Covenants

Question 1

What is a covenant?

Answer 1

A promise relating to land.

Question 2

What is the purpose of a covenant?

Answer 2

To ensure the buyer does not do anything that could affect the amenity/value of the retained land.

Question 3

What must a covenant be in order to be valid?

Answer 3

Must be in writing and signed by the grantor (LPA 1925, s 53(1)(a)).

Question 4

Who is the covenantee?

Answer 4

The person who receives the benefit of the promise.

Question 5

Who is the covenantor?

Answer 5

The person who makes the promise and can be sued if the covenant is breached.

Question 6

What is dominant land?

Answer 6

Land which is benefited by the promise.

Question 7

What is servient land?

Answer 7

Land which is burdened by the promise.

Question 8

What is a positive covenant?

Answer 8

A promise to do something, usually involving expenditure of money/time/effort.

Question 9

What is a negative covenant?

Answer 9

A promise not to do something and can be complied with by inaction.

Question 10

What is the ‘hand in pocket’ test?

Answer 10

A method to determine if a covenant is positive or restrictive - if the covenantors have to spend money or time to perform the covenant, it is positive

Haywood v Brunswick Permanent Benefit Building Society

Question 11

What are mixed covenants?

Answer 11

Covenants that can be interpreted as either separate covenants or an obligation with a condition attached.

Question 12

What is the general rule regarding the burden of a covenant?

Answer 12

The burden does not pass to a successor at common law.

Austerberry v Oldham Corporation

Question 13

What must a covenant satisfy to pass the burden at equity?

Answer 13

It must satisfy the rule in Tulk v Moxhay.

Question 14

What are the requirements for a covenant to pass the burden at equity?

Answer 14

1. Must be restrictive
2. Must accommodate the dominant tenement
3. Must have intention for the burden to run (express or implied)
4. Must have notice of the covenant (protected by notice/class D(II) land charge)

Question 15

What is required for the burden to pass in terms of proximity?

Answer 15

The dominant land and servient land must be in proximity.

Question 16

What does LPA 1925, s 79 state regarding covenants?

Answer 16

A covenant relating to land shall be deemed to be made by the covenantor on behalf of his successors in title unless contrary intention is expressed.

Question 17

What must be shown for a breach to be enforced by a successor covenantee under the rules in equity?

Answer 17

The benefit must also have passed at equity.

Question 18

What are the two elements for the benefit to pass in equity?

Answer 18

1. The covenant must ‘touch and concern’ the dominant land
2. The benefit must pass by one of the methods in Renals v Cowlishaw.

Question 19

What are the methods for the benefit to pass under the equitable rules?

Answer 19

• annexation (express or statutory)
• assignment
• building scheme

Question 20

What is express annexation?

Answer 20

When the express words of the covenant make it clear that the benefit becomes part of the dominant land.

equitable rules

Question 21

What is statutory annexation?

Answer 21

LPA 1925, s 78(1) provides that a covenant shall be deemed made with the covenantee and his successors, but this can be expressly excluded

equitable rules

Question 22

What is required for an assignment of the benefit of a covenant?

Answer 22

Must be in writing and signed by the person transferring the benefit (LPA 1925, s 53(1)(c)).

equitable rules

Question 23

What conditions must be met for a building scheme to apply?

Answer 23

1. All buyers buy from the same seller
2. Seller divided the estate into plots
3. Covenants intended to benefit all plots
4. Each buyer buys on the understanding that covenants benefit all plots.

Ellison v Reacher

equitable rules

Question 24

What remedies are available for breaches of restrictive covenants when the benefit and burden has passed in equity?

Answer 24

1. Injunctions
2. Prohibitory or mandatory injunctions.

these are discretionary and subject to the equtiable principles

Question 25

What is the general rule regarding the burden of a covenant at common law?

Answer 25

The burden does not pass to a successor.

Question 26

As it is unlikely that the burden will pass under the common law rules, what options do the DT owners have?

Answer 26

Sue the original covenantor - but the only remedy will be damages

Question 27

What must an original covenantor seek from a successor to protect themselves from liability?

Answer 27

An indemnity covenant promising to comply and indemnify for any loss incurred due to breach - this should be sought every time the burdened land is sold

Question 28

What is the limited exception to the general rule regarding burdens?

Answer 28

The doctrine of mutual benefit and burden. This applies as long as: - there is a clear link between the benefit and burden - there is a genuine choice as to whether or not to take the benefit - the benefit and burden were conferred in the same transaction | Halsall v Brizell

Question 29

What are the two ways of passing the benefit at common law?

Answer 29

1. Express Assignment (in writing with express notice to the covenantor) 2. Implied Assignment.

Question 30

Can covenants in leases be enforceable against successors in title?

Answer 30

Yes

Question 31

What are the requirements for implied assignement of the benefit under the common law?

Answer 31

P&A Swift investments v Combined ENglish Stores Group plc 1989: 1. the covenant must touch and concern the land 2. there must have been an intention that the benefit run with the DT (this will be implied in as long as it is not expressly excluded) 3. the original covenantee must have a legal estate in the DT 4. the successor covenantee must hold a legal estate in the DT.

Question 32

What must be done for the burden of a covenant in registered land to pass under equity?

Answer 32

A notice must be entered against the title of the burdened land.

Question 33

What must be done for the burden of a covenant in unregistered land to pass under equity?

Answer 33

- covenants created pre 1926 --> doctrine of notice applies, so they do not need to be registered and will be enforceable on anyone except equity's darling covenants created after 1926 --> must be registered as a Class D(ii) Land Charge against the name of the original covenantor

Question 34

What happens to a covenant if the same person becomes the owner of both dominant and servient land?

Answer 34

It will automatically be discharged.

Question 35

What power does Law of Property Act 1925, s 84(1) give the Lands Chamber?

Answer 35

The power to wholly or partially discharge covenants.

Question 36

What are the two ways the DT owner may agree to discharge the covenant?

Answer 36

- expressly --> usually in return of payment, done by deed - impliedly --> they do nothing when the covenant is being openly breached

Question 37

Under what condition can a restrictive covenant be discharged wholly or partly by the Lands Chamber?

Answer 37

- S 84(1)(a): it has become obsolete due to changes in character - S 84(1)(aa): its continued existence impedes the reasonable use of the land - S 84(1)(b): the dominant owners expressly or impliedly agrees - S 84(1)(c): the dominant owners will not suffer injury | LPA 1925