By Law Teacher
THE LAW ESSAY PROFESSIONAL
8.1.1 Freehold and Restrictive Covenants – Introduction
Welcome to the eighth topic in this module guide – Freehold and Restrictive Covenants! A covenant is a promise made in a deed by a covenantor for the benefit of a covenantee. In land law, covenants can burden land and affect the use of it somehow. Alternatively, a covenant may give the owner control over what is done on the land that surrounds their land.
Freehold covenants can be varied, and as such they can include a range of different topics. A freehold covenant is a promise extracted by a covenantee from a covenantor. Here, the covenantor either promises to not do (a negative covenant), or to do (a positive covenant) something on their land. The land that benefits from this promise becomes the dominant tenement, whereas the land which is burdened by the promise becomes the servient tenement.
A restrictive covenant prohibits a covenantor from doing something specific over their land or using their land for a particular purpose. The burden of a restrictive covenant is also capable of ‘running’ with the land. This means that subsequent owners and occupiers of the land have to abide by the restriction.
Below are some goals and objectives for you to refer to after learning this section.
Goals for this section:
- To understand what a freehold covenant is and how they operate.
- To know how the original parties to a covenant will be bound, irrespective of any sale of the land.
- To understand what a restrictive covenant is and how they operate.
Objectives for this section:
- To be able to identify the remedies available if a covenant is broken.
- To be able to analyse the issues with the current law on covenants and to be able to suggest potential areas for reform.
- To be able to appreciate the difference between the rules of covenants under the common law and the rules of covenants under equity.
8.1.2 Freehold and Restrictive Covenants Lecture
With leasehold covenants, a covenant regulates the use of land in some way.
This raises questions as to whether the new owners of the land are bound by the promises made by the previous owners.
The burden of a covenant
The ‘burden’ of a covenant refers to the land which has the obligation to do, or not to do in the case of restrictive covenants, something. For example, for a covenant to keep the grass short, the owner of that land has the ‘burden’. The ‘running’ of the burden refers to whether a new owner of the land has to abide by the covenant.
The general rule at common law
The basic rule is that the burden of a covenant in relation to land does not run with the land at common law (Austerberry v Corporation of Oldham(1995)). This follows the basic rules of privity of contract.
Case in focus:Rhone v Stephens 
Circumventing the general rule
As you can see, the fact that positive covenants cannot be enforced leaves covenantees without a remedy. Here are some quick examples of ways which this may be circumvented:
- A chain of indemnity covenants.
- To lease the land instead of selling it, and replicate the covenants in the tenancy agreement.
The best way of enforcing a positive covenant is through equity.
The general rule at equity
The leading case of Tulk v Moxhay  created a certain set of circumstances which would result in the burden of a covenant running.
Case in focus: Tulk v Moxhay 
When using the case of Tulk v Moxhay, four requirements must be satisfied.
The covenant must be negative
The test for whether a covenant is negative or not is whether they will have to pay anything to comply with the covenant (Haywood v Brunswick Permanent Benefit Building Society(1881)).
At the date of the covenant, it must be made to benefit the dominant land
Case in focus: London County Council v Mrs Allen
The best way to understand this rule is by reference to the London County Council case.
The covenant must touch and concern the dominant land
The covenant must benefit the dominant land. Usually, this test falls down to how far away the dominant land is from the servient land (Kelly v Barrett).
Case in focus: Newton Abbot Co-operative Society Ltd v Williamson and Treadgold(1952)
The covenant must be made with the intention to burden the servient land
There is a distinction to be had between covenants that are intended to bind only the covenantor, and those which are intended to bind the land itself and subsequent owners.
The operation of privity of contract in covenants – binding the original parties
It is important to know that the original parties to a covenant will be bound by the covenant, regardless of any sale of the land. This follows the principles of privity of contract.
Furthermore, S56 of the LPA 1925 explains that any person can take the benefit of a covenant despite not being named as a party to the conveyance or other instrument.
Similar to the above exploration of S79, this presumption under S56 can be rebutted (Re Ecclesiastical Commissioners for England’s Conveyance ).
A covenant is not only restricted to owners or successors in land. A generic class of persons can be referred to, such as ‘the owners of all of the houses on this street’. However, the rule is that only those persons who are identifiable and in existence at the date of the covenant can claim under S56.
Changes implemented by the Contracts (Rights of Third Parties) Act 1999
Essentially, this piece of legislation removes the requirement that the third party wishing to enforce the benefit of a covenant must be in existence at the time of the covenant.
This only applies to covenants made after 11 May 2000. If so, and one of these requirements are met, a third party may enforce the covenant:
- The covenant expressly states the third party
- The third party is identified by name, a member of a class or a particular description (they do not need to be in existence).
The benefit of a covenant
Benefit of a covenant at common Law
Similar to the burden of covenants, there are four clear requirements:
The covenant must ‘touch and concern’ the land
Similar to the rule on the burden of a covenant, there must be some benefit to the dominant land. The test for whether the covenant touches and concerns the land was formed in P & A Swift Investments v Combined English Stores Group  AC 632.
The covenantee must hold a legal estate in the land on the date of the covenant
This requirement is fairly straightforward. Simply, the covenantee must hold a recognised legal estate in the land. This can either be through fee simple absolute in possession or a term of years absolute under S1(1) of the LPA 1925.
The buyer of the land must derive their title from the original covenantee
This test changes dependant on whether the covenant is pre-1926 or post-1926.
The benefit must have been intended to run with the land at the date of the covenant
Again, this requirement is different dependant on whether the covenant is pre or post 1926.
Following these four requirements being met, the benefit of the covenant has passed at common law, meaning the current owner can sue for breach of covenant. If any one of the requirements have not been met, the test fails and the covenantee must look to equity for a remedy.
Benefit of a covenant at equity
There are four different ways in which the benefit of a covenant may run in equity. The first of those is extremely simple, and it is that the covenant must ‘touch and concern’ the land. The other three ways are:
- A building scheme.
Annexation is where the benefit of a restrictive covenant is clearly applicable to a defined area of land in such a way that the benefit of the covenant will pass on any transfer of the land. This can be a confusing principle and case law has attempted to clarify it (Federated Homes Ltd v Mill Lodge Properties Ltd).
In express annexation, the document conferring the covenant will be drafted in such a way that it is clear that the covenant is made the benefit the land and not the covenantee. The covenantee may be mentioned in the document, but as long as the drafting is clearly focussed on the actual land, it will be considered express annexation.
Cases in focus: Renals v Cowlishaw (1879) &Rogers v Hosegood 
The above cases show two covenants with very similar wording, but highlight the importance of identifying a dominant land.
Annexation of large pieces of land
When annexing a large piece of land, you wish to place a covenant over, you can either choose to annex the covenant to only the whole of the dominant land, or to annex the covenant to each and every part of the dominant land.
Disadvantages of annexing to the whole of the dominant land
Re Ballard’s Conveyance  Ch 473 highlights the disadvantage very well. In situations where the servient land is small and the dominant land is large in comparison, there may be an issue in proving that every part of the dominant land benefits from the covenant.
Subdivision of dominant land
Where there has been a successful annexation to a dominant land, then the dominant land is subdivided and sold on, the owners of the subdivided land cannot enforce any covenants attached to the original dominant land (Russell v Archdale  Ch 38).
Disadvantages of annexing to each and every part of the dominant land
After we have discussed the disadvantages of annexing as a whole, it would seem that the obvious choice would be to annex to each and every part. However, as you can imagine, the number of dominant owners could end up being extremely large, which may create problems in itself.
Federated Homes Ltd v Mill Lodge Properties Ltd  1 WLR 594 meant that any restrictive covenant entered into after 1925 resulted in an automatic annexation to each and every part of land owned by the covenantee at that point. Crest Nicholson v McAllister  1 WLR 2409 rejected the Federated Homes reading and held that the dominant land must be mentioned in the conveyance, or identifiable from the surrounding circumstances. It was held that any annexation would be to the whole of the dominant land unless there was an express mention of the covenant being for each and every part.
Assignment of the benefit
The rules of assignment are relevant and helpful where annexation has failed, either through a failure of valid annexation, or where the dominant land has been subdivided where the annexation was only to the whole of the dominant land.
If some kind of assignment seems to have taken place, the requirements of Miles v Easter  Ch 611 need to be met:
The covenant is for the benefit of some identifiable land
This is satisfied if the document conveying the covenant expressly mentions the dominant land, or as per Newton Abbot Co-operative Society, if you can identify the dominant land from the surrounding circumstances
The identifiable land must be benefitted
Earl of Leicester v Wells-next-the-Sea  3 All Er 77 ruled that the whole of the identifiable land must be benefitted.
The assignee must acquire some of the identifiable land
The assignee need not acquire the whole of the land, but some will be sufficient (Stilwell v Blackman  3 All ER 514).
The assignment of the restrictive covenant must be simultaneous with the conveyance of the land
This requires that when the piece of land is transferred, there should be an express clause in the transfer document that assigns the benefit of the covenant. However, there are some exceptions to this requirement.
A building scheme is where land is sold or leased in lots/plots, and these pieces of land are subject to benefits and burdens of covenants which the purchasers are subject to and will be mutually enforceable between the current owners. When validly created, all properties are servient and dominant.
The requirements for a building scheme were set out in Elliston v Reacher , and a fifth was added in Reid v Bickerstaff .
If a covenant is broken, the regular remedies for breach of contract of damages for breach and an injunction preventing breach can be sought under most circumstances. However, a claim for damages cannot be brought against a successor in title because there is no privity of contract (Rhone v Stephens).
Avoidance of delay
If an individual is seeking an equitable remedy, there must not be any delay when making a claim. Silence to a breach can be considered acquiescence and the right to any remedies under a breach may be lost. Gafford v Graham(1998) 77 P&CR 73.
The LPA 1925 S84(2) declaration
A declaration under S84(2) will establish whether or not a covenant is binding on a person, or the person seeking to enforce it is able to enforce it.
Reform of the law
Issues with the current law
- The burden of a restrictive covenant does not run at law, but does in equity
- The rules under equity are complicated
- The benefit of a covenant runs at law and equity but under different rules
- The rules are more complicated than the burden rules
- The annexation and building scheme rules are technical and difficult to apply sometimes
The potential solution
‘Land obligations’ have been suggested as a new type of interest in the land. These obligations may be positive or negative, and they will be registrable interests. This would make them more akin to easements, meaning they will pass with the property and there would be less complications when ascertaining whether they are enforceable or not.
8.1.3 Freehold and Restrictive Covenants Lecture – Hands on Examples
The following section will test your knowledge of freehold covenants in the context of land law – when does the burden or benefit of a covenant pass, are the rules different under common law and equity, and what remedies may be available to the individual who benefits from the covenant? After studying the detailed chapter on freehold covenants you should be able to identify the issues in these questions and apply the law correctly. The answers for this question will be at the very bottom of this page.
In order to identify a question relating to freehold covenants, you should look for some kind of promise between two land owners, either to do something or not to do something. Don’t get confused between easements, where a land owner may have a right to do something on someone else’s property – here you are looking for a promise in relation to their own property. The question below should allow you to grasp exactly what a question on covenants may look like.
Here is a basic, sensible approach to questions involving covenants. You may wish to follow this or use your own methods:
- Establish what the covenant is, and whether it is a positive or negative obligation
- Establish who the covenantee is, and who the covenantor is.
- Who gets the benefit of the covenant, and who gets the burden? Identify and dominant and servient land
- Consider the burden of the covenant – can it run at common law? (Remember this is highly unlikely)
- Can the burden of the covenant run at equity as per Tulk v Moxhay – remember the four requirements
- Consider the benefit of the covenant – can it run at common law?
- If it cannot run at common law, can it run at equity? Consider annexation, assignment and building schemes
- What are the remedies and are they enforceable?
This approach should cover all the issues and will allow you to determine whether or not a covenant is enforceable. The relevant tests, cases and statutory provisions will need to be utilised in order to get full marks.
Anna has inherited a substantial amount of land from her family in 1970, and has sold a lot of it off with various conditions and promises made between her and the purchasers. She would like some advice on whether anybody can claim against her.
- Anna enjoys her peace and quiet. When she sold the land directly adjacent to her house to Lewis, he promised by covenant not to make noise past 9pm. Lewis then sold the land on to Rob. Unfortunately, Rob has been consistently making noise way past midnight and Anna is unhappy.
Is this covenant enforceable by Anna, and if so, what should she do?
- Anna then sold her piece of land that was adjacent to Rob’s to Sara in 2003. Sara holds the land as fee simple absolute in possession. Rob assumed that as Anna was now gone, he was not subject to the covenant to not make noise past 9pm, therefore he decided to start throwing parties every weekend. Sara is not happy.
Does Sara have any remedy against Rob?
- Anna owns a 100 acre piece of land in one corner. In the very far corner she sells 1 acre to Tyler. One condition of the sale is a covenant to not fly any drones or other aerial devices. Subsequently, Anna subdivides her 100 acre piece of land and sells it off in chunks. The conveyance states ‘the conveyance is drafted for the benefit of the whole of the dominant land’. The new owner of the land adjacent to Tyler’s is Bob. Tyler has now started flying his drones around and scaring Bob’s dog. Bob wants to know whether he can enforce this covenant.
Does Bob have any remedy against Tyler under equity as per the annexation rules? Assume the covenant is clearly drafted to run with the land. What if the covenant had been drafted as an annexation to each and every part of the land?
- Anna is the original covenantee, and therefore we do not need to consider whether the benefit of the covenant runs. However, as Lewis has sold the land on to Rob, we need to consider whether the burden of that covenant has run. At common law, the burden of a covenant does not run as per the privity of contract rules. However, the burden may run under equity as per the Tulk v Moxhay rules. These requirements seem to have been met: the covenant is negative as Rob will not have to pay anything to comply with the covenant; the covenant was made to benefit Anna’s land; it touch and concerns Anna’s land as there are adjacent therefore noise would affect her land; there is no reference to the express wording of the covenant, therefore it can be assumed that the covenant is intended to burden the subsequent owners as per S79(1) of the Law of Property Act 1925.
Therefore, the burden of the covenant runs with the land and Anna will be entitled to a remedy. Anna should seek an injunction as soon as possible as if she delays seeking a remedy is may be considered acquiescence.
- This is a question of whether the benefit of the covenant runs. Therefore, the common law test should first be applied. Firstly, it is clear the covenant touches and concerns the land, as it benefits Sara’s land, the quality of her land, and it is assumed that there is no express wording that would mean it was not intended to run. It can also be assumed on the facts that the covenantee held a legal estate in the land on the date of the covenant. Next, it is clear Sara derived her title from the original covenantee, Anna, and on the facts, she holds the land on a fee simple absolute in possession. Finally, the covenant was made post-1926 therefore there is an assumption the benefit was meant to pass with the land as per S78(1) of the Law of Property Act 1925.
Therefore, the benefit of the covenant runs with the land and Sara is entitled to a remedy. As with Anna, she should make the injunction claim as soon as possible.
- The issue here is whether the subdivision of the dominant land will have affected the rights of Bob to enforce the covenant. The case of Russell v Archdale  Ch 38 confirms that annexation to the whole land would not extend to subdivided and sold land. Therefore, Rob would not be able to enforce the covenant.
If the covenant had been drafted to annex each and every part of the land, the covenant would have been enforceable against Tyler.