freehold covenants

Question 1

What is a freehold covenant?

Answer 1

Freehold covenants are promises (between the covenantor and covenantee) made by deed to do or not to do certain things on freehold land.

Question 2

Who is the Coventator?

Answer 2

The covenantor is the landowner making the promise i.e. the burdened land.

Question 3

Who is the Covenatee?

Answer 3

The covenantee is the landowner who benefits from the covenant.

Question 4

What is a positive covenant?

Answer 4

A positive covenant is a promise by the covenantor to the covenantee to actively do something e.g. to build a fence, to contribute to the maintenance of a shared driveway, or to repair a shared roof, or expenditure of money.

Question 5

What is a restrictive covenant?

Answer 5

A restrictive/negative covenant is a promise by the covenantor to the covenantee to refrain from doing or restricting the use of land, e.g. an agreement not to erect any buildings or structures on their land.

Question 6

There are four key distinctions to consider when attempting to determine whether a covenant is binding on a new owner of land:

What are they?

Answer 6

• The ‘running’ of the benefit in Common Law.
• The ‘running’ of the benefit in Equity.
• The ‘running’ of the burden in Common Law.
• The ‘running’ of the burden in Common Law in Equity

Question 7

For the benefit of a covenant to pass at Common Law, four clear requirements must be met;

What are they?

Answer 7

• The covenant must ‘touch and concern’ the land
• The covenantee must hold a legal estate in the land
• The buyer of the land must derive their title from the original covenantee
• The benefit must have been intended to run with the land at the date of the covenant.

NOTE:

Following these four requirements being met, the benefit of the covenant has passed at common law, meaning the current owner can sue for breach of covenant.

If any one of the requirements have not been met, the test fails and the covenantee must look to equity for a remedy.

Question 8

The covenant must ‘touch and concern’ the land

What does this mean?

Answer 8

There must be some benefit to the dominant land.

The test for whether the covenant touches and concerns the land was formed in P & A Swift Investments v Combined English Stores Group.

Does the covenant benefit the owner of the dominant land?

Question 9

The covenantee must hold a legal estate in the land on the date of the covenant.

What does this mean?

Answer 9

The covenantee must hold a recognised legal estate in the land.

This can either be through fee simple absolute in possession or a term of years absolute under S1(1) of the Law of Property Act 1925.

Question 10

There are four different ways in which the benefit of a covenant may run in equity.

What are they?

Answer 10

1) The covenant must ‘touch and concern’ the land (P & A Swift Investments v Combined English Stores Group)

The benefit of the covenant must have passed to the successor in title in one of three ways:

2) Annexation

3) Assignment

4) A building scheme.

Question 11

What case governs touch and concern?

Answer 11

(P & A Swift Investments v Combined English Stores Group)

Question 12

What does the burden of covenant mean?

Answer 12

The ‘burden’ of a covenant refers to the land which has the obligation to do, or not to do something.

Question 13

What case governs the burden of a covenant in law?

Answer 13

The basic rule is that the burden of a covenant in relation to land does not run with the land at common law, as per Austerberry v Corporation

and following the basic rules of privity of contract – Contract (rights of third parties) Act 1996.

Question 14

What are the exceptions to the rule of the burden of a covenant passing at common law?

Answer 14

• There is an unbroken chain of Indemnity Covenants
• The Conveyance contains a rent charge.
• The principle in Halsall v Brizell (1957) where the covenant relates to a ‘mutual burden and benefit.

Question 15

What is the principle governing a positive covenant and equity?

Explain mutual benefit and burden.

Answer 15

The burden of a positive covenant does not pass in equity.

This has created significant problems for freeholders of land; therefore, exceptions exist that provide an indirect method of passing the burden to a successor in title, ensuring ways of enforcement.

Under the principle in Halsall v Brizell (1957) where the positive covenant relates to a ‘mutual burden and benefit’ a successor in title will not be able to take the benefit without the corresponding burden.

Question 16

What was the principle in Thamesmead Town v Allotoy

Answer 16

The burden must directly relate to the benefit taken.

Question 17

What is the principle in (Halsall and Allotoy).

Answer 17

The limitation is that the successor in title can reject the burden, as long as he does not take the benefit (Halsall and Allotoy).

Question 18

What is the principle in Tulk v Moxhay

Answer 18

Where the covenant is:

1) restrictive in nature and
2) the purchaser of land has notice of the covenant

They are bound by it.

Question 19

When using the case of Tulk v Moxhay, four requirements must be satisfied.

What are they?

Answer 19

• The covenant must touch and concern the dominant land
• The covenant must be negative
• At the date of the covenant, it must be made to benefit the dominant land
• The covenant must be made with the intention to burden the servient land. (s79 LPA 1925)

Question 20

S79(1) of the Law of Property Act 1925 states that…

Answer 20

Creates a presumption that a covenant created will be intended to bind the covenantor, the land and any subsequent owners