Freehold Covenants

Introduction

• Freehold covenants are promises affecting land

• Wylie’s Irish Land Law definition: “promise under seal”.

• Problem arises on transfer of land eg by sale or by intestacy

• Common law traditionally harsh and does not run burdens with the land

• Equity attempted to soften the law

• Article 34 introduced in attempt to codify and simplify law.

Common law benefit

• Benefits can run with land so long as they satisfy criteria: (Smith and Snipes v River Douglas)

  • Touch and concern land

  • Covenantee holds legal estate

  • Buyer takes legal title from original covenantee

  • Benefit intended to run with land at time of making

Common law burdens

• Negative and positive burdens generally do not run with land (Austerberry v Oldham Corporation) due to privity of contract principles. Reaffirmed in Rhone v Stephens to show staunchly against. Exceptions can lead to indirectly applicable burdens:

  • Conditional Estates

  • Halsall v Brizell rule: benefit cannot be accepted without burden

  • Indemnity claims

  • Leasehold conversion

  • Rentcharges

• Problems of common law exist during modern housing developments

• Chris Bevan’s criticism in the Cambridge Law Journal (2018): Law governing positive covenants marked by frailty.

Equity benefit

• Benefit can pass when covenant touches and concerns land:

  • Express assignment (Re Union of London)

  • Will (Newton Abbott Corporation)

  • Annexation (Rogers v Horsegood)

  • Estate schemes (Ellison v Reacher)

Equity burdens

• Tulk v Moxhay: Restrictive covenants may be passed if conditions are met: 

  • Restrictive

  • Benefit identifiable land

  • OG parties intended benefit to run

  • Successor had notice of covenant

• Equity allowed restrictive burdens to run, but not positive ones, creating inconsistency

• Equitable common law system is uncertain for purchasers and have led to confusion between applicability of common and equity

Article 34

• Attempted to modernise covenant enforceability, codifying law

• Applies to NI covenants created after Jan 2000

• Allows benefit and burden to run more freely, and reduces dependence on the positive/ negative covenant distinction

• Successors bound on statutory conditions, bringing more clarity to law

• However, still ability for interpretation issues and application: some courts may favour continued reliance on old law

Evaluation

• Avoids distinction between positive and negative covenants

• Codifies and simplifies law for purchasers

• George and Layard: Equity and common law confusing system, article 34 simplifies

• Better suited to modern housing and shared complexes

• Reduced complexities eg rentcharges

• Complexity remains for interpretation: not always coherent

• Reform not entirely comprehensive: Although it introduces certain provisions, principles may need to be consulted still

Conclusion

• Traditionally, common law prevented burdens from running until equity partially mitigated

• Split led to inconsistency, particularly between positive and negative covenants. Law commission criticised

• Article 34 modernised NI by codifying, though some uncertainties still remain

• Regardless, modernisation still useful