Lecture 4: Rights & Interest in Land 1: Covenants

Question 1

What is the legal basis of land rights? What are the Ingredients and Terms of the Contract?

Answer 1

Contractual: All contracts are agreements but not all agreements are contracts

Ingredients of Contract:

1. Offer
2. Acceptance
3. Consideration
4. Intention to create a legal relationship
5. Formalities: must be some notes/memorandum in writing (Section 6 of Civil Law Act) in land transactions as land is unique and has high value –> minimizes possibility of disputes

Terms of Contract:

1. Expressed: Adress & articulated & expressed between parties
2. Implied: Legislation/Customs/Statues

Question 2

What is Covenants and what are the types of covenants?

Answer 2

Covenants are terms in land contract & promises made in a deed in a contract (enforceable agreement)

Types of Covenants:
1. Positive: promise to do something & requires an action & usually need to spend time and money to do something
eg Paint the fence & maintain the roof

2. Negative (Restrictive): promise not to do something
   eg Covenant not to use the property for commercial/business purposes

Question 3

Explain the Privity Doctrine.

Answer 3

Since it is based on contract, contractual obligations arise and privity doctrine applies (Tweddle v Atkinson)
Doctrine of Privity of Contract: Strict common law doctrine which states the relationship which exists and there is the enforceability of covenants where there is privity between original parties between immediate/original parties to a contract.

1. Covenantor: Person who promises to do/not to do something
2. Covenantee: Recipient of promise –> person who will benefit from the promise

Question 4

What happens when there is a 3rd party under common law?

Answer 4

Owners of adjacent land may covenant with each other that regarding the use of respective land –> alright for original owners to sue each other in breach of contract

Subsequent owners: 3rd party outside of contract –> no privity exists between the seller and subsequent buyer of property imposed on 3rd parties
Consequence: no right/obligations is given/imposed on 3rd parties

Question 5

Explain the terminologies used in a covenant.

Answer 5

1. Covenantor/Promisor/Servient Tenement: promises to do/not to do something and carries the burden –> services the other parcel of land
2. Covenantee/Promisee/Dominant Tenement: Enjoys benefit

Benefit & Burden must be considered separately

Question 6

Passing of Benefit & Burden to 3rd parties.

Answer 6

At common law, the benefit of a covenant may be passed on to 3rd parties and run with the land, where A can assign the benefit of the covenant to 3rd parties when he sells and transfers land to him.

At common law, the burden of a covenant never passes to 3rd parties and does not run with the land for both positive and negative covenants –> do not need to suffer burden. (Rhone v Stephen and Austerberry v Oldham Corporation)

Question 7

Burden of negative covenants (Position in Equity)

Answer 7

An important contribution by Equity

The outcome of Equity’s Intervention: For a certain type of covenants, the burden can run with the land and pass to the subsequent buyers which is an exception to the Privity Doctrine.

Law (legal application) in Tulk v Moxhay:

• Position of negative/restrictive covenants changed by equity: Whether subsequent owners will be bound to follow the negative covenant
• Subsequent owners will be bound by the restrictive covenant provided it:
  a. Subsequent buyer had taken notice of the covenant
  b. Covenant touches and concerns land
  c. Benefit the covenantee’s land/dominant land
  d. Negative/restrictive covenant
• Burden of POSITIVE covenants cannot be passed down to 3rd parties/does not run with the land, both in equity and common law.

Question 8

Explain the ways to discharge covenants.

Answer 8

1. Unity of dominant & servient tenement under one owner
2. Effluxation of time: A restrictive covenant had a life span of 20 years for the covenant to be expired/lapse. Upon expiration, it shall no longer be binding on servient tenement.
3. Release/variation of the covenant: the servient tenement may be released from the burden of the covenant if the owner of the dominant tenement agrees to release and arises out of the agreement and executes in writing
4. Change in use of land: Where continuance of restriction impedes the development of land for public and private purposes (eg to increase provision for housing)