SBAQ - FREEHOLD

Question 1

1. Is the following statement True or False?

A restrictive covenant is one that requires the expenditure of money or labour by the covenantor

Answer 1

FALSE

A positive covenant requires expenditure or labour by the covenantor. A restrictive covenant requires the covenantor to refrain from a particular action

Question 2

Which ONE of the following statements is Correct?
Hide answer choices
1. Positive covenants may be enforced against successors in title to the original covenantor.
2. Restrictive covenants can be enforced against successors in title to the original covenantor at both common law and in equity provided that various conditions are satisfied.
3. Both positive and restrictive covenants can be indirectly enforced against successors if a chain of indemnity exists.

Answer 2

C is correct. Neither positive nor restrictive covenants can be enforced against successors in title to the original covenantor at common law. Restrictive covenants can only be enforced in equity under the rule in Tulk v Moxhay.

Question 3

Which ONE of the following statements is Wrong?

1. The annexation of the benefit of a covenant attaches the benefit of the covenant to the land of the covenantee
2. The annexation of the benefit of a covenant occurs at the same time as the transfer of the land to a successor covenantee.
   Correct answer
3. The annexation of the benefit of a covenant occurs at the time of creation of the covenant.
4. Incorrect:
   In the absence of express annexation of the benefit of a covenant, s 78 of the Law of Property Act 1925 implies annexation of the benefit of a covenant to the land of the covenantee.

Answer 3

2. The annexation of the benefit of a covenant occurs at the same time as the transfer of the land to a successor covenantee.

The annexation of the benefit of a covenant attaches the benefit of the covenant to the land of the covenantee at the time of creation of the covenant. Such annexation can be express in the deed in which the covenant is created or implied into the deed under s 78 of the Law of Property Act 1925. Express assignment of the benefit of the covenant may take place at the time of the transfer of the land to a successor covenantee.

Question 4

One of the conditions for the benefit of a covenant to pass automatically at common law is that both the original covenantee and the person now seeking to enforce the covenant had/have a legal estate in the land.

Is the following statement True or False?

The person seeking to enforce the covenant must have the same legal estate in the land as the original covenantee.

Answer 4

FALSE:

Well done. In Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1948] 2 KB 500, the Court of Appeal considered that as s.78 of the Law of Property Act 1925 provided for a covenant relating to the land of the covenantee to be deemed to be made not only with the covenantee’s successors in title, but also with “persons deriving title under him or them”, so tenants holding a leasehold estate are included.

Question 5

X has a large estate of land and he sells a plot to A. A enters into two covenants with X: (a) not to use the land for any purpose other than a residence, and (b) to erect and maintain a fence on the boundary between the plot sold to A and X’s remaining land.

Which ONE of the following statements most accurately describes the legal relationship between A and X?

1. Privity of estate exists between A and X.
2. Privity of contract exists between A and X.
3. Both privity of contract and privity of estate exist between A and X.

Answer 5

2. Privity of contract exists between A and X.

This question relates to freehold covenants, so privity of contract exists between A and X. Privity of estate only exists between landlord and tenant

Question 6

Using the same facts as the previous question, A starts to use the house for a bed and breakfast business.

Which ONE of the following remedies is not available?

1. Incorrect:
   Damages
2. Injunction
3. Specific Performance

Answer 6

Specific Performance

That’s not right. Specific performance is not an available remedy because X does not want A to take a positive action to comply with the covenant; he wants to prevent A from breaching a restriction, so an injunction to stop the breach of covenant and/or damages are the appropriate remedies

Question 7

Using the same facts as question 5, X now sells the remainder of his estate to Y and A sells his property to B.

Which ONE of the following statements most accurately describes the action Y can take if B breaches the covenants?

1. Y can sue B as privity of contract exists between them.
2. Y can sue B in respect of the covenant not to use the land for any purpose other than a residence, because the burden of the covenant passed to B.
3. Y can sue B in respect of both covenants (a) and (b) because the burden of both covenants passed to B.

Answer 7

B: Y can sue B in respect of the covenant not to use the land for any purpose other than a residence, because the burden of the covenant passed to B.

Whilst at common law the burden of the covenants will not pass to B, in equity Y obtains the benefit of the covenants and B takes the burden of covenant (a) (the restrictive covenant) under Tulk v Moxhay, but not (b) which is a positive covenant

Question 8

Using the same set of facts as in the previous question, B sells the property to C and C continues to use the house for a bed and breakfast business.

Is the following statement True or False?

If Y successfully sues A for breach of covenant, there are no circumstances in which A will be able to recover his losses from C.

Answer 8

False

A will be able to recover his losses from C through B if there is a chain of indemnity covenants. When A sold the house to B, he could have obtained an express indemnity covenant from B and when B then sold the house to C, he could have obtained an express indemnity covenant from C.

Question 9

One of the conditions that has to be satisfied for the burden of a covenant to run in equity is that the person against whom it is sought to enforce the covenant must have notice of it.

Select the correct phrase from the list below to complete the following sentence:

Where the burdened land is registered, a restrictive covenant will be protected by the entry of a notice on the Charges Register of the title affected as it is

A. An interest affecting a registered estate.

B. A registrable disposition.

C. An overriding interest.

Answer 9

Statement A is correct.

A restrictive covenant is classified in registered land as an interest affecting a registered estate.

Question 10

In which one or more of the following ways can a covenant over freehold property be discharged?

To obtain credit for this question you must identify all correct statements.

1. By implied consent.
2. By application to the High Court.
3. By application to the Lands Tribunal.
4. By application to the Local Authority.
5. By express agreement.

Answer 10

.By application to the Lands Tribunal.

By express agreement.

Feedback
That’s not right. Statements C and E should have been selected. (Note: from 1 June 2009 the Lands Tribunal became the Lands Chamber of the Upper Tribunal, but is still referred to as the Lands Tribunal).

Question 11

1. The freehold owner of a farm (the seller) sells a field containing a barn forming part of the farm (‘the Property’) to a buyer. The transfer to the buyer contains the following:

“The Buyer covenants with the Seller to repair and maintain the barn forming part of the Property”

Which of the following statements best describes the right created by the seller and the buyer?
1. The positive covenant is a legal interest as it has been created by deed.
2. The restrictive covenant is an equitable interest although it has been created by deed.
3. The positive covenant is an equitable interest although it has been created by deed.
4. The restrictive covenant is a legal interest as it has been created by deed.
5. This creates an easement in favour of the buyer to access the barn forming part of the Property.

Answer 11

The correct option is C.

A covenant is not capable of being legal (s 1(3) LPA 1925). Creation by deed does not alter this. Options A and D are, therefore, wrong.

The covenant in question is positive as it will require effort or expenditure to perform it. Option B is, therefore, wrong.

Option E is wrong as a covenant has clearly been created, not an easement.

Question 12

A barrister is the freehold owner of two houses. He lives in one house (‘the Retained Land’). He sells the other house (‘the Property’) to an architect. The transfer contains the following clause:

“For the benefit and protection of the Retained Land the Buyer and his successors in title covenant with the Seller and his successors in title to only use the Property as a private dwelling house”

The architect sells the Property to a doctor. The barrister sells the Retained Land to a vet. The doctor sells the Property to a friend.

Which of the following answers best describes the parties to the various transactions?
1. The barrister is the original covenantee and the vet owns the land burdened by the covenant.
2. The barrister is the original covenantor and the friend owns the land burdened by the covenant.
3. The architect is the original covenantee and the friend owns the land which benefits from the covenant.
4. The architect is the original covenantor and the vet owns the land which benefits from the covenant.
5. The architect is the original covenantor and the barrister owns the land which benefits from the covenant.

Answer 12

Feedback
The correct option is D.

The architect is the original covenantor. Option C is, therefore, wrong.

The friend now owns the land burdened by the covenant – the Property.

The original covenantee was the barrister. Option B is, therefore, wrong.

The vet now owns the land that benefits from the covenant. Option A is, therefore, wrong.

Option E is wrong as, although the architect is the original covenantor, the barrister no longer owns the land benefitting from the covenant.

Question 13

A market research analyst is the freehold owner of two houses. The analyst sells one house (‘the Property’) to an occupational therapist. The transfer to the occupational therapist contained the following clause:

“The Buyer and her successors in title covenant with the Seller and his successors in title to use the Property only as a private dwelling house”
Elsewhere in the transfer, the other house is identified as the seller’s ‘Retained Land’. The occupational therapist has sold the Property to a recruitment consultant. The market research analyst has sold his house to a teacher. The recruitment consultant has started running a business from the Property in breach of the covenant.

Which of the following answers best describes the basis upon which the teacher has the benefit of the covenant?
1. There has been an express assignment of the benefit of the covenant to the teacher.
2. There is statutory annexation as the land to be benefited is identified in the transfer.
3. The benefit passes to the teacher at common law as the criteria are met and so the teacher can pursue a claim against the recruitment consultant.
4. There is express annexation as words of annexation have been used.
5. There is a mutual benefit and burden enabling the teacher to enforce the covenant.

Answer 13

The correct option is B.

There is nothing in the facts to suggest that there has been express assignment. Option A is wrong.

There is no express annexation as words of annexation have not been used and the land to benefit from the covenant is not identified in the clause creating the covenant. Option D is wrong.

Option C is accurate as the benefit will have passed to the teacher at common law. However, at common law, the burden of covenants does not run and if (as here) the covenant is restrictive then the burden will only pass in equity. In order for the teacher to pursue a claim, they must show that benefit of the covenant has passed to them in equity . Option C is, therefore, not the best answer.

There is nothing on the facts to suggest a mutual benefit and burden. This only applies to positive covenants and here the covenant is restrictive. Option E is, therefore, wrong.

For these reasons, the only way in which the benefit of the covenant can pass to the teacher is by way of statutory annexation.

Question 14

A solicitor is acting on behalf of a buyer of a registered freehold property. The seller’s solicitor has informed the buyer’s solicitor that the land has the burden of an obligation not to use the property as anything other than a private dwelling house.

What will the buyer’s solicitor be looking for when examining the Land Registry official copy of the title to the property to confirm that the obligation is properly registered?
1. An entry referring to a restrictive covenant in the Property Register.
2. An entry referring to a positive covenant in the Property Register.
3. An entry referring to an easement in the Charges Register.
4. An entry referring to a restrictive covenant in the Charges Register.
5. An entry referring to a positive covenant in the Charges Register.

Answer 14

Option D is the correct answer. The obligation in question is a restrictive covenant (not positive) and therefore B, C and E must be wrong. The burden of restrictive covenants appears as a notice in the charges register and not the property register and so A is wrong.

Question 15

An entry on the Charges Register of a registered freehold title reveals a notice of a covenant. The covenant states that the land can only be used for residential purposes and it is not expressed as being personal to the original parties. The covenant also states that it is intended to benefit the neighbouring freehold title, which is also a residential property. The wording of the covenant, however, makes no mention of the intention for the burden to run with the land.

Does the burden of this covenant run with the land?
1. No, because the covenant does not touch and concern the benefited land.
2. Yes, because the covenant is positive and all the requirements for the burden to run with the land have been satisfied.
3. No, because the intention for the burden of the covenant to run with the land was not expressly stated when the covenant was created
4. Yes, because all the requirements for the burden to run have been satisfied.
5. Yes, because registration of the covenant is confirmation from Land Registry that all the requirements for the burden to run have been satisfied.

Answer 15

Option D is the correct option. The covenant is restrictive, there appears to have been identifiable land owned by the covenantee at the time the covenant was created, the covenant touches and concern the benefited land (see below), the intention for the burden to run will be implied by s79 LPA 1925 (as it has not been expressly shown) and the owner of the burdened land has notice of the covenant through its registration. Consequently, the burden of the covenant does run with the land.

Question 16

The owner of a freehold farmhouse, who completed the purchase of the property 6 months ago, has started to use one of the outbuildings for her printing business. Her neighbour, the current freehold owner of the adjoining field, has now complained that the noise of the printing press disturbs the cattle grazing in the field and has produced a copy of the transfer deed entered into 3 years ago when the previous owner of the farmhouse sold off the field to its previous owner. The transfer deed included the following wording:

“The Seller with the intent and so as to bind the retained land [the farmhouse and outbuildings] and to benefit and protect the land hereby transferred to the Buyer [the field] hereby covenants with the Buyer that he and his successors in title will use the retained land for domestic and agricultural use only.”

The “Seller” and the “Buyer” were defined in the transfer deed as including successors in title. A notice recording the wording above was registered in the register of title of the farmhouse at the time. The owner of the farmhouse had no knowledge of this deed as she did her own conveyancing.

Can the neighbour take action to stop the owner of the farmhouse using the outbuilding for her printing business?
1. Yes, because the covenant has been registered on the register of title of the farmhouse.
2. Yes, because the benefit and burden of all freehold covenants automatically pass with the land.
3. No, because it is a positive covenant and the burden does not pass with the land.
4. No, because the owner of the farmhouse must have actual knowledge of the covenant to be bound by it.
5. No, because although the burden of the covenant has passed, only the previous owner of the field has the ability to take action to enforce it.

Answer 16

Option A is correct - this is a restrictive covenant and the benefit and burden can pass to successors of the original parties to the covenant. The requirements for the benefit and the burden of the covenant to pass automatically have been satisfied. The wording in the transfer deed means that the benefit of the covenant has been expressly annexed and shows an intention for the burden to run. The facts shows that the covenant was registered on the title to the farmhouse before the date of registration of the current owner and so the current owner had notice.

Option B is wrong - it is not true to say that the benefit and burden of all freehold covenants will pass. As explained above, certain requirements must be satisfied for the benefit and burden of freehold covenants to pass with the land (including registration of the covenant on the title register of the burdened land in registered land) and only the burden of restrictive covenants can directly pass to the successors of the burdened land.

Option C is wrong - this is not a positive covenant.

Option D is wrong - actual knowledge of the covenant is not required in order to bind the buyer of the burdened land – the registration of the notice on the register of title of the farmhouse amounts to notice of the covenant to the current owner.

Option E is wrong - the benefit of the covenant does not remain solely with the original covenantee and has passed to the current owner of the field.

Question 17

A client owns a freehold property with a registered title. When the client bought the property, their solicitor advised them that the property had the benefit of two covenants over a piece of adjoining land. The covenants were entered into when the previous owner of the client’s property sold off the adjoining land to a developer.

The two covenants provided that the developer was required to build and maintain a fence on the adjoining land and that the developer would not be allowed to use the adjoining land for business purposes. The covenants were given by the developer on behalf of himself and his successors and with the intent that the burden of the covenants would run with the adjoining land. Both covenants were registered in the Charges Register of the title to the adjoining land immediately following the sale to the developer.

The developer sold the adjoining land six months ago to a dentist who has just started running her dental practice from the adjoining land. She is also refusing to maintain the fence. The title to the adjoining land reveals that the dentist agreed to observe the two covenants and indemnify the developer if the developer suffered any loss as a consequence of the dentist’s breach of covenant.

Which of the following best describes the action that the client can take against the dentist?
1. The client can sue the dentist for breach of both covenants because the burden of both covenants has passed to the dentist.
2. The client can sue the dentist only for breach of the covenant not to use the land for business purposes.
3. The client cannot sue the dentist for breach of either covenant because the covenants were expressed to be personal to the developer.
4. The client cannot sue the dentist for breach of either covenant because the dentist was not a party to the original covenants.
5. The client can sue the dentist for breach of both covenants because the dentist gave an indemnity covenant to the developer.

Answer 17

Option B is correct. The burden of a covenant can only pass (in equity) if it meets the requirements laid out in Tulk v Moxhay: it is restrictive, it was made to benefit land retained by the covenantee, it touches and concerns the covenantee’s land, there was an intention that the burden would run with the burdened land and the owner of the burdened land had notice of the covenant. The covenant not to use the land for business purposes satisfies all these requirements. The covenant to build and maintain the fence is positive, however and so the burden of that covenant does not pass (despite its registration). It cannot therefore be enforced directly against the dentist.

Option A is wrong. As explained above, although the burden of the covenant not to use the land for business purposes passes to the dentist, the covenant to maintain the fence is positive and the burden of that covenant does not pass.

Option C is wrong. A covenant that is expressed as personal would not touch and concern the covenantee’s land but the facts indicate that this covenant was given by the developer on his own behalf and on behalf of his successors in title. It was not, therefore, expressed to be personal to the developer.

Option D is wrong because, as discussed at Option B above, the burden of a restrictive covenant does run with the land if the requirements laid out in Tulk v Moxhay are satisfied. The client can sue the dentist for breach of the restrictive covenant even though the dentist was not a party to the original covenant. Not being a party to the original covenant would, however, preclude the direct enforcement of the positive covenant against the dentist.

Option E is wrong. Although we are told that the dentist gave an indemnity covenant to the developer, this simply means that if the client sues the developer, then the developer can in turn sue the dentist under the indemnity covenant. An indemnity covenant given by a successor covenantor does not allow direct action to be taken against them. The client can still sue the developer directly because the client has the benefit of both of the covenants and the developer is still liable as the original covenantor.

Question 18

A solicitor is acting for a buyer of a house. The house has a registered freehold title and the seller is a sole registered proprietor. The seller’s solicitor tells the buyer’s solicitor that the house is subject to a covenant which states that it must only be used for residential purposes. The buyer also tells his solicitor that when the seller’s mother showed him around the house, she commented that the house had been a good investment for her and her son and she hoped it would be for the buyer too.

Which of the following statements best explains whether the buyer may be bound by the issues affecting the title to the house?
1. The buyer will only be bound by the positive covenant if it is noted in the Charges Register of the title, however he may be bound by any trust interest which the seller’s mother has in the house even if it is not protected by an entry on the title register.
2. The buyer will not be bound by the positive covenant even if it is noted in the Charges Register of the title and he will only be bound by any trust interest which the seller’s mother has in the house if there is a restriction in the Proprietorship Register to protect it.
3. The buyer will be bound by the restrictive covenant if it is noted in the Charges Register of the title and he will also be bound by any trust interest which the seller’s mother has in the house if it is protected by an entry on the title register.
4. The buyer will be bound by the restrictive covenant if it is noted in the Charges Register of the title and he may also be bound by any trust interest which the seller’s mother has in the house even if there is no entry on the register in respect of it.
5. The buyer will be bound by the restrictive covenant if it is noted in the Charges Register of the title, but he will only be bound by any trust interest which the seller’s mother has in the house if there is a restriction in the Proprietorship Register to protect it.

Answer 18

D is correct – despite being worded in a positive way, the substance of the covenant is restrictive, so A and B are wrong. In the registered system a restrictive covenant must be protected by a notice on the Charges Register in order to bind successors in title. As regards the seller’s mother, she may have a trust interest if she invested money in the house. This trust interest may be overriding if she is also in actual occupation of the house and the conditions of paragraph 2 of Schedule 3 of the Land Registration Act 2002 are satisfied. Overriding interests bind even though there is no mention of them on the registered title therefore, option C is wrong. Finally, whilst a beneficiary can register a restriction on the Proprietorship Register, this does not protect the trust interest, instead, it alerts a potential buyer of the need to overreach the trust interest. So option E is wrong.