Land VI Freehold Covenants

Question 1

Meaning of covenantor vs covenantee

benefit vs burden

Answer 1

The person entering into the covenant is the covenantor(usually the buyer) and the person having the benefit of the covenant is known as the covenantee (usually the seller)

The land over which the covenant has been imposed takes the burden of it. The land which imposed the covenant enjoys the benefit of it.

Question 2

Privity of contract in freehold covenant

Answer 2

The original covenantee can always enforce the covenantor against the original covenantor. The original covenantor remains liable on the covenant even after sale of the land

Question 3

When do the BENEFITS of a covenant become enforceable when the title changes hand at COMMON LAW?

(4)

Answer 3

The benefit of the covenant will be enforceable as long as:

The covenant touches and concerns the land of the covenantee. This means the covenant must benefit the land itself and must not be a personal right(Smith & Snipes Hall Farm v River Douglas Catchment Board);

The covenant was intended to run with the legal estate by the original parties

At the time when the covenant was made, the covenantee held the legal estate in the land to be benefited

and the assignee of the original covenantee now holds the legal estate

Question 4

Can a BURDEN be binding against the successor in title?

5

Answer 4

Only enforceable in equity, as long as:

the covenant is by nature negative

The covenantee owned land as at the date of the covenant which would benefit from that covenant;

the burden was intended to run with the land

General equitable principles apply and the need for notice applies

for registered land - IARE must be protected by entry of a notice in the charges register. If the title is unregistered - the covenant must be registered as a D(ii) land charge.

(Tulk v Moxhay [1848])

Question 5

to make sure that benefits bind and are passed to the successor, the benefits of a title must satisfy equitable rules as well.

To enforce a benefit, how may the successors satisfy the equitable rules?

(3)

Answer 5

By annexation - broadly this means that the party seeking enforcement must demonstrate that the benefit of the covenant is intended to attach to the land

By express assignment of the benefit of the covenant; or

Under the rules relating to building schemes - that a scheme of development has been set up an estate is built(so the covenant is obvious)

Question 6

What is a positive covenant?

Answer 6

A positive enforces a duty to do a positive act. A positive act is to actively do sth, contrasted with a negative act which is a promise to refrain from doing something

Question 7

Methods of enforcing a positive covenant#

(4)

LIBRE

Answer 7

Granting a Lease: a lease will carry the burden of negative and positive leasehold due to the privity of estate

Chain of Indemnity covenant: the liability of the original covenantor can be offset by a chain of indemnity, as long as there is no break in the chain.

The Benefit and burden rule: that made the enjoyment of a right subject to a burden. By not bearing the burden the successor may be denied the right.

Right to reentry coupled with a rentcharge: The right can be made subject to the performance of a positive obligation and may be annexed to a rentcharge

(Halsall v Brizell [1956[)

Question 8

The benefits of a positive covenant can be passed to a successor.

However, if the positive covenant is not observed, what can the successor do

Answer 8

no damages will be awarded since no privity of contract,

The successor can seek specific performance or injunction

Question 9

Definition of touch and concern land/personal

Answer 9

Covenant touches and concerns had when it enhances the enjoyment of one parcel of real property by burdening the enjoyment of another

It must affect the mode of occupation of the land, or must by itself affect the value of the land

Question 10

The basic principle for the burden of liability for breach of freehold covenants?

Answer 10

The claimant can consider suing the original covenantor, or the successor covenantor. The successor covenantor can be sued if the claimant(covenantee) has the benefit of the covenants and if the successor covenantor has the burden of the covenants.

Question 11

list and explain the requirements for the benefit of a covenant to run at common law

(4)

Answer 11

Benefit in general pass to successor covenantee if

there has been an express assignment (s.136 LPA). if this fails, the benefit can pass automatically on the conditions below:

the covenant must touch and concern covenantee’s land - must show the covenant affects the mode of occupation or value of the land and is not personal

original covenantee and claimant had legal estate (Smith and Snipes); and

Original parties intended benefit to run -
express annexation or statutory(deemed) annexation (s.78 LPA 1925)

And the assignee now has the legal estate

Question 12

Define express annexation

and

statutory annexation (s.78 LPA 1925)

Answer 12

The express annexation of the benefit
of the covenants to the land can be shown by the following wording: ‘The Buyer [Dave Fischer] covenants with the Seller [Bluebell Homes] for the benefit of each and every part of the land shown edged in green on the attached plan
(“the Retained Land”)’.

s. 78 LPA 1925 A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed

Question 13

list and explain the requirements for the BURDEN of a covenant to be passed at common law

Answer 13

Generally no (Austerberry v Oldham Corpn) due to privity of contract and s. 79 LPA - original covenantor remains liable

Exception:
if there is a chain of indemnity covenant; or

Mutual benefit and burden rule (Halsall v Brizell and Wilkinson & Others v Kerdene Ltd) - provided burden in some way relates to benefit conferred (Rhone v Stephens)

Question 14

list and explain the requirements for the BENEFIT of a covenant to run at EQUITY

Answer 14

Yes if

the covenant touches and concerns land of covenantee; and

if either

there is an express assignment (s. 136 LPA);
or
original parties intended benefit to run - express annexation/statutory(deemed) annexation (s.78 LPA 1925) (Federated Homes Ltd v Mill Lodge Properties Ltd)

Question 15

list and explain the requirements for the BURDEN of a covenant to run at EQUITY

3RS

(Register Run Restrictive Swift test)

Answer 15

Burden pass to successor convenator under Tulk v Maxhay, if,

(i) covenant is restrictive
(ii) covenant touches and concerns covenantee’s land (apply swift investment)
(iii) original parties intended burden to run - express or deemed (statutory) (s.79 LPA); and

(iv) the covenant must be registered
:Register as IARE a notice on charge register before the date of registration of the new purchaser
:Unregistered D(ii) land charge before date of completion

(v) the original covenantee must have owned the land for the benefit of which the covenant was taken

Question 16

P & A Swift Investments v Combined English Stores Group plc, definition of touch and concern

Answer 16

If
covenant benefits landlord/tenant only while they own the land;

covenant affects the nature, quality, mode of use or value of the land

covenant is not expressed as personal, and

then
covenants to pay money if covenant is connected with something to be done on the land

Question 17

How will the court enforce equitable burden in a freehold covenant pre-1925

Answer 17

Pre-1925 covenants will bind all except equity’s darling

Question 18

Remedies for breach of
equitable burden and benefit
common law burden and benefit

Answer 18

Common law remedies:
Damages only against an original covenantor, even if he no longer owns the land

Equity law remedies:
Injunction/specific performance for breach of a restrictive covenant, against the current owner of the land (equity may award damage in lieu)

For a positive covenant the only option is to sue the original covenantor for damages

Question 19

4 ways for the discharge of the burden of a covenant

Answer 19

Express release: the covenantee of a restrictive covenant can agree to the modification or release of a covenant through a deed

Common ownership: if the burden and benefited land come into the same ownership, the covenant is extinguished

S.84 LPA: By application to the Lands Tribunal e.g. if the covenantee cannot be located or refuses to release/modify covenant (Re Vince’s Application)

Breach Insurance: The covenantor will be able to recover any loss incurred by the enforcement of his breach.

Question 20

Explain the rule in Halsall v Brizell

Answer 20

if there is an easement that confers a benefit to one party, the dominant owner must accept the related burden.

Halsall v Brizell does not give an immediate right to claim the contribution , but the threat of refusing the benefit of the easement may be persuasive

Question 21

Rule following s78 LPA and interpretation in Federated Homes

Answer 21

a benefit will pass at equity if

as long as a person can show that they entered into a covenant with the covenantee and can show that the covenantee had at the time, land that was capable of benefiting from it, the benefit of the covenant will be deemed to be annexed to the land and pass to successors

Question 22

Contrast constructive trust and resulting trust

Answer 22

Resulting Trust

A ‘resulting trust’ arises when “B” has made a direct financial contribution to the purchase of the property registered solely in “A”’s name. It is important to have evidence of this payment and to show that this contribution to the purchase was not intended to be a gift or a loan. A resulting trust means that “A” holds either all or part of the property on trust for or for the benefit of “B”.

Constructive Trust

A ‘constructive trust’ is a more complex area of law and happens when there is an agreement, arrangement , understanding or promise between the two parties. This can happen in one of two ways, when there is an express agreement and when there is not. Either way, the Court will look at all the evidence in determining the share of each party: