Freehold Covenants

Question 1

Are covenants capable of being legal?

Answer 1

No. They are equitable in nature.

Question 2

What are the relevant formalities required to create a covenant?

Answer 2

• In must be in writing and signed.
• Note covenants will usually be created by deed as they tend to be created on sale of part land and will be included in the transfer.

Question 3

The burden of a restrictive covenant will pass in equity is certain criteria are met. List the criteria.

Answer 3

1) Must be negative (restrictive) in substance.
2) Covenant must at the time of creation of covenant have been made to benefit the dominant land retained by the covenantee;
3) Covenant must touch and concern the dominant land;
4) Owner of the servient land must have notice of the covenant for it to bind them.

Question 4

Explain the requirement that the covenant must touch and concern the dominant land.

Answer 4

Three part test as follows:
1) Must benefit only the dominant owner for the time being, so if separated from their land, it ceases to be advantageous to them;
2) Covenant must affect the nature, quality, mode of user or value of the land belonging to dominant owner;
3) Covenant must not be expressed to be personal (ie not specialist given to one specific dominant owner, but rather the person who owns the land at any time).

Question 5

Give the two types of intention which can be used to create a covenant which burdens the servient land.

Answer 5

1) Express intention.

2) Implied intention.

Question 6

Explain how a lease makes a positive covenant enforceable.

Answer 6

Instead of selling land freehold, a lease can be created by landowner.

• With regards to leases, the tenant will be bound by both positive and negative covenants.
• This is because lease must be created for a fixed period (not losing forever like freehold).

Question 6

Explain implied intention to create a covenant to burden the servient land.

Answer 6

Under LPA 1925, s79, intention can be implied in the absence of express words.

Question 6

Explain express intention to create a covenant to burden the servient land.

Answer 6

This is where covenant is set out specifically in a document which creates the covenant.

Eg ‘The Buyer and their successors in title covenants with the Seller to use the property only as a private dwelling house’.

Question 7

Which three ways can a positive covenant be enforced?

Answer 7

1) Creation of a lease;
2) Indemnity covenant;
3) Doctrine of mutual benefit and burden - Halsall v Brizzell.

Question 8

Explain the doctrine of mutual benefit and burden under Halsall v Brizzell.

Answer 8

Doctrine creates rule that a person wishing to benefit from a service, facility or right which benefits their land must also comply with a corresponding obligation (eg contributing to a driveway over which you enjoy access from).

Doctrine has two requirements:

1) Burden must be relevant to the exercise of the rights which enable the benefit to be obtained. As such there must be clear correlation between benefit and linked burden.

2) Covenanter’s successors in title must have opportunity to elect whether to take the benefit (and therefore accept the burden with it) or reject it and escape the related burden.

Question 9

Explain the annexation method of passing the benefit of a covenant at common law.

Answer 9

The covenantee’s successor can enforce a covenant at common law if the following criteria is met:

1) Covenant must touch and concern the land;
2) Must have been an intention that benefit should run with the estate owned by the covenantee (this will either be express words or implied by s78 LPA 1925);
3) Covenantee must have legal estate in benefited land (ie no benefit can pass if covenantee held an equitable interest);
4) Buyer of benefited land must also take legal title in the benefited land (ie the person buying the land must obtain a legal interest).

Question 10

Explain the method of assignment of the benefit of a covenant (at common law).

Answer 10

• This must be done by express assignment and take place at the same timer as the transfer of the land.
• It must be in writing and signed by the assignor (ie the original covenantee) and written notice must be given to the person with the burden of the covenant.

Question 11

Which three methods of annexation can be used for a burden of a covenant to run in equity?

Answer 11

• Express annexation;
• Implied annexation;
• Statutory annexation.

Question 12

Explain express annexation (for burden to run in equity).

Answer 12

• Covenant should express intention to benefit a defined piece of land (insufficient for covenant to be made foe the benefit of the covenantee and their successors in title).
• Standard practice is to include words ‘each and every part’ which ensures covenant is annexed to each part of dominant land if in the future it is divided into smaller plots.

Question 13

Explain statutory annexation (regarding benefits of covenants passing in equity).

Answer 13

S78 LPA 1925 automatically annexes freehold covenant to each and every part of land retained by covenantee where following criteria is met:

1) covenant must have been created after implementation of LPA;
2) covenant must touch and concern the land.

Note this has been expanded so the land must also be benefited from covenant to be identifiable from description, plan, or other reference in transfer.

Question 13

Explain implied annexation (for burden to run in equity).

Answer 13

• Courts sometimes willing to idly annexation where it was obviously intended and would be unjust to ignore the intention.
• Required intention must be manifested in the transfer and construed in light of surrounding circumstances.

Question 14

Can s78 LPA 1925 (statutory annexation) be excluded from the transfer creating the covenant?

Answer 14

Yes - it can be excluded by the original covenanting parties in the transfer deed.

Question 15

Can the benefit of a covenant pass to a successor of the covenantee in equity by express assignment?

Answer 15

Yes.

Question 16

What are the two possible remedies for breach of a positive covenant?

Answer 16

• Damages; or
• Specific performance.

Question 17

On breach of a positive covenant, what does the original covenantee need to show to be able to claim damages?

Answer 17

• Provided they have the benefit of the covenant at common law, they can sue for damages on breach of the covenant by the covenanter.
• Damages may include a sum for future loss.
• Once the covenantee disposes of the land which benefits from the covenant, they can no longer claim damages.

Question 18

On breach of a positive covenant, what does the original covenantee need to show to be able to obtain the remedy of specific performance?

Answer 18

• Can only be claimed against the original covenantee (and not the successor in title).
• Note the original coveter my not be in control of the land at the time of breach (as it may be a successor in title occupying the land).
• Therefore likely they can only pay damages, but won’t be in a position to perform the specific obligation.

Question 19

What are the two possible remedies for breach of a restrictive covenant?

Answer 19

1) Damages;
2) An injunction.

Question 20

Give an example of a situation where it may be deemed oppressive on respondent for court to grant an injunction.

Answer 20

Where homes have been built, sold and occupied in breach of a restrictive covenant.

Question 20

Explain the situation where a court will award damages over an injunction for breach of a restrictive covenant.

Answer 20

1) Injury to C’s rights are small; and
2) capable of being estimated in money; and
3) can be adequately compensated by money; and
4) it would be oppressive to respondent for injunction to be granted.

Question 21

True or False: Court will not award an injunction where C has acted inequitably or delayed their action.

Answer 21

True.

Question 21

List the methods of removing or limiting the effect of a freehold covenant.

Answer 21

1) Express release;
2) common ownership;
3) s84 LPA 1925;
4) Indemnity insurance.

Question 22

Explain express release of restrictive covenant.

Answer 22

• Where covenantee agrees to release or modify covenant.
• Deed is required to do so.
• Payment or some other value is usually negotiated for such a release.

Question 23

Explain how common ownership releases a covenant (restrictive or positive).

Answer 23

Where servient and dominant land come into common ownership, the covenant is extinguished. This is called unity of seisin.

Question 24

Explain the s84 LPA 1925 method of removing a restrictive covenant.

Answer 24

This involves applying to the Upper Tribunal (Land Chamber) to discharge or modify the covenant.

• Burden is on applicant to satisfy one of the grounds in s84 below:

(a) the restrictive covenant was found to be obsolete; or
(aa) the restrictive covenant impedes some reasonable use of the land and either:
(i) it does not secure any practical benefit or value to the persons it should benefit; or
(ii) it is contrary to the public interest
and in either case, money will be adequate compensation; or
(b) that those entitled to the benefit have expressly or impliedly agreed to the discharge; or
(d) that the discharge will not injure the persons entitled to the benefit.

Question 25

When will the burden of a covenant pass to a successor?

Answer 25

If the criteria in Talk v Moxhay are met:

1) Covenant is restrictive;
2) It benefits land owned by the covenantee t time covenant was created;
3) It touches and concerns the covenantee’s land;
4) There must be intention (either express or implied) for the burden to run with the covenanter’s land (either expressly or by implication); and
5) New owner of the burdened land must have notice of the covenant.

Question 26

How is it determined whether a covenant touches and concerns the covenantee’s land (ie the requirements from P&A Swift Investments v Combined English Stores Group plc)?

Answer 26

1) Covenant must benefit only the dominant owner at that time so if they are separated from their land it will cease to be advantageous to them;

2) Covenant must affect the nature, quality, mode of user value or value of the land of the dominant owner;

3) Covenant must not be expressed to be personal (ie not only given to one specific dominant owner).