Freehold Covenants

DEFINITION: A covenant is a personal contractual promise given by the covenantor to the covenantee. Freehold covenants are made between the freehold owners of two separate pieces of land and are often created on a sale of part.
RESTRICTIVE COVENANTS: The covenantor must passively not do something in order to keep their promise which usually does not involve expenditure e.g. a promise not to build on the land.
1. COMMON LAW
  1. Burden DOESN'T pass
  2. Benefit DOES pass
    1. REQUIREMENTS: 1) ‘Touch and Concern’ Case: - Smith and Snipes Hall Farm v River Douglas Catchment Board [1949] - ‘The covenant must either affect the land as regards its mode of occupation or it …affects the value of the land.’ 2) Original covenantor held a legal estate in land 3) Successor in covenantee title holds a legal estate in land 4)Benefit ‘annexed’ Annexation Express? Implied? S.78 LPA 1925 *Check if it meets the deed requirements for the LP(MP)A 1989
      1. **Benefit of a restrictive covenant is NOT registerable
2. EQUITY
  1. Benefit DOES pass
    1. REQUIREMENTS: 1) ‘Touch and concern’ 2) Successor must own an estate in law or in equity 3) Intended to run
      1. Intended to run: i. Assignment ii. Annexation iii. Development Scheme
        Annexation: 1. Express - Equity would want to see that the original parties attached the benefit of the covenant to the land. 2. Implied (rare) 3. Statute - Federated Homes v Mill Lodge Properties – where a restrictive covenant touched or concerned covenantee’s land, s.78, LPA 1925 automatically annexed the benefit
  2. Burden DOES pass
    1. REQUIREMENTS: 1) Negative in nature 2) Covenant must ‘accommodate’ the dominant land - Sufficiently proximate - Rogers v Hosegood [1900]; Touch and Concern - Case: - P & A Swift Investments v Combined English Stores Ltd 1989 3) Intended the burden to pass - Express or Implied (s.79 LPA 1925) 4) Transferee of the servient land must have notice - Register notice on charges register s.32 LRA 2002
      1. ** Restrictive covenants are only equitable interest in land and are not overriding
        Basic priority rule s.28 LRA 2002 Special priority rule s.29 LRA 2002
POSITIVE COVENANTS: The covenantor must actively do something in order to keep their promise which usually involves expenditure e.g. a promise to maintain a fence.
1. COMMON LAW
  1. Benefit DOES pass
    1. S.56 (1) LPA 1925 permits “a person [to] take the benefit of a covenant even though he is not named as a party to the conveyance” Beswick v Beswick - for a non-party to take the benefit he had to be identifiable from the original covenant.
    2. Requirements are the same as Restrictive Covenants expect Positive Covenants ARE registerable
  2. Burden DOESN'T pass
    1. So a covenant can only run when the original covenantor retains the title to the land. In Austerberry v Oldham Corporation the burden to maintain and repair a road did not run and so the successor in title was not bound.
    2. EXCEPTION
      1. The doctrine of MUTUAL BENEFIT is the EXCEPTIONto the general rule that the burden of a covenant cannot run. ‘He who takes the benefit of the freehold grant must also take the burden’. Key case: Halsall v Brizell [1957]
        Anmerkungen:
        The rule in Halsall v. Brizell [1967] states that he who takes the benefit of a deed must also shoulder the burden. However, Lord Templeman limited the use of the doctrine in Rhone v. Stephens [1994], he made it clear that the benefit and the burden must be connected, they cannot be independent obligations.
        REQUIREMENTS: 1) Benefit and burden must be conferred in the same transaction 2) Enjoyment of benefit and imposition of burden must relate 3) The burdened party must have had the opportunity to disclaim the enjoyment of the benefit ( cannot be forced). Davies v Jones [2009]
      2. INDEMNITY COVENANTS are another way a burden can pass, in circumstance where the seller includes a clause in the transfer of the land and the buyer agrees to carry the burden of the covenant through the conveyance; thus being liable for any future potential breaches.
2. EQUITY
  1. Burden DOESN'T pass
  2. Benefit DOESN'T pass
FORMALITIES
1. Must be contained in a deed to be enforceable s.1 LP(MP) A 1989
  1. EQUITABLE interests must be created in writing s.53(1)(a) LPA 1925
REMEDIES
1. Injunction (mandatory or prohibitory) OR Damages in lieu of an injunction
2. Generally if it is between the original parties the doctrine of privity of contract will allow the awarding of DAMAGES for breach of contract. BUT extended under C(ROTP)A 1999
EXTINGUISH AND VARIATION
1. 1.Express release or variation 2. Implied release (abandonment) or variation 3.Unification 4.Obsolescence

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Freehold Covenants

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