Land 4 Freehold Covenants

Covenant

A promise relating to land

Covenantee

A person who sells part of their land and benefits from the covenant

Covenantor

The person who gives the promise and must observe the terms of the covenant

Two Types of Covenant

Positive or Negative/ Restrictive

Determining the nature of a covenant

The Hand in Pocket Test

Haywood v Brunswick Permanent Benefit Building Society

Established the Hand in Pocket Test

The Hand in Pocket Test

If the covenantors have to spend time, effort or money, then the covenant is positive

Mixed Covenants

A promise which has positive and restrictive elements

Austerberry v Oldham Corporation

As a general rule, the burden of a covenant does not pass to the successor at common law and therefore is unenforceable

Tulk v Moxhay

Some covenants may pass the successor if: they are restrictive, accommodate the dominant tenement, there is intention for the burden to run and there is notice of the covenant

Rhone v Stephens

Only negative covenants can be enforced on a successor

Aspects to the accommodation of the dominant tenement

Covenantee and successor covenantee must hold an interest in the land at the time of creation and enforcement, the covenant must touch and concern the land and the dominant and servient land must be in proximity

Covenantee and successor must hold an interest in the land at the time of creation and enforcement

There must a dominant tenement which can be benefitted, so the original covenantee successor must have retained an interest in dominant land at the time of creation and enforcement of the covenant

Covenant must touch and concern the land

The covenant must have some direct beneficial impact on the dominant land

There must be sufficient proximity between the dominant and servient land

The dominant and servient land must be near each other

LCC v Allen

Court refused to enforce a covenant as LCC did not have an interest in the dominant land

Bailey v Stephens

Dominant and servient land do not need to share a boundary but must be close enough that the dominant land benefits from the covenant

Way to show intention for the burden of the covenant to run

Expressly or Impliedly

Express Intent

The covenant is worded in such a way as to make it clear that successors are to be bound

Implied Intent, LPA 1927, s79

A covenant shall be deemed to be made on behalf of the successors in title unless a contrary intention is expressed

Notice of the Covenant for Registered Land

The covenant must be protected by the entry of a notice in the charges register of the servient title (LRA 2002, s32)

Notice of the Covenant for Unregistered Land

Covenant must be protected by a Class D(II) Land Charge or it will not be binding on a purchaser for value (but will bind a donee)

Passing a benefit in equity

Covenant must tough and concern the dominant land and must pass by one of the methods in Renals v Cowlishaw

Methods in Revals v Cowlishaw

Annexation, Assignment or a Building Scheme

Annexation

Occurs where the covenant is made in such a way that the benefit becomes a permanent part of the dominant land: can be express or statutory

Express Annexation

Express words of the covenants make it clear that the original parties intend the benefit to become part of the dominant land rather than simply a person advantage to the covenantee

Rogers v Hosegood

A covenant made “for the benefit of the owners and successors in title” to named land was enough to demonstrate express annexation

Statutory Annexation LPA 1925, s78(1)

A covenant relation to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title of the land intended to be benefitted

Roake v Chadha

S78(1) can be expressly excluded

Assignment

Where the benefit of the covenant has not been annexed at the outset, it can be assigned when the dominant land is transferred

Assignment Formalities in LPA 1925, s53(1)(c)

Assignment document must be in writing and signed by the person transferring the benefit

Building Scheme

If the conditions are met, covenants are treated as a set of bylaws and are enforceable against all owners

Ellison v Reacher

Set out the conditions for a building scheme: all buyers buy the same seller, the seller divided the estate into plots, the covenants were intended to benefit all plots and each buyer buys on the understanding that the covenants are intended to benefit all plots

Remedies

Equitable remedies: an injunction or damages

Wrotham Park Estate Co Ltd v Parkside Homes

Court did not allow for an injunction as it was too oppressive and instead awarded damages

Common Law Rules: Burden

The burden cannot be

Remedies for Continuing Liability

The only remedy available against the original

Indemnity Covenant

Allows the original covenantor to recover damages from the successor all the way down the chain until the relevant successor

Doctrine of Mutual Benefit

A party may not take the benefit of a right granted without accepting the corresponding burden which goes with that right

Rhone v Stephens (Doctrine of Mutual Benefit and Burden)

There must be a clear link between the burden and the benefit

Thamesmead Town Ltd v Allotey (Doctrine of Mutual Benefit and Burden)

There must be a genuine choice to take the benefit

Davies v Jones (Doctrine of Mutual Benefit and Burden)

Other ways of enforcing covenants

Granting a Long Lease

Common Law Rules: Benefit

A successor covenantee can enforce the covenant either against the original or successor covenantor if they can show it has passed at common law

Passing the benefit at common law

Express and Implied Assignment

Express Assignment: Benefit

LPA 1925, s135 the assignment must be in writing and express notice give to the covenantor

P&A Swift Investments v Combined English Stores Group plc

Conditions of implied assignment of benefit: Covenant must touch and concern the land, there must have been intention that the benefit should run with the dominant land and the original covenantee must have a legal estate in the dominant land/ the successor covenantee must hold a legal estate in the dominant land

Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board

A successor estate does not have to be of the same nature to receive a benefit at common law

Discharging a Covenant

Means it is no longer valid

Modifying a covenant

Means its scope is altered but not completely invalidated

Re Tildwood, Sussex

Merger - A covenant is automatically discharged if the same person becomes the owner of the dominant and servient land

Express Discharge

Dominant owner will enter sign a deed to discharge the covenant

Implied Discharge

Dominant owner does nothing when the covenant is breached openly

Statutory Discharge or Modification of Covenants

Servient owner can apply to Upper Tribunal (Lands Chamber) to discharge or modify any covenant

Statutory Discharge LPA 1925, s84(1)

Covenant can be discharged if the covenant is obsolete due to changes in character (1)(a), impedes the reasonable use of land (1)(aa), the dominant owner expressly/ impliedly agrees (1)(b) and will not suffer injury (1)(c)