Freehold Covenants Flashcards
What is a freehold covenant?
A freehold covenant is a promise, typically contained in a deed from covenantor to covenantee. Where burden passes by equity/common law, benefit must pass in the same way.
POSITIVE
- governed by common law rules.
- requires positive action
NEGATIVE
- requires the covenantor to refrain from doing something
- governed by equitable rules
- may be complied with without expenditure of time and/or money.
Does the burden of a negative covenant run with the land?
Original covenantee has the benefit of the covenant and can sue under the contract.
COMMON LAW
The common law rule is that the burden of a negative covenant does not run with the land.
EQUITY
However, the rule in equity is that the burden of negative covenants may pass to successors in title if the requirements are met:
(a) Covenant must accommodate dominant tenement
- covenantee/successor must hold interest in land at time of creation/enforcement.
- covenant must touch and concern the land
- dominant and servient land must be in proximity.
(b) Must be intention (express or implied) for burden to run. Express words or covenant relating to land deemed enforceable unless contrary intention expressed.
(c) Must be notice of covenant (e.g for reg land, notice in Charges Reg of servient title, for unreg land, protected by Class D(II) land charge)). If no notice, purchaser for value of burdened land will not be bound but donee will be.
Does the benefit of a restrictive covenant run with the land?
Covenant must touch and concern the dominant land + pass by annexation, assignment or a building scheme.
(A) Annexation
- benefit itself becomes part of dominant land at time covenant o/g made e.g expressed in deed “made for benefit of owners and successors in title to named land” but NOT “for covenantees, heirs, executors and assigness” because not for benefit of people but for land.
- need not be express because annexation is automatic by statute (LPA 1925, s 78) but can exclude this in contract by giving other method for passing benefit.
(b) Assignment
- occurs at time land sold if not annexed. Benefit exists independently of land and must be transferred separately when land transferred. Must be in writing and signed by transferor (s.53(1) LPA 1925)).
(c) housing estate where all properties subject to same covenants. If guidelines met, covenants treated as by-laws enforceable between owners. Court must be satisfied that parties intended to create scheme of mutually enforceable obligations.
- all buyers from same seller
- seller divided estate into plots
- covenants intended to benefit all plots
- buyer buys on understanding that covenants intended to benefit all plots.
Remedies for Breach of Restrictive Covenant
Benefit and burden must have passed, can enforce covenant directly against successor in breach.
Discretionary, equitable remedies (no unreasonable delay and must have clean hands).
Injunction = may be refused if oppressive (e.g demolishing), must enforce immediately and not wait for end of breach.
Damages in lieu = may be awarded where injunction oppressive. Paid in terms of profits made by covenantor in breach.
Does the burden of a positive covenant run with the land?
General rule that burden of covenant does not pass at common law.
BUT will pass by doctrine of mutual burden and benefit if covenantee grants easement and imposes connected burden. e.g right to park if covenantor pays cost of maintenance.
Requirements:
1. Must be clear link between benefit and burden
2. Benefit and burden conferred in the same transaction.
3. Successor must submit voluntarily to obligation in order to take the benefit, if successor happy to relinquish benefit then does not pass.
Does the benefit of the positive covenant run with the land?
(1) Express Assignment = assignment in writing + notice given to covenantor.
(2) Implied Assignment = benefit of covenant automatically passes every time land transferred if reqs met:
- Covenant must touch and concern land
- Intention that benefit run with dominant land (either by express annexation or statutory annexation not excluded).
- Original covenantee must have owned (legal estate) in dominant land when covenant was made. Successor must own legal estate at time of enforcement. Estate need not be of same nature.
Discharge, Modification & Release of Covenants
- Discharge by Agreement = covenant no longer valid if parties agree to discharge by deed (express) or covenantee does nothing when covenant openly breached (implied).
- Statutory Discharge = Servient owner applies to Upper Tribunal (Lands Chamber) for discharge or modification. Grounds for discharge:
- covenant obsolete due to changes in character of property/neighbourhood
- cont existence impedes reasonable use of land (no practical value or contrary to public interest and financial compensation adequate).
- dominant owner expressly or impliedly agrees
- dominant owners will not suffer injury - Merger = same person becomes owner of dominant and servient land
Continuing liability of original covenantor
At common law, the covenant is unenforceable against a successor in title to the covenantor (always check if you can pass burden using equitable rules). If burden has not passed, the burden remains with the original covenantor. The covenantor can be sued for its own breaches and the breaches of its successors. Covenantee can then sue for damages for breach.
Indemnity covenants = original covenants can recover outlay for breach if it has an indemnity covenant from its closest successor in title. If there is a complete chain of indemnity, then covenantor can enforce indemnity against further away party in chain but chain will be broken by bankruptcy / death / lack of indemnity covenant.
