Land 4 - Covenants and Mortgages Flashcards
Legal?
Not capable by s1(2) - equitable in nature 1(3).
Formality - writing and signed s53(1).
Annexation - benefit of covenant is attached to the land of covenantee and benefit passes automatically to successor in title.
Original parties
bound by privity of contract
If not express implied by s79 LPA 1925.
Burden at common law
Positive does not pass (unless indemnity chain).
Common law rule - only benefit of contract can be assigned.
Burden in equity
Restrictive
Tulk v Moxhay;
negative
been made to benefit dominant land retained by covenantee
covenant must touch and concern dominant land
-cannot be personal, must affect nature, quality mode of user of value of the land.
must be made with intent to burden servient land
-express or implied.
owner of servient land must have notice for it to bind them.
Enforcing positive covenants
Create a lease -
Indemnity covenant
Doctrine of mutual benefit and burden - Halsall v Brizell -
person who wishes to take advantage of service/facility which benefits must also comply with corresponding obligation.
Two conditions;
-burden must be relevant to exercise of rights which enable benefit to be obtained (clear correlation between benefit and linked burden).
-Convenator’s successors in title must have opportunity to elect whether to take the benefit or renounce it.
Running of benefit at common law
Annexation -
If land benefiting sold, can enforce if;
- Covenant must touch and concern the land
-must have been intention that benefit should run with the estate owned by the covenantee (express or implied)
-covenantee must have legal estate in benefitted land
-buyer of benefitted land must also take legal title in benefited land.
Assignment -
must be in writing (signed by assignor) and written notice must be given to person with burden.
Annexation
Express-
intention to benefit defined piece of land.
Implied - obviously intended and would be an injustice to ignore that intention in all circumstances
Statutory -
-covenant implemented after creation of LPA
-must touch and concern the land
Building schemes
defined area title derived from common owner
estate laid out in lots subject to restrictions
common owner intended restrictions to apply to all lots
orignal buyers bought lots on basis restrictions would benefit all lots in the scheme.
Remedies for breach
Positive -
damages.
Specific performance
Restrictive -
Injunction
Damages instead if - rights are small, quantifiable, oppressive to grant injunction.
Delated or acted inequitably cannot get an injunction.
Modification and discharge
Express release
may agree to release or modify. Deed required
Common ownership - Dom and serviant come into common ownership.
S84 LPA 1925;
Restriticve only
Application to Lands Chamber of Upper Tribunal to discharge or modify the covenant.
Burden on applicant to prove conditions;
- Found to be obsolete
-Does not secure any practical benefit
-contrary to public interest
-expressly or impliedly agreed to discharge
-discharge will not injure person entitled to benefit where ownership is not certai.
Insurance - one-off premium in event dominant owner seeks to enforce breach.
Mortgages
Capable of being lead.
Deed must fill s1 LPMPA.
May recognise in equity under Walsh v Lonsdale.
Possession
Possession - does not need to be in default.
Taking physical possession or where let directing tenants to pay.
Cannot threaten or use violence
Possession proceedings (weighted in favour of borrower)
S36 allows borrower to ask court to;
adjourn
suspend execution or postpone
Applies where;
Started possession proceedings
Dwelling-house
Likely within reasonable period to pay any sums due
Must show detailed financial plan
If property producing income lender can use income;
must account to borrower for surplus
manage property with due diligence.
Power of sale
Expressly or implied into every legal mortgage.
Money must be due.
may be exercisable;
lender given borrower notice to repay loan amount and not paid for three months.
in arrears after two months due
breached a term of the mortgage.
Lender must;
act in good faith
take reasonable care to obtain true market value.
Equity of redemption - surplus back to borrower.
Exposed to market fairly.
Onus on borrower to argue this not the case.
Effect
Takes
free of any estates or interests which selling lender took priority over
subject to any estates and interests which took priority over selling lender
Proceeds -
selling lender trustee and must distribute them in accordance with s105 LPA 1925 to pay;
cost of redeeming prior mortgages
lenders expenses
lender’s own mortgage
balance to equity of redemption
Debt action
Legal date of redemption must have passed.
Limitation;
Six years for interest
Twelve years for capital.
Where proceeds of sale insufficient
Appointment of a receiver;
appointed in writing, demand income from property (where it receives income),
To pay;
outgoing on property
interest on prior mortgages
insurance premiums, repair costs and own costs
interest on current mortgage
capital on current mortgage
balance to borrower.
Receiver is the agent of the borrower.
Must ensure
no conflicts of interest
good faith
reasonable competence
Foreclosure
Once legal date of redemption passed.
Foreclosure nisi- directing preparation of accounts of what is owed followed by a period of six months in which to pay
Foreclosure absolute - effect of vesting title to property in lender and extinguishing equity of redemption held by borrower.
If property less, borrower released from liability.
Protection for borrower;
-discretion of court to re-open proceedings in exceptional circumstances.
-property is a dwelling house, borrower may seek to adjourn foreclosure my application under AJA 1970
-an application to court for a judicial sale under s9(1)(2) LPA 1925, will preserve equity of redemption in favour of the borrower. Any person with interest in equity of redemption.
