Tutorial 5
Freehold Covenants
- can be positive or negative
- =promise contained in a deed
- can be enforced by:
a)the original parties
b)any other person who the covenantor purports to covenant with – even though they are not parties to the deed e.g. A covenants with B and as a separate covenant with D and E …… here, D and E are not parties to the deed. S.56 LPA 1925 allows D and E to take the benefit of the covenant.
c)A covenants with B and as a separate covenant also with B’s assigns = other owners of the land for the time being.
d)The Contracts (Rights of Third Parties) Act 1999 – from 11/5/00 – where a covenant expressly provides that a 3rd party may enforce it and the covenant purports to confer a benefit on the 3rd party. E.g. A covenants with B so as to benefit B and the other owners for the time being of adjoining properties.
Enforcement of covenants – the common law rules
The benefit of a covenant whether it is positive or negative will run with the land if:
a)it touches and concerns the land of the covenantee =
i)affects the mode of occupation or
ii)affects the value of the land
b)at the date of the deed the covenantee owned land capable of benefiting from the covenant and that land is identifiable
c)both the original covenantee and the person seeking to enforce the covenant have a legal estate in the land. N.B. s. 78 LPA 1925 – this extends the benefit to successors in title and those deriving title (i.e. a legal title) under them. The assignee need not have the same legal estate as the covenantee, Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board
d)the parties must intend that the benefit of the covenant is to run with the land to be enforceable not only by the original covenantee but also by successors in title to the original covenantee, or
e)the deed transferring ownership expressly assigns the benefit of the covenant n.b. the assignment must occur at the same time as the transfer of the land.
Burden of covenants
The common law will not allow the burden of positive or negative covenants to pass at all, (solution was a chain of indemnities). But,
he who takes the benefit must take a burden, Halsall v Brizell. Here persons who had been given rights to use roads and sewers were bound by a covenant to contribute towards the cost of maintenance of them although they were not the original covenantors.The burden must relate to the benefit conferred.
Enforcement of covenants – the rules of equity
The benefit will pass if the covenant touches and concerns the land of the covenantee and the benefit of the covenant has passed by:
a)annexation –express or statutory under s.78 LPA 1925, which states that “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”.Federated Homes Ltd v Mill Lodge Properties Limited where s.78 LPA 1925 was considered. It was held that if a covenant is enforceable by a successor in title then the covenant must run with the land and a covenant is annexed to every part of the land unless a contrary intention is expressed
b)assignment – Roake v Chadha, the parties can preclude annexation and expressly require assignment each time there is a change of ownership
c)a building scheme – see below
The Burden
- Tulk v Moxhay - a person who buys land with knowledge of a covenant is bound by that covenant as a court of equity restrains anyone taking a property with notice of a covenant from using it in a way inconsistent with the covenant.BUT this does not apply to positive covenants, which do not run either at common law or in equity, Austerberry v Corporation of Oldham and Rhone v Stephens.
4 criteria to be satisfied;
a)covenant is restrictive
b)must be an intention that it was to run with the land, either by express annexation, or impliedly via s.79 LPA 1925, whereby in the absence of a contrary intention expressed in the conveyance, a covenant is deemed to run with the land.
c)the covenantee must have owned land that was capable of benefiting from the covenant at the time the covenant was entered into, (it must touch and concern the land)
d)successor in title of the covenantor must purchase with notice of the covenant. After 1925, this means that the covenant must either be protected by registration as a class D(ii) land charge where title to the land is unregistered, or by a notice on the charges register if title to the land is registered.
- Building schemes.
Criteria to establish one:
a)plaintiffs and defendants derive title from a common vendor
b)general scheme of development in place before any sales take place
c)restrictions were for the benefit of all lots intended to be sold
d)plaintiffs and defendants bought on that basis
Equity will allow both the benefit and the burden of restrictive covenants to run where a building scheme can be established, but not positive covenants.
Remedies for breach of covenant
- injunction
- damages – awarded in lieu of injunction where:
a)injury is small
b)it is capable of being estimated in money
c)it can be compensated by small money payment
d)it would be oppressive to grant an injunction
s.84 LPA 1925 - Lands Chamber of the Upper Tribunal can discharge/modify a covenant
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