Freehold Covenants Flashcards
Covenant
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).
Dominant Land
“benefitted” land is the land which benefits from the covenant. It is owned by the covenantee.
Servient Land
“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.
Tulk v Moxhay
Has the burden passed in equity?
- 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)
Haywood v Brunswick Permanent Benefit Building Society
- hand in pocket’ test – if you have to spend time/money/energy it is a positive covenant; if you don’t it’s negative
Shepherd Homes v Sandham (no 2) [1971]
- Where a covenant is both positive and negative, they can be separated as long as both parts are capable of standing on their own.
Powell v Hemsley
a negative undertaking within a positive covenant may be held to be positive overall or vice versa
Rhone v Stephens
Equity will never enforce positive covenants
London City Council v Allen
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.
P&A Swift Investments v Combined English Stores
Touch and concern land
“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.
Bailey v Stephens
The benefitted and burdened tenements must be sufficiently proximate, i.e. neighbouring or at least closely adjacent
s.79 LPA 1925
Passing the Burden
Equity
- 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
In order to provide notice of the covenant for unregistered land:
- 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
In order to provide notice of the covenant for registered land:
- 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
Renals v Cowlishaw
Passing the Benefit
Equity
- There are 2 conditions for the benefit to pass in equity:
- The covenant must touch and concern the land
- 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
Annexation
- 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)
Rogers v Hosegood
Express Assignment
- – covenant made for the benefit of the dominant land, e.g. “for the benefit of the land known as”
Renals v Cowlishaw
Express Assignment
Personal
- Annexation will not occur if held to be personal and not for the benefit of land
Federated Homes Ltd v Mill Lodge Properties Ltd
Statutory Annexation
Benefit Equity
- s78 LPA 1925 operates to automatically annex the covenant of each and every part of the land if it touches and concerns the land
Roake v Chadha
Statutory Annexation
s78 can be expressly or impliedly excluded
- approved in Crest Nicholson Residential South Ltd v McAllister
Wrotham Park Est Co Ltd v Parkside Homes Ltd
Any size of land can be annexed
Assignment
Benefit in Equity
- 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
Miles v Easter [1933]
Assignment
Benefit Passing in Equity
- The benefit must be assigned every time the property is transferred
Elliston v Reacher
Scheme of Development
Passing of Benefit in Equity
- 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
Austerberry v Oldham Corporation
Burden in Common Law
General rule – the burden does not pass at common law
Halsall v Brizell
Exception
Burden in Common Law
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
Rhone v Stephens
Exception
Burden in Common law
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)
Davies v Jones
Exception
Burden in Common law
Benefit and burden must be set out in the same deed
Thamesmead Town Ltd v Allotey
Exceptions
Burden in Common Law
-
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
Tophams v Earl of Sefton
Pursue Original Covenantor
- 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
s 40 LRA 2002 restriction
Covenantee could place a <strong>s 40 LRA 2002</strong> <strong>restriction</strong> on the register of the servient land so that <strong>no transfer of the burdened land can take place without the covenantee’s consent</strong>
- 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.
S136 LPA 1925
Conditions for Express Assignment
Benefit at Common Law
-
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
P A Swift Investment v Combined English Stores Group plc [1989]
Implied Assignment
Benefit at Common law
- 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
Smith and Snipes Hall Farm Limited v River Douglas Catchment Board [1949]
Implied Assignment
Benefit at Common Law
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
Discharge of Restrictive Covenants
- 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
