Freehold covenants Flashcards
What is a freehold covenant?
Contractual promise to do or not to do something
Restrictive Covenant
Prohibits/restricts the owner doing something
Positive Covenant
Means you have to do something e.g take positive action
Covenantor
They have the burden. They are the one making the promise to the landowner.
Covenantee
They have the benefit. The one the promise is made to
Dominant land
That of the covenantee
Servient Land
That of the covenantor
Who can take action when a covenant is broken
Only the person who has the benefit and they can only take action against the person who has the burden
Original Parties - Original Covenantee
Due to privity of contract the original covenantee will always be able to enforce it against ANYONE who has the burden
Original Parties - Original Covenantor
As they are a party to the contract, they will continue to be liable under it even if they sell the land to someone else. It doesn’t matter if the covenant is positive or restrictive as long as it relates to the land. Essentially the covenantor is liable forever
Original Parties - Indemnity Covenant
To protect the original covenantor against liability when selling they can require the buyer to give a covenant to perform the original covenants and indemnify the original covenantor against the consequences of any breach
The main question to ask when selling land - Will the benefit and burden pass to the successors? - Two sets of rules
1) Common Law
2) Equity
Can’t mix and match
A person claiming they have the benefit of a covenant at common law must prove that the other party has the burden of the covenant at common law and vice versa
What happens when the original covenantee sells the land to someone else (benefit) - General rule
The benefit can pass under common law and in equity
What happens when the original covenantee sells the land to someone else (benefit) - Common Law
The benefit can pass to a successor under common law by one of two ways:
1) Express assignment
2) Pass automatically - if certain conditions are met
Rules apply whether the covenant is positive or negative
What happens when the original covenantee sells the land to someone else (benefit) - Common Law - Express assignment
Has to be done at the same time as the transfer of the land (rare in practice)
What happens when the original covenantee sells the land to someone else (benefit) - Common Law - Automatically - Conditions
1) Must ‘touch and concern’ the land of the covenantee (it must either affect the way the land is occupied or affect the value of the land).
2) Both the original covenantee and the person now seeking to enforce the covenant must have a legal estate in the land.
3) The original parties must intend that the benefit of the covenant is to run with the land - might be express words or if after 1st Jan 1926 assumed under S.78
What happens when the original covenantee sells the land to someone else (benefit) - Equity
Can pass at equity if:
1) The covenant touches and concerns the land (affect the way the land is occupied or affect the value of the land)
2) The benefit has passed either by express assignment (express words) at the time of the transfer or by annexation (after 1st Jan 1926 assumed under S.78)
What happens when the original covenantor sells the land to someone else (burden) - Common Law
Common Law will not impose the burden on the successor - it will not run.
What happens when the original covenantor sells the land to someone else (burden) - Common Law - Indirect way of enforcing covenant
Principle of mutual benefit and burden - A successor in title who takes the benefits of rights in a deed must accept the burden of covenants connected to those rights contained in the same deed.
What happens when the original covenantor sells the land to someone else (burden) - Equity
Equity is prepared to enforce a covenant against a successor in title to the original covenantor where that successor has notice of the covenant. There are conditions
What happens when the original covenantor sells the land to someone else (burden) - Equity - Conditions
1) Covenant must be restrictive
2) Covenant must touch and concern the land (affect the way land is occupied or affect the value of the land)
3)The original parties must intend that the benefit of the covenant is to run with the land - might be express words or if after 1st Jan 1926 assumed under S.79 - covenant is deemed to be made on behalf of successors)
4) The successor must have notice of the covenant - registered or Class D(ii) charge
Remedies for breach - Restrictive Covenant - Injunction
Preventing a party doing something. Only against current covenantor
Remedies for breach - Restrictive Covenant - Damages
Could be in place of an injunction or in addition to an injunction.
Remedies for breach - Restrictive Covenant - Original covenantor
Can only bring a claim in damages against them. If they have an indemnity covenant then they can claim money back from current covenantor
Remedies for breach - Positive Covenant - Specific Performance
Only against original covenantor. If they have sold their land then the burden does not run either in common law or equity. In this situation the current covenantee will have to sue the original covenantor for damages and hope the original covenantor has taken an indemnity covenant from current covenantor
What should the buyer’s solicitor do if there is a restrictive covenant on title?
1) Obtain a restrictive covenant insurance policy for the proposed breach of covenant
2) Ask the seller if they know the person who owns the benefitted land and try to come to an agreement with them
3) Apply to Upper tribunal for modification or discharge of the covenant
