Freehold Covenants & Mortgages

Question 1

Are covenants capable of being legal interests in land?

Answer 1

No

Question 2

How are covenants created?

Answer 2

In writing and signed by party making the promise (s 53 LPA)

Commonly created by deed

Question 3

What are the requirements for the burden of a covenant to run in equity as set out in Tulk v Moxhay?

Answer 3

1. Must be negative in substance
2. Must at time of creation have been made to benefit dominant land retained by the covenantee
3. Covenant must touch and concern the dominant land
4. Covenant must be made with intent to burden servient land
5. Owner of servient land must have had notice of covenant (i.e. registered)

Question 4

What are the alternative methods for enforcing a positive covenant?

Answer 4

1. Create a lease
2. Indemnity covenant
3. Doctrine of mutual benefit and burden - must be clear correlation between the benefit / linked burden; successor’s in title must have opportunity to elect whether to take benefit or escape benefit

Question 5

What are the requirements for annexation of the benefit of the covenant at common law?

Answer 5

1. Must touch and concern the land
2. Must have been intended that the benefit should run with estate
3. Covenantee must have legal estate in benefitted land
4. Buyer of benefitted land must also take legal title

Question 6

How can the benefit of a covenant be annexed in equity?

Answer 6

Express
Implied
Statutory

Question 7

What are the remedies for breach of a positive covenant?

Answer 7

Damages at common law

Question 8

What are the remedies for breach of a negative covenant?

Answer 8

Injunction OR damages in more minor instances

Question 9

How can you discharge a covenant?

Answer 9

Express release
Common ownership
Application to Lands Chamber (restrictive only)
Insurance (restrictive only)

Question 10

Which register would the burden of a restrictive covenant appear for a registered freehold property?

Answer 10

Charges register

Question 11

What kind of interest is a mortgage?

Answer 11

Proprietary interest capable of being legal, provided it was created by deed

Question 12

What are the requirements for making a mortgage?

Answer 12

A deed - however equity may intervene where document lacks deed requirements and recognise and equitable mortgage

Question 13

Does a borrower of a mortgage need to be in default for the lender to exercise right of possession?

Answer 13

No

Question 14

What does a lender have to do in order to invoke their right to possession if a property is residential?

Answer 14

Obtain court order

Question 15

What are the requirements for power of sale to be invoked by a lender?

Answer 15

Must exist
Must have arisen, i.e. mortgage money due
Must be exercisable

Question 16

In what events can a lender invoke their power of sale?

Answer 16

Borrower has defaulted or breach obligations of agreement

Question 17

How does the lender distribute proceeds of sale following invoking power of sale?

Answer 17

Must distribute in accordance with LPA

Question 18

What are the limitations for debt action by the lender?

Answer 18

As per Limitations Act, 6 years for recovery of interest; 12 years for recovery of any capital outstanding

Question 19

Why would a lender chose foreclosure over power of sale?

Answer 19

Foreclosure removes right of borrower to repay the mortgage and transfers title of property in full to lender (allowing them to keep an profit from proceeds of sale)

Question 20

When the lender appoints a receiver, what power do they have?

Answer 20

To demand and receive income from the property