Covenants Flashcards
(18 cards)
what is a covenant
A covennat is a promise concering land made by deed.
Relevant in both leases and freehold owners.
Essentially promises between landowners
what are types of covenants
they can be either positive or negitive (restrictive)
Positive- requires a party to do something on their land (paint, plant trees, pay maintanance contributions)
Negative- requires a party to NOT do something on their land (not run a business, not build above a certain height)
Distinction depends on the constructing words used and the broader terms of the conveyance.
- What looks positive might be negative (e.g ‘for residentail purposes only’ restricts non residents)
Freehold Covenanats
Nature: Promises made by deed between freehold owners regarding use of their land, typically for the benefit of neighbouring land.
Parties: Partybound by the promise Conventor (subject to the burden) and the party recieiving the promise is Conventee (subject to benefit)
Types: Can be positive or negative.
They affect the enjoyment of adjoining or neighbouring land
Freehold Covenants enforcability of Original parties
Rule: Covenants are contracts and are necessarily binding between the original parties to the deed
Principle: This is based on the doctrine of privity of contract
Action: The original convantee can sue the original conventor for breach. Remedies: specific performance, injunction or damages
Freehold Covenants- enforcability on successors
If land is transferred, the original contract is broken. A successor can’t sue another successor based on privity of contract.
To enforce a covenant between successors, ‘the duality principle’ must be satisfied.
1) The benefit has passed or ‘run’ to the claimant
2) The burden has passed or ‘run’ to the defendant
If both benefit and burden are shown to have passed, the covenant is enforcebale between the successors
There are different rules ofr equity and law. CANNOT mix them up
Freehold Covenants- Passing the benefit at Law
**Rule: the benefit of both positive and negative covenants can pass at law
Conditions: 5 conditons must be satiafied (Bryant Homes v Stein 2016)
1) The covenant ‘touches and concerns’ the land of the original convantee (must benefit the land not individual) (P&aA swift test 1989)
2) Original Coventee held a legal estate in the land when covenant was granted
3) Claimant (successor) holds a legal estate in the land
4) Benefited land must be identifiable
5) Benefit was intend to run with the land (pass to successors by Annexation: covenant was permanently attached to the land,implied annexation (benefits land rather than an individual), Statutory annexation- s78 LPA 1925 creates a statutory of presumption that the benefit passess (even without express words Federated Homes v Mill 1980) unless contarty.
Freehold- passing the burden at law
Rule: the burden of postive or negative freehold CAN’T pass at law
Austerberry v Corporation (1885)
Freehold Covenants- Passing the burden in Equity
Rule: Negative covenanats can pass to successors but not positive
Principle: Tulk v Moxhay (1848)
Conditions: 5 conditions must be met for a restrictive covenant to pass in Equity
1) Covenant must be restrictive (determined from constructive words used Crest v McAllister 2004)
2) Covenant must ‘touch and concen’ the land (directly affects the land itself rather than benefiting the individual owner)
- P&A Swift test: affects the value of the land, is not purely personal, not expressed as to be personal
3) Must be capable of benefiting (dominant land must exsist to be identifiable)
4) Burden must be intended to run with the Servient land (bind successors) ( S.79 LPA 1925) creates a statutory presumption unless contrary intention shown
5) Successor must have notice of the covenant (rules depend on registered/ unregistered land)
Unregisterd land: Restrictive covenants after 1 Jan 1925 must be registered against the owners name of the OG conventor as a Class D (iii) land charge under the LCA 1972- failure= void .
Restrictive Covenants before 1 Jan 1926= subject to doctrine of notice
Registered land: Restricive Covenants must be portected by entry of notice in the Charges Register against burdened title. Failure= void
Freehold Covenants- Passing the benefit in Equity
Rule: The benefit of both positive and negative CAN pass in equity
Condtions: 2 main conditions must be met
1) the covenant ‘touches and concerns’ the land (same as benefit in law)
2) the claimant (owner of benefited land) must have a legal OR equitable estate in the land, doesn’t have to be the same as the original convantee (S78 LPA 1925)
Shown by:
Transmission= Annexation/implied (S78 LPA 1925), Assignment: transfers the benefit when the land is sold: Conditions (from Miles v Easter):
- The land must be capable of benefiting.
- The land must be identifiable.
-The assignment must happen at the same time as the land transfer.
Building Scheme/ Scheme of development: A group of homes/plots bought from the same seller, with covenants that everyone in the area can enforce against each other. Creates a local law (Reid Bickerstaff 1909)
Conditions: Must meet strict conditions (Birdlip v Hunter):
- Clear layout or boundaries
- Common seller
- Intention that covenants be mutually enforceable
- Awareness of restrictions by all buyers
Freehold Covenants- Workarounds for Positive covenants (Burden)
Problem: At common law the burden of positive covenant cannot run directly at law or in equity
**Solutions:
Chain of indemnity Covenanats: Mechanism used to ensure that the burden of a positive covenant continues despite common law rule- successive purchasers promise to indemnify (compensate) the previous seller if sued for breach. If one owner doesn’t take the covenant, chain breaks (all done through contract agreements)
- Halsall v Brizell Principle (1957)(Benefit and Burden): if a successor takes the benefit of the right, they must also accept the corresponding burden. The benefit-and-burden rule applies only if the new owner chooses to accept the benefit (e.g. actually uses the road). If they don’t use the benefit, they can avoid the corresponding burden (Thamesmead Town v Allotey 1998 CA). This is why it’s not a general way to make all positive obligations bind successors — it’s quite limited and there must be a clear link between benefit and burden (using a road then paying for maintenace)
- Creating a lease instead of selling freehold: instead of selling the freehold, the owner could grant a lease as positive covenants are more easily enforceable against successors as leaseholder msut follow rules set out in the lease
Freehold Covenants- Discharge and Modification
Problem: Some restrictive covenants might become useless or too restrictive over time. Landowners may want to change or remove.
The Land Chamber of the Upper Tribunal can modify or remove restrictive covenants to keep land useful if grounds apply and should be made. This is does not apply to Positive Covenants
Who can apply: Anyone affected by the coveanant
Rules: Under S.84 LPA 1925, the Tribunal will only modify or remove if one of these 4 reasons apply:
- The covenant is obsolete- it no lomger makes sense or served a useful purpose
- The covenant blocks reasonable use of the land AND either provides no real benefit to benefitor, contrary to the public interest and money would be adequate compensation for removing it.
- Those entitled to the covenant agree to change/ remove it
- Removing or changing the covenant won’t harm those who benefit from it.
Covenants cannot be removed just because they are old or unpopular. Can’t deliberately breach a covenant before applying for removal (Alaxander Devine 2020 CA)
Leasehold Covenants
Promises made between landlord and tenants within a lease agreement. they provide the content of leases
Types: Landlord’s covenants (obligations of the landlord), Tenant’s covenants (obligations of the tenant).
Can be exoress or implied
Leasehold Covenants- Key concepts
Assignment: when the landlord transfers their interest or the tenants trasfers their interest to a third party (assignee)
Dual Character of Lease: Both propreitary (creates an estate in land ) and contractual (agreement between 2 parties)
Privity of contract: Exsists between parties who have direct contractual relationship
Privity of Estate: Liability on covenants can be based on either privity of contract or privity of estate. Privity of estate= both positive and negative covenants are enforceable by and against parties to the leasehold estate.
Leasehold Covennats- Enforceability Pre 1966 Leases
Govered by the old law: Landlord and Tenant (Covenants) Act 1995 (LTCA 1995)
**Original Parties: **Enforceable between the originl landlord and original tenant based on privity of contract and privity of estate. Og tenant usually remains liable for breaches throughout the lease term even after assignment. Og Landlord also potentially liable.
Assignees: Enforceability depends on whether the benefit and burden have passed or run with the landlord’s assignee (reversion) and the leasehold (for tenant’s assignee).
- P&A test
Leasehold Covenants- Enforceability Post 1996 leases
Govered by the Landlord and Tenants (Covenants) Act 1995, applies to leases granted on or after 1 Jan 1996
Principle: The benefit and burden of all leasehold covenants pass automatically upon assignment of the lease or reversion (S.3 LTCA 1995), except for covenanst expressed to be personal (S.3(6) LTCA 1995).
Original parties are released from liability for future breaches after they assign their interest, subject to exceptions.
Leasehold Covenants- Remedies
Landlord can seek 5 potential
1) Action for debt- for rent arrears
2) Damages
3) Injunction
4) Specific Performance (+ covenants)
5) Forfeiture (termination of the lease)
How to answer a problem question
1) Is the Covenantor a successor in title or original parties?
2) Enforceability requirements: burden then benefit?
3) Breach/ remedies
What is the P&A Test (1989)
the covenant affects the nature, quality, mode of user or value of the ‘dominant land’
