Covenants relating to freehold land

Question 1

What is a Covenant? (Nature/Characteristics)

Answer 1

•A promise contained in a deed.
•It may be positive or negative.
•Covenantor-Person who makes the promise.
•Covenantee-Person in whose favour the promise is made.
•Examples-Covenant to erect a wall, covenant to contribute towards costs of
repair for a road, what type of business a purchaser can carry on etc.
•79% of freeholds are subject to at least one restrictive covenant.

Question 2

Creation?

Answer 2

By deed.

Question 3

Effect?

Answer 3

• Always enforceable as between the original parties-contractual.
• Potential liability of covenantor after he has parted with land.
• Right to sue under the Contracts (Rights of Third Parties) Act 1999, s. 1.

Question 4

Right to sue under the Contracts (Rights of Third Parties) Act 1999, s. 1

Answer 4

Arguable that it only applies to contracts and not to deeds. If covenantee no longer owns the land he will not be granted an injunction and any damages awarded will be nominal. “Touch” and concern” qualification may be justified in s.1 (2).

Question 5

Potential liability of covenantor after he has parted with land

Answer 5

Example is covenant-preventing use of land for business purposes. S. 79 LPA 1925:

Unless covenant makes it clear that covenantor is only responsible for his own acts or while he remains the owner of the land he will be liable.

Question 6

Identifying covenantees:

Answer 6

oAnyone with whom a covenant is made.
oGeneric description can be sufficient e.g. “owner of Greenacre” (s. 56 LPA 1925).
oCovenant must be made with that person. Not enough that it was for that person’s benefit.

Question 7

Remedies available:

Answer 7

oInjunction (Equitable-Discretionary)
oSpecific Performance (Equitable-Discretionary)
oDamages

Question 8

Successors in Title

Answer 8

Consider whether the benefit, the burden or both the benefit and the burden have passed.

Question 9

Passing Benefit at Common Law

Answer 9

•Possible for successor of convenantee to enforce at common law. If this was not possible, the covenantor could simply ignore his promise after the land had been sold.

Smith and Snipes v River Douglas Catchment

Question 10

Smith and Snipes v River Douglas Catchment

Answer 10

oDrainage authority covenanted with freehold owners of land subject to flooding to repair and maintain flood prevention works.

oInvolves action for damages by the covenantee’s assignee and his yearly tenant.

oHeld that they could enforce the convenant.

Question 11

Conditions of passing benefit at common law

Answer 11

♣Covenant must touch and concern the covenantee’s land. Set out by Lord Oliver in Swift v Combined English:

• Covenant must benefit the landowner for the time being and not benefit the covenantee once he has parted with the land.
• Covenant must affect the nature, quality, and mode of user or value of the covenantee’s land. Same as requirement for an easement to accommodate the dominant tenement.
• Covenant must not be expressed to be personal to the covenantee.

Question 12

The passing of the burden at common law

Answer 12

• The burden of a covenant cannot run with land at common law (Austerberry v Oldham cf. Rhone v Stephens-HL-If there is to be a change in the law it has to be from Parliament. If Courts changed the law it would be retrospective)
• This rule has been severely criticised. Mainly based around positive covenants-e.g. land with shared amenities.

Question 13

Law Commission Reform (2011)

Answer 13

oProposes creation of a new interest called a Land Obligation. It would replace covenants made in the future.
oStill have to touch and concern the land.
oCould be both restrictive and positive.
oOnly cover certain positive obligations-obligation to do something on servient land or to do something in relation to a boundary structure or feature. Also include obligation to make a payment in relation to the above.
oHave to be created expressly- added to list of legal interests in LPA 1925.
oRequirement of registration- Class G for unregistered land. Could not be overriding interest.
oOriginal covenantor not liable once parted with land.
o Original covenantee not allowed to enforce covenant once parted with land.
o Benefit automatically passes with dominant land. Burden is attached to servient land.

Question 14

Contracts (Rights of Third Parties) Act 1999

Answer 14

♣Only applies to contacts entered into after 11th May 2000.
♣If a covenant purports to confer a benefit on successors in title, they
could enforce a covenant under s. 1. Probably enough for express
annexation anyway.
♣Useful if there is insignificant identification of the land in question.
♣No restriction to covenants that “touch and concern the land”