Land - Freehold Covenants (6) Flashcards
What are freehold covenants?
Freehold Covenants: Freehold covenants are equitable interests over land, requiring a landowner to do or not do something on their land, for the benefit of an adjacent landowner (s1(3) LPA). They can be positive and restrictive.
(1) Positive: Covenantor must perform a positive action, usually requiring expenditure (i.e. repairing a fence).
(2) Restrictive: Covenantor must refrain from performing a given action (i.e. from changing use of the property).
How are freehold covenants created?
Creation: Covenants are created in writing, incorporating all express terms, and signed by both parties (s53 LPA).
>In practice, they are usually created in a deed of sale, when a landowner sells part of their land. However, a deed is not a strict requirement.
How are freehold covenants enforced against original parties?
Enforcement (Original Parties): Through privity of contract, both original parties remain liable to the benefit or burden of covenants for life.
(1) Both In Possession: Whilst both remain in possession, enforcement is simple, and can include damages and other remedies such as injunctions.
(2) Covenantee Vacated: If the covenantee has vacated the land, they remain liable for the breach of any covenant, but only to the extent of damages. They will usually require subsequent owners to indemnify them.
(3) Covenantor Vacated: If the covenantor has vacated the land, they may still enforce their covenants for damages, however the sum will be extremely nominal, as they will not be able to establish tangible loss.
How are freehold covenants enforced against successors at law?
Successors At Law: Covenants can be enforced at law and in equity. It is generally more difficult at law, as the burden of covenants will not generally pass with the land directly.
Benefit of Covenant
Benefit of Covenant: The benefit of covenants will pass with the land, meaning successors can enforce them, if either:
(1) Express: The covenantee expressly assigned the benefit of covenant to the current owner, and notified the current burdened party in signed writing.
(2) Implied: The benefit will pass in any case, if the benefit ‘touches and concerns’ the land (P&A Swift).
Burden of Covenant
Burden of Covenant: The burden of covenants will not pass with the land at law (Austerberry v Oldham), subject to two workarounds.
(1) Benefit and Burden: The land may come subject to a benefit which also imposes a corresponding covenant, for example a right of way provided it is maintained by the purchaser (Halsall v Brizell).
>I.e. The land has a right of way (easement), but requires the owner to maintain the right of way (positive covenant). The landlower can either accept both the benefit and the burden, or reject both.
(2) Indemnity Covenant: As the original covenantor remains liable, purchasers are invariably required to enter into indemnity covenants on sale, to indemnify the original covenantor for breach. This effectively ensures compliance.
>As only OC is liable, the indemnity covenant indemnifies the previous owner, who indemnifies the previous owner before them and so on, in a ‘chain of indemnity’.
How are freehold covenants enforced against successors in equity?
Successors In Equity: Covenants can be enforced at law and in equity. It is preferable to enforce in equity, as the burden of restrictive covenant may pass with the land.
Benefit of Covenant
Benefit of Covenant: The benefit of covenants will pass with the land, provided they are attached to the land, and they are intended to pass (presumed unless proved otherwise) (s78 LPA).
Burden of Covenant
Burden of Covenant: The burden of restrictive covenants will pass with the land, on four conditions (Tulk v Moxhay).
(1) Restrictive: Covenant is restrictive (Rhone v Stephens).
(2) Benefits Land: Covenant benefits covenantee’s land (touches and concerns; proximate) (Bailey v Stephens).
(3) Intention to Pass: Covenant is intended to pass, which is presumed unless proved otherwise (s79 LPA).
(4) Registered: Covenant is registered against the land (IARE/D(ii) Land Charge) by date of transfer (s29 LRA).
What is the best way to enforce covenants?
Enforcement (Best Method): In effect, it is wisest to enforce a covenant in a way that ensures the best outcome.
(1) OC Still Occupier: If the original covenantor is in occupation, this is best (permits damages and other remedies).
(2) Positive Covenant: The best way to enforce a positive covenant is for damages against the original covenantor through privity of contract in law (for damages only). They will seek indemnity from the current occupier.
(3) Restrictive Covenant: The best way to enforce a restrictive covenant is against the current occupier in equity (damages and other remedies). However, damages can also be sought from the original covenantor if necessary.
How are freehold covenants remedied or removed?
Remedies and Removal: Restrictive covenants may be remedied or resolved (such as where the covenantee is unknown).
(1) Negotiation: Covenantee may agree to remove covenant, usually for payment (Re Tiltwood).
(2) Merger: Covenant expires if benefited and burdened land come under common ownership (Re Tiltwood).
(3) Indemnity Insurance: Covenantors can take out insurance (but should not alert covenantee first).
(4) Upper Tribunal: Land Chamber of Upper Tribunal can release a covenant if obsolete, of no public benefit, and compensable in damages - this is an expensive and cumbersome process (Re Vince; s84 LPA).
