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Freehold covenants

Strictly speaking a covenant is a promise contained in a deed. Covenant can also be applied to any enforceable promise about the use of land even though its not contained in a deed. Covenants are not capable of being legal interests in land s 1(2) LPA 1925 Can only be equitable s 1(3) LPA 1925, as an equitable interest the minimum formability requirement is signed writing s 53(1)(a) LPA 1925. Positive covenants require a person to carry out work or spend money, e.g. a covenant to repair. A negative (or restriction) covenant is one that places restrictions on what a person may do.

Terminology Covenantor: the person who makes the promise in the deed; they have the burden of the covenant. Covenantee: the person to whom the promise is made; they have the benefit of the covenant. Annexation: means that the benefit/burden of the covenant is attached to the land so that it passes automatically to successors of the covenantee or covenantor. Assignment: express transfer of the benefit of a covenant to a successor.

Enforcement of freehold covenants

Only if a party has the benefit of the covenant can he enforce it; and only if he has the burden of the covenant can action be taken against him. The original covenantee They are a party to the contract in which the covenant was created. The original covenantee will get the benefit of all the express covenant (positive and negative, real and personal) in the contract. The original covenantor Under s 79 LPA 1925, covenants relating to the land of the covenantor shall be deemed to have made by the covenantor on behalf of his successors in title and persons deriving title under him, as well as on behalf of himself. Original covenantors will remain liable for breach of covenants relating to the land after the sale of the land. The effect of privity of contract and s79 LPA 1925 is that he has promised that not only will he observe the covenants but that his successors will do so as well. Note s 79 doesnt apply to personal covenants.

Solution for original covenantors Indemnity covenants: a clause in a transfer document in which the buyer undertakes to compensate the seller if the buyer breaches in any of the restrictions in the title deeds that affect the property Successors in title to the original parties The running of the benefit at common law

Benefit will pass to successor of the covenantee at common law in one of two ways: by express assignment (s 136 LPA 1925)

- At the time the benefitting land is being sold to the new owner provided notice is given to the owner of the burdened land. Or automatically (if there is no express assignment)

covenant touches and concerns (P&A Swift Investments test) land of covenantee Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board; and

original covenantee and the successor now seeking to enforce the covenant both had/have a legal estate in the land; and

original parties intended benefit to run with the covenantees land ie benefit was annexed to land expressly, or impliedly via s.78 LPA 1925.

As long as these 3 conditions are satisfied, the benefit of the covenant will pass to any person who has the appropriate legal estate.

The running of the burden at common law The common law does not allow the burden of covenants to pass to those who did not enter into the original covenants Austerberry v Oldham Corpn. However there are exceptions: 1. Halsall v Brizell: a successor in title who takes the benefit of rights contained in a deed must accept the burden of covenants contained in the same deed. Known as the principle of mutual benefit and burden. 2. Rhone v Stephens: interpreted the principle of mutual benefit and burden narrowly. Not all burden imposed by the deed become enforceable. The burden must be in some way related to the benefit conferred. The running of the benefit in equity Successor(s) of the original covenantee, will have the benefit of the covenants in equity if two conditions are met:

covenant must touch and concern the land of the covenantee

and benefit of the covenant has passed to the successor of the covenantee in one of the following ways:

express assignment as above.

or express annexation specifically attached to the land in the conveyancing. or statutory annexation under s 78 LPA 1925.

Burden in equity Equity allows the burden of some covenants to pass to successor(s) of the original covenantor, if four conditions are met - Tulk v Moxhay (1848) 41 ER 1143.

Tulk v Moxhay involved the use of some land in Leicester Square, London. There was a covenant to keep the park in the centre of the Square uncovered by any building, in a neat and ornamental order. The court decided that the covenant could be enforced against the owner in 1848 who was prevented from building on it.

4 conditions: covenant must be restrictive (negative) i.e. enforceable by injunction

covenantee owned land, for the benefit of which the covenant was taken

original parties intended burden to run with covenantors land burden was annexed to land expressly, or impliedly via s 79 LPA 1925 (unless contrary intention shown)

the person against whom it is sought to enforce the covenant must have notice of it. Post-1925 covenants must be registered:

If title to covenantors land is registered: Covenant classed as an interest affecting a registered estate and requires protection by a notice on Charges Register of title to the land before registration of the successor as the new proprietor.

If title to covenantors land is unregistered: Covenant must be protected as D(ii) land charge against the name of original covenantor on the Land Charges Register before date of completion of sale to the successor.

Which rules to use? Will need to show how the C has the benefit of the covenant breached using the common law or equitable reuses, depending upon who he is suing and how the D has the burden of that covenant using the same set of rules. I.e. if the party being sued has the burden of the covenant at common law, the party suing musty sow that they have the benefit of the covenant at common law.

Original Covenantor The original covenantor is liable for breach of covenant whilst he retained an interest in the land and also once the land has been sold. Whilst the original covenantor retains an interest in the land, in the

event of any breach of covenant the covenantee may obtain damages, or an injunction to restrain a breach of restrictive covenant, or in the case of breach of positive covenant, an order for specific performance. However, once the land has been sold and the original covenantor no longer has an interest in the land, where there is a breach of covenant by a successor the only remedy available against the original covenantor for breach of covenant by his successor is damages, an order for specific performance would be unenforceable.

Successor to the original covenantor A successor to the original covenantor has liability for breach of a restrictive covenant under the rule in Tulk v Moxhay. Where there has been a breach of a restrictive covenant, the appropriate remedy would be an injunction restraining the breach of covenant.

Discharge of freehold covenants

Express release: The covenantee of the restrictive covenant can agree to the modification or release of the covenant. The covenantee will seek a payment fro the release of the covenant, such modification or release is voluntary it cannot be forced upon the covenantee.

Common ownership Where the burdened and benefited land come in to the same ownership, the covenant will be extinguished (similar to extinguishment of an easement).

S 84 LPA 1925 Under s 84 an application can be made to the Lands Tribunal and if certain grounds can be made out, the tribunal has power to release or modify restrictive covenants. Grounds are specified in s 84 and are limited

Breach insurance In some cases, the best option for a covenantor us to take out breach insurance. Payment of a premium will ensure that, should a restrictive covenant be breached the covenantor will be able to recover insurance for any loss incurred by the enforcement of that breach.