Land: Covenants ✅ Flashcards
(40 cards)
Covenant is?
PROMISE
How do you create a valid covenant?
s53(1)(a) - in writing, signed by grantor.
Positive vs Negative/Restrictive Covenant?
Positive = promise to DO something
Negative = promise NOT TO DO something.
Q: is I do nothing, will I be in breach of the covenant? If yes, then probably positive.
What are the TWO sets of rules for passing benefit and burden?
EQUITABLE RULES
COMMON LAW RULES
Test for whether is a postive covenant?
HAND IN POCKET test - if covenantors have to put their hands into their pockets to find money to spend to comply with covenant, it is positive. Expenditure of MONEY, EFFORT or TIME
Substance, not form.
Mixed covenant meaning?
Some covenants have positive and negative elements
Try split into 2 separate covenants
If cannot split, viewed as either overall positive with restrictive condition attached, or overall negative with positive condition attached.
At common law, does BURDEN of covenant pass to successor?
NO - At common law, the covenant is UNENFORCEABLE against successor in title to covenantor.
EQUITABLE RULES: What are the FOUR rules in Tulk v Moxhay that allow burden to pass to successors?
- Must be RESTRICTIVE (-ve)
- Must accommodate the dominant tenement
- Must be INTENTION for the burden of the covenant to run
- Must be NOTICE of covenant
THREE parts of rule that ‘covenant must accommodate dominant tenement’?
- Covenantee + successor covenantee must hold interest in land AT TIME OF CREATION AND ENFORCEMENT
- Covenant must TOUCH AND CONCERN the land
– only benefit dom owner whilst they own dom land
– affect nature, quality, use or value of dom land
– not be expressly personal - Must be SUFFICIENT PROXIMITY between dominant and servient land - not need to share common boundary but must be close enough to benefit.
Meaning of ‘must be INTENTION for burden of covenant to run’?
Expressly - covenant wording makes it clear successors to be bound
Impliedly - s79 LPA 1925 - covenant relating to land shall be deemed to be made by covenantor on behalf of its successors in title, unless a contrary intention expressed - will always be implied intention unless a covenant drafted to exclude it.
Must be notice?
Registered - s32 LRA 2002 - covenant must be protected by entry of NOTICE in charges register of servient title.
Unregistered - must be protected by CHARGE D(ii) Land Charge.
If either of these not done in relation to relevant time of land, purchaser for value of burdened land WILL NOT BE BOUND - but volunteer or donee would be bound.
EQUITABLE RULES: What are the TWO requirements for benefit to pass in equity?
- Covenant must TOUCH AND CONCERN dominant land;
and
- Benefit must pass by ONE of the recognised methods:
a. annexation (express/statutory)
b. assignment
c. building scheme.
Requirement for equitable remedy re covenant?
Both burden and equity must pass - rules go hand in hand
Express Annexation meaning?
Express words make clear original parties intend benefit to become PART OF DOMINANT LAND, rather than simply personal advantage to covenantee
e.g. benefit of owners and successors in title = enough for annexation as to named land vs ‘benefit of X, their heirs, executors and assignees’ shows benefit expressed to people not land, so no annexation.
Statutory Annexation meaning?
s78 LPA 1925 - annexation automatic UNLESS EXCLUDED - either expressly excluded in words, or impliedly by another method of passing benefit being stipulated in transfer deed.
Assignment meaning?
Where benefits not annexed at ouset - can be assigned where dominant benefit transferred - must be transferred every time transferreed, separate assignment must comply with s53(1)(c) LPA 1925 i.e. in writing, signed by person disposing of interest.
When land sold, does original covenantee have ability to sue on it?
Under contractual principles, technically, yes, as it still has the benefit of the covenant. Unlikely will, and it is hard to envisage loss if they don’t hold land anymore.
What are the available remedies?
Restrictive covenant is equitable interest in land so equitable remedies available, although discretionary i.e. no automatic right to remedies.
Most common remedy = INJUNCTION
– prohibitory - you must stop doing X
– mandatory - you must do Y.
Where would be oppressive to grant injunction, other equitable remedies may be awarded in lieu of injunction
e.g. Breach of covenant not to develop land without approval - court refused to grant mandatory injunction to demolish houses - would be waste of much needed houses - awarded damages as % of profit made by developer.
Common law rules: burden and indirect enforcement?
Covenant UNENFORCEABLE against successor in title to covenantor because of the general rule that burden will not pass. Always consider first if equitable rules apply.
What is mean by continuing liability of original covenantor?
Common law general rule means successor covenantor cannot be sued.
BUT burden of covenant therefore remains with OG covenantor permanently = ‘the continuing liability of the original covenantor’
So…OG covenantor can be sued for both its breaches and breaches of its successors.
How is continuity found?
Usually express wording in covenant stating continuity.
If not expressed, then it can be implied - s79(1) LPA 1925 held to imply wording of continuing liability of original covenant into the covenant
What remedies are available against OG covenantor?
DAMAGES = only remedy available against original covenantor, as original covenant is no longer in possession of land.
What is an indemnity covenant?
⭐ An indemnity covenant is a primary obligation, and is agreement by one party to bear the cost of certain losses or liability suffered by another party in certain circumstances
As part of sale, OG covenantor (seller) should require successor (buyer) to enter indemnity covenant promising to:
1. Comply with covenant
2. Indemnity (reimbuse) if
any loss incurred as
result of breach
Indemnity covenant sought each time land sold → ‘Chain of Indemnities’ ⛓️⛓️
IC = only enforceable against direct successor:
if indemnity covenant included in each subsquent sale → chain complete → INDIRECT ENFORCEMENT
If not, indirect enforcement fails - chain of indemnities only as strong as weakest link.
⚠️ Indemnity covenant does not pass burden of covenant and does not enable current owner to be sued by anyone except their predecessor in title.
COMMON LAW RULES: Doctrine of mutual benefit and burden?
= exception to general rule that covenants unenforceable at common law.
Transfer deed granted rights of way and drainage over private roads and drains. In deed, OG purchasers covenanted to contribute to cost of maintaining roads and drains. Successor covenantor relied on common law principle that burden does not pass, and refused to pay, while enjoying benefit of easement.
Successor covenantor could not take benefit (i.e. rights of way and drainage) without submitting to the burden i.e. obligation to contribute to the costs of maintenance). Only if the successor covenantor is happy to reliquish the benefit, the burden cannot be enforced. Liability is conditional.
