Freehold Covenants

Covenant

a promise typically contained in a deed or otherwise enforceable

Is it legal or equitable?

Cannot be legal as not listed in s1(2) of LPA 1925, only equitable (s1(3)) and must be created by signed writing (s53(1)(a))

Covenantor

Person who makes the covenant

Covenantee

Person to whom the covenant is made

Annexation

Benefit of covenant is attached to land, so it passes on to successors of covenantee

Assignment

Express transfer of benefit of covenant to successor

Enforcement of covenant to original covenantee

• Promise given in a deed, privity of contract prevails

• A party to the contract that created the covenant, cannot sue successors once leaving

Enforcement of covenant by original covenantor

Covenants are (not always) imposed when a person sells part of their land

In a freehold estate, liability of original covenantor can last forever, indemnity needed for protection, need a chain of indemnities in the Charges Register

s79 of LPA 1925

Covenants made by covenantor will apply to successors unless deed says otherwise (does not apply to personal covenants), doesn’t matter if it’s positive or restrictive

Running of the benefit of the covenant at common law by express assignment

Covenant is a “thing in action”, assignment recognised in equity and potentially legally under s136 of the LPA 1925, but must be done simultaneously with transfer of land through a written notice signed by the assignor

Running of the benefit of the covenant at common law automatically

• Tucker LJ in Smith and Snipes Hall Farm v River Douglas Catchment Board (1944), covenant must “touch and concern” covenantee land

• Both the original covenantee and person seeking to enforce the covenant must have a legal estate in the land (equitable estate doesn’t count)

• Original parties must intend that the benefit of the covenant is to run with the land

Austerberry v Oldham Corporation (1885)

The burden does not run in equity, only enforceable in equity

Halsall v Brizell (1957)

• Successor who takes benefit of deed rights must also accept covenant burdens

• Only applies to associated rights in the deed like easements

Lord Templeman in Rhone v Stephens (1994)

Burden should only be accepted if it relates to the exercise of the right

Running of the benefit in equity

Will pass to successors where the covenant “touches and concerns” covenantee’s land and it has been passed by express assignment (same as common law) or annexation

Federated Homes v Mill Lodge Properties (1980)

Benefit of a covenant is annexed to every part of the land unless said otherwise, capability and intention is key

Crest Nicholson v McAllister (2004)

Benefited land must be easily identifiable for s78 to be applied

Tulk v Moxhay (1848)

Equity will enforce a covenant against a successor in title to the original covenantor where that successor had notice of that covenant

Conditions to apply Tulk

• Must be a restrictive covenant

• Must “touch and concern” the land

• Intended *directly or indirectly) the burden to run with the covenantor’s land

• Covenant must be registered appropriately (either on Charges Register or Class D(ii) land charge)

Remedies for original covenantor breach

• They are liable for breach of covenant as long as they have an interest in the land

• Options include damages, an injunction or specific performance for positive covenants

• Once the interest is gone, only damages are available

Express release

Covenantee can agree to modification/release through a deed, not mandatory to agree

Common ownership

Where the burdened and benefited land come into the same ownership, the covenant will be extinguished

s84 of the LPA 1925

If the covenantee cannot be located, application can be made to the Lands Chamber/Upper Tribunal

Breach insurance

Allows for covenantor to recover funds in the event of a breach of covenant