Freehold Covenants

Question 1

Covenant

Answer 1

A covenant is a promise made by one party (the “covenantor”) for the benefit of another party (the “covenantee”) which is (usually) contained in a deed (Mackenzie).

Question 2

Dominant Land

Answer 2

“benefitted” land is the land which benefits from the covenant. It is owned by the covenantee.

Question 3

Servient Land

Answer 3

“burdened” land bears the burden of carrying out the covenant. It is owned by the covenantor – the landowner who made the promise of the covenant to the original owner.

Question 4

Tulk v Moxhay

Has the burden passed in equity?

Answer 4

• The Covenant is NEGATIVE in Substance
• The Covenants must Accommodate the Benefitted Tenement
• The Original Parties intended the burden to pass
• The person against whom the covenant is being enforced must have ‘notice’ of it under the rules: actual knowledge is irrelevant (Notice means registration)

Question 5

Haywood v Brunswick Permanent Benefit Building Society

Answer 5

• hand in pocket’ test – if you have to spend time/money/energy it is a positive covenant; if you don’t it’s negative

Question 6

Shepherd Homes v Sandham (no 2) [1971]

Answer 6

• Where a covenant is both positive and negative, they can be separated as long as both parts are capable of standing on their own.

Question 7

Powell v Hemsley

Answer 7

a negative undertaking within a positive covenant may be held to be positive overall or vice versa

Question 8

Rhone v Stephens

Answer 8

Equity will never enforce positive covenants

Question 9

London City Council v Allen

Answer 9

original covenantee had an estate in the benefitted tenements at the time the covenant was created and the successor has an estate in the benefitted tenement at the time of enforcement.

Question 10

P&A Swift Investments v Combined English Stores

Touch and concern land

Answer 10

“touch and concern” explained by Lord Oliver means “affecting the quality, mode of use, or value of the covenantee’s land”

Cannot be personal i.e. it must only benefit the landowner for as long as they own the benefitted land.

Question 11

Bailey v Stephens

Answer 11

The benefitted and burdened tenements must be sufficiently proximate, i.e. neighbouring or at least closely adjacent

Question 12

s.79 LPA 1925

Passing the Burden

Equity

Answer 12

• A covenant relating to land is deemed to be made on behalf of a successor in title unless a contrary intention appears from the terms of the covenant
• Therefore, the burden passes automatically at equity unless expressly excluded

Question 13

In order to provide notice of the covenant for unregistered land:

Answer 13

• Must enter Class D(ii) Land Charge to be binding
• S.198 LPA 1925: registration = notice to world
• S. 4(6) LCA 1972: if not registered, purchaser of legal estate not bound
• Doctrine of Notice applies for pre-1926 covenants

Question 14

In order to provide notice of the covenant for registered land:

Answer 14

• Must enter s.32 Notice on Charges register to be binding
• S.32 LRA 2002: registration = notice to world
• S.29 LRA 2002: if not registered, purchaser of legal estate not bound

Question 15

Renals v Cowlishaw

Passing the Benefit

Equity

Answer 15

• There are 2 conditions for the benefit to pass in equity:
  
  1. The covenant must touch and concern the land
  2. Renals v Cowlishaw [1878] - The successor in title to the covenantee must have become entitled to its benefit by either annexation, assignment or business scheme

Question 16

Annexation

Answer 16

• The benefit of the covenant is stuck to the land from the outset, becoming an incorporeal hereditament in one of 3 ways:
  
  • Express
  • Implied (rare)
  • Statue (s78 LPA 1925)

Question 17

Rogers v Hosegood

Express Assignment

Answer 17

• – covenant made for the benefit of the dominant land, e.g. “for the benefit of the land known as”

Question 18

Renals v Cowlishaw

Express Assignment

Personal

Answer 18

• Annexation will not occur if held to be personal and not for the benefit of land

Question 19

Federated Homes Ltd v Mill Lodge Properties Ltd

Statutory Annexation

Benefit Equity

Answer 19

• s78 LPA 1925 operates to automatically annex the covenant of each and every part of the land if it touches and concerns the land

Question 20

Roake v Chadha

Statutory Annexation

Answer 20

s78 can be expressly or impliedly excluded

• approved in Crest Nicholson Residential South Ltd v McAllister

Question 21

Wrotham Park Est Co Ltd v Parkside Homes Ltd

Answer 21

Any size of land can be annexed

Question 22

Assignment

Benefit in Equity

Answer 22

• If not annexed on creation, the benefit can be assigned (transferred) to the successor expressly.
• Any assignment must comply with the formalities set out in s53(1)(c) LPA 1925 – signed in writing and signed by person transferring it because represents disposition of an equitable interest

Question 23

Miles v Easter [1933]

Assignment

Benefit Passing in Equity

Answer 23

• The benefit must be assigned every time the property is transferred

Question 24

Elliston v Reacher

Scheme of Development

Passing of Benefit in Equity

Answer 24

• Conditions for the benefit to pass come from Elliston v Reacher:
  
  • All purchasers acquire their property from the same vendor
  • The vendor has divided the estate into plots prior to the sales
  • The restrictive covenants were intended by the vendor to continue for the benefit of all the plots
  • Every purchaser must acquire the plot on the understanding that the covenants benefit all the other plots in the scheme

Question 25

Austerberry v Oldham Corporation Burden in Common Law

Answer 25

General rule – the **burden does not pass at common law**

Question 26

Halsall v Brizell Exception Burden in Common Law

Answer 26

**Where covenantor has been granted a right as the result of a deed, they must also submit to any burdens** Exception to Austerberry v Oldham

Question 27

Rhone v Stephens Exception Burden in Common law

Answer 27

For the burden to pass, it must be **_explicity interlinked_** with the benefit The principle does not apply in reverse - bearing the burden does not entitle you to the benefit (**Parker v Roberts**)

Question 28

Davies v Jones Exception Burden in Common law

Answer 28

Benefit and burden must be set out in the same deed

Question 29

Thamesmead Town Ltd v Allotey Exceptions Burden in Common Law

Answer 29

* **successor in title must have a genuine choice. If you choose to take the benefit, you must submit to the burden.** * If there is no choice, then the burden will not pass

Question 30

Tophams v Earl of Sefton Pursue Original Covenantor

Answer 30

* applying **s79 LPA 1925,** the original covenantor remains liable under the common law for any breaches of the covenant, even if it is the successor that commits the breaches. * However, the original covenantor can **_only pay damages_** * **_May be of limited use_**

Question 31

s 40 LRA 2002 restriction

Answer 31

_{Covenantee could place a s 40 LRA 2002 restriction on the register of the servient land so that no transfer of the burdened land can take place without the covenantee’s consent} * What this means in practice is that the covenantee will ask for a new covenant directly from the potential successor covenantor (only allowing the land to be sold if its given). This is a **_new covenant**_, so all issues of the burden passing are irrelevant – _**the burden will be taken by the successor covenantor_**.

Question 32

S136 LPA 1925 Conditions for Express Assignment Benefit at Common Law

Answer 32

* **benefit** of covenant (choses in action) can be **expressly assigned** by the holder of the benefit, **provided it’s not purely personal**. * Assignment must be **in writing** * **Express written notice of the assignment** must be given **to the covenantor**

Question 33

P A Swift Investment v Combined English Stores Group plc [1989] Implied Assignment Benefit at Common law

Answer 33

* **Benefit must touch and concern the land** - The covenant must **affect the nature, quality, use or value** of the **dominant land** and can't be **personal** * Parties **must have intended the benefit to pass** * **Express** wording of covenant * “…for the benefit of **land** known as…” * **Implied** by **s.79(1) LPA 1925** * “a covenant relating to any land of the covenantee **shall be deemed to have been made with the covenantee and his successors in title and the persons deriving title under him**…” * **Original covenantee must had a legal estate** * **S.1(1) LPA 1925** - No benefit can pass at law where covenantee has only an equitable interest in dominant land * **Successor must hold legal estate**

Question 34

Smith and Snipes Hall Farm Limited v River Douglas Catchment Board [1949] Implied Assignment Benefit at Common Law

Answer 34

Successor doesn’t have to hold the same legal estate as the original covenantee to satisfy the condition in **P&A Swift** for the **benefit to pass at common law**

Question 35

Discharge of Restrictive Covenants

Answer 35

* **Express** – restrictive covenant may be discharged or varied with the express agreement of the person entitled to the benefit. * **Implied** – **if covenantee has** **allowed** **a long use inconsistent with the covenant** or if **both lots of land come into same ownership** * **Declaration by court as to nature and extent** * **s.84 LPA 1925 – can discharge under following grounds:** * Covenant obsolete due to changes in the character of the neighbourhood * Covenant impedes reasonable user of land * Benefited parties have agreed ‘by their acts or omissions’ to discharge * Benefited parties will not be injured by the proposed discharge or modification