W8 Freehold Covenants and W9 Mortgages Flashcards
What is a positive covenant?
A covenant requiring action - must do something
What is a negative covenant?
A covenant prohibiting something - cannot do something
Shepherd Homes v Sandham 1971
Facts: Covenantee sued the covenantor for breach of freehold covenant and sought an injunction. Question was whether Land Tribunal had jurisdiction to modify the covenant.
Significance: Lands Tribunal can alter covenants which run with the land but also which are personal but affect the land.
Powell v Hemsley 1909
Facts: Freehold purchaser covenanted with vendor not to build private residences and to get their approval on building plans. Then leased the land and the lessors breached the covenant by building without approval. They went bankrupt, he took back the land, covenantee took action to compel removal of the building. Court found it was not a continuing breach.
Significance: Inseverable covenant – not to build on land without approval of neighbour, in which case you look at the covenant as a whole and subsume the positive requirement into the negative and judge as wholly negative
Is a freehold covenant an equitable or legal interest in land?
Equitable
What are the formalities for freehold covenants?
Signed writing (s53(1)(a) LPA 1925) and/or Deed
What is a dominant tenement?
The tenement benefitted by/made more valuable by the covenant
What is the servient tenement?
The tenement made less valuable/serving the covenant
If a freehold covenant is negative, do we use law or equity?
Equity
If a freehold covenant is positive, do we use law or equity?
Law
Tulk v Moxhay 1848
Facts: Covenant to keep free the land in Leicester Square. Phrased positively but really a negative covenant not to build, was deemed binding on successors.
Significance: Authority for burden of negative covenants passing in equity.
What is required for the burden of a freehold covenant to pass at equity?
Must be a negative covenant
Must accommodate the dominant tenement
Original parties must have intended the burden to run
Must follow applicable notice rules for registered or unregistered land
What does it mean to “accommodate the dominant tenement”?
Must benefit the land
Must touch and concern the dominant land
Must have sufficient proximity
What are the notice rules for a freehold covenant on registered land?
Notice on charges register to bind purchasers (s32 LRA 200)
Otherwise, not bound and cannot be an overriding interest
What are the notice rules for a freehold covenant on unregistered land?
Requires a class D(ii) land charge to bind third party purchaser
LCC v Allen 1914
Facts: Owner applied to council for right to build a new street on land they owned. Permission granted subject to a covenant not to build at the end of the street (council did not own this land). Owner sold the land, including the covenant. Council tried to enforce the covenant. Court said they could not enforce.
Significance: Covenantee must have an estate in land to enforce a freehold covenant, otherwise no standing.
P&A Swift v CES 1989
Facts: Parent company guaranteed subsidiary’s lease, and was liable for outstanding rent. Was found to touch and concern the land.
Significance: Covenant must touch and concern the dominant land for the burden to pass at equity. Rent touches and concerns.
Cosmichome v Southampton CC 2013
Facts: Land formerly owned by BBC and was subject to a covenant confining use of the land to BBC broadcasting, but the restriction could be lifted on payment of a development charge. Also contained right of pre-emption, where local authority had first refusal on buyback. BBC sold the land, notified the council, who did not respond. Court found the covenant did not pass, as it did not benefit the dominant/adjoining land.
Significance: Covenant must accommodate the dominant tenement for burden to pass at equity.
Bailey v Stephens (1862)
Facts: Someone cut down a tree they weren’t supposed to.
Significance: Dominant and servient tenements (for easements and covenants) must be proximate to one another.
s79 LPA 1925
Covenants relating to the land will bind successors in title, if covenant was made after commencement of the LPA 1925
Implies the intention of original parties to allow the burden to run
Morrells of Oxford v Oxford United 2000
Facts: Oxford United FC were purchasing land that once belonged to a pub, and as such was subject to a covenant prohibiting licenses premises within half a mile of the pub. The covenant did not include words expressly binding successors, but other covenants in the same agreement did. Court found that the absence of words in this covenant, where present in other covenants, conveyed an intention not to bind successors.
Significance: s79 LPA binds successors unless contrary intention expressed. Contrary intention does not need to be explicit.
What is required for the benefit of a freehold covenant to pass at equity?
Must touch and concern the land
Successor covenantee must have legal or equitable estate in the land of the original covenantee
Must pass through annexation, assignment, or scheme of development
What are the types of annexation of freehold covenant?
Express annexation - words making it clear the benefit passes
Implied annexation - implied by court
Statutory annexation - s78 LPA 1925
Marten v Flight Refuelling 1962
Facts: Sale of a farm, with covenant that it was for agricultural purposes only. Was later acquired by the MOD via compulsory powers rather than conveyance. Were the covenants binding on the MOD? Burden and benefit had passed, but could not prevent defence work.
Significance: Successor covenantee can enforce against successor covenantor, provided existence can be demonstrated.
Federated Homes v Mill Lodge Properties
Facts: Two parcels of land subject to an original covenant that no more than 300 houses could be built on them, ended up being owned by same company. One had successive chains of assignment, the other did not. Court found that since the covenant touched and concerned the land, it ran with it and was annexed to every part of the land.
Significance: A restrictive covenant which touches and concerns the land annexes the benefit of the covenant to the covenantee’s land.
Roake v Chadha 1984
Facts: Language of the covenant specifically said that the benefit did not pass unless expressly assigned. Court found that complied with s78 LPA 1925 - the Act only implies where silent.
Significance: s78 LPA annexes covenant to land unless clear intention otherwise
Crest Nicholson v McAllister 2004
Facts: Home owner tried to enforce a covenant. Court found that the dominant land was not sufficiently identifiable from the original conveyance, so the covenant had not annexed to the land.
Significance: Dominant tenement must be identifiable in the originating Deed.
How does assignment of a freehold covenant work?
Assignment does not glue the covenant to the land
The covenant must be assigned at each stage of the chain of successive assignments
Miles v Easter
Facts: Land with a covenant was split up . Court found no evidence that the benefit had been either assigned or annexed to the land.
Significance: Authority for chain of assignment
What are the requires for assignment of a freehold covenant?
The benefit of the covenant must be assigned each and every time the land is sold
Benefitted land must be properly identifiable
Assignment must coincide with conveyance
Must comply with s53 LPA 1925
What is a scheme of development?
Where a single vendor laid a housing estate into plots, all subject to similar covenants
What are the requirements for a scheme of development to pass benefit of freehold covenants?
Restrictions must intend to benefit all land sold
Area of scheme must be clearly defined
Claimant and defendant derive title from common vendor
Elliston v Reacher 1908
Facts: Scheme of development with covenant not to use as a hotel. Covenant was found to run with the land.
Significance: Authority for scheme of development covenants.
What are the remedies for breach of freehold covenant?
Injunction
Specific performance (if positive)
Damages
Declaration/modification by court
Wrotham Park v Parkside 1974
Facts: Land sold to a developer subject to a covenant requiring prior approval of layout. Broke the covenant, built houses, covenantee sued. Covenant was found to be enforceable, but injunction (i.e. demolition) would be unfair, so damages awarded instead. Damages equated to a reasonable sum to relax the covenant, so 5% of profits.
Significance: Damages in lieu.
What are the differences in remedy for freehold covenants between common law and equity?
Common law: damages more likely
Equity: Court is more discretionary
How can a freehold covenant be extinguished?
Express agreement
Implied agreement (long usage)
Common ownership
When would a court modify or discharge a negative freehold covenant?
If the covenant is obsolete, impeding reasonable use, or the person with the benefit would suffer no loss
Does the burden of a positive freehold covenant transfer at common law?
Generally, no, unless a workaround is in use
Austerberry v Oldham 1885
Facts: A road was subject to a covenant of repair. Was later declared a street, which moves the maintenance responsibility to the inhabitants. Court found the covenantee could not enforce the covenant - does not pass the burden of positive covenants.
Significance: Positive covenants don’t typically bind successors.
Rhone v Stephens 1994
Facts: Covenant to repair part of a roof which overhung the dominant tenement. Roof started to leak, tried to enforce.
Significance: Positive covenants don’t bind successors.
What are the workarounds to pass the burden of a positive freehold covenant in common law?
Sue the original covenantor under s79 LPA 1925
Chain of indemnity covenants
Forced re-covenant
Enlarge a long lease into freehold
Mutual benefit and burden rule
What is a forced re-covenant?
Servient land cannot be sold unless the dominant land consents, with the condition that new servient owner re-covenants
Becomes a contractual right of enforcement
s40 LRA 2002
Allows entry onto land registry restrictions relating to dispositions of registered land
s153 LPA 1925
Allows a lease with at least 200 years left to run (with no rent) to be converted into a freehold
What does it mean to enlarge a long lease into a freehold?
Leases of at least 300 years, with at least 200 years left (with no rent) can be converted into a freehold
What is the mutual benefit and burden rule?
Allows enforcement of a payment obligation for a connected benefit
