
3. The dominant owners expressly or impliedly agree

4.The dominant owners will not suffer injury: