Freehold Covenants

Question 1

What is a covenant?

Answer 1

A covenant is a promise usually contained in a deed, though a deed is not essential.

Question 2

What is the purpose of covenants between freehold owners?

Answer 2

They ensure that the buyer does not do anything which could affect the amenity and value of the seller’s retained land.

Question 3

What is a covenantee?

Answer 3

The person who receives the benefit of the promise and can sue if the covenant is breached.

Question 4

What is dominant land?

Answer 4

The land which is benefitted by the promise.

Question 5

What is a covenantor?

Answer 5

The person who makes the promise and can be sued if the covenant is breached.

Question 6

What is servient land?

Answer 6

The land which is burdened by the promise.

Question 7

What is a positive covenant?

Answer 7

A promise to do something, usually involving expenditure of money.

Question 8

What is a negative or restrictive covenant?

Answer 8

A promise not to do something, which restricts the use of the land and can be complied with by inaction.

Question 9

What are the two sets of rules for passing the burden and benefit of covenants?

Answer 9

The equitable rules and the common law rules.

Question 10

What is required for a covenant to be enforced in equity?

Answer 10

The benefit and burden must have both passed using the rules of equity.

Question 11

What is a freehold covenant?

Answer 11

A promise relating to land, which must be in writing and signed by the grantor.

Question 12

What is the difference between positive and restrictive covenants?

Answer 12

A positive covenant requires action, while a restrictive covenant can be complied with by inaction.

Question 13

What is the general rule regarding the burden of a covenant at common law?

Answer 13

The burden of a covenant does not pass to a successor at common law.

Question 14

What case established the equitable rules for the burden of covenants?

Answer 14

The rules began with the case of Tulk v Moxhay (1848).

Question 15

What are the four requirements for the rule in Tulk v Moxhay?

Answer 15

1. The covenant must be restrictive. 2. The covenant must accommodate the dominant tenement. 3. There must be intention for the burden to run. 4. There must be notice of the covenant.

Question 16

What must be shown for a covenant to be restrictive?

Answer 16

The substance of the covenant must be restrictive.

Question 17

What does it mean for a covenant to accommodate the dominant tenement?

Answer 17

The covenantee must hold an interest in land, the covenant must touch and concern the land, and the dominant and servient land must be in proximity.

Question 18

How can intention for the burden of a covenant to run be shown?

Answer 18

Intention can be shown expressly or impliedly under LPA 1925, s 79.

Question 19

What is required for notice of the covenant?

Answer 19

The covenant must be properly protected by registration.

Question 20

What is the requirement for registered land regarding covenants?

Answer 20

The covenant must be protected by a notice in the charges register of the servient title.

Question 21

What is the requirement for unregistered land regarding covenants?

Answer 21

The covenant must be protected by a Class D(Il) Land Charge.

Question 22

What must be shown for a successor covenantee to enforce a breach against a successor covenantor?

Answer 22

That the burden of the covenant has passed to the successor covenantor in equity and that the benefit has passed to the successor covenantee in equity.

Question 23

What is annexation in the context of covenants?

Answer 23

Annexation occurs when the covenant is made in such a way that the benefit becomes a permanent part of the dominant land itself, passing automatically when the dominant land is sold.

Question 24

What are the two main ways annexation occurs?

Answer 24

Express annexation and statutory annexation (LA 1925, s 78).

Question 25

What is express annexation?

Answer 25

Express annexation occurs when the express words of the covenant make it clear that the original parties intend the benefit to become part of the dominant land.

Question 26

Provide an example of express annexation.

Answer 26

In Rogers v Hosegood [1900] 2 Ch 388, a covenant made ‘for the benefit of the owners and successors in title’ to named land demonstrated express annexation.

Question 27

What is statutory annexation?

Answer 27

Statutory annexation under LPA 1925, s 78(1) provides that a covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title.

Question 28

Can statutory annexation be expressly excluded?

Answer 28

Yes, as held in Roake v Chadha [1984] 1 WLR 40, s 78(1) can be expressly excluded if an alternative method of passing the benefit is stipulated in the original transfer deed.

Question 29

What is assignment in the context of covenants?

Answer 29

Assignment occurs where the benefit of the covenant has not been annexed at the outset but can be assigned when the dominant land is transferred.

Question 30

What are the formalities for assignment?

Answer 30

The separate assignment of the benefit must comply with LA 1925, s 53(1)(c): in writing and signed by the person transferring the benefit.

Question 31

What is a building scheme?

Answer 31

A building scheme is a set of conditions where all buyers buy from the same seller, the seller divided the estate into plots, and the covenants are intended to benefit all plots.

Question 32

What must be shown for the original covenantee to enforce a covenant after selling the dominant land?

Answer 32

The original covenantee technically still has the benefit of the covenant and can sue on it, but it is unlikely they would wish to enforce it.

Question 33

What is the most common remedy for breach of covenant?

Answer 33

The most common remedy is an injunction, either prohibitory or mandatory, depending on whether the breach is ongoing or has already occurred.

Question 34

What must be shown for equitable remedies to be available?

Answer 34

If the burden has passed in equity, the benefit must be shown to have passed in equity.

Question 35

What is the general rule regarding the burden of a covenant at common law?

Answer 35

The burden of a covenant does not pass to a successor at common law, making the covenant unenforceable against a successor in title.

Question 36

What is the continuing liability of the original covenantor?

Answer 36

At common law, the burden remains with the original covenantor permanently, who can be sued for breaches.

Question 37

What is the only remedy available against the original covenantor?

Answer 37

The only remedy available is damages.

Question 38

What is an indemnity covenant?

Answer 38

An indemnity covenant is an agreement by one party to bear the cost of certain losses or liabilities suffered by another party.

Question 39

What is the doctrine of mutual benefit and burden?

Answer 39

The doctrine allows the burden of a covenant to pass to a successor covenantor at common law when the covenantee grants a benefit in the nature of an easement.

Question 40

What are the three conditions for the doctrine of mutual benefit and burden to operate?

Answer 40

There must be a clear link between the burden and the benefit, a genuine choice to take the benefit, and the benefit and burden must have been conferred in the same transaction.

Question 41

How can the burden of a freehold covenant be enforced against a successor covenantor?

Answer 41

By disposing of the land via a long lease, as all covenants in leases except personal ones are enforceable by and against successors in title.

Question 42

What must a successor covenantee show to enforce a covenant at common law?

Answer 42

The successor covenantee must show that the benefit has passed to it at common law.

Question 43

What are the two ways the benefit can pass at common law?

Answer 43

Through express assignment or implied assignment.

Question 44

What are the conditions for implied assignment to occur?

Answer 44

The covenant must touch and concern the land, there must be an intention for the benefit to run with the dominant land, and both the original and successor covenantees must hold a legal estate.

Question 45

What does discharge of a covenant mean?

Answer 45

Discharge of a covenant means that it is no longer valid.

Question 46

What does modification of a covenant mean?

Answer 46

Modification of a covenant means that the scope of the covenant is altered, but it is not completely invalid.

Question 47

What must a covenant do in relation to the land?

Answer 47

The covenant must touch and concern the land.

Question 48

What intention is required for a covenant’s benefit to run with the dominant land?

Answer 48

There must have been an intention that the benefit should run with the dominant land.

Question 49

What is required of the original covenantee regarding the dominant land?

Answer 49

The original covenantee must have a legal estate in the dominant land.

Question 50

What is required of the successor covenantee regarding the dominant land?

Answer 50

The successor covenantee must hold a legal estate in the dominant land.

Question 51

What does modification of a covenant mean?

Answer 51

Modification of a covenant means that the scope of the covenant is altered, but it is not completely invalidated.

Question 52

When is a covenant automatically discharged?

Answer 52

A covenant will automatically be discharged if the same person becomes the owner of both the dominant and servient land.

Question 53

What is the term for when a covenant is automatically discharged due to ownership?

Answer 53

This is known as merger.

Question 54

How can a dominant owner expressly agree to discharge a covenant?

Answer 54

The dominant owner may expressly agree to discharge the covenant and will enter into a formal release of covenant, usually in return for a payment.

Question 55

What must a release of covenant be made by?

Answer 55

The release must be made by deed.

Question 56

How can a dominant owner impliedly agree to discharge a covenant?

Answer 56

The dominant owner may impliedly agree to discharge the covenant by doing nothing when the covenant is being breached openly.

Question 57

What can a servient owner do to avoid being held to ransom by a dominant owner?

Answer 57

The servient owner can apply to the Upper Tribunal (Lands Chamber) for the discharge or modification of any covenant.

Question 58

Which legislation gives the Lands Chamber the power to discharge or modify covenants?

Answer 58

Legislation: LPA 1925, s 84(1) gives the Lands Chamber the power wholly or partially to discharge or modify any restriction.

Question 59

What does LPA 1925, s 84(1) set out?

Answer 59

LPA 1925, s 84(1) sets out the grounds on which the Lands Chamber can discharge or modify a covenant.

Question 60

What can the Lands Chamber require if it discharges or modifies a covenant?

Answer 60

If the Lands Chamber discharges or modifies a covenant it may require compensation to be paid to the owners of the dominant land.

Question 61

What grounds can a servient owner use to apply for discharge or modification of a covenant under LPA 1925, s 84(1)(a)?

Answer 61

A servient owner may apply for a declaration to discharge or modify a covenant on the basis that it has become obsolete due to changes in the character of the property or neighbourhood.

For example, a covenant to use property only as a residence may be obsolete if the surrounding area is now business, retail or mixed use.

Question 62

What is the basis for an application under LPA 1925, s 84(1)(aa)?

Answer 62

An application can be made on the basis that the covenant impedes reasonable use of the servient land.

Question 63

What must the applicant show under LPA 1925, s 84(1)(aa)?

Answer 63

The applicant must show either that the covenant confers no practical value, or that it is contrary to public interest.

For example, a covenant restricting the density of houses on a plot may confer no practical value on the dominant land if that land is itself densely developed.

Question 64

What does LPA 1925, s 84(1)(b) apply to?

Answer 64

This section applies where the dominant owners have agreed, expressly or impliedly, to discharge.

Question 65

What can be the outcome of an application under LPA 1925, s 84(1)(b)?

Answer 65

The tribunal will decide the level of compensation to be paid, thereby preventing the dominant owner from holding the servient owner to ransom.

Question 66

What does LPA 1925, s 84(1)(c) enable?

Answer 66

This section enables an application to be made where discharge of a covenant will not ‘injure’ the dominant owners.

Question 67

What balancing act does the tribunal perform under LPA 1925, s 84(1)(c)?

Answer 67

The tribunal will be wary of discharging covenants simply because discharge will not injure the current dominant owner and will regard social and economic concerns.

Question 68

What is a summary of the discharge, modification, and release of covenants?

Answer 68

Properly created covenants can exist forever. Covenants can be discharged or modified in several ways: Merger, Express release/modification, Implied release/modification, On one of the grounds in LPA 1925, s 84.