Freehold CovenantsWhat are freehold covenants?Enforcement original partiesEnforcement successors in titlePositive covenantsDischarge/modification

What are Freehold Covenants?A covenant is a promise in a deed.Covenants may be:RestrictivepositiveA potential buyer of land will need to know whether there are any covenants relating to the land that could be enforced against him/her if they buy the land.

Enforcement Original PartiesA sells part of his land to BIn the transfer B promises not to carry on any trade or business on the land.A (the original covenantee) has the benefit of the covenant and can enforce the covenant against BB (the original covenantor) has the burden of the covenant and is liable to A for any breach of covenant.

Enforcement Original PartiesThe original covenatee can always enforce the covenant against the original covenantor as a matter of contract.What is the position if the covenantee no longer owns the land to which the covenant relates?What is the position if the covenantor no longer owns the burdened land?

Enforcement Original PartiesNote that the class of original covenantees can be extended to person who were not parties to the original deed.S.56 Law of Property Act 1925Re Ecclesiastical Comms for Englands Conveyance [1936] Ch 430White v Bijou Mansions Ltd [1937] Ch 610Amsprop Trading Ltd v Harris Distribution Ltd [1997] 1 WLR 1025Contracts (Rights of Third Parties) Act 1999

S.56 LPA 1925

Contracts (Rights of Third Parties) Act 1999S.1(1): A third party may enforce a term of a contract if:The contract expressly provides that s/he may, or The term purports to confer a benefit on him/her.S.1(3): The third party may be expressly identified in the contract but need not be in existence when the contract is entered into

Enforcement Successors in TitleIf A sells his retained land to X, can X then enforce the covenant not to carry on any trade or business on the land against B?Does the benefit of the covenant pass to X?

If B sells the burdened land to Y, does Y have to comply with the covenant?Does the burden of the covenant pass to Y?

Enforcement Successors in TitleDifferent rules apply at common law and in equityDifferent rules apply for the running of the benefit and the burdenDifferent rules apply for restrictive and positive covenantsAdopt a clear structure!

Common Law:1. The BenefitThe benefit of both restrictive and positive covenants runs at common law if:The covenant touches and concerns the land of the original covenanteeP&A Swift Investments v Combined English Stores Group [1989] AC 632At the time the covenant was made it was intended to benefit the covenantees landS.78(1) Law of Property Act 1925

Common Law:1. The BenefitAt the time the covenant was made the covenantee held a legal estate in the benefited land.The claimant must derive their title from or under the original covenantee but does not need to hold the same legal estate as the original covenantee.Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 K.B. 500

Common Law:2. The BurdenThe burden of a covenant does not run at common law.Austerberry v Oldham Corporation (1885) 29 ChD 750

Rhone v Stephens [1994] 2 AC 310

Common Law:2. The BurdenThe effect of this is that a covenant can be enforced at common law only where a remedy is sought against the original covenantor.The claimant must consider the rules in equity where:He seeks to enforce the covenant against a successor in title to the original covenantor, orHe requires an equitable remedy (i.e. an injunction)

Equity:1. The BurdenTulk v Moxhay (1848) 2 Ph 774The burden runs in equity provided:The covenant is negative in substanceHaywood v Brunswick Permanent Building Society (1881)8 QBD 403At the date of the covenant the covenantee must have owned benefited landLondon County Council v Allen [1914] 3 KB 642The covenant touches and concerns the land of the covenantee

Equity:1. The BurdenThe burden is intended to run:S.79 Law of Property Act 1925The rules for registration or notice are satisfied:Doctrine of notice (if created pre 1.1.1926)D(ii) Land Charge (if created on/after 1.1.1926)Notice on the Register

Equity:2. The BenefitIf the burden of the covenant has run in equity, the benefit must also run in equity to enable the claimant to obtain a remedy.The benefit may run by:1. Express annexationRogers v Hosegood [1900] 2 Ch 388Renals v Cowlishaw (1878) 9ChD 125Re Ballards Conveyance [1937] Ch 473

Express AnnexationThe buyer with the intent and so as to bind the Property into whosoever hands the same may come and to benefit and protect the land retained by the Seller (hereinafter called the Retained Land) or any part thereof hereby covenants with the Seller to observe and perform the following stipulations and restrictions in relation to the Property

Equity:2. The Benefit2. Statutory annexationS.78(1) Law of Property Act 1925: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.

Statutory AnnexationFederated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594Held: Provided the condition precedent of s.78 is satisifed, i.e. provided there is a covenant which touches and concerns the covenantees land, the benefit of the covenant is annexed to and runs with every part of the land.Roake v Chaddha [1984] 1 WLR 40

Equity:2. The Benefit3. Express Assignment

Unbroken chain of assignments

Assignment to purchaser must be made at time of conveyance/transfer to them

Equity:2. The Benefit4. Building SchemeDerive title from a common sellerLand must be laid out in plots before saleSame restrictions imposed on each sale & clear that for benefit of all plotsPurchasers acquire plot on understanding that covenants intended to benefit all other plots in schemeElliston v Reacher [1908] 2 Ch 374

Equity:2. The BenefitHow strict are the requirements?Re Dolphins Conveynace [1970] Ch 654

Baxter v Four Oak Properties Ltd [1965] Ch 816

Emile Elias v Pine Groves Ltd [1993] 1 WLR 305

Positive Covenants The burden of covenants (positive or negative) does not run in law.The burden of a positive covenant does not run in equity.There are a number of indirect methods of ensuring that a positive covenant can be enforced against the owner of the burdened land

Positive CovenantsMutual benefit & burden:Halsall v Brizell [1957] Ch 169Rhone v Stephenson [1994] 2 AC 310

A chain of indemnity covenants

Discharge & ModificationBurdened & benefited land in same ownershipDischarge/modification s.84 LPA 1925:Obsolete due to changes in the character of property/neighbourhoodImpedes a reasonable user and provides no practical benefit/value to any person or is against public policyAgree/implied discharge Discharge cause no loss to the person entitled to the benefit