Land Law - Covenants

Question 1

Covenantee vs Covenantor - explain their relationship and liability?

What is the relationship & liability between a Successor Covenantee vs Successor Covenantor?

Answer 1

The covenantor has the obligation under the covenant and can be sued if the covenant is breached.
The covenantee benefits from the covenant (dominant land).

A successor covenantee coming to the dominant land will also gain the benefit of a restrictive covenant (NOTE positive covenants do not run with the land, but may still be on the LR’s Charges Register).
(1) It must be shown that the benefit/burden of the covenant(s) are validly passed to the successor covenantee / covenantor.
(2) The benefit & burden must BOTH pass through EQUITABLE or COMMON LAW - one or the other.

Question 1

How do you validly create a covenant?

Answer 1

Must be in writing and signed by the grantor (Deed is NOT required but is most common form of conveyance).

Question 2

Does a positive covenant run with the land, or not?

Answer 2

Positive covenants do not run with the land in equity.

They can only pass via common law (contract), e.g. with an covenant indemnity contract.

Question 3

What is an example of a mixed covenant?

Answer 3

Where covenant language includes

Question 4

What is the rule in Austerberry v Oldham Corporation (1885)? [common law]

Answer 4

The burden of a covenant (positive or negative) does not pass at COMMON LAW.

In the (Austerberry case), the original owners of a road covenanted to keep it in repair. The court held that the new owners could not be forced to comply with a covenant that they did not enter into.

Question 5

What is the rule in Tulk v Moxhay and its 4 requirements (1848)? [DECIDES WHETHER THE COVENANT CAN PASS IN EQUITY]

Answer 5

Tulk v Moxhay gives us an EQUITABLE test for when the burden of a covenant can pass onto the land’s new owner, thus binding him to comply with the covenant:
(1) it is a restrictive covenant,
(2) covenant accommodates the dominant tenement
a. Covenantee and Successor Covenantee must have the SAME interest in the land at the time of creating the covenant, e.g. a past owner cannot enforce a covenant against the Successor Covenantee if he no longer owns the land]
b. The covenant must benefit the land (e.g. restricting to residential use makes the land more attractive), and not be expressly personal (land cannot be received as a gift),
c. The servient land and dominant land need to proximate to one another, but not necessarily touch.
(3) there is intention for the covenant to run/follow-on [implied unless contrary intention is shown - s.79 LPA]
(4) there must be notice of the covenant for the incoming owner who has to comply with it.
Registered Land: Registration / entry of notice in the Charges Register of the SERVIENT LAND (s.32 LRA 2002).
Unregistered Land: By having a land charge on the Central Land Charges Register - land charge d(ii).

Question 6

When will the burden of a covenant pass onto the successor covenantor (i.e. new owners), in both equity and common law?

Answer 6

Common Law: burden of a covenant (restrictive or positive) CANNOT pass, (because the new owner did not agree to it).
Equity: burden of a RESTRICTIVE covenant may pass, if it satisfied the 4 criteria of Tulk v Moxhay:
(1) it is a restrictive covenant,
(2) covenant accommodates the dominant tenement
(3) there is intention for the covenant to run/follow-on
(4) there must be notice of the covenant for the incoming owner who has to comply with it.

Question 7

For a restrictive covenant to be enforceable in equity, it must be protected by “notice”.
- What is satisfactory “notice” for both unregistered and registered land?

Answer 7

Registered Land: Entry of notice in the Charges Register of the SERVIENT LAND (s.32 LRA 2002) will protect the covenant.

Unregistered Land: By having a land charge on the Central Land Charges Register - land charge d(ii).

Question 8

If a successor (new owner) receives the land as a gift - can he enforce a restrictive covenant IN EQUITY, assuming it goes through the 4-stage Tulk v Moxhay test?

Answer 8

No, the restrictive covenant cannot be enforced IN EQUITY. This is because the restrictive covenant is of an “expressly personal nature”.

You must consider whether the Donee can enforce at common law.

Question 9

What are the rules of “assignment” and “annexation”, in the context of the benefit of a restrictive covenant passing in Equity?

Answer 9

Annexation is the rule that, as per s.79 LPA 1925, if:
(1) the covenant touches the land, and
(2) the dominant land benefiting was identified at the time,
Then the “annexation” of the covenant is automatic. The benefit is permanently attached to the land (Federated Homes case).

Assignment is the rule that applies if the covenant was not annexed to the land when it was created:
- Covenants can be expressly assigned at a later date, provided the conveyance and assignment happen at the same time
(Re Union of London case, 1933).

Question 10

When we talk about the “annexation” of a restrictive covenant, what sort of language do we expect to see?

Answer 10

Annexation is where the benefit of a restrictive covenant is tied to the land permanently, provided the name of the dominant land to benefit is named.

Wording like “for the benefit of the owners and successors in title [to X named land]” is sufficient - (Rogers v Hosegood).
Merely saying “for the benefit of Mr Smith, his heirs and executors” is NOT ENOUGH because it is not tied to the land.

Question 11

What are the remedies for breach of a covenant?
Why are these remedies, sometimes, not ideal?

Answer 11

The most common remedy is an injunction.
Either to force you to do something (mandatory injunction) or force you to stop (prohibitory injunction).

These remedies are creatures of EQUITY. Equitable remedies are not available AS OF RIGHT but are awarded based on the discretion of the court. Similarly, there are equitable maxims which means an injunction must be sought immediately:
“delay defeats equity”.

Question 12

How are restrictive covenants dealt with in a building scheme?

Answer 12

If the parties intended to create a scheme of mutually enforceable obligations for everyone’s benefit, the BENEFIT of a restrictive covenant passes to all NEW OWNERS.

Question 13

In practice, when are the common law rules relevant [ASSESSMENT TIP!]

Answer 13

Given that restrictive covenants can pass in equity (see rules), the common law rules mostly apply to POSITIVE covenants.

Question 14

At common law (contract), if a new owner is subject to a covenant (burden, so covenantor), who can the covenantee (person meant to be receiving the benefit of the covenant) sue?

How is this often approached in real life?

Answer 14

The covenantee will sue the original covenantor (previous owner).

This is because the new owners (successor covenantors) cannot be held liable for something they did not enter into.
The liability on the original owner is permanent and cannot be extinguished.

In real life, the original owner (Seller) will get the new owner (Buyer) to enter into an indemnity covenant. This means the Buyer will agree to comply with the covenant and the Seller gets reimbursed by the new owners (Buyer) for any costs.

Question 15

What is the effect of s.79 LPA 1925?

Answer 15

The section makes the original covenantor liable for all breaches of covenant by any person who holds the land after the original covenantor has parted with it. It does not pass the burden of the covenant.

Question 16

What is the effect of an indemnity covenant?

Answer 16

An indemnity covenant is made between the original covenantor and his successor in title and is personal to them. If the original covenantor pays out damages for a successor’s breach, the indemnity covenant enables the original covenantor to recover the outlay from the immediate successor in title, who may not be the person in breach.

Question 17

What is the doctrine of “mutual benefit and burden” (Halsall v Brizell)
- what does it mean for covenants at common law?

Answer 17

This is the exception to the rule that BURDENS of covenants cannot pass at COMMON LAW.
Provided the covenantee provides a benefit to the burdened covenantor, the burden will pass to the covenantor.

The following conditions must be met:
1. There is a direct link between the benefit (easement granted) and burden (covenant);
2. The burdened covenantor exercises free will to choose to accept the benefit (& associated burden);
3. Burden and benefit must be conferred in the same transaction.

EG: New owners of a property have the right to park on the communal property or use the communal pool - but must provide reasonable maintenance expenses. The new owners choose NOT to use either the pool or parking spot.
Here: There is no mutuality of benefit and burden, so the burden of the covenant will not pass.
If the benefits were used, then the new owner would also have to accept the covenant to pay.

Question 18

How does the BENEFIT of a covenant pass at COMMON LAW?

Answer 18

Assignment, express (in writing + notice to covenantor) or implied.

Implied assignment (automatic, as per s.78 LPA - provided that the land is named).

Other conditions, if required, similar to (Tulk v Moxhay test):
1. Covenant must touch the land;
2. INTENTION that the covenant should run with the land;
3. Original covenantee must have had a legal estate in the land; [person benefitting must have it to transfer it]
4. Successor covenantee must have a legal estate in the land. [person receiving must have it to enforce it]

Question 19

If you are trying to pass the BENEFIT of a covenant at Common Law. How would you phrase this, and what would you mention?

Answer 19

“The buyer covenants with the intention of benefiting land know of 31 Yew Tree Close to only use the land for residential purposes.”

(The property to which the covenant relates MUST be named!).

For example, this would fail because it does not concern land:
“B covenants with A to wash A’s car every week.”

Question 20

When can a covenant be discharged (extinguished)?

Answer 20

1. If the dominant land owner buys / acquires the servient land also. This is a merger.
2. The dominant owner expressly agrees to discharge the covenant and this is done via DEED.
3. The dominant owner impliedly agrees to discharge the covenant because he does nothing when it is continuously breached.
4. The servient land owner can apply to the Upper Tribunal (Land Chamber) for the covenant to be set aside - ONLY if a restrictive covenant, in the following circumstances:

Question 21

When can a covenant be modified?

Answer 21

The servient land owner can apply to the Upper Tribunal (Land Chamber) for the covenant to be modified - ONLY if a restrictive covenant, in the following circumstances:

(1) has become obsolete due to changes in character;
EG: covenant restricting to only residential land use, but the surrounding neighbourhood is business / mixed use.

(2) its continued existence impedes reasonable use of the land;
EG: Must show no practical value or contrary to public interest (e.g. covenant restricting density of houses)

(3) the dominant owners expressly or impliedly agree;

(4) the dominant owners will not suffer injury if it is set aside.
EG: Tribunal can set aside frivolous decisions but has balancing act based on social and economic factors - public interest and lack of financial injury for D (benefitting from the current covenant).